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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: PENDING
ATLANTIC EXPRESS TRANSPORTATION CORP.
(Exact name of registrant as specified in its charter)
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NEW YORK 13-392-3467
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
<S> <C>
7 NORTH STREET, STATEN ISLAND, NEW YORK 10302-1205
(Address of principal executive offices) (Zip Code)
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(718) 442-7000
Registrant's telephone number, including area code
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes__ No __ Note: This is a voluntary
filing; Registrant not yet subject to Section 13 or 15(d).
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes __ No __
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
As of September 1, 1997, 100 shares of Common Stock, no par value, were
outstanding, all of which were held by an affiliate.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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PART I.
ITEM 1. BUSINESS
GENERAL
UNLESS OTHERWISE INDICATED OR THE CONTEXT OTHERWISE REQUIRES, REFERENCES TO
THE "COMPANY" AND "ATLANTIC" ARE TO ATLANTIC EXPRESS TRANSPORTATION CORP. AND
ITS SUBSIDIARIES, AND, FOR PERIODS PRIOR TO FEBRUARY 4, 1997, THE SUBSIDIARIES
OF ATLANTIC EXPRESS TRANSPORTATION GROUP INC. (TOGETHER WITH ITS PREDECESSORS,
"AETG") ENGAGED IN THE TRANSPORTATION BUSINESS. ATLANTIC CONDUCTS ITS BUSINESS
THROUGH ITS SUBSIDIARIES. REFERENCES TO FISCAL YEARS ARE TO YEARS ENDING JUNE
30.
Atlantic is one of the largest providers of school bus transportation in the
United States. The Company has contracts with 54 school districts in New York,
Missouri, California, Pennsylvania, Connecticut and New Jersey. In addition to
its school bus transportation operations (the "School Bus Division"), the
Company provides services to public transit systems for physically and mentally
challenged passengers (the "Paratransit Division"), transportation for
pre-kindergarten children and Medicaid recipients (the "Pre-K/Medicaid
Operations"), and express commuter line and charter and tour bus services (the
"Coach Division"). Atlantic has a fleet of approximately 3,600 vehicles
operating from 32 facilities.
Atlantic is a wholly owned subsidiary of AETG. AETG has contributed to the
Company all of the issued and outstanding stock of the subsidiaries of AETG,
other than those subsidiaries that are engaged in AETG's entertainment business.
Atlantic was founded in 1964 as a school bus company based in Staten Island,
New York. Domenic Gatto, Chairman of the Board, Chief Executive Officer and
President of the Company, commenced employment with the Company in 1973 and
purchased the Company in 1974, at which time the Company operated only 16 buses.
In 1979, the Company was awarded two major school bus transportation contracts
by the New York Board of Education, which substantially increased the Company's
revenues. These contracts, which were originally awarded for a period of three
years, have been extended successively through fiscal 2000. From 1982 to 1987,
the Company strengthened its presence in New York City through the acquisition
of 14 regional school bus transportation companies which, in aggregate,
contributed approximately $26.3 million of revenues in fiscal 1997. In 1986, the
Company won and purchased additional contracts in New York City, which also have
been extended successively through 2000, and which contributed revenues of
approximately $27.1 million in fiscal 1997. From 1986 to 1989, the Company
further strengthened its presence in New York City through the acquisitions of
four local contractors and expanded its operations to Nassau and Suffolk
counties on Long Island, New York, through a combination of acquisitions and
winning new contracts. From 1990 to 1995, the Company consummated five
additional acquisitions in the New York metropolitan area and three acquisitions
on Long Island, New York, which generated approximately $23.4 million of
revenues in fiscal 1997. In addition to the Company's expansion in the New York
greater metropolitan area, the Company extended its operations to Philadelphia
in 1993, where it was the successful bidder for a new contract, which, when
combined with subsequent acquisitions in 1993 and additional new contracts
received in 1996 and 1997, contributed approximately $9.8 million of revenues in
fiscal 1997. Continuing its strategy of expanding its operations outside New
York City, the Company established operations in St. Louis in 1995 and 1996 by
winning contracts, which contributed $17.1 million of revenues in fiscal 1997.
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SCHOOL BUS DIVISION
The School Bus Division is Atlantic's largest division. The Company has
contracts to provide school bus transportation in 54 school districts located in
New York, Missouri, California, Pennsylvania, Connecticut and New Jersey. The
Company's revenues from school bus operations have increased at a compound
annual growth rate of 14.3%, from $90.3 million in fiscal 1994 to $135.0 million
in 1997.
SERVICES. The Company generally provides services for transportation of
open enrollment ("Regular Education") students through the use of standard
school buses, and transportation for physically or mentally challenged ("Special
Education") students through the use of an assortment of vehicles, including
standard school buses, passenger vans, and lift-gate vehicles, which are capable
of accommodating wheelchair bound students. In most jurisdictions serviced by
the Company, escorts are required to accompany drivers on Special Education
vehicles.
CONTRACTS. The Company's school bus transportation contracts are awarded by
school districts based on public bidding or request for proposal ("RFP")
process. The Company's school bus transportation contracts have provided a
relatively predictable and stable stream of revenues over their terms, which
range from one to five years. Since 1979, Atlantic has achieved a contract
renewal rate of approximately 98%. Compensation under school bus transportation
contracts is generally based upon a daily rate per vehicle which is established
either by public bidding or by proposal and negotiation with respect to RFP
contracts. Contracts in New York City provide for the payment of the daily
vehicle rate (which encompasses all costs of the Company, including driver and
escorts) for days of scheduled performance in accordance with the school
calendar and provides for payment in the event of school cancellation as a
result of inclement weather or other emergencies. The number of vehicles
required is determined by the school districts, initially pursuant to its bid
specifications and/or RFP, and is subject to change.
Commencing June 1995, the Company received five-year extensions on all 17 of
its school bus transportation contracts with the Board of Education of the City
of New York (the "New York Board of Education"). To receive these extensions,
the Company agreed to a reduction in its rates in fiscal 1996 and to a ceiling
on the increases in fiscal 1997 and 1998. Thereafter, the contracts provide that
the Company will receive increases based upon the applicable Consumer Price
Index ("CPI") increase.
The Company's school bus transportation contracts generally provide for
performance security in one or more of the following forms: performance bonds,
letters of credit and cash retainages. Under current arrangements, the Company
secures the performance of its New York Board of Education contracts through the
use of performance bonds plus cash retainages of 5% of amounts due to the
Company. In most instances, the Company has opted to satisfy its security
performance requirements by posting performance bonds. At June 30, 1997, the
Company had provided performance bonds aggregating $19.9 million.
CUSTOMERS. The Company has longstanding relationships with many of the
school districts which it services. School districts with which the Company does
business generally appoint a business manager and/ or transportation supervisor
to oversee school bus transportation operations. Larger school districts have
separate bureaus or divisions which regulate and supervise the provision of
school bus transportation services. Passenger safety, timeliness and quality of
service are among the factors used by school bus transportation administrators
to evaluate the Company.
In the Company's experience, unless a school district is dissatisfied with
the services of a school bus transportation contractor, school districts tend to
extend existing contracts rather than solicit bids from potential replacement
contractors, unless applicable law or the terms of the contract otherwise
require. Management believes that replacing an existing contractor through a
bidding process generally has resulted in higher prices to districts than
contract extensions because of the significant start-up costs that a replacement
contractor faces. Bidding also exposes a school district to uncertainty in the
quality of service which would be provided by a new contractor.
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Historically, school districts awarded school bus transportation contracts
through a public bidding process by which such contracts were required to be
awarded to the lowest responsible bidder, without regard to quality of service.
However, management believes that due, in part, to the poor performance of
certain low-priced school bus transportation contractors, school districts will
increasingly rely on a RFP process, which enables school administrators to
broaden the factors considered when awarding a contract. Factors such as
passenger safety, timeliness and quality of service, among others, are generally
considered under the RFP process. In 1996, the State of New York (where the
Company has its largest concentration of school bus transportation contracts)
adopted legislation which, for the first time, permits school districts in the
State of New York to select school bus transportation contractors through a RFP
process. Management believes that because of the reputation it has developed in
the school bus transportation industry, it is well-positioned to obtain
contracts which are awarded by the RFP process as well as by public bidding.
The Company's 17 contracts with the New York Board of Education have been
successively extended through fiscal 2000. The New York Board of Education
accounted for 46.1%, 49.8%, and 57.0% of the Company's revenues in fiscal 1997,
1996 and 1995, respectively. No other customer contributed greater than 7% of
the Company's revenues during these periods.
PARATRANSIT DIVISION
The Paratransit Division is Atlantic's second largest and fastest growing
division. The Paratransit Division's revenues have increased from $3.4 million
in fiscal 1994 to $19.0 million in fiscal 1997. Management believes the demand
for paratransit services in the United States will continue to grow over the
next several years. Pursuant to the Americans with Disabilities Act of 1990 (the
"ADA"), certain public transit systems are required to provide comparable
services to disabled persons who are unable to use standard public
transportation. The ADA required over 500 public transit systems in the United
States to implement fully operational paratransit systems by January 1997.
Because the ADA was enacted in 1990, the paratransit services industry is
relatively young, with most existing contracts having been awarded in the last
five years. The larger public transit systems in the United States rely
predominantly upon the private sector to perform paratransit services, while
approximately one-half of the small and medium size systems outsource
paratransit transportation services. Management believes many small companies
that have been providing paratransit services may be unable to fulfill the
complex service requirements of paratransit contracts, and thus many of the
contracts presently held by such operators may not be renewed. The Company has
gained substantial experience in satisfying the rigorous demands of such
contracts and plans to compete aggressively to obtain new paratransit contracts
in the next five years as contracts awarded expire. With the exception of
relatively minor contributions for some vehicle acquisition costs, the ADA
requirement to provide paratransit services was an unfunded mandate by the
federal government. An industry source estimates that the annual cost of
providing paratransit services in the United States is approximately $1 billion.
Better known national paratransit providers include Laidlaw Transit, Inc.,
Ryder ATE, a division of Ryder Systems Inc., Southeast Transit Management Inc.
and the Company. In addition, paratransit services are also provided by several
hundred smaller local paratransit companies and by local municipalities.
To achieve passenger safety and to satisfy paratransit contract
requirements, the Company has instituted a comprehensive driver training course
which encompasses defensive driving, passenger sensitivity, first aid and CPR
procedures, passenger assistance techniques and a comprehensive knowledge of
disabilities of the passengers which the Company transports. The Company has
also developed and implemented complex and comprehensive routing and scheduling
programs in order to provide its paratransit services in accordance with rapid
response times which are contractually mandated. Paratransit services are
primarily funded by public transit systems.
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SERVICES. The Company's paratransit services are rendered based upon
advance call-in requests for transportation, which are generally scheduled by
the Company. At June 30, 1997, the Company had approximately 300 vehicles
consisting of full-size four-door sedan automobiles and lift-equipped vans to
service its paratransit transportation contracts. The Paratransit Division has
developed a substantial degree of expertise in developing and providing
transportation services required by its physically or mentally challenged
passengers in this developing segment of the transportation industry.
CONTRACTS. The terms of the Company's paratransit contracts range from one
to five years. The scope of services and contract requirements vary considerably
from one jurisdiction to another. The three general components of paratransit
transportation services are (i) providing the actual transportation services;
(ii) reserving passenger requests for service; and (iii) sorting and scheduling
passenger requests for service. Some of the Company's customers require the
Company to perform all three components of service while other customers perform
one or more of such functions themselves. Paratransit vehicles are either
provided by the transit agency or the Company depending upon the terms of a
particular contract. The Company is generally entitled to a specified charge per
hour of vehicle service. Paratransit users pay the Company a fixed amount per
trip determined by the local transit system governmental entity (which may be
equal to or based upon prevailing public transportation fees in the jurisdiction
in question), which is credited against the monthly contract price due from the
local transit system.
CUSTOMERS. The Company presently performs paratransit services under
contracts with public transit systems in New York City; Yonkers, New York;
Louisville, Kentucky; Atlantic City, New Jersey; and Bucks County and Montgomery
County, Pennsylvania. Management believes that its New York City Transit
Authority contract is one of the largest paratransit contracts awarded to date
in the United States.
PRE-K/MEDICAID OPERATIONS
The Company provides transportation for physically or mentally challenged
children between the ages of three and five, to and from pre-kindergarten
facilities located in the New York City metropolitan area. At June 30, 1997, the
Company transported approximately 351 children each school day with
approximately 38 vehicles pursuant to contracts with the New York City
Department of Transportation. Each vehicle requires the presence of an escort
who is responsible to assist the children on and off the bus. Escorts are
employed and trained by the Company. The Company is compensated on a per child
basis at rates which were determined pursuant to public bidding. In September
1997, the Company returned five contracts utilizing 18 vehicles and transporting
187 children and elected to extend the balance of its contracts.
The Company also performs contracts with private, not-for-profit
organizations, which are funded under Medicaid, for the transportation of
physically or mentally challenged passengers to and from rehabilitation
facilities. At June 30, 1997, the Company utilized 80 vehicles in the
performance of these contracts and receives compensation based upon a daily rate
per person transported, which rates of compensation vary based upon ambulatory
and nonambulatory passengers.
The Company generated approximately 3.9% of its revenues in fiscal 1997 from
its Pre-K/Medicaid Operations.
COACH DIVISION
The Company provides express commuter, charter and tour bus transportation
services with a fleet of 32 luxury motor coaches and 15 mini coaches.
For the year ended June 30, 1997, express commuter services were provided to
approximately 700 passengers from a "Park and Ride" facility (which is leased
from an affiliate company in AETG's entertainment business) in Staten Island,
New York to and from Manhattan on a daily basis.
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Charter and tour bus operations include single day and multi-day charters
throughout the continental United States and Canada. In addition, the Company
operates scheduled line services between New York City and Atlantic City under
contractual arrangements with tour operators. Luxury coaches are generally
contracted for individual special events. The Company's contracts for coach
services vary based on duration and length of trip. This segment of the
Company's operations generated 3.4% of the Company's revenues in fiscal 1997.
REORGANIZATION
In March 1992, Atlantic Express Inc., the predecessor in interest to AETG,
and certain subsidiaries of the Company filed a voluntary petition requesting
relief from creditors under chapter 11 of the Bankruptcy Code of 1986, as
amended (the "Bankruptcy Code"). In August 1993, the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court") entered an
order confirming a Joint Plan of Reorganization (the "Plan"). The Plan has been
consummated and a final decree closing the chapter 11 proceeding was entered by
the Bankruptcy Court in January 1994. As part of the reorganization, on August
23, 1993, Atlantic Express Inc. (which operated in two industries:
transportation and entertainment), transferred all of its assets and liabilities
to AETG, which became the new parent company. On January 30, 1997, AETG
transferred all operating assets and liabilities pertaining to the
transportation operations to the Company, which became the parent company of the
companies operating in the transportation industry. A major cause of the chapter
11 filing was the seizure of the Company's principal bank by the Federal Deposit
Insurance Corporation on the maturity date of the Company's outstanding notes
due to such bank (and the consequent non-renewal of such notes) during a period
when the Company was experiencing liquidity constraints due to, among other
things, certain non-recurring expenses. The chapter 11 proceedings did not
adversely affect the Company's relationship with any of the school districts
which it serviced at the time of, or subsequent to, the chapter 11 proceedings.
All transportation contracts of the Company were performed without interruption
and have since been further extended by each of such school districts. Moreover,
the Company has not encountered difficulty in bidding for or negotiating
contracts with new school districts as a result of the chapter 11 proceedings.
RECENT TRANSACTIONS
CERTAIN OF THE RECENT TRANSACTIONS (AS DEFINED BELOW) DISCUSSED BELOW
OCCURRED AFTER JUNE 30, 1997, THE END OF THE FISCAL YEAR COVERED BY THIS FORM
10-K. NEVERTHELESS, THE DISCUSSION HAS BEEN INCLUDED TO PROVIDE A MORE COMPLETE
DESCRIPTION OF THE BUSINESS OF THE COMPANY AS OF THE DATE OF THE FILING OF THIS
FORM 10-K. CERTAIN OF THE INFORMATION PROVIDED IN THIS FORM 10-K IS GIVEN AS OF
JUNE 30, 1997, AFTER GIVING EFFECT TO THE RECENT TRANSACTIONS. THE EVENTS
DESCRIBED BELOW IN THIS SUBSECTION ARE COLLECTIVELY REFERRED TO AS THE "RECENT
TRANSACTIONS."
RECENT FINANCING ACTIVITY. On February 4, 1997, the Company issued $110.0
million aggregate principal amount of its 10 3/4% Senior Secured Notes due 2004
(the "Original Notes") in a private placement. The offering of the Original
Notes was part of a refinancing plan designed to extend the maturity of the
Company's indebtedness, provide the Company with additional financing and
operating flexibility, and enhance the Company's financial liquidity. The
Company applied the net proceeds of the offering of the Original Notes (i) to
repay existing indebtedness; (ii) to terminate certain operating leases and
purchase the vehicles and other assets leased thereunder; (iii) to acquire a
Medicaid Business (as defined) and purchase additional vehicles to perform the
Company's obligations thereunder; and (iv) for general corporate purposes.
Upon consummation of the offering of the Original Notes, the Company entered
into a $30.0 million revolving credit facility (the "Revolving Credit
Facility").
In August 1997, the Company issued an additional $40.0 million aggregate
principal amount of 10 3/4% Senior Secured Notes due 2004 (the "Additional
Notes") in a private placement. The Company applied the
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net proceeds of the offering of the Additional Notes to (i) acquire 100% of the
common stock of Central New York Coach Sales & Service, Inc. ("Coach") and
Jersey Bus Sales, Inc. ("Jersey") and certain related real property (together
with Coach and Jersey, collectively "Central") and (ii) to fund the Company's
entrance into the Los Angeles market.
ACQUISITION OF CENTRAL. On August 14, 1997, the Company completed the
acquisition of Central for total consideration of $26.5 million of cash less
long-term indebtedness, which as of June 30, 1997, was $4.8 million, and its
agreement to issue a $2.2 million mortgage and note relating to certain real
property. The Company funded the acquisition of Central by using a portion of
the proceeds from the sale of the Additional Notes.
Central is the leading authorized distributor of school buses manufactured
by Blue Bird Body Company ("Blue Bird"), which is the leading manufacturer of
school buses in North America. Central also currently operates 147 school buses
in New Jersey. The Company intends to continue to operate the businesses of
Central. Mr. Thomas Denney, the President and Chief Executive Officer of Central
since July 1978, will continue in such positions with Central.
ENTRANCE INTO THE LOS ANGELES MARKET. In May 1997, the Los Angeles Unified
School District (the "LAUSD") awarded the Company contracts for up to 150 school
buses (collectively, the "L.A. Contract") and in July 1997, a private school
awarded an 18 vehicle contract to the Company. The L.A. Contract is a five-year
contract, with services commencing in September 1997. The entrance into the Los
Angeles market required $12.6 million of capital expenditures, including $2.9
million for the purchase of real property, $8.5 million for the purchase of
vehicles and $1.2 million for real property improvements. Prior to June 30,
1997, the Company has made certain of these capital expenditures.
NEW PARATRANSIT CONTACTS. In July 1997, the Company was awarded a
three-year contract to provide paratransit services in Philadelphia,
Pennsylvania by the Southeastern Pennsylvania Transportation Authority ("SEPTA")
(the "SEPTA Contract"). Pursuant to the SEPTA Contract, SEPTA will provide the
Company with all of the required vehicles and, as a result, the Company will not
need to make significant capital expenditures to fulfill its obligations
thereunder. In May 1997, the Company was also awarded a six-month paratransit
contract in Montgomery County, Pennsylvania.
ACQUISITION OF SABELLA. On April 30, 1997, the Company acquired
substantially all of the assets of V. Sabella Bus Co., Inc. ("Sabella"), a New
York City school bus contractor which currently operates 74 school bus routes,
for $1.1 million.
FOCUS ON PASSENGER SAFETY AND SERVICE
Management has developed a corporate culture focused on passenger safety and
service. Atlantic participates in the "Safe Bus" program, under which complaints
regarding school bus drivers' performance and safety are registered by an
independent party and forwarded to the Company for remedial action. Unlike many
of its competitors, the Company requires its drivers to wear standardized
uniforms, thereby reinforcing its professional image. In addition, all drivers
are required to attend periodic safety workshops and training programs, which
emphasize defensive driving and courteous behavior. Management believes that its
emphasis on passenger safety and service is a competitive advantage and a major
contributor to its success in winning new contracts.
FLEET MANAGEMENT AND MAINTENANCE
At June 30, 1997, after giving effect to the Recent Transactions, the
Company had a fleet of 3,637 vehicles and the average age of the Company's fleet
was 6.1 years (6.7 years for school buses, which account for 61.9% of the
Company's fleet). School buses have an average useful life of approximately 16
years.
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At June 30, 1997, after giving effect to the Recent Transactions, the fleet
was maintained by the Company's trained mechanics at its 32 facilities. The
Company has a comprehensive preventive maintenance program for its equipment to
minimize equipment down time and prolong equipment life. Programs implemented by
the Company include standard maintenance, regular safety checks, lubrication,
wheel alignments and oil and filter changes, all of which are performed on a
regularly scheduled basis by the Company's mechanics.
The following is a breakdown of the Company's fleet of vehicles at June 30,
1997 after giving effect to the Recent Transactions:
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LIFT/ SERVICE
RAMP AND
SCHOOL MINIVANS EQUIPPED SUPPORT
BUSES AND CARS VEHICLES COACHES VEHICLES TOTAL
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Owned................................... 2,124 709 333 33 47 3,246
Leased.................................. 129 107 123 14 18 391
Total................................... 2,253 816 456 42 65 3,637
------ -------- -------- ------- --- -----
------ -------- -------- ------- --- -----
Average age (years)..................... 6.7 5.1 5.4 5.3 5.5 6.1
------ -------- -------- ------- --- -----
------ -------- -------- ------- --- -----
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In addition to the vehicles in the table above, the Company will operate 116
vehicles provided by SEPTA pursuant to the SEPTA contract.
The Company used $5.8 million of the net proceeds of the offering of the
Original Notes to terminate certain operating leases and purchase approximately
230 related vehicles and other assets. Currently, the Company's operating leases
have terms which range from five to seven years and require fixed monthly
payments. The leases generally have fixed rates which are negotiated on the
lease origination date.
EMPLOYEES
At June 30, 1997, the Company had over 5,600 employees to provide
transportation services, consisting of approximately 4,084 drivers, 886 escorts,
284 mechanics and 16 porters. In addition, there were approximately 330
employees in executive, operations, clerical and sales functions. The Company's
school bus drivers and escorts are required to undergo background checks, drug
and alcohol testing and fingerprinting as a condition for employment on school
buses. All drivers are licensed to drive school buses and/or motor coaches in
accordance with federal and state licensing requirements.
The Company requires its drivers to complete a thorough and comprehensive
training process in addition to satisfying federal and state requirements. In
some states, such as New York, a special subclass of license is required for
school bus drivers. The Company's paratransit drivers are also required to
complete special training. Drivers undergo a 20 hour basic training course once
a year and a two hour refresher class twice per year. In addition, drivers are
required to be fingerprinted and pass a defensive driving test, as well as
physical, oral and written tests. Further, all drivers must pass a
pre-employment drug test as well as random drug and alcohol tests during the
course of each year. Pursuant to federal and state law, each year the Company is
required to randomly test 50% of its drivers for drug use and 25% for alcohol
use.
At June 30, 1997, approximately 68% of the Company's employees were members
of various labor unions and the Company was a party to 15 collective bargaining
agreements, eight of which, covering approximately 2,000 employees, expire over
the next three years and one of which, covering 1526 employees of the School Bus
Division, has expired. In the third quarter of fiscal 1997, the Transport
Workers Union of America won an election to unionize a subsidiary of the Company
that has approximately 355 employees. Management does not expect a material
increase in its labor costs as a result of such
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unionization, although no assurance can be given as to the outcome of
negotiations with the representatives of the newly unionized employees.
Management believes that its relations with its employees are satisfactory. The
Company has had no strikes or work stoppages in the past 10 years.
At June 30, 1997, approximately 37% of the Company's school bus drivers,
escorts and mechanics were represented by Local 1181 of the Amalgamated Transit
Union, which primarily represents personnel rendering services on behalf of the
New York Board of Education. Labor agreements with Local 1181 require
contributions to the Local 1181 welfare fund and pension plan on behalf of
drivers, mechanics and certain escorts. All contracts awarded by the New York
Board of Education during the past 17 years contain employee protection
provisions and require continued contributions to the Local 1181 pension plan
and welfare fund for rehired employees opting to remain in such plan and such
fund. Pursuant to a plan amendment approved by the Pension Benefit Guarantee
Corporation, withdrawal liability for contributing employers to the plan, such
as the Company, is essentially eliminated, provided that withdrawal is based
upon the loss of New York Board of Education contracts and that the successor
contractor becomes a contributing employer to the plan.
Pursuant to the Central acquisition, the Company employs an additional 141
school bus drivers and seven escorts, and a staff of seven full-time mechanics
for its school bus contract operations. Central's drivers are paid an hourly
wage rate. At July 1, 1997, Central had 124 employees engaged in the school bus
sales business consisting of approximately 16 employees in executive, operations
and clerical functions, 14 employees engaged in sales, 88 full-time and
part-time mechanics and six employees engaged in other business-related
activities. None of Central's employees are members of labor unions and Central
is not party to any collective bargaining agreements. Management of Central
believes that its relations with its employees are satisfactory. Central has had
no strikes or work stoppages in its 22 year history.
RISK MANAGEMENT AND INSURANCE
The Company maintains various forms of liability insurance against claims
made by third parties for bodily injury or property damage resulting from
operations. Such insurance consists of (i) general liability insurance of $50
million per occurrence with no deductible against claims resulting from other
(e.g., non-automobile) liability exposures; (ii) automobile liability insurance
of up to $50 million per occurrence, subject to a $250,000 deductible per
occurrence and an aggregate annual deductible of $3.4 million; and (iii)
statutory workers' compensation and employers' liability insurance, subject to
an aggregate annual deductible of $2.8 million ($250,000 per occurrence). Beyond
the deductibles and per occurrence limits mentioned herein, the automobile
liability coverage provides indemnity for an unlimited number of occurrences and
the general liability coverage provides $50 million aggregate coverage per
location. The Company's insurance policies provide coverage for a one year term
and are, therefore, subject to annual renewal.
The Company self-insures its annual automobile and workers compensation
insurance deductibles through Atlantic North Casualty Company ("Atlantic
North"), a wholly owned captive insurance company chartered in Vermont. The
Company believes it is able to (i) reduce the premium expense paid to its third-
party insurance carriers and (ii) increase its investment income through the
retention and investment of premium income in excess of amounts paid under
claims in any given period. Atlantic North's total claims liability is partially
funded by premium income and receivables from the Company, which, in turn, are
limited to the amount of the combined deductibles on the Company's automobile
and workers compensation insurance policies (currently $6.2 million annually).
The Company obtained a reduction of approximately $1 million in the initial
scheduled premium for its workers' compensation coverage for calendar 1997
compared to calendar 1996. Such reduction was due in part to the Company's
recent claims experience and to recent tort reform and managed care initiatives
in New York State, where most of the Company's employees work. The Company's
ability to permanently obtain the benefit of such premium reductions is subject
to the Company's future claims experience, which
9
<PAGE>
cannot be predicted with certainty. If the Company's workers' compensation
claims experience is significantly adverse, the Company may be required to apply
a portion or all of its premium savings towards policy retentions and future
premiums could increase.
In addition, the Company maintains catastrophic coverage of $20 million per
occurrence, for an unlimited number of occurrences, subject to a $100,000
deductible per occurrence. This insurance provides replacement cost coverage for
losses on the Company's fleet and insurance against business interruptions
resulting from the occurrence of natural catastrophes. The Company also
maintains property insurance for the replacement cost of all of its real and
personal property.
COMPETITION
The school bus transportation industry is highly competitive. The Company
competes on the basis of its reputation for passenger safety, quality of service
and price. Management believes it is competitive in each of these areas.
Contracts are generally awarded pursuant to public bidding, where price is the
primary criteria for a contract award. The Company has many competitors in the
school bus transportation business including transportation companies with
resources and facilities substantially greater than those of the Company. The
Company competes with Laidlaw Transit, Inc., a division of Laidlaw, Inc., the
largest private transportation contractor in North America, Ryder Student
Transportation, a division of Ryder System, Inc., the second largest company in
the industry and Durham Transportation Inc., in addition to other regional and
local companies.
ENVIRONMENTAL MATTERS
The Company's operations are subject to a broad range of federal, state and
local environmental laws, ordinances and regulations, including those governing
discharges into the air and water, the storage, handling and disposal of solid
and hazardous wastes, the remediation of soil and groundwater contaminated by
petroleum products or hazardous substances or wastes, and the health and safety
of employees ("Environmental Laws"). In addition, a number of the Company's
facilities are located in metropolitan areas where there is a long history of
industrial and/or commercial use. The Company is taking into account the
requirements of such Environmental Laws in the improvement, modernization,
expansion and start-up of its facilities and therefore has retained a consultant
to implement a program to assure that existing facilities comply with such
requirements. As with most transportation companies, the Company could incur
significant costs related to environmental compliance or remediation; these
costs, however, most likely would be incurred over a period of years. Compliance
with Environmental Laws or more vigorous enforcement policies of regulatory
agencies, or stricter or different interpretations of such laws and future
regulatory action regarding soil or groundwater, may require material
expenditures by the Company.
Under various Environmental Laws a current or previous owner of real estate
or operations conducted thereon may be liable for the costs of removal or
remediation of certain hazardous substances or petroleum products on, under or
in such property, without regard to whether the owner or operator knew of, or
caused, the presence of the contaminants. The presence of, or failure to
properly remediate, such substances, may adversely affect the ability to sell or
rent such real estate or to borrow using such real estate as collateral. Persons
who generate, arrange for the disposal or treatment of, or dispose hazardous
substances may be liable for the costs of investigation, remediation or removal
of such hazardous substances at or from the disposal or treatment facility
regardless of whether such facility is owned or operated by such person.
Finally, the owner of a site may be subject to common law claims by third
parties based on damages and costs resulting from environmental contamination
emanating from a site.
Certain federal, state and local laws, regulations and ordinances govern the
removal, encapsulation or disturbance of asbestos-containing material ("ACM")
when such materials are in poor condition or in the event of building
remodeling, renovation or demolition. Such laws may impose liability for the
release of
10
<PAGE>
ACM and may provide for third parties to seek recovery from owners or operators
of real estate for personal injury associated with ACM. The Company has not
undertaken an environmental assessment or ACM survey at all of its facilities.
However, based on previous inquiries, the Company is aware that ACM is present
at various facilities, some of which may be in a condition requiring removal or
encapsulation at this time.
Underground storage tanks ("USTs") are located at many of the Company's
properties. In the case of USTs operated by previous owner-operators, the
Company has not evaluated whether such USTs were closed in accordance with
applicable legal requirements. The Company has retained a consultant to assist
it in implementing a compliance program to assure that its USTs conform to
applicable legal requirements that become effective in 1998. The Company
estimates the costs of implementing such program will not exceed $500,000. In
addition, property owned and/or operated by the Company may be impacted by
offsite issues, such as leaking USTs or previous or current industrial
operations. Except in certain instances in connection with the removal of a UST,
the Company has not undertaken an analysis of the condition of the subsurface
soils at its properties.
In connection with its ownership and operation of its properties, the
Company may be potentially liable for costs in connection with the matters
discussed above (including costs of investigation and remediation), which costs
could have a material adverse effect on the Company. With respect to Central's
facilities, the Company has sought to reduce the impact of such costs by
obtaining certain representations and indemnities from the sellers of Central.
The indemnity covers environmental matters to the extent that such matters
exceed $200,000 and involve a maximum of $1,000,000. To be indemnified, the
Company must assert any claims within four years of the consummation of the
Central acquisition. The Company has no assurance that the sellers will perform
their indemnification obligations.
GOVERNMENT REGULATION
The Company is subject to a wide variety of federal, state and municipal
laws and regulations concerning vehicle standards and equipment maintenance;
qualification, training and testing of employees; and qualification and
maintenance of operating facilities. The Company's vehicles are subject to
federal motor vehicle safety standards established by the National Highway
Traffic Safety Administration ("NHTSA"). Specific standards are promulgated by
the NHTSA with regard to school buses pursuant to the School Bus Safety Act of
1974. The Company's vehicles are also subject to the laws and regulations of
each state in which it operates, which are often more stringent than applicable
federal requirements. For example, in New York State, in addition to federal
standards, regulations promulgated by the New York State Department of Motor
Vehicles and the New York State Department of Transportation ("NYSDOT") require
that school buses be equipped with high back seats, lefthand emergency door
exits, 16 gauge side panels and illuminated school bus signs. All school buses
and paratransit vehicles are required to be inspected twice annually by NYSDOT
inspectors in accordance with a rigorous set of standards covering each
mechanical component of the vehicles.
The Company's employees are subject to various federal and state laws and
regulations pertaining to driver qualifications, and drug, alcohol and substance
abuse testing. The Commercial Motor Vehicle Safety Act of 1986 requires drivers
of commercial vehicles, including school buses, motor coaches and paratransit
vehicles, to obtain a commercial drivers license. Many states have additional
licensing requirements for subclasses of drivers such as school bus drivers
and/or paratransit drivers. Under regulations enacted at the state and/or local
levels, the Company's school bus drivers and paratransit drivers are required to
complete certain minimum basic training and follow-up refresher classes
annually. Pursuant to regulations promulgated by the United States Department of
Transportation under the Drug Free Workplace Act of 1988, the Company's drivers
are required to undergo pre-employment drug and alcohol testing, and the Company
is required to conduct random testing for drug and/or alcohol abuse. Similar
drug and alcohol abuse testing is also required under various state laws. The
Company's operating and maintenance facilities for its
11
<PAGE>
School Bus Division, Paratransit Division and Pre-K/Medicaid Operations are also
required to be maintained in accordance with regulations promulgated by various
federal and state agencies including departments of education, departments of
motor vehicles and state departments of transportation.
ITEM 2. PROPERTIES
The Company is headquartered in Staten Island, New York. Subsidiaries of the
Company, after giving effect to the Recent Transactions, provide transportation
services and sales from 32 facilities (of which six are owned, 23 leased and
three which are partially owned and partially leased) in seven states. The
facilities are utilized for bus storage, repair and maintenance and/or
administrative purposes. The following table outlines the facilities owned or
leased by the Company or its subsidiaries at June 30, 1997.
<TABLE>
<CAPTION>
SQUARE
AREA FACILITY LOCATION OWNERSHIP FOOTAGE TYPE OF OPERATION
- -------------------------- -------------------------- ----------- ----------------- --------------------------
<S> <C> <C> <C> <C>
New York.................. 7 North Street Owned 131,000 Coach
Staten Island
52 Bayview Ave. Leased 37,500 School Bus
Staten Island
141 East Service Road West Leased 300,250 Coach
Shore Expressway Staten
Island
46-81 Metropolitan Ave. Owned 203,000 School Bus/Paratransit
Ridgewood Pre-K/Medicaid
107-10 180th St. Jamaica Leased 221,000 School Bus
1752 Shore Parkway Leased 225,000 School Bus
Brooklyn
1380-86 Ralph Avenue Leased 186,840 School Bus
Brooklyn
Exterior St. Owned/ 177,000 School Bus
The Bronx Leased
c/o Somers Jr. High School Leased 87,120 School Bus
Route 202 Somers
870 Nepperhan Ave. Yonkers Leased 33,500 Paratransit
Gnarled Hollow Road Owned/ 128,763 School Bus
Setauket Leased
1575 Route 112 Leased 65,000 School Bus
Port Jefferson Station
Lawson Blvd. Owned/ 720,000 School Bus
Oceanside Leased
1620 New Highway Leased 161,172 School Bus
Farmingdale(1)
91 Baiting Place Road Leased 130,680 School Bus
Farmingdale
7765 Lakeport Rd. Owned(2) 372,337 Central-Sales
Chittenango
2926 Lakeville Road Avon Leased 6,000 Central-Repair Facility
New Jersey................ 2628 Fire Road Leased 12,000 Paratransit
Egg Harbor Township
2015 Route 206 Bordentown Owned(2) 217,824 Central-Sales
107 How Lane Leased 6,800 Central-School Bus
New Brunswick
222-226 Red Lion Road Leased 307,650 Central-School Bus
South Hampton
70 Stacy Haines Road(3) Leased 33,189 Central-School Bus
Medford
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
SQUARE
AREA FACILITY LOCATION OWNERSHIP FOOTAGE TYPE OF OPERATION
- -------------------------- -------------------------- ----------- ----------------- --------------------------
<S> <C> <C> <C> <C>
Pennsylvania.............. 3740 East Thompson St. Leased 54,425 School Bus/Paratransit
Philadelphia
6940 Norwitch Dr. Leased 2,000 School Bus/Paratransit
Philadelphia(1)
6971 Norwitch Dr. Leased 90,291 School Bus/Paratransit
Philadelphia
Connecticut............... 57 South St. Leased 78,408 School Bus
Ridgefield
Kentucky.................. 925 West Broadway Leased 42,385 Paratransit
Louisville
Missouri.................. 200 Sidney St. Owned 148,104 School Bus
St. Louis
5411 Brown Ave. Leased 208,696 School Bus
St. Louis
Missouri (continued)...... 1808 So. 3rd St. Leased 115,200 School Bus
St. Louis
6810 Prescott St. Leased 301,000 School Bus
St. Louis
California................ 201 W. Sotello St. Owned 158,973 School Bus
Los Angeles
</TABLE>
- ------------------------
(1) These leases are occupied on a statutory month-to-month basis.
(2) The Company has exercised its options to acquire ownership of these
properties.
(3) Lease expired on August 31, 1997. Operations have been transferred to the
new South Hampton facility.
ITEM 3. LEGAL PROCEEDINGS
The Company is a plaintiff in a multi-party action against the New York
Board of Education. The action, which is pending in the Supreme Court of the
State of New York, New York County, concerns the method of calculation for
increases to the daily rate of compensation paid to the Company under contract
extension agreements. The New York Board of Education has claimed in preliminary
audits that transportation contractors, including the Company, received contract
payments in prior years which exceeded the amount to which the contractors were
entitled in accordance with contract rate adjustment procedures. Following the
commencement of the litigation, the Company and other school bus contractors
agreed that on a prospective basis, contractors would accept the lower contract
rate which the New York Board of Education calculated to be due (based upon
cumulative rate adjustments) and that the difference would be held in escrow by
the New York Board of Education. A favorable result in the pending action would
result in a prospective increase in the Company's daily rate of compensation and
the release to the Company of the funds presently held in escrow. An unfavorable
result would not affect the rates of payment which the Company is presently
receiving, but could result in a liability of up to $1.0 million to the New York
Board of Education for claimed overpayments for past years. The Company does not
believe that such pending litigation will have a material adverse effect on the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
13
<PAGE>
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MARKETS
The Company is a wholly owned subsidiary of AETG. There is no public trading
market for the Company's common stock.
The Company has never paid any cash dividends on its common stock.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data for each of the years in the three-year period
ended June 30, 1997 were derived from the audited historical financial
statements of the Company included elsewhere in this Form 10-K. The historical
financial data for the year ended June 30, 1993 is unaudited, but in the opinion
of management include all material adjustments necessary for a fair presentation
of the financial position and the results of operations for that period. The
information contained in this table should be read in conjunction with Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical consolidated financial statements of the Company,
including the notes thereto, included elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------------------------
1993 1994(1) 1995 1996 1997
--------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
($ IN MILLIONS)
OPERATING DATA:
Revenues................................................................. $ 93.3 $ 101.5 $ 114.0 $ 142.6 166.1
Income from operations................................................... 5.2 5.6 5.8 7.3 7.4
Income (loss) before extraordinary items................................. 1.1 1.9 1.5 1.4 (0.6)
Net Income (loss) 1.1 12.3 2.6 1.4 (1.7)
BALANCE SHEET DATA (AT END OF PERIOD) (2):
Total assets............................................................. 63.1 68.9 83.0 104.4 154.4
Long-term obligations.................................................... 11.3 28.9 42.3 59.7 110.5
Total stockholder's equity............................................... 2.5 25.5 28.1 29.5 27.6
</TABLE>
- ------------------------
(1) In 1994, certain subsidiaries of the Company emerged from bankruptcy. Net
income for the year ended June 30, 1994 included $10.4 million extraordinary
income pertaining to forgiveness of indebtedness.
(2) The Company paid no dividends during any of the periods in the table.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE "SELECTED
FINANCIAL DATA" AND THE HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS OF THE
COMPANY, INCLUDING THE NOTES THERETO, INCLUDED ELSEWHERE IN THIS FORM 10-K.
GENERAL
Atlantic is one of the largest providers of school bus transportation in the
United States. The Company has contracts with 54 school districts in New York,
Missouri, California, Pennsylvania, Connecticut and New Jersey. In addition to
the School Bus Division, the Company provides services to public transit systems
for physically and mentally challenged passengers through the Paratransit
Division, transportation for pre-kindergarten children and Medicaid recipients
through the Pre-K/Medicaid Operations, and express commuter line and charter and
tour bus services through the Coach Division. At June 30, 1997, after giving
effect to the Recent Transactions, Atlantic had a fleet of 3,637 vehicles
operating from 32 facilities.
14
<PAGE>
The School Bus Division accounted for 81.3%, 84.4% and 84.4% of the
Company's revenues for each of fiscal 1997, 1996 and 1995, respectively. The
Company's school bus transportation contracts have provided a relatively
predictable and stable stream of revenues over their terms, which range from one
to five years. Since 1979, Atlantic has achieved a contract renewal rate of
approximately 98%, which management believes is due to (i) its reputation for
passenger safety and providing efficient, on-time service; (ii) its
long-standing relationships with the school districts it services; (iii) the
preference of school districts to maintain continuity of service with their
current proven contractor rather than risk the uncertainty associated with a
replacement; and (iv) the disadvantage of prospective competitors, who generally
would have to make substantially greater investments than the Company in new
equipment and who may experience difficulty obtaining suitable parking and
maintenance facilities in Atlantic's primary markets, especially in the New York
greater metropolitan area.
The price per day per vehicle varies, depending upon a wide range of factors
including (i) vehicle type (standard school buses, minivans, or vehicles with
wheelchair lifts); (ii) the nature of service to be provided (transportation of
regular enrollment students or transportation of physically or mentally
challenged students); (iii) special requirements of a particular school district
concerning age of vehicles and/or upgrades on equipment; and (iv) the cost of
labor. Salaries and related labor costs are the most significant factors in the
Company's cost structure. In urban areas, particularly those with a strong union
presence, the cost of providing school bus transportation is substantially
greater than in suburban and rural areas, where unions are generally less
prevalent and salaries are lower. As a result, prices paid by school districts
vary accordingly. School Bus Division revenues have historically been seasonal,
based on the school year and holiday schedules. During the months of September
through June, the Company's fleet of school buses has been generally fully
utilized. Historically, during the summer months, only a portion of the
Company's school buses have been needed to fulfill the Company's summer
contracts for school and camp activities and special trips. The Company conducts
periodic maintenance and overhauls of its school vehicles during the summer
months, which increases costs during a season of lower revenues.
The Paratransit Division which accounted for 11.4%, 8.3% and 5.3% of the
Company's revenues in fiscal 1997, 1996 and 1995, respectively, is Atlantic's
second largest and fastest growing division. The terms of the Company's
paratransit contracts range from one to five years. The contracts are awarded by
public transit systems through a public bidding or RFP process. The Company is
generally entitled to a specified charge per hour of vehicle service together
with other fixed charges. The method of contract compensation also varies. See
Item 1, "Business -- Paratransit Division -- Contracts."
The Company's Pre-K/Medicaid Operations accounted for less than 6% of the
Company's revenues in each of the last three fiscal years. Pre-K contracts are
generally awarded to the lowest responsible bidder in a public bidding process.
Medicaid contracts are generally awarded through negotiations with private
agencies. The Company generally services specific Pre-K bus routes during the
months of September through June, and services Medicaid routes throughout the
year. Pre-K and Medicaid contracts are generally paid based on number of
passengers per trip.
The Coach Division, which accounted for 3.4%, 3.9% and 4.9% of the Company's
revenues in fiscal 1997, 1996 and 1995, respectively, operates luxury coaches
for express commuter services and charter and tour contracts for individual
special events. The Company's contracts for coach services vary based on term
and length of the trip. Coach Division charter and tour revenues are generally a
function of the size and number of coaches utilized rather than the number of
passengers carried.
The principal elements of the Company's costs of sales are labor, fuel,
parts, vehicle insurance, equipment lease expense and rent. Historically, costs
of sales have varied directly in proportion to revenues, and approximately 88.2%
of fiscal 1997 costs of sales were variable costs consisting of direct labor
(primarily driver wages and related employment expenses), fuel costs and
maintenance costs. At June 30, 1997, approximately 68% of the Company's
employees were members of various labor unions and the Company was party to 15
collective bargaining agreements, eight of which, covering approximately
15
<PAGE>
2,000 employees, expire over the next three years, and one of which, covering
1,256 employees of the School Bus Division, has already expired. In the third
quarter of fiscal 1997, the Transport Workers Union of America won an election
to unionize a subsidiary of the Company that has approximately 355 employees.
Management does not expect a material increase in its labor costs as a result of
such unionization, although no assurance can be given as to the outcome of
negotiations with the representatives of the newly unionized employees. Although
the Company believes that historically it has had satisfactory labor relations
with its employees and their unions, the Company's inability to negotiate
acceptable union contracts in the future or a deterioration of labor relations
could result in strikes or work stoppages and increased operating costs as a
result of higher wages or benefits paid to union members, which would have a
material adverse effect on the Company. The average fuel cost for the Company
has increased approximately 19% compared to its average fuel costs in fiscal
1996. The Company spent approximately $6.8 million on fuel in fiscal 1997.
General and administrative expenses include costs associated with the Company's
headquarters in Staten Island and terminal office and managerial salaries. In
fiscal 1997, the Company increased the size of its staff in its corporate
headquarters to accommodate the Company's growth. Management believes that it
currently has sufficient staff to support anticipated revenues levels. The above
cost increases are anticipated to be offset somewhat as the Company's business
grows and the Company realizes economies of scale by (i) spreading the cost of
the administrative staff and facilities over a larger revenue base; and (ii)
capturing savings in expenses such as vehicle insurance and vehicle parts and
purchases. In addition, the Company obtained a reduction of approximately $1
million in the initial scheduled premium for its workers' compensation coverage
for calendar 1997 compared to calendar 1996. Such reduction was due in part to
the Company's recent claims experience and to recent tort reform and managed
care initiatives in New York State, where most of the Company's employees work.
The Company's ability to permanently obtain the benefit of such premium
reductions is subject to the Company's future claims experience, which cannot be
predicted with certainty. If the Company's workers' compensation claims
experience is significantly adverse, the Company may be required to apply a
portion or all of its premium savings towards policy retentions and future
premiums could increase.
Commencing June 1995, the Company received five-year extensions on all 17 of
its New York Board of Education school bus transportation contracts. To receive
these extensions, the Company agreed to a reduction in its rates in fiscal 1996
and to a ceiling on rate increases in fiscal 1997 and 1998 not to exceed the
applicable CPI. Thereafter, the contracts provide that the Company will receive
increases based solely upon the applicable CPI increase.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------
1995 1996 1997
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
($ IN MILLIONS)
Revenues......................................................... $ 114.0 100.0% $ 142.6 100.0% $ 166.1 100.0%
Gross profit..................................................... 22.6 19.8 27.4 19.3 30.0 18.1
General and administrative expenses.............................. 9.2 8.0 10.4 7.3 12.2 7.3
EBITDA(1)........................................................ 13.4 11.8 17.0 11.9 17.8 10.7
Depreciation and amortization.................................... 7.6 6.7 9.7 6.8 10.4 6.3
Income from operations........................................... 5.8 5.1 7.3 5.1 7.4 4.5
Net interest expense............................................. 3.1 2.7 5.1 3.6 8.7 5.3
Income (loss) before extraordinary item.......................... 1.3 1.5 1.4 1.0 (0.6) (0.4)
Net income (loss)................................................ 2.6 2.3 1.4 1.0 (1.7) (1.0)
</TABLE>
- ------------------------
(1) EBITDA represents income from operations before depreciation and
amortization. EBITDA is used in certain financial covenants in the indenture
relating to the Original Notes and the Additional Notes and is frequently
used by securities analysts and is presented here to provide additional
information about the Company's operations. EBITDA is not a measurement
presented in accordance with generally accepted accounting principles.
EBITDA should not be considered in isolation; as a substitute for net
income, cash flow provided by operating activities or other income or cash
flow data prepared in accordance with generally accepted accounting
principles; or as a measure of the Company's profitability or liquidity.
EBITDA as used in this Form 10-K may not be comparable to "EBITDA" as
reported by other companies.
16
<PAGE>
FISCAL YEAR ENDED JUNE 30, 1997 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1996
REVENUES. Revenues were $166.1 million in fiscal 1997 compared to $142.6
million in fiscal 1996, an increase of $23.5 million or 16.5%. This increase was
due primarily to (i) new contracts awarded to the Paratransit Division, which
added $8.0 million of revenues; (ii) $2.1 million in contract rate increases and
other billings; (iii) the acquisition of school bus routes in the State of New
York in October 1995 and May 1997, which added $2.4 million of revenues; (iv)
the award of a new contract in St. Louis, which was initiated in September 1996
and added $8.3 million; (v) $0.7 million of additional summer contracts; (vi)
$1.3 million of additional Pre-K/Medicaid billings; and (vii) additional runs
awarded in Philadelphia, which added $0.7 million in revenue.
GROSS PROFIT. Gross profit was $30.0 million in fiscal 1997 compared to
$27.4 million in fiscal 1996, an increase of $2.6 million or 9.5%. This increase
was due primarily to the increase in revenues described above. As a percentage
of revenues, gross profit decreased to 18.1% in fiscal 1997 from 19.3% in fiscal
1996. This decrease was primarily due to increases in fuel expenses of 0.7% and
in payroll and benefits expenses of 0.6%.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
were $12.2 million in fiscal 1997 compared to $10.4 million in fiscal 1996, an
increase of $1.8 million or 17.3%. The increase was principally related to
additional administrative payroll costs of $0.6 million related to
infrastructure growth and an $0.8 million increase in the bad debt reserve.
However, general and administrative expenses as a percentage of revenues
remained constant at 7.3%.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense was
$10.4 million in fiscal 1997 compared to $9.7 million in fiscal 1996, an
increase of $0.7 million or 7.0%. This increase was due to a net increase in
depreciation in connection with the purchase of new vehicles.
INCOME FROM OPERATIONS. Income from operations was $7.4 million in fiscal
1997 or 4.5% of revenues and $7.3 million in fiscal 1996 or 5.1% of revenues.
NET INTEREST EXPENSE. Net interest expense was $8.7 million for the year
ended June 30, 1997 compared to $5.1 million for the year ended June 30, 1996,
an increase of $3.6 million or 71.4%. This increase was primarily due to $4.9
million of interest in connection with the Original Notes issued in the recent
financing activity.
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS. The Company generated a loss
before extraordinary items of $0.6 million in fiscal 1997 compared to income of
$1.4 million in fiscal 1996, a decrease of $2.0 million. This decrease was due
to the following factors: increases in interest expense, depreciation and
amortization, and general and administrative expenses, offset by an increase in
gross profit and increase in benefit from income taxes.
NET INCOME (LOSS). The Company generated a net loss of $1.7 million
(including extraordinary items consisting of loss on early extinguishment of
debt and write off of unamortized deferred financing charges of $0.5 million
each (net of $0.4 million each of taxes) for the fiscal year ended June 30, 1997
compared to $1.4 million net income (with no extraordinary items) for the fiscal
year ended June 30, 1996, a decrease of $3.1 million.
FISCAL YEAR ENDED JUNE 30, 1996 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1995
REVENUES. Revenues were $142.6 million in fiscal 1996 compared to $114.0
million in fiscal 1995, an increase of $28.5 million or 25.0%. This increase was
due primarily to (i) the acquisition of certain routes in the State of New York
in May 1995 and October 1995, which added revenues of approximately $10.3
million; (ii) new school bus contracts in St. Louis, which added revenues of
$9.2 million; (iii) the acquisition of Raybern Bus Service, Inc. and related
companies in August 1995, which added revenues of
17
<PAGE>
$4.7 million; (iv) the award of a new Paratransit Division contract in Kentucky,
which added $3.4 million of revenues; and (v) approximately $2.4 million of
additional Paratransit Division revenues in New York City. These increases were
partially offset by a decrease of approximately $1.2 million in revenues in the
Company's Pre-K/Medicaid Division due primarily to lost contracts and a further
decrease of approximately $0.3 million due to a reduction in other billings.
GROSS PROFIT. Gross profit was $27.4 million in fiscal 1996 compared to
$22.6 million in fiscal 1995, an increase of $4.9 million or 21.6%. This
increase was due primarily to the increase in revenues described above. As a
percentage of revenues, gross profit was 19.3% and 19.8% in fiscal 1996 and
fiscal 1995, respectively. Commencing June 1995, the Company received five-year
extensions on all 17 of its New York Board of Education school bus
transportation contracts. To receive these extensions, the Company agreed to a
reduction in its rates in fiscal 1996 and to a ceiling on rate increases in
fiscal 1997 and 1998. Thereafter, the contracts provide that the Company will
receive increases based upon the applicable CPI increase. Consequently, the
Company's gross margins in fiscal 1996 were lower than in fiscal 1995. See "--
General."
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
were $10.4 million in fiscal 1996 compared to $9.2 million in fiscal 1995, an
increase of $1.3 million or 14.0%. This increase was due primarily to increased
corporate staff to accommodate growth in the Company's operations, although a
portion of this growth was absorbed by existing staff. As a result, general and
administrative expenses decreased as a percentage of revenues to 7.3% in fiscal
1996 from 8.0% in fiscal 1995.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense was
$9.7 million in fiscal 1996 compared to $7.6 million in fiscal 1995, an increase
of $2.1 million or 27.6%. Depreciation increased $1.5 million due to the
increased level of capital expenditures primarily relating to school buses
acquired in connection with contracts in St. Louis, and amortization increased
$0.6 million due to the purchase of certain school bus route contract rights in
fiscal 1996 and amortization of deferred financing costs.
INCOME (LOSS) FROM OPERATIONS. Income from operations was $7.3 million or
5.1% of revenues in fiscal 1996 and was $5.8 million or 5.1% of revenues in
fiscal 1995.
NET INTEREST EXPENSE. Net interest expense was $5.1 million in fiscal 1996
compared to $3.1 million in fiscal 1995, an increase of $2.0 million or 66.7%.
This increase was due primarily to interest expense in connection with (i)
acquisitions of new subsidiaries; (ii) the purchase of new vehicles; and (iii)
the term loan obtained in October 1994.
NET INCOME (LOSS). The Company generated net income of $1.4 million for
fiscal 1996 compared to $2.6 million (including extraordinary item, forgiveness
of indebtedness of $1.1 million net of $0 of taxes) for fiscal 1995, a $1.2
million decrease.
LIQUIDITY AND CAPITAL RESOURCES
The Company had historically financed both its working capital and capital
expenditures with short-term financing. As a result, the Company had been
subject to significant debt amortization and refinancing requirements which
strained the Company's cash flows, especially during the seasonal low periods.
In February 1997, the Company issued $110.0 million aggregate principal amount
of its 10 3/4% Senior Secured Notes due 2004 (the "Original Notes") in a private
placement. The offering of the Original Notes was part of a refinancing plan
designed to extend the maturity of the Company's indebtedness, provide the
Company with additional financing and operating flexibility, and enhance the
Company's financial liquidity. Management believes that the sale of the Original
Notes, together with its cash balance of $16.8 million and its Revolving Credit
facility, which was undrawn at June 30, 1997 provide the Company with
significantly more liquidity than had been previously available.
18
<PAGE>
In August 1997, the Company issued an additional $40.0 million aggregate
principal amount of 10 3/4 Senior Secured Notes due 2004 in a private placement.
The Company applied the net proceeds of the offering to acquire Central and to
fund the Company's entrance to the Los Angeles market.
Capital expenditures for the fiscal year ended June 30, 1997 totaled $26.3
million which included approximately $10.2 million for the purchase of buses for
the St. Louis contract, $6.2 million funded from the proceeds of the offering of
the Original Notes which relate to the Medicaid business and the purchase of
assets previously leased, $2.8 million for the purchase of real property in
connection with the L.A. Contract and $7.1 million of capital expenditures for
additional vehicles, equipment and expansion of the Company's corporate
headquarters.
With the current fleet size, management anticipates making approximately
$3.5 million of annual capital expenditures for regular replacement of vehicles
and approximately $2.5 million of annual maintenance capital expenditures.
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES. Net cash provided by
operating activities was $4.9 million for fiscal 1997, primarily due to $10.9
million of depreciation and amortization and a $1.1 million increase in other
sources of funds. This source of funds was offset in part by a $1.6 million net
loss and a $5.5 million use of funds for working capital. Net cash provided by
operating activities was $5.7 million for fiscal 1996, due primarily to net
income of $1.4 million and depreciation and amortization of $9.7 million which
were offset in part by $4.7 million of funds used for working capital and $1.1
million of funds transferred to restricted cash as collateral for a letter of
credit.
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES. In fiscal 1997, the
Company made $26.3 million of capital expenditures to acquire additional
vehicles and equipment, purchase certain assets previously leased, and for
expansion of the Company's corporate headquarters. Of these capital
expenditures, $11.9 million were directly financed. In addition, the Company
purchased $5.0 million of marketable securities, which securities are held by
Atlantic North. In fiscal 1996, the Company made $20.6 million of capital
expenditures, of which $17.4 million were directly financed. In addition, the
Company purchased $3.4 million of contract rights in fiscal 1996, of which $2.7
million were directly financed. The Company operates in a capital intensive
industry which has historically required significant capital expenditures to
attain additional bus routes and purchase additional buses to service such
routes. The Company's maintenance capital expenditures were approximately $1.7
million in fiscal 1996.
In July 1997, the Company acquired Central for total consideration of $26.5
million, less long-term indebtedness, which as of June 30, 1997 was $4.8
million, and its agreement to issue a $2.2 million note and mortgage relating to
certain real property.
In May 1997, the LAUSD awarded the L.A. Contract to the Company. The L.A.
Contract is a five-year contract, with services commencing in September 1997.
The Company estimates that entrance into the Los Angeles market will require
approximately $12.6 million of capital expenditures, including $2.9 million for
the purchase of certain real property, $8.5 million for the purchase of vehicles
and $1.2 million for real property improvements. Prior to June 30, 1997, the
Company has made certain of these capital expenditures.
On April 30, 1997, the Company acquired substantially all of the assets of
Sabella for $1.1 million.
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES. Net cash provided by
financing activities totaled $31.2 million for the year ended June 30, 1997, due
primarily to the net proceeds from the offering of the Original Notes plus $8.5
million of additional borrowing (including an increase of $2.9 million in the
Company's revolving line of credit), offset by $79.5 million of principal and
debt amortization requirement and $7.0 million in deferred financing and
organization costs. In addition, the Company incurred $11.9 million of
indebtedness to directly finance capital expenditures for the year ended June
30, 1997. In fiscal 1996, net cash used in financing activities totaled $5.0
million due to $12.1 million of principal repayments
19
<PAGE>
and debt amortization requirements, which were offset by $8.1 million of
additional borrowings, used to finance normal working capital needs and $0.8
million of funds transferred to restricted cash. In addition, the Company
incurred $20.1 million of aggregate indebtedness to directly finance capital
expenditures and acquisitions of contract rights.
At June 30, 1997, the Company's total debt and stockholder's equity were
$110.5 million and $27.6 million, respectively. The Company's ability to meet
its debt service obligations and to reduce its total indebtedness will depend
upon its future performance, which will be subject to general economic
conditions, its ability to achieve cost savings and other financial, business
and other factors affecting the operations of the Company, many of which are
beyond its control. If the Company cannot generate sufficient cash flow from
operations in the future to service its debt, it may be required to refinance
all or a portion of such debt (including the Notes), sell assets or obtain
additional financing. There can be no assurance that any such refinancing or
asset sales would be possible or that any additional financing could be
obtained.
QUARTERLY FINANCIAL INFORMATION; SEASONALITY
The table below sets forth unaudited summary financial information for the
Company for the last 12 quarters. This information has been prepared by the
Company on a basis consistent with its audited financial statements and includes
all adjustments that management considers necessary for a fair presentation of
the results for such quarters.
The Company's operations are seasonal in nature. Historically, the first
quarter of the Company's fiscal year has generated operating losses due to
significantly reduced revenues of the School Bus Division during the summer
months. The Company's school bus contracts generally resume in late August and
early September. The Company's quarterly operating results also fluctuate due to
a variety of factors, including variation in the number of school days in each
quarter (which is affected by the timing of the first and last days of the
school year, holidays, the month in which spring break occurs and adverse
weather conditions, which can close schools) and the profitability of the
Company's other divisions. Consequently, interim results are not necessarily
indicative of the full year and quarterly results may vary substantially, both
within a fiscal year and between comparable fiscal years. For example, in the
fourth quarter of fiscal 1997, in most of the Company's markets, the Company
experienced two additional revenue days and one less payroll day than the same
period in fiscal 1996. This disparity in the school calendar had a positive
impact on operating results in the fourth quarter of fiscal 1997.
<TABLE>
<CAPTION>
FISCAL 1996
FISCAL 1995 ----------------------------------------------------
----------------------------------------------------
SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1994 1994 1995 1995 1995 1995 1996 1996
----------- ----------- ------------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
($ IN MILLIONS)
Revenue........ $ 15.8 $ 31.7 $ 32.9 $ 33.7 $ 18.9 $ 40.7 $ 41.6 $ 41.4
Income (loss)
from
operations... (2.7) 2.6 2.7 3.3 (2.8) 3.8 2.6 3.7
Net income
(loss) before
extraordinary
item......... (2.1) 1.0 1.2 1.4 (2.5) 1.6 0.8 1.5
EBITDA......... (1.1) 4.4 4.6 5.5 (0.5) 6.4 5.2 5.9
<CAPTION>
FISCAL 1997
--------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1996 1996 1997 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue........ $ 25.2 $ 45.0 $ 45.5 $ 50.1
Income (loss)
from
operations... (2.8) 2.4 2.0 5.8
Net income
(loss) before
extraordinary
item......... (2.5) 0.5 (0.5) 1.9
EBITDA......... (0.2) 5.2 4.7 8.1
</TABLE>
Central's school bus distribution business is also seasonal in nature.
Approximately 49% of Central's annual sales have occurred in the quarter ended
September 30 each year, which is typical for the school bus sales industry. In
addition, Central's working capital needs have tended to increase during that
quarter in response to the higher seasonal sales volume and inventory is at its
highest during July and August prior to heavy seasonal school bus deliveries.
The Company believes the Central acquisition will partially offset the seasonal
effects of the Company's school bus operations, as Central's seasonal peak has
tended to occur during the months of July and August, which has been the
Company's seasonal low period.
20
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Exhibits, which appears on Page F-1
hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
21
<PAGE>
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the members of
the Board of Directors and executive officers of the Company as of September 30,
1997. Directors serve for a term of one year or until their successors are
elected and qualified.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Domenic Gatto........................................ Chairman of the Board, President and Chief Executive
48 Officer
Michael Gatto........................................ Executive Vice President, Secretary, Treasurer and
41 Director
Patrick Gatto........................................ 36 Executive Vice President and Director
Nathan Schlenker..................................... 59 Chief Financial Officer
Noel Cabrera......................................... 37 Executive Vice President
Jerome Dente......................................... 51 Director of New York School Bus Operations
David Kessler........................................ Vice President and Director of the Paratransit
57 Division
John Shea............................................ 47 Director
Peter Petrillo....................................... 37 Director
</TABLE>
The Company has expanded its Board of Directors to seven seats consisting of
two directors designated by Wafra Investment Advisory Group, Inc. (the minority
stockholder of AETG (the "Preferred Stockholder"), three directors designated by
the majority stockholders of AETG (Domenic Gatto, Michael Gatto and Patrick
Gatto) (the "Majority Stockholders"), one director to be designated by the
Majority Stockholders and one director to be designated by Jefferies & Company,
Inc. ("Jefferies"). Neither the Majority Stockholders or Jefferies has yet
designated a director to fill its respective vacancy on the Board of Directors.
DOMENIC GATTO, CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER. Mr. Gatto has been President, Chief Executive Officer and Chairman of
the Board of the Company and AETG since their formations. Mr. Gatto, a Vietnam
veteran, began his career in the school bus business as a bus driver and has
been responsible for the development of all facets of the business of the
Company and AETG.
MICHAEL GATTO, EXECUTIVE VICE PRESIDENT, SECRETARY, TREASURER AND
DIRECTOR. Mr. Gatto has been Executive Vice President, Secretary, Treasurer and
a Director of the Company since its formation and has held the positions of Vice
President, Secretary, Treasurer and Director of AETG since 1982. He has been
employed in various capacities by AETG since 1979. Mr. Gatto oversees the
overall day to day operations of the Company's school bus transportation
terminals in the New York greater metropolitan area.
PATRICK GATTO, EXECUTIVE VICE PRESIDENT AND DIRECTOR. Mr. Gatto has been
Executive Vice President and a Director of the Company since its formation and
has held the positions of Vice President and Director of AETG since 1990 and has
been employed by AETG since 1982 in various capacities. Mr. Gatto oversees the
paratransit and maintenance operations of the Company and coordinates certain
facets of the Company's school bus operations in the New York greater
metropolitan area.
NATHAN SCHLENKER, CHIEF FINANCIAL OFFICER. Mr. Schlenker has been Chief
Financial Officer of the Company since its formation, and has held such position
at AETG since 1991. Prior to 1991 Mr. Schlenker was the Vice President of
Finance of Feuer Leather Corporation, an international leather manufacturer and
marketing firm. From 1973 until 1985, Mr. Schlenker was a partner of Ekstein,
Ekstein & Schlenker, a firm of certified public accountants.
22
<PAGE>
NOEL CABRERA, EXECUTIVE VICE PRESIDENT. Mr. Cabrera has been Executive Vice
President of the Company since its formation, a Vice President of AETG since
1994 and Executive Vice President of AETG since July 1996. Mr. Cabrera joined
AETG in 1990 as a management analyst. He was previously employed as a consultant
for Manasia Enterprises, a New York based consulting firm, and as a project
manager for the Office of the President of the Republic of the Philippines with
respect to financing of industrial projects.
JEROME DENTE, DIRECTOR OF NEW YORK SCHOOL BUS OPERATIONS. Mr. Dente has
been the Director of New York School Bus Operations for the Company since 1994.
Prior to 1994 Mr. Dente served 28 years as a Transportation Officer in the
United States Army, achieving the rank of Colonel. Mr. Dente received a Master
of Science in Transportation Management from Florida Institute of Technology, a
Master of Arts in Strategic Studies from the U.S. Naval War College and a
Bachelors of Science from Widener University.
DAVID KESSLER, VICE PRESIDENT AND DIRECTOR OF THE PARATRANSIT DIVISION. Mr.
Kessler has been Vice President and Director of the Paratransit Division since
1994. He has been employed by AETG since 1989. Mr. Kessler received a Master of
Public Affairs/Master of Science in Engineering from Princeton University and a
Bachelors of Science in Engineering from Cornell University.
JOHN SHEA, DIRECTOR. Mr. Shea has been a director of AETG since February
1994. Since 1991 he has been responsible for merchant banking and direct equity
investments at Wafra. From 1984 to 1991, Mr. Shea was responsible for direct
equity investments at Lambert Brussels Capital Corporation. He is a director of
CAPMAC Holdings Inc. and Capital Markets Assurance Corporation.
PETER PETRILLO, DIRECTOR. Mr. Petrillo has been a director of AETG and the
Company since January 1997. Since January 1995, he has been a Vice President in
the merchant banking and direct equity investments group at Wafra. From January
1991 to December 1994, Mr. Petrillo was a partner at Claymore Partners Ltd., a
strategic and turnaround consulting firm.
All of the members of the Board of Directors and executive officers, other
than Messrs. Dente, Shea and Petrillo, were executive officers of the Company's
predecessors in March 1992, when certain subsidiaries of the Company filed a
voluntary petition requesting relief from creditors under chapter 11 of the
Bankruptcy Code. There are no family relationships between any of the
aforementioned persons, except that Messrs. Domenic Gatto, Michael Gatto and
Patrick Gatto are brothers.
ITEM 11. EXECUTIVE COMPENSATION
Directors who are employees of the Company or one of its subsidiaries or
affiliates of the Preferred Stockholder do not receive additional compensation
for serving as directors. It is currently contemplated that only one director of
the Company (the independent director of the Company to be designated by
Jefferies) will receive $25,000 as compensation for services as a director.
23
<PAGE>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)
<TABLE>
<CAPTION>
FISCAL OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(2) SALARY BONUS COMPENSATION INCOME(5)
- ---------------------------------------------------------- ----------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Domenic Gatto............................................. 1997 $ 486,755 -- $ 94,292 $ 3,193
President and Chief Executive Officer 1996 $ 467,578 -- $ 96,090(3) $ 3,750
Michael Gatto............................................. 1997 $ 324,150 -- $ 42,224 $ 3,050
Executive Vice President, Secretary and Treasurer 1996 $ 311,379 -- $ 40,208(4) $ 3,750
Patrick Gatto............................................. 1997 $ 324,150 -- $ 42,224 $ 2,850
Executive Vice President 1996 $ 311,379 -- $ 40,208(4) $ 3,750
Nathan Schlenker.......................................... 1997 $ 197,725 $ 17,000 -- $ 2,678
Chief Financial Officer 1996 $ 183,352 $ 2,000 -- $ 3,750
</TABLE>
- ------------------------
(1) There is no non-cash compensation in lieu of salary or bonus or other
long-term compensation awards or payouts or any other compensation payable
to the individuals named in the table. There is no applicable defined
benefit plan or actuarial plan under which benefits are determined, other
than under Section 401(k) of the Internal Revenue Code. See note (5).
(2) In accordance with Item 402(b) of Regulation S-K, information is presented
only for the Company's last two completed fiscal years.
(3) Includes (i) $25,800 for automobile allowance; (ii) $35,000 for life
insurance allowance; (iii) $6,516 for disability insurance; and (iv) $28,774
and $26,976 for vacation time not taken in 1996 and 1997, respectively.
(4) Includes (i) $17,208 and $19,224 for automobile allowance in 1996 and 1997,
respectively; and (ii) $23,000 for life insurance allowance.
(5) Representing contributions under Section 401(k) of the Internal Revenue
Code.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AETG owns all of the Company's issued and outstanding capital stock. The
following table sets forth certain information with respect to the beneficial
ownership of the Common Stock and Series A Preferred Stock of AETG as of
September 30, 1997 by (i) each person who is known by the Company to
beneficially own more than 5% of the outstanding shares of Common Stock and
Series A Preferred Stock; (ii) each director of AETG; (iii) AETG's Chief
Executive Officer and the other executive officers listed in the Summary
Compensation Table above; and (iv) all current directors and executive officers
of AETG as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
ALL OUTSTANDING
TITLE NUMBER PERCENTAGE VOTING
NAME(1) OF CLASS OF SHARES OF CLASS SECURITIES(2)
- ------------------------------------------------ ---------------------- --------------- ----------- -----------------
<S> <C> <C> <C> <C>
Domenic Gatto(3)................................ Common Stock 88 100.0% 55.0%
Michael Gatto(4)................................ Common Stock 25 28.4 15.6%
Patrick Gatto(5)................................ Common Stock 25 28.4 15.6%
Nathan Schlenker................................ -- -- -- --
Noel Cabrera.................................... -- -- -- --
John Shea(6).................................... -- -- -- --
Peter Petrillo(6)............................... -- -- -- --
Series A Preferred
Busco Capital Inc.(7)........................... Stock 72 100.0% 45.0%
All directors and executive officers of AETG as
a group (9 persons)........................... Common Stock 88 100.0% 55.0%
</TABLE>
- ------------------------
(1) Unless otherwise indicated, the business address of each beneficial owner is
c/o Atlantic Express Transportation Group Inc., 7 North Street, Staten
Island, New York 10302-1205 and each beneficial owner has sole voting power
and investment power (or shares such power with his spouse) with respect to
all shares of capital stock listed as owned by such beneficial owner.
24
<PAGE>
(2) Under certain circumstances Busco Capital Inc. is entitled to vote on
stockholder issues as though it had four times the vote it would otherwise
have.
(3) Includes 25 shares of Common Stock beneficially owned by Michael Gatto and
25 shares of Common Stock beneficially owned by Patrick Gatto, as to which
Domenic Gatto has sole voting power over the shares pursuant to irrevocable
proxies. See notes (4) and (5).
(4) Michael Gatto shares beneficial ownership of all of the shares shown as
being beneficially owned by him pursuant to an irrevocable proxy under which
Domenic Gatto has sole voting power as to such shares. See note (3).
(5) Patrick Gatto shares beneficial ownership of all of the shares shown as
being beneficially owned by him pursuant to an irrevocable proxy under which
Domenic Gatto has sole voting power as to such shares. See note (3).
(6) The business address of Messrs. Shea and Petrillo is c/o Wafra Investment
Advisory Group, Inc., 9 West 57th Street, New York, New York 10019.
(7) Busco Capital Inc. is represented by Wafra. The shares of Series A Preferred
Stock held by Busco Capital Inc. represent, upon full conversion, 45% of the
Common Stock. Busco Capital Inc.'s business address is Citco Building,
Wickhams Cay, P.O. Box 662, Road Town, Tortola, British Virgin Islands.
Holders of Series A Preferred Stock are entitled to one vote per share
subject to greater voting rights under certain conditions pursuant to which
the holders of Series A Preferred Stock may select a majority of the Board
of Directors.
AETG PREFERRED STOCK AND COMMON STOCK
The AETG Certificate of Incorporation provides that AETG may issue 228
shares of Common Stock and 72 shares of Series A Preferred Stock. The holders of
the outstanding shares of Common Stock and Series A Preferred Stock vote
together, without regard to class, with each holder of outstanding shares of
Common Stock and Series A Preferred Stock being entitled to one vote for each
share of Common Stock or Series A Preferred Stock. The Series A Preferred Stock
may be converted into Common Stock at an initial conversion price of one share
of the Series A Preferred Stock for each share of Common Stock (subject to
adjustment in accordance with certain anti- dilution provisions). The Series A
Preferred Stock participates PRO RATA (as if converted to Common Stock) with the
Common Stock with respect to any cash dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of Common
Stock. So long as the Series A Preferred Stock shall remain outstanding, neither
Common Stock nor any other stock ranking junior to the Series A Preferred Stock
shall be redeemed, purchased or otherwise acquired for any consideration. In the
event of any liquidation, dissolution or winding up of AETG, before any payment
or distribution of its assets shall be made or set apart for the holders of
Common Stock or any other series or classes of stock ranking junior to the
Series A Preferred Stock, the holders of the Series A Preferred Stock shall be
entitled to receive $218,055.56 per share. AETG may require conversion of the
Series A Preferred Stock upon a public offering providing for at least $20
million in net proceeds to AETG provided the per share issue price in such
offering shall be equal to or greater than the conversion price of the Series A
Preferred Stock at the time of the offering compounded at 30% annually from the
date of purchase of such stock and provided further that the holders of the
Series A Preferred Stock have the opportunity to sell 75% of their securities at
such price.
Under the Stockholders' Agreement, if Domenic Gatto's employment agreement
is not renewed or if Domenic Gatto's employment is terminated by the Company
without cause (as defined), Domenic Gatto has the right, subject to certain
exceptions, to resell his shares of Common Stock to AETG for a purchase price
equal to the greatest of (i) $1.5 million; (ii) if such shares are not then
publicly traded, the fair market value of the shares as determined by an
appraiser; or (iii) if such shares are then publicly traded, the market value of
such shares. Such employment agreement includes certain non-competition and non-
solicitation covenants which are effective during the term of Domenic Gatto's
employment and for 24 months after his termination. The employment agreements
for Michael Gatto and Patrick Gatto include terms similar to the employment
agreement of Domenic Gatto except that the minimum purchase price of the shares
of Common Stock subject to the put right is $1.0 million.
25
<PAGE>
STOCKHOLDERS' AGREEMENT
Pursuant to the Stockholders' Agreement, the Board of Directors of AETG
consists of five directors, three of whom have been designated by the Majority
Stockholders and two of whom have been designated by the Preferred Stockholder.
Prior to a Default (as defined in the Stockholders' Agreement), the Majority
Stockholders have the power to direct the affairs of the Company and to
determine the outcome of all matters required to be submitted to stockholders
for approval; provided, that the approval of a super majority of the directors
of each of AETG and the Company is required before the Company or any of its
subsidiaries may take any action with respect to any Significant Transaction.
Following any such Default, the Preferred Stockholder is entitled to vote on
stockholder issues as though it had four times the vote it would have on
conversion, and the Board of Directors of each of AETG and the Company will be
increased to a number so that the ratio of the directors designated by the
Preferred Stockholder is maintained at a level of four to three.
"Significant Transactions" include, among other things, (i) the creation of
any additional classes of common stock or certain other securities; (ii) certain
transactions (including acquisitions outside of the ordinary course of business)
with a value of $3.5 million or more (except that, under certain circumstances,
such threshold may be lower); (iii) any amendment or modification of any
provision of AETG's or the Company's certificate of incorporation or by-laws;
(iv) certain extensions and any amendments or modifications of any employment
agreements between AETG or the Company and Domenic Gatto, Patrick Gatto, Michael
Gatto or Nathan Schlenker; and (v) any consolidation or merger of AETG or its
affiliates with any other entity in which AETG or its affiliates will not be the
controlling or surviving corporation, or the sale of all or substantially all of
the assets of AETG or its affiliates. In addition, the approval of all of the
directors appointed by the Majority Stockholders and the Preferred Stockholder
is required to amend AETG's certificate of incorporation or its by-laws. The
approval of a majority of disinterested directors is required under the
Stockholders' Agreement to approve any transaction between AETG and the Majority
Stockholders, the Preferred Stockholder, or an affiliate of either, except in
the case of the renewal of any employment agreements between AETG and Domenic
Gatto, Patrick Gatto, Michael Gatto and Nathan Schlenker, which may be approved
by a majority of directors present at a meeting of the Board of Directors.
The Preferred Stockholder also has the right, subject to certain exceptions,
to require AETG to purchase 100% of its shares of Series A Preferred Stock
commencing February 28, 1999 (subject to six months prior written notice) at a
price based upon the higher of (i) their proportionate share of the fair market
value of AETG appraised as a public company; (ii) if then publicly traded, the
valuation of AETG at market price; or (iii) the liquidation preference value of
such Series A Preferred Stock ($15.7 million). AETG at its option can pay the
price for the preferred stock in three annual installments, subject to a premium
for payments not made within a period of one year. In the event AETG is legally
precluded from redeeming the preferred stock as the result of insufficient
surplus, it is required to redeem such shares at the rate of 60% of its cash
flow. It is unlikely AETG will have sufficient cash to make such redemption. The
ability of the Company to pay a dividend to AETG is restricted by the Indenture
relating to the Company's 10 3/4% Senior Secured Notes, due 2004. In addition to
any other rights the Preferred Stockholder may have if AETG fails to make such
redemption, the Preferred Stockholder will obtain the right to control certain
matters relating to the capitalization of AETG and its subsidiaries (including
the Company and its subsidiaries), which right includes matters relating to
repayments of the Notes.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Coach Division is operated through its wholly owned
subsidiary, Atlantic Express Coachways, Inc. ("Coachways"), which leases "Park &
Ride" and administrative facilities from Showplace Bowling Center, Inc.
("Showplace"), a wholly owned subsidiary of AETG which is engaged in the
entertainment business. The administrative facilities consist of an office and
ticket sales facilities. The lease also provides for use of parking facilities
for commuters who purchase express tickets on Coachways'
26
<PAGE>
express bus service between Staten Island and Manhattan in New York City. The
lease, which is for a term of 10 years, with two five year renewal options,
commenced July 1, 1995 for an annual base rental of $180,000. The Company
believes that the rental reflects the reasonable market value for the lease.
Staten Island Bus, Inc., a wholly owned subsidiary of the Company, leases a
facility from Dom-Rich Associates, Inc., a wholly owned subsidiary of AETG. The
lease, which is for a term of five years, with two five-year renewal options,
commenced January 1, 1997 for an annual base rental of $48,000. The Company
believes that the rental reflects the reasonable market value for the lease.
Certain of the subsidiaries of AETG which make up its entertainment business
were collectively indebted to the Company in the amount of $4.8 million as of
June 30, 1997 (the "Affiliate Loan"). Such indebtedness resulted from numerous
intercompany loans among the various subsidiaries of AETG prior to the formation
of the Company. The Affiliate Loan is evidenced by a note accruing interest,
payable at maturity at 6.8%, commencing January 1, 1997 until maturity in the
principal amount of $4.6 million payable on July 1, 2004.
Pursuant to the Stockholders' Agreement, Wafra is entitled to receive an
annual management fee from AETG equal to (i) $229,503, subject to the same
percentage adjustment, on an annual basis, as the average of the two highest
salaries paid by the Company to its employees (other than Domenic Gatto); plus
(ii) $120,000. The management fee is payable in equal monthly installments of
$29,126, subject to the foregoing adjustments. Wafra is under common control
with the Preferred Stockholder.
In fiscal 1996, the Company received management fees of $255,000 from
affiliated companies. Such fees represented the affiliated companies'
proportionate share of managerial accounting and legal expenses financed by the
Company. The Company received no such management fees in fiscal June 30, 1997
At June 30, 1997, the Company had an amount payable to AETG of $17,405. Such
amount arose as a result of payment by AETG of certain operational expenses on
behalf of its transportation subsidiaries.
In July 1997, Central entered into two five-year leases with Mr. Denney and
a former shareholder of Central to lease the real property which serves as the
primary operating facilities of Central in New York and New Jersey. Also in July
1997, the Company, Mr. Denney and the same former shareholder of Central agreed
to enter into two five-year options to purchase such property from Mr. Denney
and such other shareholder of Central for a purchase price of $2.2 million
which, upon exercise of such options, would be amortized over 15 years with a
five-year balloon paymentsecured by a purchase money note and mortgage on such
property. The Company exercised the options in August 1997.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS
See Index to Financial Statements which appears on page F-1 hereof. No
Schedules are provided as the Schedules are either not applicable, or the
information has been otherwise provided in the Financial Statements.
(b) REPORTS ON FORM 8-K
The Company filed a report on Form 8-K on August 28, 1997 regarding the
consummation of the acquisition of Central by the Company.
(c) EXHIBITS
The exhibits listed on the Exhibit Index following the signature page hereof
are filed herewith (or incorporated by reference) in response to this Item.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ATLANTIC EXPRESS TRANSPORTATION CORP.
BY: /S/ DOMENIC GATTO
-----------------------------------------
Domenic Gatto
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Date: October 15, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
NAME TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board,
/s/ DOMENIC GATTO President and Chief
- ------------------------------ Executive Officer October 15, 1997
Domenic Gatto (Principal Executive
Officer)
Chief Financial Officer
/s/ NATHAN SCHLENKER (Principal Financial
- ------------------------------ Officer and Principal October 15, 1997
Nathan Schlenker Accounting Officer)
/s/ MICHAEL GATTO Executive Vice President,
- ------------------------------ Secretary, Treasurer and October 15, 1997
Michael Gatto Director
/s/ PATRICK GATTO Executive Vice President
- ------------------------------ and Director October 15, 1997
Patrick Gatto
/s/ JOHN SHEA Director
- ------------------------------ October 15, 1997
John Shea
/s/ PETER PETRILLO Director
- ------------------------------ October 15, 1997
Peter Petrillo
28
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Certified Public Accountants......................................................... F-2
Consolidated balance sheets as of June 30, 1996 and 1997................................................... F-3
Consolidated Statements of operations for the Years Ended June 30, 1995,
1996 and 1997............................................................................................ F-4
Consolidated Statements of Stockholder's Equity for the Years Ended June 30, 1995, 1996 and 1997........... F-5
Consolidated Statements of Cash Flows for the Years Ended June 30, 1995,
1996 and 1997............................................................................................ F-6
Notes to Consolidated Financial Statements................................................................. F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholder of
Atlantic Express Transportation Corp.
We have audited the accompanying consolidated balance sheets of Atlantic
Express Transportation Corp. and subsidiaries as of June 30, 1996 and 1997, and
the related consolidated statements of operations, stockholder's equity, and
cash flows for each of the three years in the period ended June 30, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Atlantic
Express Transportation Corp. and subsidiaries as of June 30, 1996 and 1997, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended June 30, 1997 in conformity with generally
accepted accounting principles.
BDO SEIDMAN, LLP
New York, New York
September 25, 1997
F-2
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
------------------------
<S> <C> <C>
1996 1997
----------- -----------
ASSETS
Current:
Cash and cash equivalents........................................................... $ 1,211,258 $16,818,889
Current portion of marketable securities............................................ -- 1,030,000
Accounts receivable, net of allowance for doubtful accounts of $-0- and $250,000,
respectively...................................................................... 25,687,921 31,237,975
Replacement parts and other inventory............................................... 994,412 1,969,228
Notes receivable.................................................................... 180,760 191,600
Prepaid expenses and other current assets........................................... 5,120,364 4,986,656
----------- -----------
Total current assets.......................................................... 33,194,715 56,234,348
----------- -----------
Property, plant and equipment, less accumulated depreciation.......................... 58,193,715 74,967,594
----------- -----------
Other assets:
Restricted cash and cash equivalents................................................ 1,870,000 2,314,408
Retainage........................................................................... 513,556 --
Investments......................................................................... 229,000 229,000
Marketable securities............................................................... -- 4,139,697
Deferred lease expense.............................................................. 655,008 488,212
Transportation contract rights, net................................................. 3,391,718 3,444,772
Due from affiliates................................................................. 4,468,974 4,772,974
Deferred financing and organization costs, net...................................... 704,781 6,295,318
Notes receivable.................................................................... 293,664 120,992
Deposits and other noncurrent assets................................................ 858,482 1,343,661
----------- -----------
Total other assets............................................................ 12,985,183 23,149,034
----------- -----------
$104,373,613 $154,350,976
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current:
Current portion of long-term debt................................................... $11,328,497 $ 140,008
Accounts payable.................................................................... 1,760,426 764,293
Accrued compensation................................................................ 3,116,893 4,053,567
Current portion of insurance reserve................................................ 1,447,000 2,336,738
Other accrued expenses and current liabilities...................................... 4,693,025 629,855
Accrued interest.................................................................... -- 4,927,085
----------- -----------
Total current liabilities..................................................... 22,345,841 12,851,546
----------- -----------
Long-term debt, net of current portion................................................ 48,326,701 110,488,215
----------- -----------
Other long-term liabilities........................................................... 2,325,594 2,997,018
----------- -----------
Deferred income taxes................................................................. 1,890,000 400,000
----------- -----------
Commitments and contingencies
Stockholder's equity:
Common stock, shares authorized 200; issued and outstanding 100..................... 250,000 250,000
Additional paid-in capital.......................................................... 13,188,926 13,188,926
Unrealized gain on marketable securities............................................ -- 142,032
Retained earnings................................................................... 16,046,551 14,033,239
----------- -----------
Total stockholder's equity.................................................... 29,485,477 27,614,197
----------- -----------
$104,373,613 $154,350,976
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------
<S> <C> <C> <C>
1995 1996 1997
-------------- -------------- --------------
Revenues........................................................ $ 114,005,547 $ 142,551,559 $ 166,078,034
-------------- -------------- --------------
Costs and expenses:
Cost of operations............................................ 91,428,364 115,108,380 136,068,428
General and administrative.................................... 9,162,140 10,448,420 12,199,150
Depreciation and amortization................................. 7,627,575 9,735,982 10,417,187
-------------- -------------- --------------
108,218,079 135,292,782 158,684,765
-------------- -------------- --------------
Income from operations.................................. 5,787,468 7,258,777 7,393,269
Interest........................................................ (3,057,545) (5,098,443) (8,739,065)
Other income.................................................... -- -- 133,977
-------------- -------------- --------------
Income (loss) before nonrecurring items, reorganization
items, (provision for) benefit from income taxes and
extraordinary items................................... 2,729,923 2,160,334 (1,211,819)
Nonrecurring items:
Cancellation of leases........................................ (185,760) -- --
-------------- -------------- --------------
Income (loss) before reorganization items,(provision
for) benefit from income taxes and extraordinary
items................................................. 2,544,163 2,160,334 (1,211,819)
Reorganization items:
Professional fees............................................. (33,595) -- --
-------------- -------------- --------------
Income (loss) before (provision for) benefit from income
taxes and extraordinary items......................... 2,510,568 2,160,334 (1,211,819)
(Provision for) benefit from income taxes....................... (978,632) (758,897) 600,936
-------------- -------------- --------------
Income (loss) before extraordinary items................ 1,531,936 1,401,437 (610,883)
Extraordinary items:
Forgiveness of debt, net of taxes of $0....................... 1,054,134 -- --
Loss on early extinguishment of debt, net of tax benefit of
$390,000.................................................... -- -- (526,974)
Write-off of unamortized deferred finance charges, net of tax
benefit of $368,000 as a result of refinancing.............. -- -- (525,943)
-------------- -------------- --------------
Net income (loss)............................................... $ 2,586,070 $ 1,401,437 $ (1,663,800)
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED JUNE 30, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
UNREALIZED
COMMON STOCK ADDITIONAL GAIN
-------------- PAID-IN RETAINED ON MARKETABLE
NO PAR VALUE CAPITAL EARNINGS SECURITIES TOTAL
-------------- ------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, JULY 1, 1994.......... $ 250,000 $13,222,676 $ 12,059,044 $ -- $ 25,531,720
Return of capital.............. -- (33,750) -- -- (33,750)
Net income..................... -- -- 2,586,070 -- 2,586,070
-------------- ------------- ---------------- -------------- -------------
BALANCE, JUNE 30, 1995......... 250,000 13,188,926 14,645,114 -- 28,084,040
Net income..................... -- -- 1,401,437 -- 1,401,437
-------------- ------------- ---------------- -------------- -------------
BALANCE, JUNE 30, 1996......... 250,000 13,188,926 16,046,551 -- 29,485,477
Net loss....................... -- -- (1,663,800) -- (1,663,800)
Dividends...................... -- -- (349,512) -- (349,512)
Unrealized gain on marketable
securities................... -- -- -- 142,032 142,032
-------------- ------------- ---------------- -------------- -------------
BALANCE, JUNE 30, 1997......... $ 250,000 $13,188,926 $ 14,033,239 $ 142,032 $ 27,614,197
-------------- ------------- ---------------- -------------- -------------
-------------- ------------- ---------------- -------------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------
1995 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................................... $ 2,586,070 $ 1,401,437 $ (1,663,800)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Extraordinary items.............................................. (1,054,134) -- 1,836,312
Deferred income taxes............................................ 294,000 (104,000) (1,490,000)
Depreciation..................................................... 7,317,828 8,876,163 9,555,463
Amortization..................................................... 309,747 859,819 1,311,212
Write-off of doubtful accounts receivable........................ 200,000 569,000 500,000
Reserve for doubtful accounts receivable......................... -- -- 250,000
Gain on sale of property and equipment........................... (250,937) -- --
Transfer to restricted cash...................................... -- (1,120,000) (1,194,408)
Other............................................................ -- (236,012) --
Decrease (increase) in:
Accounts receivable and retainage.............................. (7,203,507) (5,639,761) (5,786,498)
Inventory...................................................... (64,150) (309,169) (974,816)
Prepaid expenses and other current assets...................... (988,766) (1,669,625) 133,708
Deferred lease expense......................................... 237,910 (515,176) 166,796
Deposits and other noncurrent assets........................... 71,470 (43,640) (485,179)
Increase (decrease) in:
Accounts payable............................................... 1,212,488 (357,467) (996,133)
Accrued expenses and other current liabilities................. 397,373 3,256,025 2,092,428
Other long-term liabilities.................................... 1,300,000 735,619 1,601,137
------------ ------------ -------------
Net cash provided by operating activities...................... 4,365,392 5,703,213 4,856,222
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------
1995 1996 1997
------------- ------------- --------------
<S> <C> <C> <C>
Cash flows from investing activities:
Additions to property, plant and equipment........................ $ (2,515,843) $ (3,195,750) $ (14,441,800)
Purchase of transportation contract rights........................ (595,300) (688,833) (873,192)
Due from affiliates............................................... 141,651 (100,596) (303,999)
Proceeds from disposition of property, plant and equipment........ 1,226,713 -- --
Notes receivable.................................................. 150,383 808,983 161,832
Marketable securities............................................. -- -- (5,027,665)
------------- ------------- --------------
Net cash used in investing activities....................... (1,592,396) (3,176,196) (20,484,824)
------------- ------------- --------------
Cash flows from financing activities:
Proceeds of additional borrowings................................. 10,754,203 8,143,521 118,473,894
Principal payments on borrowings.................................. (12,789,637) (10,919,409) (79,580,780)
Deferred financing and organization costs......................... (641,978) (328,384) (6,975,554)
Return of capital................................................. (33,750) -- (349,512)
Transfer to restricted cash....................................... -- (750,000) --
Payments to creditors under the plan of reorganization............ (3,988,434) (1,161,615) (331,815)
------------- ------------- --------------
Net cash provided by (used in) financing activities......... (6,699,596) (5,015,887) 31,236,233
------------- ------------- --------------
Net increase (decrease) in cash and cash equivalents................ (3,926,600) (2,488,870) 15,607,631
Cash and cash equivalents, beginning of year........................ 7,626,728 3,700,128 1,211,258
------------- ------------- --------------
Cash and cash equivalents, end of year.............................. $ 3,700,128 $ 1,211,258 $ 16,818,889
------------- ------------- --------------
------------- ------------- --------------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest...................................................... $ 4,077,852 $ 5,436,240 $ 3,181,000
Income taxes.................................................. 430,000 305,000 222,000
Supplemental schedule of noncash investing and financing activities:
Loans incurred for purchase of property, plant and equipment.... $ 15,501,260 $ 17,416,258 $ 11,887,542
Loans incurred for purchase of contract rights.................. -- 2,670,000 --
Deferral of payment for contract rights......................... -- 250,000 --
Note received from purchaser in exchange for bus routes and
buses......................................................... 680,000 -- --
Use of restricted cash to pay down debt......................... -- -- 750,000
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. COMPANY STRUCTURE
Prior to August 23, 1993, Atlantic Express Inc. ("AE") and subsidiaries
operated in two industries, transportation and entertainment. On August 23,
1993, as part of a reorganization, AE transferred all of its assets and
liabilities to the newly formed Atlantic Express Transportation Group Inc.
("AETG"), which became the new parent company. On January 30, 1997, AETG
transferred all operating assets and liabilities pertaining to the
transportation operations to a newly formed company called Atlantic Express
Transportation Corp. ("AETC"), which became the new parent company of the
companies operating in the transportation industry. The accompanying
consolidated financial statements give effect to the January 30, 1997
restructuring as if it had occurred prior to July 1, 1994 and, therefore,
present the financial position and results of operations of the transportation
companies for all periods presented.
2. BUSINESS
AETC is primarily engaged in providing school bus transportation services
for various municipalities in New York City, Nassau County, Suffolk County,
Westchester County, Connecticut, Pennsylvania, Missouri and New Jersey. AETC
also provides services to public transit systems for physically or mentally
challenged passengers, express commuter line and charter and tour services, and
transportation for pre-kindergarten children and Medicaid recipients.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of AETC and its
subsidiaries. All material intercompany transactions and balances have been
eliminated.
REVENUES
Revenues are recognized when services are performed.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost and depreciated utilizing
primarily the straight-line method over the lives of the related assets. The
useful lives of property, plant and equipment for purposes of computing
depreciation are as follows:
<TABLE>
<CAPTION>
YEARS
---------
<S> <C>
Building and improvements........................................................... 15-31.5
Transportation equipment............................................................ 5-15
Furniture and fixtures.............................................................. 5-7
Machinery and equipment............................................................. 5
</TABLE>
MARKETABLE SECURITIES
In accordance with Financial Accounting Standards Board Statement No. 115,
AETC determines the classification of securities as held-to-maturity or
available-for-sale at the time of purchase, and reevaluates such designation as
of each balance sheet date. Securities are classified as held-to-maturity when
AETC has the positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at cost, adjusted for amortization of
premiums and discounts to maturity. Marketable securities not
F-8
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
classified as held-to-maturity are classified as available-for-sale.
Available-for-sale securities are carried at fair value, with unrealized gains
and losses, net of tax, reported as a separate component of stockholder's
equity. Realized gains and losses are included in other income. The cost of
securities sold is based on the specific identification method.
CASH EQUIVALENTS
Cash equivalents consist of short-term, highly liquid investments which are
readily convertible into cash.
INVENTORY
Inventory primarily consists of fuel, parts and supplies which are valued at
the lower of cost or market value. Cost is determined on a first-in, first-out
("FIFO") basis.
TRANSPORTATION CONTRACT RIGHTS
AETC has acquired certain transportation contract rights with respect to
revenue contracts and travel routes. Such costs are amortized utilizing the
straight-line method over five years. Accumulated amortization at June 30, 1996
and 1997 was $4,312,877 and $1,301,917, respectively.
DEFERRED FINANCING AND OTHER COSTS
Deferred financing costs are amortized over the life of the related debt.
Other costs are amortized on a straight-line basis over five years. Accumulated
amortization at June 30, 1996 and 1997 was $345,334 and $560,040, respectively.
INCOME TAXES
AETC follows the liability method under Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." The primary
objectives of accounting for taxes under SFAS 109 are to (a) recognize the
amount of tax payable for the current year and (b) recognize the amount of
deferred tax liability or asset for the future tax consequences of events that
have been reflected in AETC's financial statements or tax returns.
AETC files consolidated federal and state income tax returns with its parent
and fellow subsidiaries. The income tax charge allocated to AETC is based upon
the proportion of AETC's income to that of the consolidated group, which
approximates the charge which would be incurred by AETC on a stand-alone basis.
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 and disclosures of certain assets
and liabilities. Actual results could differ from those estimates.
F-9
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments including cash and cash
equivalents, restricted cash, accounts receivable including retainage, notes
receivable, accounts payable, accounts payable to creditors and long-term debt
approximated fair value as of June 30, 1996 and 1997 due to either short
maturity or terms similar to those available to similar companies in the open
market. Marketable securities are valued at quoted market value.
LONG-LIVED ASSETS
Long-lived assets, such as property and equipment, are evaluated for
impairment when events or changes in circumstances indicate that the carrying
amounts of the assets may not be recoverable through the estimated undiscounted
future cash flows from the use of these assets. When any such impairment exists,
the related assets will be written down to their fair value. This policy is in
accordance with Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets to be Disposed Of," which became
effective for fiscal 1997. No write-downs have been necessary through June 30,
1997.
EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
No. 130"), which establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No. 130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.
SFAS No. 130 is effective for financial statements for periods beginning
after December 15, 1997 and requires comparative information for earlier years
to be restated. Management does not expect such additional disclosures to be
significant. Results of operations and financial position will be unaffected by
implementation of this standard.
4. RETAINAGE
Pursuant to certain municipal school bus contracts, certain contractual
amounts (retainage) are withheld from billings as a guarantee of performance by
AETC. At June 30, 1996, the majority of retainage ($6,272,177 of $6,785,733) was
classified as current since AETC elected to replace its retainage with a
performance security bond and, at June 30, 1997, all retainage is classified as
current. All current retainage is included in accounts receivable in the
accompanying consolidated balance sheets.
5. RESTRICTED CASH AND CASH EQUIVALENTS
Restricted cash and cash equivalents at June 30, 1996 consisted of a
$1,120,000 U.S. Treasury Note used as collateral for a letter of credit issued
in connection with AETC's workmen's compensation, self insurance deductible
reimbursement plan and a $750,000 segregated money market account issued as
collateral in connection with AETC's banking facility with Fleet Capital
Corporation.
F-10
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. RESTRICTED CASH AND CASH EQUIVALENTS (CONTINUED)
At June 30, 1997, restricted cash and cash equivalents consisted of a
$1,120,000 of U.S. Treasury Note and $1,200,000 of commercial paper used as
collateral for letters of credit issued in connection with AETC's workmen's
compensation and vehicle insurance deductible reimbursement plans, respectively.
Included in cash and cash equivalents is $1,564,211 and $1,307,842 at June
30, 1996 and 1997, respectively, which represents cash equivalents of a captive
insurance company subsidiary which are only available for use by that
subsidiary.
6. PROPERTY, PLANT AND EQUIPMENT
Property plant and equipment consists of the following:
<TABLE>
<CAPTION>
JUNE 30,
------------------------------
<S> <C> <C>
1996 1997
-------------- --------------
Land (Note 17)............................................... $ 5,684,372 $ 8,484,373
Building and improvements.................................... 12,013,276 15,516,059
Construction-in-progress..................................... 2,249,815 --
Transportation equipment..................................... 93,879,673 112,863,875
Machinery and equipment...................................... 6,533,367 9,138,859
Furniture and fixtures....................................... 1,114,322 1,801,002
-------------- --------------
121,474,825 147,804,168
Less: Accumulated depreciation............................... 63,281,110 72,836,574
-------------- --------------
$ 58,193,715 $ 74,967,594
-------------- --------------
-------------- --------------
</TABLE>
7. MARKETABLE SECURITIES
The amortized cost and estimated fair value of the marketable securities are
as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------------------
<S> <C> <C> <C>
GROSS
UNREALIZED
COST GAIN FAIR VALUE
------------ ---------- ------------
Available-for-sale:
Equity securities................................... $ 2,467,651 $ 136,918 $ 2,604,569
U.S. Treasury and other U.S. government debt
securities........................................ 4,054,254 3,722 4,057,976
Corporate debt securities........................... 1,218,456 1,392 1,219,848
------------ ---------- ------------
Total available-for-sale.......................... 7,740,361 142,032 7,882,393
Less: Cash equivalents.............................. 2,712,696 -- 2,712,696
------------ ---------- ------------
Total marketable securities....................... $ 5,027,665 $ 142,032 $ 5,169,697
------------ ---------- ------------
------------ ---------- ------------
</TABLE>
The above marketable securities are held by a captive insurance subsidiary
and are available for use only by that company.
F-11
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. MARKETABLE SECURITIES (CONTINUED)
Of the marketable securities, while all are available for use in the
ordinary course of business of the captive insurance company subsidiary,
$1,030,000 has been classified as current in accordance with that subsidiary's
cash on hand and expected payments of claims in the next fiscal year.
Contractual maturity dates of the above securities are as follows:
<TABLE>
<CAPTION>
COST FAIR VALUE
------------ ------------
<S> <C> <C>
January-May 1998.................................................. $ 3,163,362 $ 3,163,547
August 2005....................................................... 149,531 149,695
July 2006......................................................... 298,201 298,653
November 2007..................................................... 293,070 292,028
November 2008..................................................... 317,935 316,170
July 2014......................................................... 21,060 21,240
February 2026..................................................... 1,029,551 1,036,491
No maturity date (equity securities).............................. 2,467,651 2,604,569
------------ ------------
$ 7,740,361 $ 7,882,393
------------ ------------
------------ ------------
</TABLE>
Realized gains or losses on marketable securities through June 30, 1997
amounted to $125,000 and are included in other income.
F-12
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. DEBT
The following represents the debt outstanding at June 30, 1996 and 1997:
<TABLE>
<CAPTION>
JUNE 30,
------------------------------
<S> <C> <C> <C>
1996 1997
-------------- --------------
10 3/4% senior secured notes, due February 2004, with interest
payable on February 1 and August 1 annually(A)..................
$ -- $ 110,000,000
The following items denoted by an asterisk (*) were repaid prior
to June 30, 1997 in connection with the refinancing referred to
in(A):
(*) 8%-11.88% notes payable in connection with
transportation equipment(B).......................... 27,870,715 --
(*) 9.5% mortgage on real estate located in Bronx, New
York................................................. 1,098,926 --
(*) 9.5% mortgage on real estate, located in Oceanside, New
York................................................. 967,211 --
(*) 10% mortgage on real estate located in Staten Island,
New York............................................. 829,767 --
(*) 9% mortgage on real estate located in Setauket, New
York................................................. 381,130 --
(*) 8% notes payable....................................... 530,810 --
(*) 8.75% note payable..................................... 290,400 --
(*) 9.5% mortgage on real estate located in Queens, New
York................................................. 1,468,980 --
(*) 7% note payable issued in connection with acquisition
of subsidiaries...................................... 1,997,137 --
(*) 9.75% mortgage on real estate located in St. Louis,
Missouri............................................. 643,925 --
(*) 9.0% mortgage on real estate located in St. Louis,
Missouri............................................. 43,335 --
(*) Prime plus 2% construction loan for buildings being
constructed in Staten Island, New York............... 392,879 --
(*) Term loan.............................................. 8,743,663 --
(*) Revolving line of credit(C)............................ 13,505,039 --
Other............................................................. 891,281 628,223
-------------- --------------
59,655,198 110,628,223
Less: Current portion............................................. 11,328,497 140,008
-------------- --------------
$ 48,326,701 $ 110,488,215
-------------- --------------
-------------- --------------
</TABLE>
- ------------------------
(A) On February 4, 1997, AETC issued $110,000,000 of 10 3/4% senior secured
notes due 2004. The net proceeds from the sale of such notes were used to
repay its existing indebtedness, buy-out of certain leases and for certain
other corporate purposes. Such notes contain certain covenants, including
limitations on payments of dividends. The notes were required to be
registered with the Securities and Exchange Commission by July 3, 1997. Due
to the subsequent events described in Note 17, such
F-13
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. DEBT (CONTINUED)
registration did not occur by its given deadline, and AETC is required to
pay liquidated damages of $5,500 per week for the first 90 days and $11,000
per week thereafter until such registration is effective.
Penalties incurred upon the above-mentioned early extinguishment of debt and
related unamortized deferred finance charges written off have been recorded
net of their related tax benefits as extraordinary items.
(B) Includes capitalized leases of $7,565,726 and $-0- at June 30, 1996 and
1997, respectively, relative to vehicles with net book values of $7,532,724
and $-0-, respectively, as of the same dates.
(C) In connection with the refinancing referred to in (A), the line of credit at
June 30, 1996 was repaid and replaced with a $30 million revolving credit
facility with a different lender. Borrowings under the revolving credit
facility are available for working capital and general corporate purposes,
including letters of credit, subject to the borrowing conditions contained
therein.
The revolving credit facility is secured by first priority liens on the cash,
accounts receivable, inventory, general intangibles and documents and
instruments related thereto of the Company and its restricted subsidiaries.
The revolving credit facility expires on February 4, 2000, unless extended.
The interest rate per annum applicable to the revolving credit facility will
be the prime rate, as announced by CoreStates Bank N.A., plus 0.75% or, at
the Company's option, the adjusted Eurodollar rate (as defined) plus 2.75%,
and provides for a one-time 0.25% reduction in rates upon the Company
reaching certain profitability levels. The Company is required to pay
certain fees in connection with the revolving credit facility, including but
not limited to an unused line fee of 0.375% on the undrawn portion of the
first $22 million of the revolving credit commitment.
The revolving credit facility contains negative covenants similar to those
contained in the senior notes referred to in (A) and customary events of
default.
As of June 30, 1997, the Company had not drawn on this facility.
Aggregate yearly maturities of long-term debt as of June 30, 1997, after the
refinancing described in Note 8(a), are as follows:
<TABLE>
<CAPTION>
TOTAL
--------------
<S> <C>
1998.......................................................................... $ 140,008
1999.......................................................................... 154,097
2000.......................................................................... 169,609
2001.......................................................................... 164,509
2002.......................................................................... --
Thereafter.................................................................... 110,000,000
--------------
Total..................................................................... $ 110,628,223
--------------
--------------
</TABLE>
F-14
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. INCOME TAXES
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------
<S> <C> <C> <C>
1995 1996 1997
---------- ---------- -------------
Current:
Federal.............................................. $ 483,000 $ 687,000 $ --
State and local...................................... 202,000 176,000 131,000
---------- ---------- -------------
685,000 863,000 131,000
Deferred taxes......................................... 294,000 (104,000) (1,490,000)
---------- ---------- -------------
$ 979,000 $ 759,000 $ (1,359,000)
---------- ---------- -------------
---------- ---------- -------------
</TABLE>
Deferred tax liabilities are comprised of the following:
<TABLE>
<CAPTION>
JUNE 30,
--------------------------
<S> <C> <C>
1996 1997
------------ ------------
Deferred tax liabilities:
Depreciation.................................................... $ 6,794,000 $ 9,808,000
------------ ------------
Deferred tax assets:
Capital leases.................................................. (219,000) --
Allowance for doubtful receivables.............................. -- (105,000)
Loss and tax credit carryforwards............................... (4,685,000) (9,303,000)
------------ ------------
(4,904,000) (9,408,000)
------------ ------------
Deferred tax liabilities (net).................................... $ 1,890,000 $ 400,000
------------ ------------
------------ ------------
</TABLE>
The actual tax expense (benefit) differs from the tax expense computed by
applying the U.S. corporate rate of 34% as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------
<S> <C> <C> <C>
1995 1996 1997
---------- ---------- -------------
Tax expense (benefit) at statutory rate................ $ 853,000 $ 734,000 $ (1,028,000)
Adjustments to tax contingency reserve related to
bankruptcy issues.................................... (70,000) (136,000) --
State and local tax expense (benefit).................. 202,000 176,000 (331,000)
Other.................................................. (6,000) (15,000) --
---------- ---------- -------------
Actual tax expense (benefit)........................... $ 979,000 $ 759,000 $ (1,359,000)
---------- ---------- -------------
---------- ---------- -------------
</TABLE>
F-15
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. INCOME TAXES (CONTINUED)
At June 30, 1997, AETC had the following carryforwards available.
<TABLE>
<CAPTION>
TAX REPORTING EXPIRATION DATE
PURPOSES THROUGH
------------- ---------------
<S> <C> <C>
Investment tax credits available to offset certain future
taxes....................................................... $ 967,000 2001
Net operating loss carryforwards.............................. 13,350,000 2012
Alternative minimum tax credits available to offset certain
future taxes................................................ 2,267,000 None
------------- -----
------------- -----
</TABLE>
10. FORGIVENESS OF DEBT
In fiscal 1995, the Company had forgiveness of debt of $1,054,000 as a
result of the resolution of Federal claims following a reorganization in fiscal
1994.
11. RELATED PARTY TRANSACTIONS
AETC had amounts payable to the parent company of $82,932 and $17,405 at
June 30, 1996 and 1997, respectively. AETC had notes receivable from affiliated
companies of $4,640,536 and $4,790,379 at June 30, 1996 and 1997, respectively.
In connection with an amendment to the notes issued January 1, 1997, the notes
accrue interest, commencing January 1, 1997, at 6.8% payable at maturity on July
1, 2004. During the year ended June 30, 1996, AETC received management fee
income from affiliated companies of $255,000. No management fees were charged to
or received from related parties during the other periods presented. During
1997, AETC incurred rent expense of $224,550 in terms of operating leases of
real property from affiliated companies.
12. COMMITMENTS AND CONTINGENCIES
LEASES
Minimum rental commitments as of June 30, 1997 for noncancellable equipment
and real property operating leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDING JUNE 30,
--------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION
REAL PROPERTY EQUIPMENT TOTAL
------------- -------------- -------------
1998................................................ $ 1,887,538 $ 2,298,546 $ 4,186,084
1999................................................ 1,739,191 1,777,038 3,516,229
2000................................................ 1,435,849 1,342,829 2,778,678
2001................................................ 1,403,551 755,761 2,159,312
2002 and thereafter................................. 7,577,330 713,525 8,290,855
------------- -------------- -------------
$ 14,043,459 $ 6,887,699 $ 20,931,158
------------- -------------- -------------
------------- -------------- -------------
</TABLE>
During the year ended June 30, 1997, as part of its normal course of
business, AETC entered into various rental and purchase agreements for
replacement vehicles and additional vehicles to satisfy new transportation
contracts.
F-16
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Total rental charges included in cost of operations were $3,358,818,
$4,539,202 and $5,301,131 for the years ended June 30, 1995, 1996 and 1997,
respectively.
LITIGATION
AETC is a defendant with respect to various claims involving accidents and
other issues arising in the normal conduct of its business. Management and
counsel believe the ultimate resolution of these claims will not have a material
impact on the financial statements of AETC.
EMPLOYMENT AND CONSULTING AGREEMENTS
AETC is obligated under various employment and consulting agreements with
certain officers including the chief financial officer, which provide for base
annual compensation aggregating $1,382,666 subject to increase by a percentage
equal to the percentage increase in the Regional Consumer Price Index with a
maximum of 5% of base salary. With the exception of the agreement with the chief
financial officer, the agreements extend through January 15, 2002, subject to an
extension by the Board of Directors for up to three more years. Six months of
severance pay is payable in the event of nonrenewal of the agreements. The
agreement with the chief financial officer extends through January 1998.
OUTSTANDING LETTERS OF CREDIT
Letters of credit totaling approximately $3,527,000 and $2,591,000 were
outstanding as of June 30, 1996 and 1997, respectively. The letters of credit
serve primarily as security in connection with financial obligations.
PERFORMANCE SECURITY
The Company's school bus transportation contracts generally provide for
performance security in one or more of the following forms: performance bonds,
letters of credit and cash retainages. Under current arrangements, the Company
secures the performance of its New York Board of Education contracts through the
use of performance bonds plus cash retainages of 5% of amounts due to the
Company. In most instances, the Company has opted to satisfy its security
performance requirements by posting performance bonds. At June 30, 1997, the
Company had provided performance bonds aggregating approximately $20 million.
13. SALE OF BUS ROUTE AND BUSES/NOTES RECEIVABLE
In January 1994, AETC, through its wholly-owned subsidiary, Atlantic Express
Coachways, Inc. ("Coachways"), sold commuter bus routes that operated from
Staten Island to New York City in exchange for a promissory note in the amount
of $800,000 bearing interest at a rate of 6% per annum through December 1998.
14. EMPLOYEE SAVINGS PLAN
AETC offers an Employee Savings Investment Plan (the "Plan") under which
eligible participants can invest up to 15% of base earnings subject to a
specified maximum among several investment alternatives. An employer matching
contribution up to a maximum of 2.5% of the employee's compensation is also
F-17
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. EMPLOYEE SAVINGS PLAN (CONTINUED)
invested. AETC's contribution was approximately $69,000, $69,000 and $64,000 for
the years ended June 30, 1995, 1996 and 1997, respectively.
15. MAJOR CUSTOMER AND CONCENTRATION OF CREDIT RISK
For the years ended June 30, 1995, 1996 and 1997, revenues derived from the
Board of Education of the City of New York were approximately 57%, 50%, and 47%,
respectively. As of June 30, 1996 and 1997, AETC had accounts receivable
including retainage from this customer of $13,068,868 and $11,057,558,
respectively. Fiscal 1997 revenues and accounts receivable include $750,000
relative to this customer in connection with lost revenues due to delayed school
openings in September 1993. During fiscal 1995, contracts with this customer
were extended through the year 2000.
At June 30, 1996 and 1997, substantially all cash and cash equivalents were
on deposit with one major financial institution.
16. ACQUISITIONS
During the years ended June 30, 1995, 1996 and 1997, AETC acquired the
operations of several companies. Such investments included the purchase of
contract rights and vehicles. The acquisitions were not material to the
consolidated financial statements.
17. SUBSEQUENT EVENTS
AETC signed a definitive agreement, effective July 1, 1997, to acquire 100%
of the common stock of two companies engaged in the distribution of buses and
school bus contract operations. Total consideration consisted of $26.5 million
of cash, less long-term indebtedness, which, as of June 30, 1997, was $4.8
million and the issuance of a $2.2 million note and mortgage relating to certain
real property.
In May 1997, the Los Angeles Unified School District awarded contracts to
AETC. The contracts are for five years, commencing in September 1997. AETC
estimates that entrance into the Los Angeles market will require approximately
$12.6 million of capital expenditures, including approximately $2.9 million for
the purchase of real property, which had already been paid by June 30, 1997,
$8.5 million for the purchase of vehicles and $1.2 million for real property
improvements.
In connection with the above, in August 1997, AETC issued a further
$40,000,000 aggregate principal amount of 10 3/4% senior secured notes due 2004.
The notes are required to be registered with the Securities and Exchange
Commission concurrently with the $110,000,000 notes referred to in Note 8(a).
F-18
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ----------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
3.1 Restated Certificate of Incorporation of the Company............................................
3.2 By-laws of the Company..........................................................................
10.1 Registration Rights Agreement dated February 4, 1997 between the Company, the Guarantors (as
defined therein) and the Initial Purchaser....................................................
10.2 Loan and Security Agreement dated February 4, 1997 by and between Congress Financial
Corporation, certain subsidiaries of the Company as borrowers and the Company as guarantor....
10.3 General Security Agreement dated February 4, 1997 by and among the Company and the Guarantors
(as defined therein) in favor of Congress Financial Corporation...............................
10.4 Collateral Assignment of Trademarks (Security Agreement) dated as of February 4, 1997 between
the Company and Congress Financial Corporation................................................
10.5 Employment Agreement dated as of January 21, 1997 between the Company and Domenic Gatto.........
10.6 Employment Agreement dated as of January 21, 197 between the Company and Michael Gatto..........
10.7 Employment Agreement dated as of January 21, 1997 between the Company and Patrick Gatto.........
10.8 Employment Agreement dated as of January 21, 1997 between the Company and Nathan Schlenker......
10.9 Lease dated August 5, 1986 between Bonnie Heights Realty Corp. and Amboy Bus Co., Inc. and
Notices of Option to Renew dated December 26, 1989 and May 10, 1996 respectively, by Amboy Bus
Co., Inc. for the facility at 1752 Shore Parkway, Brooklyn, New York..........................
10.10 Lease dated June 30, 1993 by and between Rockhill Limited Partnership and Mayflower Contract
Services, Inc. and Atlantic Express of Missouri Inc. for the facility at 6810 Prescott Street,
St. Louis, Missouri...........................................................................
10.11 Lease dated August 1, 1995 between Stamar Realty Corp. and 180 Jamaica Corp. for the facility at
107-10 180th Street, Jamaica, New York........................................................
10.12 The Board of Education of the City of New York, serial no. 0070, dated July 19, 1979............
10.13 The Board of Education of the City of New York, serial no. 8108.................................
10.14 Extension and Eighth Amendment of Contract for Special Education Pupil Transportation Services,
dated June 19, 1996 by and between The Board of Education of the City of New York, Amboy Bus
Co., Inc. and Staten Island Bus Co............................................................
10.15 The Board of Education of the City of New York, serial no. 9888.................................
10.16 Extension and Sixth Amendment of Contract for Regular Education Pupil Transportation Services,
dated January 2, 1996 by and between The Board of Education of the City of New York and Amboy
Bus Co., Inc..................................................................................
10.17 New York City Transit Authority Contract #94E5461B, Five Borough Paratransit Carrier Service:
Part I Contract Terms and Conditions and Attachment I: Price Schedule.........................
10.18 Indenture dated as of February 4, 1997, including form of Note, between the Company, the
Guarantors (as defined therein) and The Bank of New York, as trustee..........................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ----------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
10.19 First Amendment to the Security Agreement, dated as of August 14, 1997 among the Company, the
Guarantors (as defined therein) and in favor of Congress Financial Corporation................
10.20 First Supplemental Indenture, dated as of August 14, 1997, between the Company, the Guarantors
(as defined therein) and The Bank of New York (as trustee)....................................
21 Subsidiaries of the Company.....................................................................
27 Financial Data Schedule.........................................................................
</TABLE>
<PAGE>
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
ATLANTIC EXPRESS TRANSPORTATION CORP.
Under Section 807 of the Business Corporation Law
ATLANTIC EXPRESS TRANSPORTATION CORP., a corporation organized and
existing under the laws of the State of New York, does hereby certify as
follows:
FIRST: That the name of the Corporation is ATLANTIC EXPRESS
TRANSPORTATION CORP. The date of filing of its original Certificate of
Incorporation with the Secretary of State of the State of New York was December
20, 1996.
SECOND: That this Restated Certificate of Incorporation amends and
restates the Certificate of Incorporation of this Corporation as follows:
1. By adding Section headings;
2. By adding a new Article VI with respect to the power of the
Board of Directors and the number and qualifications of
Directors;
3. By amending former Article VI concerning indemnification of
directors, officers and others and renumbering such article as
a new Article VII;
4. By amending former Article VII concerning personal liability
of directors with a new Article VIII entitled "Director
Liability to the Corporation".
5. By adding new Article IX and X and by renumbering former
Article VIII as a new Article XI.
THIRD: That the text of the Certificate of Incorporation of Atlantic
Express Transportation Corp. is hereby amended and restated, to read in full as
follows:
ARTICLE I
NAME
The name of this Corporation is ATLANTIC EXPRESS TRANSPORTATION
CORP.
<PAGE>
ARTICLE II
CORPORATE PURPOSES
The purposes for which this corporation is formed are as follows:
To engage in any lawful act or activity for which corporations may be formed
under the Business Corporation Law. This Corporation is not formed to engage in
any act or activity for which approval by any state department, official, board,
agency or other body is required without first being obtained.
The corporation, in furtherance of its corporate purposes above set forth, shall
have all of the powers enumerated in Section 202 of the Business Corporation
Law, subject to any limitations provided in the Business Corporation Law or any
other statute of the State of New York.
ARTICLE III
REGISTERED OFFICE
The office of the Corporation is to be located in the County of
Richmond, State of New York.
ARTICLE IV
CAPITAL STOCK
(1) Shares; Class and Series Authorized.
The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is two hundred (200) shares with no
par value.
ARTICLE V
AGENT FOR SERVICE
The Secretary of State is designated as agent of the Corporation upon whom
the process of any action or proceeding against it may be served. The postal
address to which the Secretary of State shall mail a copy of the process against
the Corporation served upon
2
<PAGE>
him is c/o Silverman, Collura & Chernis, P.C., 381 Park Avenue South, New York,
New York 10016.
ARTICLE VI
DIRECTORS
(1) Power of the Board of Directors. The property and business of
the Corporation shall be controlled and managed by or under the direction
of its Board of Directors. In furtherance, and not in limitation of the
powers conferred by the laws of the State of New York, the Board of
Directors is expressly authorized:
(a) To make, alter, amend or repeal the By-Laws of the Corporation;
provided that no By-Laws hereafter adopted shall invalidate any prior act
of the Directors that would have been valid if such By-Laws had not been
adopted;
(b) To determine the rights, powers, duties, rules and procedures
that affect the power of the Board of Directors to manage and direct the
property, business and affairs of the Corporation, including the power to
elect, appoint and empower the officers and other agents of the
Corporation, and to determine the time and place of, and the notice
requirements for Board meetings, as well as the manner of taking Board
action; and
(c) To exercise all such powers and do all such acts as may be
exercised by the Corporation, subject to the provisions of the laws of the
State of New York, this Restated Certificate of Incorporation, and the
By-Laws of the Corporation.
(2) Number and Qualifications of Directors. The number of directors
constituting the entire Board of Directors shall be fixed from time to
time by resolution of the Board of Directors but shall not be less than
three. Directors shall be elected to hold office for a term of one year.
As used in this Restated Certificate of Incorporation, the term "entire
Board of Directors" means the total number of Directors fixed in the
manner provided in this Article VI Section (2) and in the By-Laws.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
3
<PAGE>
(1) Action Not By or on Behalf of the Corporation. The Corporation
shall indemnify any person, made, or threatened to be made, a party to an
action or proceeding other than one by or in the right of the Corporation
to procure a judgment in its favor, whether civil or criminal, including
an action by or in the right of any other Corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer of the
Corporation served in any capacity at the request of the Corporation, by
reason of the fact that he, his testator or intestate, was a director or
officer of the Corporation, or served such other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise in any
capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorney's fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal therein,
if such director or officer acted, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
Corporation or any partnership, joint venture, trust employee benefit plan
or other enterprise, not opposed to, the best interests of the Corporation
and, in criminal actions or proceedings, in addition, had no reasonable
cause to believe that his conduct was unlawful.
(2) Termination of any Action Does Not Create Presumption. The
termination of any such civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such
director or officer did not act, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
Corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise, not opposed to, the best interests of the
Corporation or that he had reasonable cause to believe that his conduct
was unlawful.
(3) Action By or on Behalf of the Corporation. The Corporation shall
indemnify any person made, or threatened to be made, a party to an action
by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he, his testator or intestate, is or was a
director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer of any other
Corporation of any type or kind, domestic or foreign, of any partnership,
joint venture, trust, employee benefit plan or other enterprise, against
amounts paid in settlement and reasonable expenses, including attorneys'
fees, actually and necessarily incurred by him in connection with the
defense or settlement of such action, or in connection with an appeal
therein if such director or officer acted, in good faith, for a purpose
which he reasonably believed to be in, or, in the case of service for any
other Corporation or any partnership, joint venture, trust, employee
benefit plan or other enterprise, not opposed to, the best interests of
the Corporation, except that no indemnification under this Article VII,
Section (3) shall be made in respect of (1) a
4
<PAGE>
threatened action, or a pending action which is settled or otherwise
disposed of, or (2) any claim issue or matter as to which such person
shall have been adjudged to be liable to the Corporation, unless and only
to the extent that the court on which the action was brought, or, if no
action was brought, any court of competent jurisdiction, determines upon
application that, in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such portion of the
settlement amount and expenses as the court deems proper.
(4) Service to an Employee Benefit Plan. For the purpose of this
Article VII, the Corporation shall be deemed to have requested a person to
serve an employee benefit plan where the performance by such person of his
duties to the Corporation also imposes duties on, or otherwise involves
services by, such person to the plan or participants or beneficiaries of
the plan; excise taxes assessed on a person with respect to an employee
benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit
plan in the performance of such person's duties for a purpose reasonably
believed by such person to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Corporation.
ARTICLE VIII
DIRECTOR LIABILITY TO THE CORPORATION
(a) A Director's liability to the Corporation for breach of duty to
the Corporation or its stockholders shall be limited to the fullest extent
permitted by New York law as now in effect or hereafter amended. In
particular, no Director of the Corporation shall be liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the Director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 719 of the
New York Business Corporation Law, as the same exists or hereafter may be
amended, or (iv) for any transaction from which the Director derived an
improper personal benefit.
(b) Any repeal or modification of the foregoing paragraph (a) by the
stockholders of the Corporation entitled to vote thereon shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
(c) If the Business Corporation Law of the State of New York is
amended to authorize corporate action further eliminating or limiting the
liability of directors, then a director of the Corporation, in addition to
the circumstances in which he is not now
5
<PAGE>
liable, shall be free of liability to the fullest extent permitted by the
Business Corporation Law of the State of New York, as so amended.
ARTICLE IX
RESERVATION OF RIGHT TO AMEND CERTIFICATE
OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all the provisions of this
Restated Certificate of Incorporation and all rights and powers conferred in
this Restated Certificate of Incorporation on stockholders, directors and
officers are subject to this reserved power.
ARTICLE X
TRANSACTIONS WITH DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or more
of its directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
board which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose if (a) the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors, and the Board of Directors in good faith
authorizes the contract or transaction by the affirmative votes of a majority of
the disinterested directors, even though the disinterested directors be less
than a quorum, or (b) the material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of such stockholders, or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified by the Board of Directors or the stockholders entitled to
vote thereon. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors which authorizes the
contract or transaction.
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<PAGE>
ARTICLE XI
PERIOD OF DURATION
The period of duration of the Corporation shall be perpetual.
FOURTH: That the capital of the Corporation will not be reduced
under or by reason of any amendment in this Restated Certificate of
Incorporation.
FIFTH: That this Restated Certificate of Incorporation has been duly
authorized by a vote of the Board of Directors of the Corporation followed by
the vote of the shareholders of the Corporation entitled to vote therefor.
IN WITNESS WHEREOF, Atlantic Express Transportation Corp.. has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by Domenic Gatto, its President, Chief Executive Officer and Chairman of
the Board and by Michael Gatto, its Secretary this 30th day of January, 1997.
ATLANTIC EXPRESS TRANSPORTATION CORP.
By: /s/ Domenic Gatto
---------------------------------------
Domenic Gatto
President, Chief Executive Officer
and Chairman of the Board
By: /s/ Michael Gatto
--------------------------------------
Michael Gatto,
Secretary
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<PAGE>
VERIFICATION
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
I Domenic Gatto, being duly sworn, depose and state that I am the
President, Chief Executive Officer and Chairman of the Board of Atlantic Express
Transportation Corp., the corporation named in and described in the foregoing
certificate and that I have read the foregoing certificate and know the contents
thereof to be true, except as to the matters therein stated to be alleged upon
information and belief, and as to those matters, I believe them to be true.
/s/ Domenic Gatto
_______________________________________
DOMENIC GATTO
Sworn to before me this
day of January, 1997
/s/
________________________________
NOTARY PUBLIC
<PAGE>
Restated Certificate of Incorporation of
ATLANTIC EXPRESS TRANSPORTATION CORP.
pursuant to Section 805 of the Business Corporation Law
Filed By: Silverman, Collura & Chernis, P.C.
381 Park Avenue South Suite 1601
New York, New York 10016
<PAGE>
Exhibit 3.2
BY-LAWS OF ATLANTIC EXPRESS
TRANSPORTATION CORP.
ARTICLE I - OFFICES
The office of the Corporation shall be located in New York State in the
County designated in the Certificate of Incorporation. The Corporation may have
other offices within or without the State of New York as the Board of Directors
may designate or as the business of the Corporation may require.
ARTICLE II - MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings: The annual meeting of the shareholders of the
Corporation shall be held within five months after the close of the fiscal year
of the Corporation, for the purpose of electing directors, and for the
transaction of such other business as may come before the meeting.
Section 2 - Special Meetings: Special meetings of the shareholders for any
purpose(s) may be called by the Board of Directors or by the President, and by
the President or the Secretary at the written request of the holders of not less
than ten percent (10%) of all outstanding shares entitled to vote thereat, or as
otherwise required under the provisions of the Business Corporation Law.
Section 3 - Place of Meetings: All meetings of shareholders shall be held
at the principal office of the Corporation, or at such other places within or
without the State of New York as shall be designated by the Board of Directors,
or by written request of all shareholders entitled to vote at such meeting.
Section 4 - Notice of Meetings: (a) Written notice of each annual or
special meeting of shareholders stating the place, day and hour of the meeting
shall be given, personally or by mail, not less than ten (10) nor more than
fifty (50) days before the date of the meeting, to each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. Notice of a special meeting shall also
state the purpose(s) for which the meeting is called, and shall indicate by whom
the meeting was called. If, at any meeting, action is proposed to be taken that
would entitle shareholders to receive payment for their shares pursuant to the
Business Corporation Law, the notice of such meeting shall include a statement
of that purpose. If mailed, such notice shall be directed to each such
shareholder at his address, as it appears on the records of the shareholders of
the Corporation, unless he has previously filed with the Secretary of the
Corporation a written request that notices intended for him be mailed to some
other address, in which case, it shall be mailed to the requested address.
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of notice and prior to the meeting, or
to any shareholder who attends the meeting, in person or by proxy, or to any
shareholder who, in person or by
<PAGE>
proxy submits a signed waiver of notice before or after the meeting. Notice of
an adjourned meeting need not be given, unless otherwise required by statute.
Section 5 - Quorum: Except as otherwise provided herein, or by statute, or
in the Certificate of Incorporation or amendments thereto (hereinafter
collectively referred to as the "Certificate of Incorporation"), at all meetings
of shareholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of shareholders holding of record a majority of
the outstanding shares of the Corporation entitled to vote shall constitute a
quorum for the transaction of any business. The withdrawal of any shareholder
after the commencement of a meeting shall have no effect on the existence of a
quorum, after a quorum has been established at such meeting. If less than a
majority of the outstanding shares are represented at a meeting, a majority of
the shares so represented may adjourn the meeting. At an adjourned meeting at
which a quorum is present, any business may be transacted which might have been
transacted at the meeting as originally noticed.
Section 6 - Voting: (a) Except as otherwise provided by statute or by the
Certificate of Incorporation, any corporate action, other than the election of
directors, to be taken by vote of the shareholders shall be authorized by a
majority of votes cast at a meeting of shareholders by the holders of shares
entitled to vote thereon.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
(c) Each shareholder entitled to vote or to express consent or dissent
without a meeting may do so by proxy executed in writing by the shareholder or
by his duly authorized attorney in fact. No proxy shall be valid after the
expiration of eleven months from the date of its execution, unless the person
executing it shall have specified therein the length of time it is to continue
in force. Such instrument shall be filed with the Secretary at the meeting and
included with the records of the Corporation.
(d) Any resolution in writing, signed by all of the shareholders entitled
to vote thereon, shall constitute action by such shareholders as therein
expressed, with the same force and effect as if the resolution had been passed
by unanimous vote at a called meeting of shareholders and such resolution shall
be inserted in the Minute Book of the Corporation under its proper date.
ARTICLE III - DIRECTORS
Section 1 - Number, Election and Term of Office: (a) The number of the
directors of the Corporation shall not be less than three.
(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a majority of the votes cast at a
meeting of shareholders, by the holders of shares entitled to vote in the
election.
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<PAGE>
(c) Each director shall hold office until the next annual meeting of the
shareholders, and until his successor is elected and qualified, or until his
prior death, resignation or removal.
Section 2 - Duties and Powers: The Board of Directors shall be responsible
for the management of the business affairs of the Corporation, and may exercise
all powers of the Corporation, except those powers expressly conferred upon or
reserved to the shareholders by the Certificate of Incorporation or by statute.
Section 3 - Annual and Regular Meetings: Notice: (a) A regular annual
meeting of the Board of Directors shall be held immediately following the annual
meeting of shareholders, at the place of such annual meeting of shareholders.
(b) The Board of Directors may provide by resolution for the holding of
other regular meetings of the Board of Directors, and may fix the time and place
thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting, notice of such action shall be given to
each director who shall not have been present at the meeting at which such
action was taken within the time limited, and in the manner set forth in
paragraph (b) of Section 4 of this Article III, with respect to special
meetings, unless such notice shall be waived in the manner set forth in
paragraph (c) of such Section 4.
Section 4 - Special Meetings; Notice: (a) Special meetings of the Board of
Directors shall be held whenever called by the President or by one of the
directors, at such time and place as may be specified in the respective notices
or waivers of notice thereof.
(b) Notice of special meetings shall be delivered by mail, telegram, radio
or cable to each director at his residence or business address at least two (2)
days before the day on which the meeting is to be held, or shall be delivered to
him personally or given to him orally, not later than the day before the day on
which the meeting is to be held. A notice, or waiver of notice, except as
required by these By-Laws need not specify the purpose of the meeting.
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting for the express purpose of protesting the
lack of notice to him, or who submits a signed waiver of notice, whether before
or after the meeting. Notice of any adjourned meeting shall not be required to
be given.
Section 5 - Chairman: The Chairman of the Board shall preside at all
meetings of the Board of Directors. If there is no Chairman, or if he is absent,
then the President shall preside, and in his absence, a Chairman chosen by the
directors shall Preside.
Section 6 - Quorum and Adjournments: (a) At all meetings of the Board of
Directors, the presence of a majority of the entire Board shall be necessary to
constitute a quorum for the transaction of business. Participation of any one or
more members of the Board by means of a conference telephone or similar
communications equipment, allowing all persons participating
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<PAGE>
in the meeting to hear each other at the same time, shall constitute presence in
person at any such meeting.
(b) A majority of the directors present at the time and place of any
regular or special meeting, although less than a quorum, may adjourn the meeting
without notice, until a quorum shall be present.
Section 7 - Manner of Acting: (a) At all meetings of the Board of
Directors, each director present shall have one vote, irrespective of the number
of shares of stock, if any, which he may hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or by these By-Laws, the action of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors. Any action authorized, in writing, by all of the directors
entitled to vote thereon and filed with the minutes of the Corporation shall be
the act of the Board of Directors with the same effect as if the action had been
passed by unanimous vote at a meeting of the Board.
Section 8 - Vacancies: Any vacancy in the Board of Directors (unless a
vacancy created by the removal of a director by the shareholders, which shall be
filled by the shareholders at the meeting at which the removal was effected)
shall be filled by a majority vote of the remaining directors, though less than
a quorum, at any regular meeting or special meeting of the Board of Directors
called for that purpose. A director elected to fill a vacancy shall be elected
for the unexpired term of his predecessor in office.
Section 9 - Resignation: Any director may resign at any time by giving
written notice to the Board of Directors, the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or such
officer, and the acceptance of such resignation shall not be necessary to make
it effective.
Section 10 - Removal: A director may be removed with or without cause at
any time by the shareholders, at a special meeting of the shareholders called
for that purpose. A director, elected by vote of the holders of shares of any
class or series, or holders of bonds voting as a class entitled to elect one or
more directors may be removed only by applicable vote of said holders of shares
or bonds.
Section 11 - Salary: No stated salary shall be paid to directors for their
services, but, by resolution of the Board of Directors, a fixed sum and expenses
of attendance may be allowed for attendance at each regular or special meeting
of the Board. Nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 12 - Contracts: (a) No contract or other transaction between this
Corporation and any other corporation shall be impaired, affected or invalidated
nor shall any director be liable in any way by reason of the fact that any one
or more of the directors of this Corporation is or
4
<PAGE>
are interested in, or is a director or officer of such other corporation,
provided that such facts are disclosed or made known to the Board of Directors:
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact or
such interest be disclosed or made known to the Board of Directors, and provided
that the Board of Directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such director at the
meeting at which such action is taken. Such director or directors may be counted
in determining the presence of a quorum at such meeting. This Section shall not
be construed to impair or invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the law applicable thereto.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office: (a) The
officers of the Corporation shall consist of a President, a Secretary, a
Treasurer, and such other officers including a Chairman of the Board of
Directors, and one or more Vice Presidents, as the Board of Directors may deem
advisable. Any officer other than the Chairman of the Board of Directors may be,
but is not required to be, a director of the Corporation. Any two or more
offices may be held by the same person, except the offices of President and
Secretary, unless all the shares of stock of the Corporation are owned by one
person.
(b) The officers of the Corporation shall be elected by the Board of
Directors at the regular annual meeting of the Board following the annual
meeting of shareholders.
(c) Each officer shall hold office until the annual meeting of the Board
of Directors next succeeding his election or as provided for in such officer's
contract with the Corporation, and until his successor shall have been elected
and qualified, or until his death, resignation or removal.
Section 2 - Resignation: An officer may resign at any time by giving
written notice of resignation to the Board of Directors, or to the President or
the Secretary of the Corporation. Unless otherwise specified in such written
notice, such resignation shall take effect upon receipt thereof by the Board of
Directors or by such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
Section 3 - Removal: An officer elected or appointed by the Board may be
removed, either with or without cause, and a successor elected by the Board at
any time.
Section 4 - Vacancies: A vacancy in an office by any reason may at any
time be filled for the unexpired term by the Board of Directors.
Section 5 - Duties of Officers: Officers of the Corporation shall, unless
otherwise provided by the Board of Directors, each have such powers and duties
as generally pertain to
5
<PAGE>
their respective offices as well as such powers and duties as may be set forth
in these By-Laws. The President shall be the chief executive officer of the
Corporation.
Section 6 - Sureties and Bonds: In case the Board of Directors shall so
require, any officer (except officers who own 5% or more of the outstanding
equity securities of the Corporation), employee or agent of the Corporation
shall execute to the Corporation a bond in such sum, and with such surety or
sureties as the Board of Directors may direct, conditioned upon the faithful
performance of his duties to the Corporation, including responsibility for
negligence and for the accounting for all property, funds or securities of the
Corporation which may come into his hands.
Section 7 - Shares of Other Corporations: Whenever the Corporation is the
holder of shares of any other corporation, any right or power of the Corporation
as such shareholder (including the attendance, acting and voting at
shareholders' meetings and execution of waivers, consents, proxies or other
instruments) may be exercised on behalf of the Corporation by the President, any
Vice President, or such other person as the Board of Directors may authorize.
ARTICLE V - SHARES OF STOCK
Section 1 - Certificate of Stock: (a) The certificates representing shares
of the Corporation shall be in such form as shall be adopted by the Board of
Directors, and shall be numbered and registered in the order issued. They shall
bear the holder's name and the number of shares, and shall be signed by (1) the
Chairman or Vice Chairman of the Board or by the President or a Vice President,
and (2) the Secretary or Treasurer, or any Assistant Secretary or Assistant
Treasurer, and may bear the corporate seal.
(b) No certificate representing shares shall be issued until the full
amount of consideration therefor has been paid, except as otherwise permitted by
law.
(c) The Board of Directors may authorize the issuance of fractions of
shares represented by a certificate or uncertificated, which shall entitle the
holder to exercise voting rights, receive dividends and participate in
liquidating distributions, in proportion to the fractional holdings; or it may
authorize the payment in cash of the fair value of fractions of a share as of
the time when those entitled to receive such fractions are determined; or in
lieu of fractional shares it may authorize the issuance, as permitted by law, of
scrip exchangeable as therein provided for full shares, but such scrip shall not
entitle the holder to any rights of a shareholder, except as therein provided.
Section 2 - Lost or Destroyed Certificates: The holder of any certificate
representing shares of the Corporation shall immediately notify the Corporation
of any loss or destruction of the certificate representing the same. The
Corporation may issue a new certificate in the place of any certificate
previously issued by it, alleged to have been lost or destroyed. On production
of such evidence of loss or destruction as the Board of Directors may require,
the Board of Directors may require the owner of the lost or destroyed
certificate, or his legal representatives, to give the Corporation a bond in
such sum as the Board may direct, and with such surety or
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<PAGE>
sureties as may be satisfactory to the Board, to indemnify the Corporation
against any claims, loss, liability or damage it may suffer on account of the
issuance of the new certificate. A new certificate may be issued without
requiring any such evidence or bond when, in the judgment of the Board of
Directors, it is proper so to do.
Section 3 - Transfers of Shares: (a) Transfers of shares of the
Corporation shall be made on the share records of the Corporation only by the
holder of record, or by his duly authorized attorney, upon surrender for
cancellation of the certificate(s) representing such shares, with an assignment
of power of transfer endorsed thereon or delivered therewith, duly executed,
with such proof of the authenticity of the signature and of authority to
transfer and of payment of transfer taxes as the Corporation or its agents may
require.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares as the absolute owner thereof for all purposes and, accordingly,
shall not be bound to recognize any claim to, or interest in, such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise expressly provided by law.
Section 4 - Record Date: In lieu of closing the share records of the
Corporation, the Board of Directors may fix, in advance, a date not exceeding
fifty days nor less than ten days before the date of a meeting, as the record
date for the determination of shareholders entitled to receive notice of, or to
vote at, any meeting of shareholders, or to consent to any proposal without a
meeting, or for the purpose of determining shareholders entitled to receive
payment of any dividends, or allotment of any rights, or for the purpose of any
other action.
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of
surplus funds available therefor, as often, in such amounts, and at such time as
the Board may determine.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors, subject to applicable law.
ARTICLE VIII - CORPORATE SEAL
The corporate seal shall be in such form as shall be approved by the Board
of Directors.
ARTICLE IX - AMENDMENTS
Section 1 - By Shareholders: All By-Laws of the Corporation may be
amended, repealed, or adopted by a two-thirds vote of the shareholders entitled
to vote therefor
Section 2 - By Directors: By a two-thirds vote, the Board of Directors
shall have power to amend, repeal, and adopt By-Laws of the Corporation;
provided, however, that the shareholders entitled to vote with respect thereto
as in this Article IX above-provided may alter,
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<PAGE>
amend or repeal By-Laws made by the Board of Directors. The Board of Directors
shall have no power to change the quorum for meetings of shareholders or of the
Board of Directors, or to change any provisions of the By-Laws with respect to
the removal of directors or the filling of vacancies in the Board resulting from
the removal by the shareholders. If any By-Law regulating an impending election
of directors is adopted, amended or repealed by the Board of Directors, there
shall be set forth in the notice of the next meeting of shareholders for the
election of directors, the By-Law so adopted, amended or repealed, together with
a concise statement of the changes made.
THE UNDERSIGNED certifies that the Corporation has adopted the foregoing
By-Laws as the Restated By-Laws of the Corporation, in accordance with the
requirements of the Business Corporation Law of New York.
Dated:
______________________________________
[Name]
[Title]
8
<PAGE>
Exhibit 10.1
ATLANTIC EXPRESS TRANSPORTATION CORP.
$110,000,000 103/4% Senior Secured Notes due 2004
REGISTRATION RIGHTS AGREEMENT
February 4, 1997
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
Ladies and Gentlemen:
ATLANTIC EXPRESS TRANSPORTATION CORP., a New York corporation (the
"Company"), is issuing and selling to Jefferies & Company, Inc. (the
"Purchaser"), upon the terms set forth in a purchase agreement, dated as of
February 4, 1997 (the "Purchase Agreement"), $110,000,000 aggregate principal
amount of its 103/4% Senior Secured Notes due 2004, Series A, including the
guarantees endorsed thereon (the "Notes"). As an inducement to the Purchaser to
enter into the Purchase Agreement, the Company and each of the guarantors (the
"Guarantors") named in the Indenture (defined below) agrees with the Purchaser,
for the benefit of the holders of the Securities (defined below) (including,
without limitation, the Purchaser), as follows:
1. Definitions
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
Advice: See Section 6.
<PAGE>
Agreement: This Registration Rights Agreement.
Applicable Period: See Section 2(f).
Business Days: Any day other than (i) Saturday or Sunday, or (ii) a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to be closed.
Closing Date: February 4, 1997.
Confidential Information: See Section 6(a).
Effectiveness Date: The 150th day following the Closing Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(a).
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
Exchange Offer Registration Statement: See Section 2(a).
Exchange Securities: 103/4% Senior Secured Notes due 2004, Series B,
of the Company, including the guarantees endorsed thereon, identical in all
material respects to the Notes, except for references to series and restrictive
legends.
Filing Date: The 90th day following the Closing Date.
Holder: Each holder of Registrable Securities.
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<PAGE>
Indenture: The Indenture, dated the date hereof, between the Company
and The Bank of New York, as trustee, pursuant to which the Notes are being
issued, as amended or supplemented from time to time, in accordance with the
terms thereof.
Initial Shelf Registration: See Section 3(a).
Losses: See Section 8(a).
NASD: The National Association of Securities Dealers, Inc.
Participating Broker-Dealer: See Section 2(f).
Person: An individual, trustee, corporation, partnership, joint stock
company, joint venture, trust, unincorporated organization or government or any
agency or political subdivision thereof, union, business association, firm or
other entity.
Private Exchange: See Section 2(g).
Private Exchange Securities: See Section 2(g).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities covered by such Registration
Statement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Registrable Securities: (i) Notes, (ii) Private Exchange Securities
and (iii) Exchange Securities received in the Exchange Offer that may not be
sold without restriction under federal or state securities law.
Registration Statement: Any registration statement of the Company
that covers any of the Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
3
<PAGE>
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The Notes, the Private Exchange Securities and the
Exchange Securities, collectively.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(i).
Shelf Registration: The Initial Shelf Registration and any Subsequent
Shelf Registration.
Special Counsel: Counsel chosen by the holders of a majority in
aggregate principal amount of Securities.
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if any, the trustee
under any indenture governing the Exchange Securities or the Private Exchange
Securities.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
Weekly Liquidated Damages Amount: See Section 4(a).
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2. Exchange Offer
(a) The Company and the Guarantors shall (i) prepare and file with
the SEC promptly after the date hereof, but in no event later than the Filing
Date, a registration statement (the "Exchange Offer Registration Statement") on
an appropriate form under the Securities Act with respect to a proposed offer
(the "Exchange Offer") to the Holders to issue and deliver to such Holders, in
exchange for the Notes, a like aggregate principal amount of Exchange
Securities, (ii) use their best efforts to cause the Exchange Offer
Registration Statement to become effective as promptly as practicable after the
filing thereof, but in no event later than the Effectiveness Date, (iii) keep
the Exchange Offer Registration Statement effective until the consummation of
the Exchange Offer pursuant to its terms, and (iv) unless the Exchange Offer
would not be permitted by a policy of the SEC, commence the Exchange Offer and
use their best efforts to issue, on or prior to 30 business days after the date
on which the Exchange Offer Registration Statement is declared effective,
Exchange Securities in exchange for all Notes tendered prior thereto in the
Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the staff of the SEC.
(b) The Exchange Securities shall be issued under, and entitled to
the benefits of, the Indenture or a trust indenture that is identical to the
Indenture (other than such changes as are necessary to comply with any
requirements of the SEC to effect or maintain the qualification thereof under
the TIA).
(c) In connection with the Exchange Offer, the Company and the
Guarantors shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate letter
of transmittal that is an exhibit to the Exchange Offer Registration Statement
and related documents;
(ii) keep the Exchange Offer open for not less than 30 days after
the date notice thereof is mailed to the Holders (or longer if required by
applicable law);
(iii) utilize the services of a depository for the Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(iv) permit Holders to withdraw tendered Notes at any time prior
to the close of business, New York time, on the last Business Day on which the
Exchange Offer shall remain open; and
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(v) otherwise comply with all laws applicable to the Exchange
Offer.
(d) As soon as practicable after the close of the Exchange Offer, the
Company and the Guarantors shall:
(i) accept for exchange all Notes validly tendered and not
validly withdrawn pursuant to the Exchange Offer;
(ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver
to each Holder of Notes, Exchange Securities equal in aggregate principal amount
to the Notes of such Holder so accepted for exchange.
(e) Interest on each Exchange Security and Private Exchange Security
will accrue from the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or, if no interest has been paid on
the Notes, from the date of original issue of the Notes. Each Exchange Security
and Private Exchange Security shall bear interest at the rate set forth thereon;
provided, that interest with respect to the period prior to the issuance thereof
shall accrue at the rate or rates borne by the Notes from time to time during
such period.
(f) The Company and the Guarantors shall include within the
Prospectus contained in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution," containing a summary statement of the positions
taken or policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Securities received by
such broker-dealer in the Exchange Offer (a "Participating Broker-Dealer").
Such "Plan of Distribution" section shall also allow the use of the Prospectus
by all Persons subject to the prospectus delivery requirements of the Securities
Act, including (without limitation) all Participating Brokers-Dealers, and
include a statement describing the means by which Participating Broker-Dealers
may resell the Exchange Securities. The Company shall use its best efforts to
keep the Exchange Offer Registration Statement effective and to amend and
supplement the Prospectus to be lawfully delivered by all Persons subject to the
prospectus delivery requirement of the Securities Act for such period of time as
such Persons must comply with such requirements in order to resell the Exchange
Securities; provided that such period shall not exceed 180 days after
consummation of the
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Exchange Offer (as such period may be extended pursuant to the last paragraph
of Section 6 hereof (the "Applicable Period")).
(g) If, prior to consummation of the Exchange Offer, the Purchaser
holds any Notes acquired by it and having the status as an unsold allotment in
the initial distribution, the Company shall, upon the request of the Purchaser,
simultaneously with the delivery of the Exchange Securities in the Exchange
Offer, issue (pursuant to the same indenture as the Exchange Securities) and
deliver to the Purchaser, in exchange for the Notes held by the Purchaser (the
"Private Exchange"), a like principal amount of debt securities of the Company
that are identical to the Exchange Securities (the "Private Exchange
Securities"). The Private Exchange Securities shall bear the same CUSIP number
as the Exchange Securities.
(h) The Company may require each Holder participating in the Exchange
Offer to represent to the Company that at the time of the consummation of the
Exchange Offer (i) any Exchange Securities received by such Holder in the
Exchange Offer will be acquired in the ordinary course of its business, (ii)
such Holder will have no arrangement or understanding with any Person to
participate in the distribution of the Exchange Securities within the meaning of
the Securities Act or resale of the Exchange Securities in violation of the
Securities Act, (iii) if such Holder is not a broker-dealer, that it is not
engaged in and does not intend to engage in, the distribution of the Exchange
Securities, (iv) if such Holder is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Notes that were acquired as a
result of market-making or other trading activities and that it will deliver a
prospectus, as required by law, in connection with any resale of such Exchange
Securities, and (v) if such Holder is an affiliate of the Company, that it will
comply with the registration and prospectus delivery requirements of the
Securities Act applicable to it.
(i) If (i) prior to the consummation of the Exchange Offer, either
the Company or the Holders of a majority in aggregate principal amount of
Registrable Securities determines in its or their reasonable judgment that (A)
the Exchange Securities would not, upon receipt, be tradeable by the Holders
thereof without restriction under the Securities Act and the Exchange Act and
without material restrictions under applicable Blue Sky or state securities
laws, or (B) the interests of the Holders under this Agreement, taken as a
whole, would be materially adversely affected by the consummation of the
Exchange Offer, (ii) applicable interpretations of the staff of the SEC would
not permit the consummation of the Exchange Offer prior to the Effectiveness
Date, (iii) subsequent to the consummation of the Private Exchange but within
one year of the Closing Date, the Purchaser so requests, (iv) the Exchange Offer
is not consummated within 240 days of the Closing Date for any reason or (v) in
the case of any Holder not
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permitted to participate in the Exchange Offer or of any Holder participating
in the Exchange Offer that receives Exchange Securities that may not be sold
without restriction under state and federal securities laws (other than due
solely to the status of such Holder as an affiliate of the Company within the
meaning of the Securities Act) and, in either case contemplated by this
clause (v), such Holder notifies the Company within six months of
consummation of the Exchange Offer, then the Company shall promptly deliver
to the Holders (or in the case of any occurrence of the event described in
clause (v) hereof, to any such Holder) and the Trustee notice thereof (the
"Shelf Notice") and shall as promptly as possible thereafter file an Initial
Shelf Registration pursuant to Section 3.
3. Shelf Registration
If a Shelf Notice is required to be delivered pursuant to Section
2(i)(i), (ii), (iii) or (iv), then this Section 3 shall apply to all
Registrable Securities. Otherwise, upon consummation of the Exchange Offer in
accordance with Section 2, the provisions of this Section 3 shall apply solely
with respect to (i) Notes held by any Holder thereof not permitted to
participate in the Exchange Offer and (ii) Exchange Securities that are not
freely tradeable as contemplated by Section 2(i)(v) hereof, provided in each
case that the relevant Holder has duly notified the Company within six months of
the Exchange Offer as required by Section 2(1)(v).
(a) Initial Shelf Registration. The Company and the Guarantors shall
prepare and file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Securities (the "Initial Shelf Registration"). If the Company and the
Guarantors have not yet filed an Exchange Offer, the Company and the Guarantors
shall file with the SEC the Initial Shelf Registration on or prior to the Filing
Date. Otherwise, the Company and the Guarantors shall use their best efforts to
file the Initial Shelf Registration within 20 days of the delivery of the Shelf
Notice or as promptly as possible following the request of the Purchasers. The
Initial Shelf Registration shall be on Form S-1 or another appropriate form
permitting registration of such Registrable Securities for resale by such
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company and the Guarantors
shall (i) not permit any securities other than the Registrable Securities to be
included in any Shelf Registration, and (ii) use their best efforts to cause the
Initial Shelf Registration to be declared effective as promptly as practicable
after the filing thereof and to keep the Initial Shelf Registration continuously
effective until the date that is 36 months from the Effectiveness Date (subject
to extension pursuant to the last paragraph of Section 6 hereof) (the
"Effectiveness Period"), or such shorter period ending when (i) all Registrable
Securities covered by the Initial Shelf
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<PAGE>
Registration have been sold or (ii) a Subsequent Shelf Registration covering
all of the Registrable Securities has been declared effective under the
Securities Act.
(b) Subsequent Shelf Registrations. If any Shelf Registration ceases
to be effective for any reason at any time during the Effectiveness Period
(other than because of the sale of all of the Registrable Securities registered
thereunder), the Company and the Guarantors shall use their best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within 30 days of such cessation of effectiveness amend
the Shelf Registration in a manner reasonably expected to obtain the withdrawal
of the order suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Securities (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Company and the Guarantors shall use their best
efforts to cause the Subsequent Shelf Registration to be declared effective as
soon as practicable after such filing and to keep such Subsequent Shelf
Registration continuously effective for a period equal to the number of days in
the Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration, and any Subsequent Shelf Registration, was
previously effective.
(c) Notwithstanding the foregoing provisions of this Section 3 (but
subject to Section 4 below), the Company shall not be required to amend or
supplement a Registration Statement, any related Prospectus or any document
incorporated therein by reference, for a period not to exceed an aggregate of 60
days in any calendar year if, (i) an event occurs and is continued as a result
of which the Shelf Registration would, in the Issuer's good faith judgment,
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, and (ii) the Issuer
determines in its good faith judgment that the disclosure of such event at such
time would have a material adverse effect on (a) the business, operations or
prospects of the Issuer or (b) a pending material business transaction that has
not yet been publicly disclosed.
4. Liquidated Damages.
(a) The Company and the Guarantors acknowledge and agree that the
holders of Registrable Securities will suffer damages, and that it would not be
feasible to ascertain the extent of such damages with precision, if the Company
and the Guarantors fail to fulfill their obligations hereunder. Accordingly, in
the event of such failure, the Company and the Guarantors jointly and
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<PAGE>
severally agree to pay liquidated damages to each Holder under the
circumstances and to the extent set forth below:
(i) if neither the Exchange Offer Registration Statement nor the
Initial Shelf Registration has been filed with the SEC on or prior to the Filing
Date; or
(ii) if neither the Exchange Offer Registration Statement nor the
Initial Shelf Registration is declared effective by the SEC on or prior to the
Effectiveness Date; or
(iii) if the Company has not accepted for exchange Exchange
Securities for all Notes validly tendered in accordance with the terms of the
Exchange Offer within 30 days after the date on which an Exchange Offer
Registration Statement is declared effective by the SEC; or
(iv) if a Shelf Registration is filed and declared effective by the
SEC but thereafter ceases to be effective without being succeeded within 30 days
by a Subsequent Shelf Registration filed and declared effective;
(each of the foregoing a "Registration Default," and the date on which the
Registration Default occurs being referred to herein as an "Event Date").
Upon the occurrence of any Registration Default, the Company shall
pay, or cause to be paid (and the Guarantors hereby guarantee the payment of),
in addition to amounts otherwise due under the Indenture and the Registrable
Securities, as liquidated damages, and not as a penalty, to each holder of a
Registrable Security, an additional amount (the "Weekly Liquidated Damages
Amount") equal to (A) for each weekly period beginning on the Event Date for the
first 90-day period immediately following such Event Date, $.05 per week per
$1,000 principal amount of Registrable Securities held by such holder, and (B)
for each weekly period beginning with the first full week after the 90-day
period set forth in the foregoing clause (A), $.10 per week per $1,000 principal
amount of Registrable Securities held by such holder; provided that such
liquidated damages will, in each case, cease to accrue (subject to the
occurrence of another Registration Default) on the date on which all
Registration Defaults have been cured. A Registration Default under clause (i)
above shall be cured on the date that either the Exchange Offer Registration
Statement or the Initial Shelf Registration is filed with the SEC; a
Registration Default under clause (ii) above shall be cured on the date that
either the Exchange Offer Registration Statement or the Initial Shelf
Registration is declared effective by the SEC; a Registration Default under
clause (iii) above shall be cured on the earlier of the date (A) the Exchange
Offer is consummated with respect to all Notes validly tendered or (B) the
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<PAGE>
Company delivers a Shelf Notice to the Holders; and a Registration Default
under clause (iv) above shall be cured on the earlier of (A) the date on
which the applicable Shelf Registration is no longer subject to an order
suspending the effectiveness thereof or proceedings relating thereto or (B) a
Subsequent Shelf Registration is declared effective.
(b) The Company shall notify the Trustee within five Business Days
after each Event Date. The Company shall pay the liquidated damages due on the
Registrable Securities by depositing with the Trustee, in trust, for the benefit
of the Holders thereof, by 12:00 noon, New York City time, on or before the
applicable semi-annual interest payment date for the Registrable Securities,
immediately available funds in sums sufficient to pay the liquidated damages
then due. The liquidated damages amount due shall be payable on each interest
payment date to the Holder entitled to receive the interest payment to be made
on such date as set forth in the Indenture.
5. Hold-Back Agreements
The Company and the Guarantors agree, without the prior written
consent of the Holders of a majority in the aggregate principal amount of the
then outstanding Securities, not to effect any public or private sale or
distribution (including a sale pursuant to Regulation D under the Securities
Act) of any securities the same as or similar to those covered by a Registration
Statement filed pursuant to Section 2 or 3 hereof, or any securities convertible
into or exchangeable or exercisable for such securities, during the 10 days
prior to, and during the 90-day period beginning on, (A) the effective date of
any Registration Statement filed pursuant to Sections 2 and 3 hereof unless the
Holders of a majority in the aggregate principal amount of the Registrable
Securities to be included in such Registration Statement consent or (B) the
commencement of an underwritten public distribution of Registrable Securities,
where the managing underwriter so requests.
6. Registration Procedures
In connection with the registration of any Securities pursuant to
Sections 2 or 3 hereof, each of the Company and each Guarantor shall effect such
registrations to permit the sale of such Securities in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Company and each Guarantor shall:
(a) Prepare and file with the SEC, as soon as practicable after the
date hereof but in any event on or prior to the Filing Date, a Registration
Statement or Registration Statements as prescribed by Section 2 or 3, and use
its
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<PAGE>
best efforts to cause each such Registration Statement to become effective
and remain effective as provided herein; provided, that, if (i) such filing
is pursuant to Section 3 or (ii) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Securities during the Applicable Period, before filing
any Registration Statement or Prospectus or any amendments or supplements
thereto, the Company and the Guarantors shall, if requested, furnish to and
afford the Holders of the Registrable Securities covered by such Registration
Statement, their Special Counsel, each Participating Broker-Dealer, the
managing underwriters, if any, and their counsel, a reasonable opportunity to
review and make available for inspection by such Persons copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed, such financial and
other information and books and records of the Company and the Guarantors,
and cause the officers, directors and employees of the Company and the
Guarantors, Company counsel and independent certified public accountants of
the Company, to respond to such inquiries, as shall be necessary, in the
opinion of respective counsel to such holders, Participating Broker-Dealer
and underwriters, to conduct a reasonable investigation within the meaning of
the Securities Act (it being understood that a period of five business days
shall be deemed to afford such reasonable opportunity). The Company may
require each Holder to agree to keep confidential any non-public information
relating to the Company ("Confidential Information") received by such Holder
and not disclose such Confidential Information (other than to an Affiliate or
prospective purchaser who agrees to respect the confidentiality provisions of
this Section 6(a)) until such information has been made generally available
to the public, other than as a result of a disclosure by such Holder, its
directors, officers, employees, agents or advisors or by any other person
subject to a confidentiality agreement, unless the release of such
Confidential Information is required by law or necessary to respond to
inquiries of regulatory authorities (including the National Association of
Insurance Commissioners, or similar organizations or their successors). The
Company may also require each Holder to agree (i) to give the Company prompt
notice of any request to disclose any Confidential Information received by
such Holder so that the Company may seek appropriate protective orders, (ii)
to consult with the Company with respect to the Company's taking steps to
restrict or narrow the scope of such requests, and (iii) if the release of
the Confidential Information is required by law or necessary to respond to
inquiries of regulatory authorities, to give specific written notice to the
Company describing the Confidential Information to be disclosed (as far in
advance of its disclosure as is practicable) and to use its reasonable best
efforts to obtain assurances from the recipient that confidential treatment
will be accorded to the Confidential Information. Neither the Company nor
any Guarantor shall file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders must
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<PAGE>
be afforded an opportunity to review prior to the filing of such document, if
the Holders of a majority in aggregate principal amount of the Registrable
Securities covered by such Registration Statement, their Special Counsel, any
Participating Broker-Dealer or the managing underwriters, if any, or their
counsel shall reasonably object.
(b) Provide an indenture trustee for the Registrable Securities or
the Exchange Securities, as the case may be, and cause the Indenture (or other
indenture relating to the Registrable Securities) to be qualified under the TIA
not later than the effective date of the first Registration Statement; and in
connection therewith, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its best efforts to cause such trustee to execute,
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(c) Prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the time periods required
hereby; cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply in all material respects with the provisions of the
Securities Act and the Exchange Act applicable thereto with respect to the
disposition of all securities covered by such Registration Statement, as so
amended, or in such Prospectus, as so supplemented, in accordance with the
intended methods of distribution set forth in such Registration Statement or
Prospectus as so amended.
(d) Furnish to such selling Holders and Participating Broker-Dealers
who so request (i) upon the Company's receipt, a copy of the order of the SEC
declaring such Registration Statement and any post-effective amendment thereto
effective and (ii) such reasonable number of copies of such Registration
Statement and of each amendment and supplement thereto (in each case including
any documents incorporated therein by reference and all exhibits), (iii) such
reasonable number of copies of the Prospectus included in such Registration
Statement (including each preliminary Prospectus), and such reasonable number of
copies of the final Prospectus as filed by the Company pursuant to Rule 424(b)
under the Securities Act, in conformity with the requirements of the Securities
Act, and (iv) such other documents (including any amendments required to be
filed pursuant to clause (c) of this Section), as any such Person may reasonably
request. The Company and the Guarantors hereby consent to the use of the
Prospectus by each of the selling Holders of Registrable Securities or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
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if any, and dealers (if any), in connection with the offering and sale of the
Registrable Securities covered by, or the sale by Participating
Broker-Dealers of the Exchange Securities pursuant to, such Prospectus and
any amendment thereto.
(e) If (A) a Shelf Registration is filed pursuant to Section 3 or (B)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Registrable Securities, their
Special Counsel, each Participating Broker-Dealer and the managing underwriters,
if any, promptly (but in any event within two Business Days), and confirm such
notice in writing, (i) when a Prospectus has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective under the Securities Act, (ii) of the issuance by the SEC of any stop
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any Prospectus or the initiation of any
proceedings for that purpose, (iii) if, at any time when a Prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Securities, the representations and warranties of the Company or of
any Guarantor contained in any agreement (including any underwriting agreement)
contemplated by Section 6(n) below cease to be true and correct in any material
respect, (iv) of the receipt by the Company or any Guarantor of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Securities
or the Exchange Securities to be sold by any Participating Broker-Dealer for
offer or sale in any jurisdiction, or the contemplation, initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event that makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in such Registration Statement, Prospectus or documents so that it will
not 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, in light of the circumstances under which they were made, not
misleading, and (vi) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(f) Use its reasonable best efforts to register or qualify (to the
extent required by applicable law), and, if applicable, to cooperate with the
selling Holders of Registrable Securities, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of, Securities to be included
in a Registration Statement for offer and sale under the securities or Blue Sky
laws of
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such jurisdictions within the United States as any selling Holder,
Participating Broker-Dealer or the managing underwriters reasonably request
in writing; and, if Securities are offered other than through an Underwritten
Offering, the Company shall cause its counsel to perform Blue Sky
investigations and file registrations and qualifications required to be filed
pursuant to this Section 6(f) at the expense of the Company; keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Securities covered by the applicable
Registration Statement, provided, however, that none of the Company nor the
Guarantors shall be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) to take action that
would subject it to general service of process in any jurisdiction where it
is not so subject or (iii) subject it to taxation in any such jurisdiction
where it is not then subject.
(g) Use its reasonable best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Securities for sale in any
jurisdiction, and, if any such order is issued, to use its reasonable best
efforts to obtain the withdrawal of any such order at the earliest possible
time.
(h) If (A) a Shelf Registration is filed pursuant to Section 3 or (B)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, and if requested by the managing underwriters, if any, or the
Holders of a majority in aggregate principal amount of the Registrable
Securities, (i) promptly incorporate in a Prospectus or post-effective amendment
such information as the managing underwriters, if any, or such Holders
reasonably request to be included therein required to comply with any applicable
law and (ii) make all required filings of such Prospectus or such post-effective
amendment as soon as practicable after the Company has received notification of
such matters required by Applicable Law to be incorporated in such Prospectus or
post-effective amendment.
(i) If (A) a Shelf Registration is filed pursuant to Section 3 or (B)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which certificates
shall not bear
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any restrictive legends and shall be in a form eligible for deposit with The
Depository Trust Company ("DTC"); and enable such Registrable Securities to
be in such denominations and registered in such names as the managing
underwriters, if any, or Holders may reasonably request.
(j) If (i) a Shelf Registration is filed pursuant to Section 3 or
(ii) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
6(e)(v) or 6(e)(vi) above, as promptly as practicable prepare a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder
or to the purchasers of the Exchange Securities to whom such Prospectus will be
delivered by a Participating Broker-Dealer, such Registration Statement or
Prospectus will not contain an untrue statement of a material fact or omit to
state a 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.
(k) Use its reasonable best efforts to cause the Securities covered
by a Registration Statement to be rated with the appropriate rating agencies, if
appropriate, if so requested by the Holders of a majority in aggregate principal
amount of Securities covered by such Registration Statement or the managing
underwriters, if any.
(l) Prior to the effective date of the first Registration Statement
relating to the Securities, (i) provide the applicable trustee with printed
certificates for the Securities in a form eligible for deposit with DTC and (ii)
provide a CUSIP number for each of the Securities.
(m) Use its best efforts to cause all Securities covered by such
Registration Statement to be listed on each securities exchange, if any, on
which similar debt securities issued by the Company are then listed.
(n) If a Shelf Registration is filed pursuant to Section 3, enter
into such agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings of debt securities similar
to the Notes, as may be appropriate in the circumstances) and take all such
other actions in connection therewith (including those reasonably requested by
the managing underwriters, if any, or the Holders of a majority in aggregate
princi-
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pal amount of the Registrable Securities being sold) in order to expedite or
facilitate the registration or the disposition of such Registrable
Securities, and in such connection, whether or not an underwriting agreement
is entered into and whether or not the registration is an Underwritten
Registration, (i) make such representations and warranties to the Holders and
the underwriters, if any, with respect to the business of the Company and its
subsidiaries, and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in each
case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to the
Notes, as may be appropriate in the circumstances, and confirm the same if
and when reasonably requested; (ii) obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters, if
any, and the Holders of a majority in aggregate principal amount of the
Registrable Securities being sold), addressed to each selling Holder and each
of the underwriters, if any, covering the matters customarily covered in
opinions of counsel to the Issuer requested in underwritten offerings of debt
securities similar to the Notes, as may be appropriate in the circumstances;
(iii) obtain "cold comfort" letters and updates thereof (which letters and
updates (in form, scope and substance) shall be reasonably satisfactory to
the managing underwriters) from the independent certified public accountants
of the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by
the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each of
the underwriters and each selling Holder, such letters to be in customary
form and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings of debt securities similar
to the Notes, as may be appropriate in the circumstances, and such other
matters as reasonably requested by underwriters; and (iv) deliver such
documents and certificates as may be reasonably requested by the Holders of a
majority in principal amount of the Registrable Securities being sold and the
managing underwriters, if any, to evidence the continued validity of the
representations and warranties of the Company and its subsidiaries made
pursuant to clause (i) above and to evidence compliance with any conditions
contained in the underwriting agreement or other similar agreement entered
into by the Company. Nothing contained in this clause (n) requires the
Company or the Guarantors, their counsel or their accountants to make any
representations or warranties, to render any legal opinion or to deliver any
comfort letters that are not true.
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45 days
after
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the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing on the first day of
the fiscal quarter following each fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(p) Upon consummation of an Exchange Offer or Private Exchange,
obtain an opinion of counsel to the Company (in form, scope and substance
reasonably satisfactory to the Purchaser), addressed to the Trustee for the
benefit of all Holders participating in the Exchange Offer or Private Exchange,
as the case may be, to the effect that (i) the Company and the Guarantors have
duly authorized, executed and delivered the Exchange Securities or the Private
Exchange Securities, as the case may be, and the Indenture, (ii) the Exchange
Securities or the Private Exchange Securities, as the case may be, and the
Indenture constitute legal, valid and binding obligations of the Company and the
Guarantors, enforceable against the Company and the Guarantors in accordance
with their respective terms, except as such enforcement may be subject to
customary exceptions including, without limitation, (x) applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and (y) general principles of equity (regardless
of whether such enforcement is sought in a proceeding in equity or at law), and
(iii) all obligations of the Company and the Guarantors under the Exchange
Securities or the Private Exchange Securities, as the case may be, and the
Indenture are secured by Liens on the assets securing the obligations of the
Company under the Notes.
(q) If an Exchange Offer or Private Exchange is to be consummated,
upon delivery of the Registrable Securities by such Holders to the Company (or
to such other Person as directed by the Company) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the Company
shall mark, or caused to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, and in no
event shall such Registrable Securities be marked as paid or otherwise
satisfied.
(r) Cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD.
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(s) Use its reasonable best efforts to take all other steps necessary
to effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby.
The Company may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such reasonable information regarding such seller or
Participating Broker-Dealer and the distribution of such Registrable Securities
or Exchange Securities as the Company may, from time to time, reasonably request
in writing. The Company may exclude from such registration the Registrable
Securities of any seller or Exchange Securities of any Participating
Broker-Dealer who fails to furnish such information.
Each Holder and each Participating Broker-Dealer agrees by acquisition
of such Registrable Securities or Exchange Securities of any Participating
Broker-Dealer that, upon receipt of written notice from the Company of the
happening of any event of the kind described in Section 6(e)(ii), 6(e)(iv),
6(e)(v) or 6(e)(vi), such Holder will forthwith discontinue disposition (in the
jurisdictions specified in a notice of a 6(e)(iv) event, and elsewhere in a
notice of a 6(e)(ii), 6(e)(v) or 6(e)(vi) event) of such Securities covered by
such Registration Statement or Prospectus until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 6(j),
or until it is advised in writing (the "Advice") by the Company that offers or
sales in a particular jurisdiction may be resumed or that the use of the
applicable Prospectus may be resumed, as the case may be, and has received
copies of any amendments or supplements thereto. If the Company shall give such
notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of such
Securities covered by such Registration Statement shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 6(j) or
(y) the Advice.
7. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company and the Guarantors shall be borne
by the Company and the Guarantors whether or not the Exchange Offer or a Shelf
Registration is filed or becomes effective, including, without limitation:
(i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the
NASD and (B) fees and expenses of compliance with state securities or Blue
Sky laws (including, without limitation, reasonable fees and disburse-
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ments of counsel in connection with Blue Sky qualifications of the
Registrable Securities or Exchange Securities and determination of the
eligibility of the Registrable Securities or Exchange Securities for
investment under the laws of such jurisdictions (x) where the Holders are
located, in the case of the Exchange Securities, or (y) as provided in
Section 6(f), in the case of Registrable Securities or Exchange
Securities to be sold by a Participating Broker-Dealer during the
Applicable Period);
(ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities or Exchange
Securities in a form eligible for deposit with DTC and of printing
Prospectuses if the printing of Prospectuses is requested by the managing
underwriters, if any, or, in respect of Registrable Securities or Exchange
Securities to be sold by a Participating Broker-Dealer during the
Applicable Period, by the Holders of a majority in aggregate principal
amount of the Registrable Securities included in any Registration Statement
or of such Exchange Securities, as the case may be);
(iii) messenger, telephone, duplication, word processing and
delivery expenses incurred by the Company in the performance of its
obligations hereunder;
(iv) fees and disbursements of counsel for the Company;
(v) fees and disbursements of all independent certified
public accountants referred to in Section 6(n)(iii) (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance);
(vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Section 3 of Schedule E to the By-laws of the NASD, but only
where the need for such a "qualified independent underwriter" arises due to
a relationship with the Company;
(vii) Securities Act liability insurance, if the Company so
desires such insurance;
(viii) fees and expenses of all other Persons retained by
the Company; internal expenses of the Company (including, without
limitation, all salaries and expenses of officers and employees of the
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Company performing legal or accounting duties); and the expense of any
annual audit; and
(ix) rating agency fees and the fees and expenses incurred
in connection with the listing of the Securities to be registered on any
securities exchange.
(b) The Company and the Guarantors shall reimburse the Holders for
the reasonable fees and disbursements of not more than one counsel (in addition
to appropriate local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Registrable Securities to be included in any
Registration Statement. The Company shall pay all documentary, stamp, transfer
or other transactional taxes attributable to the issuance or delivery of the
Exchange Securities or Private Exchange Securities in exchange for the Notes;
provided that the Company shall not be required to pay taxes payable in respect
of any transfer involved in the issuance or delivery of any Exchange Security or
Private Exchange Security in a name other than that of the holder of the Note in
respect of which such Exchange Security or Private Exchange Security is being
issued.
(c) Neither the Company or the Guarantors shall be liable for any
underwriting, brokerage, finder's or similar fees, discounts or commissions, if
any, attributable to the sale of the Registrable Securities which discounts,
commissions or taxes shall be paid by the Holders of such Registrable
Securities.
8. Indemnification
(a) Indemnification by the Company. The Company and each of the
Guarantors, jointly and severally, shall, without limitation as to time,
indemnify and hold harmless each Holder and each Participating Broker-Dealer
selling Exchange Securities during the Applicable Period, each Person who
controls each such Holder (within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act) and the officers, directors, partners,
employees, representatives and agents of each such Holder, Participating
Broker-Dealer and controlling person, to the fullest extent lawful, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of preparation and reasonable attorneys'
fees as provided in this Section 8) and expenses (including, without limitation,
reasonable costs and expenses incurred in connection with investigating,
preparing, pursuing or defending against any of the foregoing) (collectively,
"Losses"), as incurred, directly or indirectly caused by, related to, based
upon, arising out of or in connection with any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or form of prospectus, or in any
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amendment or supplement thereto, or in any preliminary prospectus, or any
omission or alleged omission to state therein a 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, except insofar
as such Losses are based upon information relating to such Holder or
Participating Broker-Dealer and furnished in writing to the Company (or
reviewed and approved in writing) by such Holder or Participating
Broker-Dealer expressly for use therein; provided, however, that neither the
Company nor any of the Guarantors shall be liable to any Indemnified Party to
the extent that any such losses arise solely out of an untrue statement or
alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if (i) such Indemnified Party or related holder of a
Registrable Security failed to send or deliver a copy of the Prospectus with
or prior to the delivery of written confirmation of the sale by such
Indemnified Party or the related holder of a Registrable Security to the
person asserting the claim from which such Losses arise, (ii) the Prospectus
would have corrected such untrue statement or alleged untrue statement or
omission or alleged omission, and (iii) the Company and the Guarantors have
complied with their obligations under Section 6(e) hereof. The Company and
each of the Guarantors shall also indemnify underwriters, selling brokers,
dealer managers and similar securities industry professionals participating
in the distribution, their officers, directors, agents and employees and each
Person who controls such Persons (within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Holders or the
Participating Broker-Dealer.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement, Prospectus or form of prospectus,
any amendment or supplement thereto, or any preliminary prospectus in which a
Holder in which a Holder is participating, such Holder shall furnish to the
Company in writing such information as the Company reasonably requests for use
in connection with any Registration Statement, Prospectus or form of prospectus,
any amendment or supplement thereto, or any preliminary prospectus and shall,
without limitation as to time, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person, if any, who controls the
Company (within the meaning of Section 15 of the Securities Act and Section
20(a) of the Exchange Act), and the directors, officers, agents or employees of
such controlling persons, to the fullest extent lawful, from and against all
Losses arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or any omission or alleged omission to state therein a 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 to the
extent, but only to the
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<PAGE>
extent, that such untrue statement or alleged untrue statement of a material
fact or omission or alleged omission of a material fact is contained in or
omitted from any information so furnished in writing by such holder to the
Company expressly for use therein. In no event shall the liability of any
selling Holder be greater in amount than the dollar amount of the proceeds
(net of payment of all expenses) received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"indemnified party"), such indemnified party shall promptly notify the party or
parties from which such indemnity is sought (the "indemnifying parties") in
writing; provided, that the failure to so notify the indemnifying parties shall
not relieve the indemnifying parties from any obligation or liability except to
the extent (but only to the extent) that it shall be finally determined by a
court of competent jurisdiction (which determination is not subject to appeal)
that the indemnifying parties have been prejudiced materially by such failure.
The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party, within 20 business days after receipt of
written notice from such indemnified party of such Proceeding, to assume, at its
expense, the defense of any such Proceeding, provided, that an indemnified party
shall have the right to employ separate counsel in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless: (1) the
indemnifying party has agreed to pay such fees and expenses; or (2) the
indemnifying party shall have failed promptly to assume the defense of such
Proceeding or shall have failed to employ counsel reasonably satisfactory to
such indemnified party; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party or any of its affiliates or controlling persons, and such
indemnified party shall have been advised by counsel that there may be one or
more defenses available to such indemnified party that are in addition to, or in
conflict with, those defenses available to the indemnifying party or such
affiliate or controlling person (in which case, if such indemnified party
notifies the indemnifying parties in writing that it elects to employ separate
counsel at the expense of the indemnifying parties, the indemnifying parties
shall not have the right to assume the defense and the reasonable fees and
expenses of such counsel shall be at the expense of the indemnifying party; it
being understood, however, that, the indemnifying party shall not, in connection
with any one such Proceeding or separate but substantially similar or related
Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses
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<PAGE>
of more than one separate firm of attorneys (together with appropriate local
counsel) at any time for such indemnified party).
No indemnifying party shall be liable for any settlement of any such
Proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such
Proceeding, each indemnifying party jointly and severally agrees, subject to the
exceptions and limitations set forth above, to indemnify and hold harmless each
indemnified party from and against any and all Losses by reason of such
settlement or judgment. The indemnifying party shall not consent to the entry
of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such Proceeding for
which such indemnified party would be entitled to indemnification hereunder
(whether or not any indemnified party is a party thereto).
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless for any Losses in respect of which this Section 8
would otherwise apply by its terms (other than by reason of exceptions provided
in this Section 8), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the amount paid or payable by such indemnified party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such indemnifying party, on the one hand,
and indemnified party, on the other hand, shall be determined by reference to,
among other things, whether any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent any such statement or omission. The amount paid or payable
by an indemnified party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
Proceeding, to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in Section 8(a) or 8(b) was
available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable
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considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(d), an indemnifying party
that is a selling Holder shall not be required to contribute, in the
aggregate, any amount in excess of such Holder's Maximum Contribution Amount.
A selling Holder's "Maximum Contribution Amount" shall equal the excess of
(i) the aggregate proceeds received by such Holder pursuant to the sale of
such Registrable Securities over (ii) the aggregate amount of damages that
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 8
are in addition to any liability that the indemnifying parties may have to the
indemnified parties.
9. Rule 144 and Rule 144A
Each of the Company and each Guarantor covenants that it shall (a)
file the reports required to be filed by it (if so required) under the
Securities Act and the Exchange Act in a timely manner and, if at any time any
such Person is not required to file such reports, it will, upon the request of
any Holder, make publicly available other information necessary to permit sales
pursuant to Rule 144 and Rule 144A and (b) take such further action as any
Holder may reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration under the
Securities Act pursuant to the exemptions provided by Rule 144 and Rule 144A.
Upon the request of any Holder, the Company and the Guarantors shall deliver to
such Holder a written statement as to whether they have complied with such
information and requirements.
10. Underwritten Registrations
If any of the Registrable Securities covered by any Shelf Registration
are to be sold in an Underwritten Offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Securities included in such offering and shall be reasonably acceptable to the
Company and the Guarantors; it being understood that any Underwritten Offering
shall include at least $10,000,000 principal amount of the Registrable
Securities.
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No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Registrable Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
11. Miscellaneous
(a) Remedies. In the event of a breach by the Company or any of the
Guarantors of any of its respective obligations under this Agreement, each
Holder, in addition to being entitled to exercise all rights provided herein, in
the Indenture or, in the case of the Purchasers, in the Purchase Agreement, or
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each of the
Guarantors agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not entered into, as
of the date hereof, and shall not enter into, after the date of this Agreement,
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of at least a majority of the then outstanding aggregate principal amount of
Registrable Securities; provided, that Sections 6(a) and 8 shall not be amended,
modified or supplemented, and waivers or consents to departures from this
proviso may not be given, unless the Company has obtained the written consent of
each Holder. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Securities being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence may not be
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amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, certified
first-class mail, return receipt requested, next-day air courier or facsimile:
(i) if to a Holder, at the most current address given by
such holder to the Company in accordance with the provisions of this
Section 11(d), which address initially is, with respect to each holder, the
address of such holder maintained by the Registrar under the Indenture,
with a copy to Skadden, Arps, Slate, Meagher & Flom, 300 South Grand
Avenue, Los Angeles, California 90071, telecopy number (213) 687-5600,
Attention: Michael A. Woronoff, Esq.; and
(ii) if to the Company or any of the Guarantors, initially 7
North Street, Staten Island, New York 10302-1205, telecopy number (708)
442-5105, Attention: Nathan Schlenker, and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 11(d), with copies to Silverman, Collura and Chernis, P.C., 381
Park Avenue South, Suite 1601, New York, New York 10016, telecopy number
(212) 779-8858, Attention: Peter Silverman, and Jones, Day, Reavis &
Pogue, 599 Lexington Avenue, New York, New York 10022, telecopy number
(212) 755-7306, Attention: Robert A. Zuccaro.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders.
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(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE COMPANY AND EACH GUARANTOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF THE COMPANY AND
EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO
SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF
THE COMPANY AND EACH GUARANTOR IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY
AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY OR ANY GUARANTOR IN ANY OTHER
JURISDICTION.
(i) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
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illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to the registration rights granted by the Company in
respect of securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(k) Securities Held by the Company or its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities Act)
(other than Holders deemed to be such affiliates solely by reason of their
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the holders of such required
percentage.
29
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ATLANTIC EXPRESS TRANSPORTATION CORP.
By: /s/ DOMENIC GATTO
---------------------------------
Name: DOMENIC GATTO
---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
------------------------------
AMBOY BUS CO., INC. COURTESY BUS CO., INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
STATEN ISLAND BUS, INC. K. CORR, INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
RAYBERN CAPITAL CORP. RAYBERN EQUITY CORP.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
<PAGE>
METROPOLITAN ESCORT SERVICE, INC. METRO AFFILIATES, INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
MERIT TRANSPORTATION CORP. MIDWAY LEASING INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
TEMPORARY TRANSIT SERVICE, INC. BROOKFIELD TRANSIT INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
ATLANTIC-HUDSON, INC. ATLANTIC PARATRANS, INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
180 JAMAICA CORP. BLOCK 7932, INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
<PAGE>
ATLANTIC EXPRESS COACHWAYS, INC. ATLANTIC-CONN. TRANSIT, INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
ATLANTIC EXPRESS OF PENNSYLVANIA, ATLANTIC EXPRESS OF MISSOURI INC.
INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
ATLANTIC PARATRANS OF KENTUCKY INC. RAYBERN BUS SERVICE, INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
DOM-RICH ASSOCIATES, INC. G.V.D. LEASING CO., INC.
By: /s/ DOMENIC GATTO By: /s/ DOMENIC GATTO
--------------------------------- ---------------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------------------- ---------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE TITLE: PRESIDENT AND CHIEF EXECUTIVE
OFFICER OFFICER
------------------------------ ------------------------------
ACCEPTED AND AGREED TO:
JEFFERIES & COMPANY, INC.
By: /s/ ANDREW WHITTAKER
--------------------
Name: ANDREW WHITTAKER
Title: EXECUTIVE VICE PRESIDENT
<PAGE>
Exhibit 10.2
EXECUTION COPY
Loan and Security Agreement
by and between
CONGRESS FINANCIAL CORPORATION,
as Lender,
CERTAIN SUBSIDIARIES OF
ATLANTIC EXPRESS TRANSPORTATION CORP.,
as Borrowers,
and
ATLANTIC EXPRESS TRANSPORTATION CORP.
as Guarantor
Dated: February 4, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS..................................................... 1
SECTION 2. CREDIT FACILITIES............................................... 13
2.1 Revolving Loans................................................. 13
2.2 Letter of Credit Accommodations................................. 14
2.3 Availability Reserves........................................... 16
2.4 Borrowers' Representative....................................... 16
SECTION 3. INTEREST AND FEES............................................... 16
3.1 Interest........................................................ 16
3.2 Closing Fee..................................................... 18
3.3 Servicing Fee................................................... 18
3.4 Unused Line Fee................................................. 18
3.5 Changes in Laws and Increased Costs of Loans.................... 18
SECTION 4. CONDITIONS PRECEDENT............................................ 19
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations ................................................. 19
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations ................................................. 21
SECTION 5. GRANT OF SECURITY INTEREST...................................... 21
SECTION 6. COLLECTION AND ADMINISTRATION................................... 22
6.1 Borrower's Loan Account......................................... 22
6.2 Statements...................................................... 22
6.3 Collection of Accounts.......................................... 23
6.4 Payments........................................................ 24
6.5 Authorization to Make Loans..................................... 24
6.6 Use of Proceeds................................................. 24
SECTION 7. COLLATERAL REPORTING AND COVENANTS.............................. 25
7.1 Collateral Reporting............................................ 25
7.2 Accounts Covenants.............................................. 25
7.3 Power of Attorney............................................... 26
7.4 Right to Cure................................................... 27
7.5 Access to Premises.............................................. 27
SECTION 8. REPRESENTATIONS AND WARRANTIES.................................. 28
8.1 Corporate Existence, Power and Authority; Subsidiaries.......... 28
8.2 Financial Statements; No Material Adverse Change................ 28
8.3 Chief Executive Office; Collateral Locations.................... 29
8.4 Priority of Liens; Title to Properties.......................... 29
8.5 Tax Returns..................................................... 29
8.6 Litigation...................................................... 29
8.7 Compliance with Other Agreements and Applicable Laws............ 30
8.8 Employee Benefits............................................... 30
<PAGE>
8.9 Environmental Compliance........................................ 31
8.10 Accuracy and Completeness of Information....................... 31
8.11 Survival of Warranties; Cumulative............................. 32
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.............................. 32
9.1 Maintenance of Existence........................................ 32
9.2 New Collateral Locations........................................ 32
9.3 Compliance with Laws, Regulations, Etc.......................... 32
9.4 Payment of Taxes and Claims..................................... 34
9.5 Insurance....................................................... 34
9.6 Financial Statements and Other Information...................... 35
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc......... 36
9.8 Encumbrances.................................................... 37
9.9 Indebtedness.................................................... 38
9.10 Loans, Investments, Guarantees, Etc............................ 39
9.11 Dividends and Redemptions...................................... 39
9.12 Transactions with Affiliates................................... 40
9.13 Costs and Expenses............................................. 40
9.14 Compliance with ERISA.......................................... 41
9.15 Further Assurances............................................. 41
SECTION 10. EVENTS OF DEFAULT AND REMEDIES................................. 42
10.1 Events of Default.............................................. 42
10.2 Remedies....................................................... 44
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW... 45
11.1 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver ................................................. 45
11.2 Waiver of Notices............................................. 46
11.3 Amendments and Waivers........................................ 46
11.4 Waiver of Counterclaims....................................... 46
11.5 Indemnification............................................... 47
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS............................... 47
12.1 Term.......................................................... 47
12.2 Notices....................................................... 48
12.3 Partial Invalidity............................................ 48
12.4 Successors.................................................... 49
12.5 Entire Agreement.............................................. 49
<PAGE>
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Schedule 8.9 Environmental Matters
<PAGE>
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated February 4, 1997 is entered into by
and between CONGRESS FINANCIAL CORPORATION, a California corporation ("Lender"),
AMBOY BUS CO., INC., a New York corporation, ATLANTIC-CONN. TRANSIT, INC., a
Connecticut corporation, ATLANTIC-HUDSON, INC., a New York corporation, ATLANTIC
PARATRANS, INC., a New York corporation, ATLANTIC PARATRANS OF KENTUCKY INC., a
Kentucky corporation, ATLANTIC EXPRESS COACHWAYS, INC., a New Jersey
corporation, ATLANTIC EXPRESS OF MISSOURI INC., a Missouri corporation, ATLANTIC
EXPRESS OF PENNSYLVANIA, INC., a Delaware corporation, BROOKFIELD TRANSIT INC.,
a New York corporation, COURTESY BUS CO., INC., a New York corporation, K. CORR,
INC., a New York corporation, MERIT TRANSPORTATION CORP., a New York
corporation, METROPOLITAN ESCORT SERVICE, INC., a New York corporation, RAYBERN
BUS SERVICE, INC., a New York corporation, RAYBERN CAPITAL CORP., a New York
corporation, RAYBERN EQUITY CORP., a New York corporation, and STATEN ISLAND
BUS, INC., a New York corporation (each individually, a "Borrower" and any two
or more collectively, "Borrowers"), and ATLANTIC EXPRESS TRANSPORTATION CORP., a
New York corporation (a "Guarantor").
W I T N E S E T H:
WHEREAS, Borrowers have requested that Lender enter into certain financing
arrangements with Borrowers pursuant to which Lender may make loans and provide
other financial accommodations to Borrowers; and
WHEREAS, Lender is willing to make such loans and provide such financial
accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code of the State of New York shall have the meanings given
therein unless otherwise defined in this Agreement. All references to the plural
herein shall also mean the singular and to the singular shall also mean the
plural. All references to Borrowers, Guarantors, and Lender pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns. The words "hereof",
"herein", "hereunder", "this Agreement" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced. An
Event of Default shall exist or continue or be continuing until such Event of
Default is waived in accordance with Section 11.3. Any accounting term used
herein unless otherwise defined in this Agreement shall have the meanings
customarily given to such term in accordance with GAAP. For purposes of this
Agreement, the following terms shall have the respective meanings given to them
below:
<PAGE>
1.1 "Accounts" of a Borrower shall mean all present and future rights of
such Borrower to payment for goods sold or leased or for services rendered,
which are not evidenced by instruments or chattel paper, and whether or not
earned by performance.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining the
reserve requirement which is or would be applicable to deposits of United States
dollars in a non-United States or an international banking office of Reference
Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with
the proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective date of any change in the Reserve
Percentage.
1.3 "Adjusted Pre-Tax Income" shall mean, for any fiscal year, the amount
equal to: (a) the Consolidated Net Income of Parent and its Subsidiaries (on a
consolidated basis) for such year; plus (b) the provision for taxes deducted in
determining such Consolidated Net Income; plus (c) any amounts deducted pursuant
to clause (v) of the definition of Consolidated Net Income in determining the
Consolidated Net Income for such year.
1.4 "AETG" shall mean Atlantic Express Transportation Group Inc., a New
York corporation.
1.5 "Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with") shall mean, with respect to any
Person: (i) the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise; (ii) in
the case of a corporation, beneficial ownership of 10% or more of any class of
Capital Stock of such Person; and (iii) in the case of an individual, (A)
members of such Person's immediate family (as defined in Instruction 2 of Item
404(a) of Regulation S-K promulgated under the Securities Act of 1933, as
amended, as in effect on the date hereof), and (B) trusts, any trustee or
beneficiary of which is such Person or members of such Person's immediate
family. Notwithstanding the foregoing definitions, none of Jefferies & Company,
Inc. and its Affiliates shall be considered Affiliates of Parent or any of its
Subsidiaries.
1.6 "Asset Sale" shall mean (a) any transfer, other than in the ordinary
course of business, of any assets of Parent or any of its Subsidiaries; or (b)
any direct or indirect issuance of any Capital Stock of any Subsidiary of
Parent; in the case of either (a) or (b), to any Person other than Parent or a
Subsidiary of Parent and other than the issuance of directors' qualifying
shares. For the purposes of this definition, (x) any series of transfers that
are part of a common plan shall be deemed a single Asset Sale and (y) the term
"Asset Sale" shall not include any disposition of all or substantially all of
the assets of Parent or any of its Subsidiaries.
1.7 "Atlantic North" shall mean Atlantic North Casualty Company, a Vermont
corporation.
2
<PAGE>
1.8 "Availability Reserves" shall mean, as of any date of determination,
such amounts as Lender may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letter of Credit Accommodations which
would otherwise be available to a Borrower under the lending formula(s) provided
for herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Lender in good faith, do or may (i) affect in any material respect
the Collateral or any other property which is security for the Obligations or
its value, (ii) affect in any material respect the assets, business or prospects
of any Borrower individually or of Parent and its Subsidiaries taken as a whole
or (iii) the security interests and other rights of Lender in the Collateral
(including the enforceability, perfection and priority thereof); or (b) to
reflect Lender's good faith belief that any collateral report or financial
information furnished by or on behalf of a Borrower or any Obligor to Lender is
or may have been incomplete, inaccurate or misleading in any material respect or
(c) in respect of any state of facts which Lender determines in good faith
constitutes an Event of Default or can reasonably be expected, with notice or
passage of time or both, to constitute an Event of Default.
1.9 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.10 "Borrower" shall mean each Person identified as such in the caption
of this Agreement and which executes and delivers this Agreement, and each other
Subsidiary of Parent that from time to time hereafter becomes a Borrower
pursuant to a written supplement to this Agreement acceptable in form and
substance to Lender.
1.11 "Borrowers' Representative" shall mean Parent.
1.12 "Business Day" shall mean (a) for the Prime Rate Loans, any day other
than a Saturday, Sunday, or other day on which commercial banks are authorized
or required to close under the laws of the State of New York or the Commonwealth
of Pennsylvania, and a day on which the Reference Bank and Lender are open for
the transaction of business, and (b) for all Eurodollar Rate Loans, any such day
as described in (a) above in this definition of Business Day, excluding any day
on which banks are closed for dealings in dollar deposits in the London
interbank market or other applicable Eurodollar Rate market.
1.13 "Capital Stock" shall mean (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interest (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
1.14 "Cash Equivalent" shall mean (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (b) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $250,000,000 and commercial paper issued by others rated at least
A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2
or the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition; and (c) investments in
money market funds substantially all of whose assets comprise securities of the
types described in clauses (a) and (b) above.
3
<PAGE>
1.15 "Change of Control" shall mean (a) the transfer (in one transaction
or a series of transactions) of all or substantially all of the assets of Parent
or its Subsidiaries to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) other than to one or more Existing Holders; (b)
the liquidation or dissolution of Parent or the adoption of a plan by the
stockholders of Parent relating to the dissolution or liquidation of Parent; (c)
the acquisition by any Person or group (as such term is used in Section 13(d)(3)
of the Exchange Act), except for one or more Existing Holders, of beneficial
ownership, directly or indirectly, of more than 50% of the aggregate ordinary
voting power of the total outstanding Voting Stock of Parent or AETG; (iv)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of Parent or AETG (together with
any new directors whose nomination for election by the stockholders of Parent or
AETG, as the case may be, was approved by a vote of at least 66-2/3 of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Parent or AETG, as the case may be, then still in office; or (v)
the failure by AETG to own 51% of the voting power of the total outstanding
Voting Stock of Parent.
1.16 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.17 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.18 "Consolidated Net Income" shall mean, for any period, the amount
equal to: (a) the net income or loss of Parent and its subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP; minus (b) to
the extent included in calculating such net income or loss: (i) gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with any Asset Sales and dispositions pursuant to
sale and leaseback transactions; (ii) extraordinary gain (but not loss),
together with any related provision for taxes on such gain (but not loss); (iii)
the net income of any Person that is not a wholly owned Subsidiary of Parent or
that is accounted for by the equity method of accounting to the extent it
exceeds the amount of dividends or distributions paid during such period to
Parent or a wholly owned Subsidiary of Parent; (iv) the net income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition; and (v) the net income of any Subsidiary to the extent that
declarations of dividends or distributions by that Subsidiary of such net income
are not at the time permitted, directly or indirectly, by operation of the terms
of its organization documents, or any agreement, instrument, judgment, decree,
order, statute, rule, or governmental regulation applicable to that Subsidiary
or its owners.
1.19 "Disqualified Capital Stock" shall mean any Equity Interest that (i)
either by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) is or upon the happening of an
event would be required to be redeemed or repurchased or is redeemable at the
option of the holder thereof at any time or (ii) is convertible into or
exchangeable at the option of the issuer thereof or any other Person for debt
securities.
1.20 "Eligible Accounts" of a Borrower shall mean Accounts created by a
Borrower which are and continue to be acceptable to Lender based on the criteria
set forth below. In general, Accounts shall be Eligible Accounts if:
4
<PAGE>
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in
accordance with all those terms and provisions contained in any documents
related thereto with which such Borrower must comply in order for the account
debtor to be obligated to pay such Accounts;
(b) such Accounts are not unpaid more than ninety (90) days after
the date of the original invoice for them, or more than one hundred twenty (120)
days after the date of the original invoice in the case of Accounts arising from
paratransit services, transportation services funded under Medicaid, or
transportation services for physically or mentally challenged pre-kindergarten
students ("Paratrans/Pre-K/Medicaid Accounts"), provided, however, that there
shall not be included in Eligible Accounts more than an aggregate of $6,000,000
in gross amount of Accounts that are unpaid more than ninety (90) days but less
than one hundred twenty (120) days after the original invoice date;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect to
such Accounts is located in the United States of America, or, at Lender's
option, if either: (i) the account debtor has delivered to such Borrower an
irrevocable letter of credit issued or confirmed by a bank satisfactory to
Lender, sufficient to cover such Account, in form and substance satisfactory to
Lender and, if required by Lender, the original of such letter of credit has
been delivered to Lender or Lender's agent and the issuer thereof notified of
the assignment of the proceeds of such letter of credit to Lender, or (ii) such
Account is subject to credit insurance payable to Lender issued by an insurer
and on terms and in an amount acceptable to Lender, or (iii) such Account is
otherwise acceptable in all respects to Lender (subject to such lending formula
with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress billings, bill and hold
invoices or retainage invoices (it being understood that Accounts representing
amounts accrued for transportation services provided for a portion of the
current month shall not constitute progress billings solely because the account
debtor is not billed for such amounts until after the end of such month);
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to, any right of setoff against such
Accounts;
(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
5
<PAGE>
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee or agent of
or affiliated with such Borrower directly or indirectly by virtue of family
membership, ownership, control, management or otherwise;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, the applicable
Borrower has complied with any Federal, State or local law, compliance with
which is required in order for Lender to have a security interest in the
Accounts owed by such account debtor that is enforceable and perfected against
such account debtor and third parties;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(m) such Accounts of a single account debtor or its Affiliates do
not constitute more than twenty-five (25%) percent (or fifty (50%) percent in
the case of Accounts owed by the New York City Board of Education) of all
otherwise Eligible Accounts, net of retainages included therein (but the portion
of the Accounts not in excess of such percentage may be deemed Eligible
Accounts);
(n) such Accounts are not owed by an account debtor who has Accounts
unpaid more than ninety (90) days (or one hundred twenty (120) days in the case
of Paratrans/Pre-K/Medicaid Accounts) after the date of the original invoice for
them which constitute more than fifty (50%) percent of the total Accounts of
such account debtor;
(o) such Accounts are owed by account debtors whose total
indebtedness to all Borrowers does not exceed the credit limit with respect to
such account debtors as determined by Lender from time to time in its reasonable
judgment (but the portion of the Accounts not in excess of such credit limit may
still be deemed Eligible Accounts); and
(p) such Accounts are owed by account debtors deemed creditworthy at
all times by Lender, as determined in good faith by Lender.
General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith. Lender shall give the Borrower's Representative
notice of any new or revised criteria as promptly as practicable after
establishing or revising such criteria. Any Accounts which are not Eligible
Accounts shall nevertheless be part of the Collateral.
1.21 "Environmental Laws" shall mean all federal, state, district, local
and foreign laws, rules, regulations, ordinances, and consent decrees relating
to health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to a Borrower's business and
facilities (whether or not owned by it), including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination,
chemicals, or hazardous, toxic or dangerous substances, materials or wastes into
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals, or
hazardous, toxic or dangerous substances, materials or wastes.
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1.22 "Equity Interests" shall mean Capital Stock or warrants, options, or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
1.23 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.24 "ERISA Affiliate" shall mean any person required to be aggregated
with Parent or any Borrower or any of their Subsidiaries under Sections 414(b),
414(c), 414(m) or 414(o) of the Code.
1.25 "Eurodollar Rate" shall mean with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrowers and approved by Lender) on or
about 9:00 a.m. (New York City time) two (2) Business Days prior to the
commencement of such Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans requested by and available to a
Borrower in accordance with this Agreement, with a maturity of comparable
duration to the Interest Period selected by such Borrower.
1.26 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.27 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.28 "Excess Availability" shall mean the amount, as determined by Lender,
calculated at any time, equal to: (a) the lesser of (i) the amount of the
Revolving Loans available to Borrowers as of such time based on the applicable
lending formulas multiplied by the Net Amount of Eligible Accounts, as
determined by Lender, and subject to the sublimits and Availability Reserves
from time to time established by Lender hereunder and (ii) the Maximum Credit,
minus (b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations, plus (ii) the aggregate amount of all trade payable of Borrowers
which are more than sixty (60) days past due as of such time.
1.29 "Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same now exists or may from time to time hereafter be amended, modified,
recodified, or supplemented, together with all rules, regulations, and
interpretations thereunder or related thereto.
1.30 "Existing Holders" shall mean Domenic Gatto, Michael Gatto, Patrick
Gatto, and Busco Capital Inc.
1.31 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements and other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by any
Borrower or any Obligor in connection with this Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.32 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the
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Accounting Principles Board and the American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial Accounting
Standards Boards which are applicable to the circumstances as of the date of
determination consistently applied, except that, for purposes of calculating
Consolidated Net Income and Adjusted Pre-Tax Income, GAAP shall be determined on
the basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the audited financial statements delivered to
Lender prior to the date hereof.
1.33 "Guarantors" shall mean (a) Parent, Block 7932, Inc., a New York
corporation, G.V.D. Leasing Co., Inc., a New York corporation, 180 Jamaica
Corp., a New York corporation, Metro Affiliates, Inc., a New York corporation,
Midway Leasing Inc., a New York corporation, and Temporary Transit Service,
Inc., a New York corporation, and (b) each other Person (other than a Borrower)
that from time to time hereafter becomes a Guarantor pursuant to a written
guarantee of the Obligations acceptable in form and substance to Lender.
1.34 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation any that are or become classified as hazardous or toxic under any
Environmental Law).
1.35 "Indenture" shall mean the Indenture dated as of February 4, 1997,
among Parent, the Subsidiaries of Parent as guarantors, and The Bank of New
York, as Trustee for the holders of the Senior Notes, pursuant to which Parent
is issuing the Senior Notes, as the same may be amended, modified, supplemented,
extended, renewed, restated, or replaced.
1.36 "Information Certificate" shall mean the Information Certificate of
the Borrowers and Guarantors constituting Exhibit A hereto containing material
information with respect to each Borrower and Guarantor, its business and assets
provided by or on behalf of Borrowers and Guarantors to Lender in connection
with the preparation of this Agreement and the other Financing Agreements and
the financing arrangements provided for herein.
1.37 "Intercreditor Agreement" shall mean the Intercreditor Agreement
dated the date hereof between Lender and the collateral agent for the Senior
Notes, as the same may be amended, modified, supplemented, extended, renewed,
restated or replaced, all in form and substance acceptable to Lender.
1.38 "Interest Period" shall mean for any Eurodollar Rate Loan, a period
of approximately one (1), two (2), or three (3) months duration as a Borrower
may elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, a Borrower
may not elect an Interest Period which will end after the last day of the
then-current term of this Agreement.
1.39 "Interest Rate" shall mean, as to Prime Rate Loans, a rate of
three-quarters of one (3/4%) percent per annum in excess of the Prime Rate and,
as to Eurodollar Rate Loans, a rate of two and three-quarter (2-3/4%) percent
per annum in excess of the Adjusted Eurodollar Rate (based on the Eurodollar
Rate applicable for the Interest Period selected by a Borrower as in effect
three (3)
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Business Days after the date of receipt by Lender of the request of such
Borrower for such Eurodollar Rate Loans in accordance with the terms hereof,
whether such rate is higher or lower than any rate previously quoted to such
Borrower); provided, that, the Interest Rate shall mean the rate of two and
three-quarters (2-3/4%) percent per annum in excess of the Prime Rate as to
Prime Rate Loans and all other non-contingent Obligations (other than Eurodollar
Rate Loans) and the rate of four and three-quarters (4-3/4%) percent per annum
in excess of the Adjusted Eurodollar Rate as to Eurodollar Rate Loans, at
Lender's option, without notice, (a) for the period on and after the date of
termination or non-renewal hereof, or the date of the occurrence of any Event of
Default or event which with notice or passage of time or both would constitute
an Event of Default, and for so long as such Event of Default or other event is
continuing and until such time as all Obligations are indefeasibly paid in full
(notwithstanding entry of any judgment against any Borrower) and (b) on the
Revolving Loans at any time outstanding in excess of the amounts available to
Borrowers under Section 2 (whether or not such excess(es) arise or are made with
or without Lender's knowledge or consent and whether made before or after an
Event of Default). Notwithstanding the preceding provisions if for any fiscal
year of Parent ending on or after June 30, 1997, Parent has Adjusted Pre-Tax
Income in excess of $2,000,000 then, effective five business days after Lender
receives audited financial statements of Parent and its consolidated
Subsidiaries for such fiscal year, conforming to the requirements of Section
9.6(a) and reflecting such Adjusted Pre-Tax Income, the percentages per annum
referenced above, which are added to the Prime Rate or the Adjusted Eurodollar
Rate, as the case may be, shall be reduced in each instance by one-quarter of
one (1/4%) percent per annum. While Lender may rely on such financial statements
for purposes of determining whether such rate adjustment shall apply, it shall
not be bound by such financial statement if it reasonably determines that such
statements are inaccurate or incomplete in any respect. Only one such reduction
shall be permitted during the term or any renewal term hereof.
1.40 "Inventory" of a Borrower shall mean all of such Borrower's now owned
and hereafter existing or acquired inventory consisting of fuel and oil and
other supplies used or useful in such Borrower's business and spare parts for
vehicles, wherever located.
1.41 "Letter of Credit Accommodations" shall mean the letters of credit,
merchandise purchase or other guaranties which are from time to time either (a)
issued or opened by Lender for the account of any Borrower or any Obligor or (b)
with respect to which Lender has agreed to indemnify the issuer or guaranteed to
the issuer the performance by any Borrower of its obligations to such issuer.
1.42 "Loans" shall mean the Revolving Loans.
1.43 "Maximum Credit" shall mean the amount of $30,000.000.
1.44 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) returns, discounts, claims, credits, allowances and retainages
of any nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto.
1.45 "Net Proceeds" means the aggregate proceeds received in the form of
cash or Cash Equivalents in respect of any Asset Sale (including payments in
respect of deferred payment obligations when received), net of (a) the
reasonable and customary direct out-of-pocket costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions), other than any such costs payable to an Affiliate of
AETG, (b) taxes actually payable directly as a result of such Asset Sale (after
taking into account any available tax credits or
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deductions and any tax sharing arrangements), (c) amounts required to be applied
to the permanent repayment of indebtedness in connection with such Asset Sale,
and (d) appropriate amounts provided as a reserve by Parent or any Subsidiary of
Parent, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by Parent or such Subsidiary, as the case may be, after
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations arising from such
Asset Sale.
1.46 "Obligations" shall mean any and all Revolving Loans, Letter of
Credit Accommodations and all other obligations, liabilities and indebtedness of
every kind, nature and description owing by any one or more Borrowers to Lender
and/or its affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to a Borrower under the United States Bankruptcy Code or any
similar statute (including, without limitation, the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case), whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by Lender.
1.47 "Obligor" shall mean any Guarantor, and any endorser, acceptor,
surety or other person liable on or with respect to the Obligations or who is
the owner of any property which is security for the Obligations, other than
Borrowers.
1.48 "Parent" shall mean Atlantic Express Transportation Corp., a New York
corporation.
1.49 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.50 "Permitted Payments Amount" shall mean $2,000,000 plus the amount, if
any, not less than zero, equal to the sum of (a) 50% of the Consolidated Net
Income of Parent and its subsidiaries for the period (taken as one accounting
period) from the beginning of the first fiscal quarter commencing immediately
after the date hereof to the end of Parent's most recently ended fiscal quarter
for which internal financial statements are available at the time of
determination (or if such Consolidated Net Income is a deficit, 100% of such
deficit), plus (b) 100% of the aggregate net cash proceeds (or the net cash
proceeds received upon conversion of non-cash proceeds to cash) received by
Parent from the issuance or sale, other than to a Subsidiary, of Equity
Interests (other than Disqualified Capital Stock) after the date hereof and on
or prior to the time of determination, plus (c) 100% of the aggregate net cash
proceeds (or the net cash proceeds received upon the conversion of non-cash
proceeds into cash) received by Parent from the issuance or sale, other than to
a Subsidiary, of any convertible or exchangeable debt security of Parent that
has been converted or exchanged into Equity Interest of Parent (other than
Disqualified Capital Stock) pursuant to the terms thereof after the date hereof
and on or prior to the date of determination (including any net cash proceeds
received by Parent upon such conversion or exchange).
1.51 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Code) limited liability company, business
trust, unincorporated association, joint stock corporation, trust, joint venture
or other entity or any government or any agency or instrumentality or political
subdivision thereof.
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1.52 "Prime Rate" shall mean the rate from time to time publicly announced
by CoreStates Bank, N.A., or its successors, at its office in Philadelphia,
Pennsylvania, as its prime rate, whether or not such announced rate is the best
rate available at such bank.
1.53 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms hereof.
1.54 "Public Equity Offering" shall mean an underwritten public offering
of Capital Stock of Parent (other than Disqualified Capital Stock), pursuant to
a registration statement filed with and declared effective by the Commission in
accordance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
1.55 "Purchase Money Indebtedness" shall mean (a) the amount of any
obligations of any Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and (b) indebtedness of
any specified Person representing, or incurred to finance, the cost of acquiring
or improving any assets, or the cost of construction or build-out of
manufacturing, distribution, or administrative facilities (including any such
indebtedness of any Person at the time it is merged with or into or is otherwise
acquired by the specified Person), provided that indebtedness described in this
clause (b) shall not constitute Purchase Money Indebtedness unless (i) the
principal amount of such indebtedness is equal to or less than 100% of the cost
(including construction charges) of the assets or facilities, (ii) any lien
securing such indebtedness does not extend to or encumber any asset or property
other than the asset or property being acquired, improved, constructed, or built
out with the proceeds of such indebtedness, and (iii) such indebtedness is
incurred, and any liens with respect thereto are granted, within 180 days of the
acquisition or improvement of such asset or property.
1.56 "Records" shall mean all of a Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of such Borrower with respect to the
foregoing maintained with or by any other person).
1.57 "Reference Bank" shall mean CoreStates Bank, N.A., or its successors,
or such other bank as Lender may from time to time designate.
1.58 "Revolving Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of a Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.59 "Senior Notes" shall mean Parent's 10 3/4% Senior Secured Notes due
2004, in the aggregate original principal amount of $110,000,000, together with
any notes with terms substantially identical thereto offered in exchange
therefor pursuant to a registration statement filed in accordance with the
Registration Rights Agreement (as defined in the Indenture).
1.60 "Stockholders Agreement" shall mean the Stockholders Agreement dated
as of February 28, 1994 by and among AETG and the Existing Holders as amended by
the First Amendment thereto dated as of January 30, 1997 by and among AETG and
the Existing Holders.
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1.61 "Subsidiary" shall mean with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Voting Stock is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of such Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof;
provided, however, that for the purposes of this Agreement, Atlantic North shall
not be considered a Subsidiary of Parent except as otherwise expressly provided
herein.
1.62 "Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of January 31, 1997 between Parent and AETG.
1.63 "Voting Stock" shall mean, with respect to any Person: (a) one or
more classes of the Capital Stock of such Person having general voting power to
elect at least a majority of the board of directors, managers, or trustees of
such Person (irrespective of whether or not at the time Capital Stock of any
other class or classes has or might have voting power by reason of the happening
of any contingency); and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
1.64 "Weighted Average Life to Maturity" shall mean, when applied to any
indebtedness at any date, the number of years (rounded to the nearest
one-twelfth) obtained by dividing (i) the then outstanding principal amount of
such indebtedness into (ii) the total of the products obtained by multiplying
(x) the amount of each then remaining installment, sinking fund, serial maturity
or other required payments of principal, including payment at final maturity, in
respect thereof, by (y) the number of years (calculated to the nearest one
twelfth) that will elapse between such date and the making of such payment.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions contained herein,
Lender agrees to make Revolving Loans to each Borrower from time to time in
amounts requested by such Borrower or the Borrowers' Representative up to an
amount, which, when taken together with all other Revolving Loans which are
outstanding to Borrowers, does not exceed to the sum of:
(i) eighty-five (85%) percent of the aggregate Net Amount of
Eligible Accounts of all Borrowers, less
(ii) any Availability Reserves.
(b) Lender may, in its discretion, from time to time, upon not less
than five (5) Business Days prior telephonic notice to Borrowers' Representative
(which may, in Lender's sole discretion, be confirmed by Lender in writing at
any time thereafter without limiting the effectiveness of the original
telephonic notice), reduce the lending formula with respect to Eligible Accounts
to the extent that Lender determines in good faith that: (A) the dilution with
respect to the Accounts for any period (based on the ratio of (1) the aggregate
amount of reductions in Accounts other than as a result of payments in cash to
(2) the aggregate amount of total revenues) has increased in any material
respect or may be reasonably anticipated to increase in any material respect
above historical levels, or
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(B) the general creditworthiness of account debtors has declined. In determining
whether to reduce the lending formula(s), Lender may consider events,
conditions, contingencies or risks which are also considered in determining
Eligible Accounts or in establishing Availability Reserves.
(c) Except in Lender's discretion, the aggregate amount of the Loans
and the Letter of Credit Accommodations outstanding to all Borrowers at any time
shall not exceed the Maximum Credit. In the event that the outstanding amount of
any component of the Loans, or the aggregate amount of the outstanding Loans and
Letter of Credit Accommodations, exceed the amounts available under the lending
formulas, the sublimits for Letter of Credit Accommodations set forth in Section
2.2(c) or the Maximum Credit, as applicable, such event shall not limit, waive
or otherwise affect any rights of Lender in that circumstance or on any future
occasions and Borrowers shall, upon demand by Lender, which may be made at any
time or from time to time, immediately repay to Lender the entire amount of any
such excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained herein,
at the request of a Borrower or the Borrowers' Representative, Lender agrees to
provide or arrange for Letter of Credit Accommodations for the account of a
Borrower containing terms and conditions acceptable to Lender and the issuer
thereof. Any payments made by Lender to any issuer thereof and/or related
parties in connection with the Letter of Credit Accommodations shall constitute
additional Revolving Loans to such Borrower pursuant to this Section 2.
(b) In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations, each Borrower
shall pay to Lender a letter of credit fee at a rate equal to one and
one-quarter (1.25%) percent per annum on the daily outstanding balance of the
Letter of Credit Accommodations for the immediately preceding month (or part
thereof), payable in arrears as of the first day of each succeeding month;
provided, however, that for the period on and after the date of termination of
non-renewal hereof, or the date of the occurrence of any Event of Default or
event which with notice or passage of time or both would constitute an Event of
Default, and for so long as such Event of Default or other event is continuing
as determined by Lender and until such time as all Obligations (including,
without limitation contingent Obligations with respect to Letter of Credit
Accommodations) are indefeasibly paid or satisfied in full (notwithstanding
entry of any judgment against any Borrower) such letter of credit fee shall
accrue at a rate of two and one-quarter (2.25%) per cent per annum. Such letter
of credit fee shall be calculated on the basis of a three hundred sixty (360)
day year and actual days elapsed and the obligation of such Borrower to pay such
fee shall survive the termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available unless on
the date of the proposed issuance of any Letter of Credit Accommodations, the
Revolving Loans available to the Borrowers (subject to the Maximum Credit and
any Availability Reserves) are equal to or greater than one hundred (100%)
percent of the face amount of such proposed Letter of Credit Accommodations and
all other commitments and obligations made or incurred by Lender with respect
thereto. Effective on the issuance of each Letter of Credit Accommodation, the
amount of Revolving Loans which might otherwise be available to Borrowers shall
be reduced by one hundred (100%) percent of the face amount of such Letter of
Credit Accommodation.
(d) Except in Lender's discretion, the amount of all outstanding
Letter of Credit Accommodations and all other commitments and obligations made
or incurred by Lender in
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connection therewith, shall not at any time exceed $10,000,000. At any time an
Event of Default exists or has occurred and is continuing, upon Lender's
request, each Borrower will either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations furnished to such Borrower or furnish cash collateral to Lender
for the Letter of Credit Accommodations furnished to such Borrower, and in
either case, the Revolving Loans otherwise available to such Borrower shall not
be reduced as provided in Section 2.2(c) to the extent of such cash collateral.
(e) Each Borrower shall, jointly and severally with all other
Borrowers, indemnify and hold Lender harmless from and against any and all
losses, claims, damages, liabilities, costs and expenses which Lender may suffer
or incur in connection with any Letter of Credit Accommodations and any
documents, drafts or acceptances relating thereto, including, but not limited
to, any losses, claims, damages, liabilities, costs and expenses due to any
action taken by any issuer or correspondent with respect to any Letter of Credit
Accommodation. Each Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
such Borrower's agent. Each Borrower assumes all risks for, and agrees to pay,
all foreign, Federal, State and local taxes, duties and levies relating to any
goods subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder. Each Borrower hereby releases and holds Lender harmless
from and against any acts, waivers, errors, delays or omissions, whether caused
by such Borrower, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation. The provisions of this Section
2.2(e) shall survive the payment of Obligations and the termination or
non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed to grant
any Borrower any right or authority to pledge the credit of Lender in any
manner. Lender shall have no liability of any kind with respect to any Letter of
Credit Accommodation provided by an issuer other than Lender unless Lender has
duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Each Borrower shall be bound by any interpretation made in good faith by Lender,
or any other issuer or correspondent under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of any Borrower or Borrowers' Representative with respect to such
Letter of Credit Accommodations or documents. Lender shall have the sole and
exclusive right and authority to, and no Borrower shall: (i) at any time an
Event of Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any instructions
as to acceptance or rejection of any documents or goods or (C) execute any and
all applications for steamship or airway guaranties, indemnities or delivery
orders, and (ii) at all times, (A) grant any extensions of the maturity of, time
of payment for, or time of presentation of, any drafts, acceptances, or
documents, and (B) agree with any third party as to any amendments, renewals,
extensions, modifications, changes or cancellations (which have been requested
or approved by Borrowers' Representative or the applicable Borrower) of any of
the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Lender may take such actions either in its
own name or in a Borrower's name.
(g) Any rights, remedies, duties or obligations granted or
undertaken by a Borrower to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower to Lender.
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Any duties or obligations undertaken by Lender to any issuer or correspondent in
any application for any Letter of Credit Accommodation, or any other agreement
by Lender in favor of any issuer or correspondent relating to any Letter of
Credit Accommodation, shall be deemed to have been undertaken by the applicable
Borrower to Lender and to apply in all respects to such Borrower.
2.3 Availability Reserves. All Revolving Loans and Letter of Credit
Accommodation otherwise available to any Borrower pursuant to the lending
formulas and subject to the Maximum Credit and other applicable limits hereunder
shall be subject to Lender's continuing right to establish and revise
Availability Reserves. Lender shall give Borrowers' Representative notice of any
Availability Reserve as promptly as practicable after it is established or
revised.
2.4 Borrowers' Representative. Each of the Borrowers hereby appoints the
Borrowers' Representative as its agent and representative for the purposes of
all communications and authorizations between such Borrower and Lender under
this Agreement or any of the other Financing Agreements, including, without
limitation: making requests for Loans or Letter of Credit Accommodations; giving
notices to Lender and receiving notices from Lender; and giving any direction or
instruction to Lender contemplated by this Agreement. Each of the Borrowers
hereby authorizes and directs Lender to act in accordance with any and every
authorization, request, notice, instruction, or direction received on such
Borrower's behalf from the Borrower's Representative, without requiring Lender
to confirm such Borrower's authorization therefor, and each Borrower hereby
releases Lender from and indemnifies Lender and holds Lender harmless against
any liability, claim, loss, damages, cost, or expense arising from or relating
in any way to Lender's acting upon such authorization, request, notice,
instruction, or direction. Notwithstanding the foregoing, Lender may require a
Borrower to confirm such request, notice, instruction, or direction, or to
execute personally any agreement or instrument between such Borrower and Lender,
whenever Lender in its sole discretion deems it necessary or desirable to do so.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Each Borrower shall pay to Lender interest on the outstanding
principal amount of the non-contingent Obligations of such Borrower at the
Interest Rate. All interest accruing on and after the date of any Event of
Default or termination or non-renewal hereof shall be payable on demand.
(b) Each Borrower may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate
Loans continue for an additional Interest Period. Such request from a Borrower
shall specify the amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Lender of
such a request from a Borrower, such Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case
may be, provided, that, (i) no Event of Default, or event which with notice or
passage of time or both would constitute an Event of Default, exists or has
occurred and is continuing, (ii) no party hereto shall have sent any notice of
termination or non-renewal of this Agreement, (iii) such Borrower shall have
complied with such customary procedures as are established by Lender and
specified by Lender to such Borrower from time to time for requests by a
Borrower for Eurodollar Rate Loans, (iv) no more than four (4) Interest Periods
may be in effect at
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any one time, (v) the aggregate amount of the Eurodollar Rate Loans to all
Borrowers must be in an amount not less than $1,000,000 or an integral multiple
of $1,000,000 in excess thereof, (vi) the maximum amount of the Eurodollar Rate
Loans at any time requested by such Borrower and all other Eurodollar Rate Loans
outstanding to the Borrowers shall not exceed the amount equal to eighty (80%)
percent of the daily average of the principal amount of the Revolving Loans
which it is anticipated will be outstanding during the applicable Interest
Period, as determined by Lender (but with no obligation of Lender to make such
Revolving Loans) and (vii) Lender shall have determined that the Interest Period
or Adjusted Eurodollar Rate is available to Lender through the Reference Bank
and can be readily determined as of the date of the request for such Eurodollar
Rate Loan by such Borrower. Any request by a Borrower to convert Prime Rate
Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans
shall be irrevocable. Notwithstanding anything to the contrary contained herein,
Lender and Reference Bank shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Lender and Reference Bank had purchased such deposits to
fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Lender
has received and approved a request to continue such Eurodollar Rate Loan at
least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Lender's option, upon notice
by Lender to the applicable Borrower, convert to Prime Rate Loans in the event
that (i) an Event of Default, or event which with the notice or passage of time
or both would constitute an Event of Default, shall exist, (ii) this Agreement
shall terminate or not be renewed, or (iii) the aggregate principal amount of
the Prime Rate Loans which have previously been converted to Eurodollar Rate
Loans or existing Eurodollar Rate Loans continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest Period
exceed (or would exceed but for such conversion and after giving effect to all
repayments of Revolving Loans during such Interest Period) either (A) the
aggregate principal amount of the Loans then outstanding, or (B) the then
outstanding principal amount of the Revolving Loans then available to Borrowers
under Section 2 hereof. Each Borrower shall pay to Lender, upon demand by Lender
(or Lender may, at its option, charge any loan account of any Borrower) any
amounts required to compensate Lender, the Reference Bank or any participant
with Lender for any loss (including loss of anticipated profits), cost or
expense incurred by such person, as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent Obligations (other than Eurodollar
Rate Loans) shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs. In no event shall charges
constituting interest payable by any Borrower to Lender exceed the maximum
amount or the rate permitted under any applicable law or regulation, and if any
part or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.
3.2 Closing Fee. Borrowers shall jointly and severally pay to Lender as a
closing fee the amount of $150,000, which shall be fully earned as of and
payable on the date hereof.
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3.3 Servicing Fee. Borrowers shall jointly and severally pay to Lender
monthly a servicing fee in an amount equal to $3,250 in respect of Lender's
services for each month (or part thereof) while this Agreement remains in effect
and for so long thereafter as any of the Obligations are outstanding, which fee
shall be fully earned as of and payable in advance on the date hereof and on the
first day of each month hereafter.
3.4 Unused Line Fee. Borrowers shall jointly and severally pay to Lender
monthly an unused line fee equal at a rate equal to three-eighths of one (3/8%)
percent per annum calculated upon the amount by which $22,000,000 exceeds the
average daily principal balance of the outstanding Revolving Loans and Letter of
Credit Accommodations during the immediately preceding month (or part thereof)
while this Agreement is in effect and for so long thereafter as any of the
Obligations are outstanding, which fee shall be payable on the first day of each
month in arrears.
3.5 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Lender to Borrowers, convert to
Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either (A)
make it unlawful for Lender or the Reference Bank to make or maintain Eurodollar
Rate Loans or to comply with the terms hereof in connection with the Eurodollar
Rate Loans, or (B) shall result in the increase in the costs to Lender of making
or maintaining any Eurodollar Rate Loans by an amount deemed by Lender to be
material, or (C) reduce the amounts received or receivable by Lender in respect
thereof, by an amount deemed by Lender to be material or (ii) the cost to Lender
of making or maintaining any Eurodollar Rate Loans shall otherwise increase by
an amount deemed by Lender to be material. Each Borrower shall pay to Lender,
upon demand by Lender (or Lender may, at its option, charge any loan account of
any Borrower) any amounts required to compensate Lender or the Reference Bank
for any loss (including loss of anticipated profits), cost or expense incurred
by such Person as a result of the foregoing, including, without limitation, any
such loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Person to make or maintain the
Eurodollar Rate Loans or any portion thereof. A certificate of Lender setting
forth the basis for the determination of such amount necessary to compensate
Lender as aforesaid shall be delivered to Borrowers and shall be conclusive,
absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Lender other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of Collateral, each Borrower
shall pay to Lender upon demand by Lender (or Lender may, at its option, charge
any loan account of any Borrower) any amounts required to compensate Lender or
the Reference Bank for any additional loss (including loss of anticipated
profits), cost or expense incurred by such person as a result of such prepayment
or payment, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Person to make or maintain such Eurodollar Rate Loans or any portion
thereof.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lender making
the initial Loans and providing the initial Letter of Credit Accommodations
hereunder:
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(a) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has valid perfected and first priority
security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Obligor
in respect thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements; without limiting the foregoing,
Lender shall have received, in form and substance satisfactory to Lender, all
releases, terminations and such other documents as Lender may request to
evidence and effectuate the termination by the existing lenders to Borrowers and
Guarantors and/or their respective Subsidiaries of such existing lenders'
respective financing arrangements with Borrowers and Guarantors and/or such
Subsidiaries and the termination and release by them, of any interest in and to
any assets and property of each Borrower or Guarantor and its Subsidiaries, duly
authorized, executed and delivered by each such existing lender, including, but
not limited to, (i) UCC termination statements for all UCC financing statements
previously filed by each such existing lender or its predecessors, as secured
party, and any Borrower, any Guarantor, any such Subsidiary or any other
Obligor, as debtor, and (ii) satisfactions and discharges of any mortgages,
deeds of trust or deeds to secure debt by any Borrower or Guarantor, its
Subsidiaries or any other Obligor in favor of such existing lenders, in form
acceptable for recording in the appropriate government office;
(b) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Lender, and Lender shall have received all information and
copies of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or governmental authorities;
(c) no material adverse change shall have occurred in the assets,
business or prospects of any Borrower or Guarantor since the date of Lender's
latest field examination and no change or event shall have occurred which would
impair the ability of any Borrower or any Obligor to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a party
or of Lender to enforce the Obligations or realize upon the Collateral;
(d) Lender shall have completed a field review of the Records and
such other information with respect to the Collateral as Lender may require to
determine the amount of Revolving Loans available to Borrowers, the results of
which shall be satisfactory to Lender, not more than three (3) business days
prior to the date hereof;
(e) Lender shall have received, in form and substance satisfactory
to Lender, all consents, waivers, acknowledgments and other agreements from
third persons which Lender may deem necessary or desirable in order to permit,
protect and perfect its security interests in and liens upon the Collateral or
to effectuate the provisions or purposes of this Agreement and the other
Financing Agreements;
(f) Lender shall have received evidence of insurance required
hereunder and under the other Financing Agreements, in form and substance
satisfactory to Lender;
(g) Lender shall have received, in form and substance satisfactory
to Lender, such opinion letters of counsel to Borrowers and Guarantors with
respect to the Financing Agreements and such other matters as Lender may
request;
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(h) Lender shall have conducted such review and due diligence as it
deems appropriate (with the results of such review and due diligence to be
satisfactory to Lender) with respect to (i) contracts pursuant to which any of
the Borrowers render services to its customers, (ii) performance bonds, and any
similar instruments or performance support, which any Borrower has provided to
any of its customers (iii) all collective bargaining agreement to which any
Borrower or any Subsidiary of a Borrower is a party and (iv) other matters
pertaining to the business, operations or assets of any of the Borrowers or
their Subsidiaries;
(i) Lender shall have received evidence satisfactory to it of the
completion of the issuance, on terms acceptable to Lender, by Parent of the
Senior Notes and Parent shall be simultaneously receiving the proceeds thereof
and applying such proceeds to repay all outstanding indebtedness for borrowed
money or capital leases of Borrowers and their respective Subsidiaries (other
than approximately $800,000 in principal amount of indebtedness incurred to
finance vehicles used in Borrowers' paratransit operations);
(j) Lender shall have received (i) a guarantee agreement, in form
and substance satisfactory to it, from (A) each Borrower, guaranteeing the
Obligations of all other Borrowers, and (B) Parent and each Subsidiary of Parent
that is not a Borrower, guaranteeing the Obligations of all Borrowers and (ii) a
security agreement from each Subsidiary of Parent that is not a Borrower,
granting Lender a security interest in its personal property of the same types
as the Collateral to secure its guarantee of the Obligations; and
(k) Lender shall have received the Intercreditor Agreement, duly
executed by the collateral agent for the holders of the Senior Notes, and in
full force and effect; and
(l) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
in form and substance satisfactory to Lender.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
Lender making Loans and/or providing Letter of Credit Accommodations to any
Borrower, including the initial Loans and Letter of Credit Accommodations and
any future Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto; and
(b) no Event of Default and no event or condition which, with notice
or passage of time or both, would constitute an Event of Default, shall exist or
have occurred and be continuing on and as of the date of the making of such Loan
or providing each such Letter of Credit Accommodation and after giving effect
thereto.
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SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, each Borrower hereby
grants to Lender a continuing security interest in, a lien upon, and a right of
set off against, and hereby assigns to Lender as security, the following
property and interests in property, whether now owned or hereafter acquired or
existing, and wherever located (collectively, the "Collateral"):
5.1 Accounts;
5.2 subject to the final paragraph of this Section 5, all present and
future contract rights (including, without limitation, all rights under service
contracts pursuant to which any Borrower renders its services to its customers,
which rights shall include any and all rights to all retainages which may arise
thereunder), general intangibles (including, but not limited to, tax and duty
refunds, patents, trade secrets, trademarks, service marks, copyrights, trade
names, applications and registrations for the foregoing, goodwill, processes,
drawings, blueprints, customer lists, licenses, whether as licensor or licensee,
choses in action and other claims), chattel paper, documents, instruments,
letters of credit, bankers' acceptances and guaranties;
5.3 all present and future monies, securities, credit balances, deposits,
deposit accounts and other property of Borrower now or hereafter held or
received by or in transit to Lender or its Affiliates or at any other depository
or other institution from or for the account of Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and all
present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Accounts and other Collateral, including,
without limitation, (a) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, (c) goods described in invoices, documents, contracts
or instruments with respect to, or otherwise representing or evidencing,
Accounts or other Collateral, including, without limitation, returned,
repossessed and reclaimed goods, and (d) deposits by and property of account
debtors or other persons securing the obligations of account debtors;
5.4 Inventory;
5.5 Records; and
5.6 all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and all claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
In no event shall Lender's security interest in a contract or agreement of any
Borrower be deemed to be a present assignment, transfer, conveyance, subletting
or other disposition (an "Assignment") of such contract or agreement to Lender
within the meaning of any provision in such contract or agreement prohibiting,
or requiring any consent or establishing any other conditions for, an Assignment
thereof by such Borrower. Lender acknowledges that any sale, transfer or
assignment of any such contract or agreement upon the enforcement of Lender's
security interest therein would be subject to the terms of such contract or
agreement governing Assignment, except as otherwise provided in Section 9-318 of
the Uniform Commercial Code. Lender's security interest in each contract or
agreement of a Borrower shall attach from the date hereof to all of the
following, whether now existing or hereafter arising or acquired: (i) all of
such Borrower's Accounts and general intangibles for money due or to become due
arising under such contract or agreement; (ii) all
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proceeds paid or payable to such Borrower from any sale, transfer or assignment
of such contract or agreement and all rights to receive such proceeds; and (iii)
all other rights and interests of such Borrower in, to and under such contract
or agreement to the fullest extent that attachment thereto would not be a
violation of such contract or agreement directly or indirectly entitling a party
thereto (other than any Borrower, Guarantor or Affiliate thereof) to a legally
enforceable right to terminate such contract or agreement.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower's Loan Account. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of each Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s) shall
be made in accordance with Lender's customary practices as in effect from time
to time.
6.2 Statements. Lender shall render to Borrowers each month a statement
setting forth the balance in Borrowers' loan accounts maintained by Lender for
Borrowers pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by each Borrower and conclusively
binding upon each Borrower as an account stated except to the extent that Lender
receives a written notice from a Borrower's Representative of any specific
exceptions of such Borrower thereto within thirty (30) days after the date such
statement has been mailed by Lender. Until such time as Lender shall have
rendered to a Borrower a written statement as provided above, the balance in
such Borrower's loan account(s) shall be presumptive evidence of the amounts due
and owing to Lender by such Borrower.
6.3 Collection of Accounts.
(a) The Borrowers shall establish and maintain, at their joint and
several expense, such blocked accounts ("Blocked Accounts"), as Lender may
specify, with such banks as Borrower selects and are reasonably acceptable to
Lender, into which each Borrower shall promptly deposit or cause to be deposited
all payments on Accounts and all payments constituting proceeds of other
Collateral in the identical form in which such payments are made, whether by
cash, check or other manner; provided, however, that with respect to the
proceeds of Accounts and other Collateral received on a particular day, if, at
all times during the immediately preceding 30 days (i) all accrued interest or
fees that have become due and payable to Lender during such period have been
paid when due, (ii) no Event of Default has occurred and (iii) there has been
Excess Availability on an average daily basis (after giving effect to all
outstanding Letter of Credit Accommodations) of at least $5,000,000, then
Borrowers shall not be required to deposit or transfer the proceeds of Accounts
and other Collateral received on such day to the Blocked Accounts or a Payment
Account. All such proceeds that are not deposited or transferred to a Blocked
Account shall be deposited to bank accounts of the applicable Borrower which
have been identified to Lender in writing, and such proceeds shall be used only
for Borrowers' working capital or other proper corporate purposes not otherwise
prohibited by the terms hereof. The banks at which the Blocked Accounts are
established shall enter into an agreement, in form and substance satisfactory to
Lender, providing that all items received or deposited
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in the Blocked Accounts are the property of Lender, that the depository bank has
no lien upon, or right to setoff against, the Blocked Accounts, the items
received for deposit therein, or the funds from time to time on deposit therein
and that the depository bank will wire, or otherwise transfer, in immediately
available funds, on a daily basis, all funds received or deposited into the
Blocked Accounts to such bank account of Lender as Lender may from time to time
designate for such purpose ("Payment Account"). Each Borrower agrees that all
payments made to such Blocked Accounts or other funds received and collected by
Lender, whether on the Accounts or as proceeds of other Collateral or otherwise
shall be the property of Lender.
(b) Payments or other funds received will be applied (conditional
upon final collection) to the Obligations on the Business Day of receipt by
Lender in the Payment Account, if such payments are received within sufficient
time (in accordance with Lender's usual and customary practices as in effect
from time to time) to credit Borrowers' loan account on such day, and if not,
then on the next Business Day.
(c) Each Borrower and all of its affiliates, Subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes, drafts or
any other payment relating to and/or proceeds of Accounts or other Collateral
which come into their possession or under their control and immediately upon
receipt thereof, except as otherwise expressly provided in Section 6.3(a), shall
deposit or cause the same to be deposited in the Blocked Accounts, or remit the
same or cause the same to be remitted, in kind, to Lender. Except when Borrowers
are not required to deposit or transfer such payments and proceeds to the
Blocked Accounts as expressly provided in Section 6.3(a), in no event shall the
same be commingled with any Borrower's own funds. Each Borrower agrees to
reimburse Lender on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in the
transfer of funds to or from the Blocked Accounts arising out of Lender's
payments to or indemnification of such bank or person. The obligation of each
Borrower to reimburse Lender for such amounts pursuant to this Section 6.3 shall
survive the termination or non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lender may designate from time to
time. Lender may apply payments received or collected from a Borrower or for the
account of a Borrower (including, without limitation, the monetary proceeds of
collections or of realization upon any Collateral) to such of the Obligations,
whether or not then due, in such order and manner as Lender determines;
provided, however, that when no Event of Default has occurred and is continuing,
all payments shall be applied first to the Obligations other than the principal
of the Eurodollar Rate Loans that are not then due and payable, until there are
no such Obligations outstanding, and then to the principal of such Eurodollar
Rate Loans. At Lender's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to any loan account(s) of the applicable
Borrower. Each Borrower shall make all payments to Lender on the Obligations
free and clear of, and without deduction or withholding for or on account of,
any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees,
deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Lender is required to surrender or return such payment
or proceeds to any Person for any reason, then the Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and continue and this
Agreement shall continue in full force and effect as if such payment or proceeds
had not been received by Lender. Each Borrower shall be liable to pay to Lender,
and does hereby indemnify and hold Lender harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.4 shall remain
effective notwithstanding any contrary action which may be taken by Lender in
reliance upon such payment or proceeds. This Section 6.4 shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
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6.5 Authorization to Make Loans. Lender is authorized to make the Loans
and provide the Letter of Credit Accommodations based upon telephonic or other
instructions received from anyone purporting to be an officer of a Borrower or
the Borrower's Representative or other authorized person or, at the discretion
of Lender, if such Loans are necessary to satisfy any Obligations. All requests
for Loans or Letter of Credit Accommodations hereunder shall specify the date on
which the requested advance is to be made or Letter of Credit Accommodations
established (which day shall be a business day) and the amount of the requested
Loan. Requests received after 12:00 noon, New York City time on any day shall be
deemed to have been made as of the opening of business on the immediately
following business day. All Loans and Letter of Credit Accommodations under this
Agreement shall be conclusively presumed to have been made to, and at the
request of and for the benefit of, a Borrower when deposited to the credit of
such Borrower or otherwise disbursed or established in accordance with the
instructions of such Borrower or in accordance with the terms and conditions of
this Agreement.
6.6 Use of Proceeds. All Loans made or Letter of Credit Accommodations
provided by Lender to a Borrower pursuant to the provisions hereof shall be used
by such Borrower only for costs, expenses and fees in connection with the
preparation, negotiation, execution and delivery of this Agreement and the other
Financing Agreements and for general operating, working capital and other proper
corporate purposes of such Borrower not otherwise prohibited by the terms
hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of Regulation G
of the Board of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Each Borrower shall provide Lender with the
following documents in a form satisfactory to Lender: (a) on a weekly basis or
other regular basis as required by Lender, a borrowing base report, which shall
be in form, substance and detail satisfactory to Lender, (b) on a monthly basis
or more frequently as Lender may request, agings of accounts payable and
accounts receivable, (c) upon Lender's request, copies of customer statements
and credit memos, remittance advices and reports, and copies of deposit slips
and bank statements; and (d) such other reports as to the Collateral as Lender
shall request from time to time. At any time that Excess Availability is less
than $5,000,000, Lender shall have the right to require the foregoing documents
and reports to be provided to it on a more frequent basis determined by Lender.
If any of a Borrower's records or reports of the Collateral are prepared or
maintained by an accounting service, contractor, shipper or other agent, such
Borrower hereby irrevocably authorizes such service, contractor, shipper or
agent to deliver such records, reports, and related documents to Lender and to
follow Lender's instructions with respect to further services at any time that
an Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Each Borrower shall notify Lender promptly of: (i) any material
delay in such Borrower's performance of any of its obligations to any account
debtor or the assertion of any claims, offsets, defenses or counterclaims by any
account debtor, or any disputes with account debtors, or any settlement,
adjustment or compromise thereof, (ii) all material adverse information relating
to the financial condition of any account debtor and (iii) any event or
circumstance which, to such
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Borrower's knowledge would cause Lender to consider any then existing Accounts
as no longer constituting Eligible Accounts. No credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any account
debtor without Lender's consent, except in the ordinary course of such
Borrower's business in accordance with practices and policies previously
disclosed in writing to Lender. So long as no Event of Default exists or has
occurred and is continuing, each Borrower shall settle, adjust or compromise any
claim, offset, counterclaim or dispute with any account debtor in accordance
with such Borrower's business judgment and customary practices. At any time that
an Event of Default exists or has occurred and is continuing, Lender shall, at
its option, have the exclusive right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof or borrowing base report
delivered to Lender shall be true and complete, (ii) no payments shall be made
thereon except payments immediately delivered to Lender pursuant to the terms of
this Agreement (except as otherwise expressly permitted herein), (iii) no
credit, discount, allowance, extension or retainage or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Lender in
accordance with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of the applicable Borrower's
business in accordance with practices and policies previously disclosed to
Lender, (iv) there shall be no setoffs, deductions, retainages, contras,
defenses, counterclaims or disputes existing or asserted with respect thereto
except as reported to Lender in accordance with the terms of this Agreement, and
(v) none of the transactions giving rise thereto will violate in any material
respect any applicable State or Federal laws or regulations, all documentation
relating thereto will be legally sufficient under such laws and regulations and
all such documentation will be legally enforceable in accordance with its terms.
(c) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise. When no Event of Default has
occurred and is continuing, Lender shall give Borrowers' Representative at least
one Business Day's prior telephonic notice of any such verification.
(d) Each Borrower shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to such
Borrower, all chattel paper and instruments which Borrower now owns or may at
any time acquire immediately upon such Borrower's receipt thereof, except as
Lender may otherwise agree.
(e) Lender may, at any time or times that an Event of Default exists
or has occurred and is continuing, (i) notify any or all account debtors that
the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all accounts debtors to make
payment of Accounts directly to Lender or to the Blocked Accounts, (ii) extend
the time of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all Accounts
or other obligations included in the Collateral and thereby discharge or release
the account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Lender shall not be liable for its failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Lender may deem necessary or
desirable for the protection of its interests. At any time that an Event of
Default exists or has occurred and is continuing, at Lender's request, all
invoices and statements sent to any account debtor
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shall state that the Accounts and such other obligations have been assigned to
Lender and are payable directly and only to Lender and each Borrower shall
deliver to Lender such originals of documents evidencing the sale and delivery
of goods or the performance of services giving rise to any Accounts as Lender
may require.
7.3 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as such Borrower's true
and lawful attorney-in-fact, and authorizes Lender, in such Borrower's or
Lender's name, to: (a) at any time an Event of Default or event which with
notice or passage of time or both would constitute an Event of Default exists or
has occurred and is continuing (i) demand payment on Accounts or proceeds of
other Collateral, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of such Borrower's rights and remedies to collect
any Account or other Collateral, (iv) sell or assign any Account upon such
terms, for such amount and at such time or times as the Lender deems advisable,
(v) settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Account, (vii) prepare, file and sign such Borrower's name on any
proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the post office authorities to change the address for
delivery of such Borrower's mail to an address designated by Lender, and open
and dispose of all mail addressed to such Borrower, and (ix) do all acts and
things which are necessary, in Lender's determination, to fulfill such
Borrower's obligations under this Agreement and the other Financing Agreements
and (b) at any time to (i) take control in any manner of any item of payment or
proceeds thereof, (ii) have access to any lockbox or postal box into which such
Borrower's mail is deposited, (iii) endorse such Borrower's name upon any items
of payment or proceeds thereof and deposit the same in the Lender's account for
application to the Obligations, (iv) endorse such Borrower's name upon any
chattel paper, document, instrument, invoice, or similar document or agreement
relating to any Account or any goods pertaining thereto or any other Collateral,
(v) sign such Borrower's name on any verification of Accounts and notices
thereof to account debtors and (vi) execute in such Borrower's name and file any
UCC financing statements or amendments thereto. Each Borrower hereby releases
Lender and its officers, employees and designees from any liabilities arising
from any act or acts under this power of attorney and in furtherance thereof,
whether of omission or commission, except as a result of Lender's own gross
negligence or wilful misconduct as determined pursuant to a final non-appealable
order of a court of competent jurisdiction.
7.4 Right to Cure. Lender may, at its option, (a) cure any default by a
Borrower under any agreement with a third party or pay or bond on appeal any
judgment entered against a Borrower, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Lender's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Lender with respect thereto.
Lender may add any amounts so expended to the Obligations and charge the
applicable Borrower's account therefor, such amounts to be repayable by such
Borrower on demand. Lender shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of any Borrower. Any payment made or other action taken
by Lender under this Section shall be without prejudice to any right to assert
an Event of Default hereunder and to proceed accordingly.
7.5 Access to Premises. From time to time as requested by Lender, at the
cost and expense of each Borrower, (a) Lender or its designee shall have
complete access to all of each Borrower's premises during normal business hours
and after reasonable notice to the Borrowers' Representative, or at any time and
without notice to any Borrower if an Event of Default exists or has occurred and
is continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of Borrowers' books and records, including, without
limitation, the Records, (b) each Borrower shall promptly
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furnish to Lender such copies of such books and records or extracts therefrom as
Lender may request, and (c) use during normal business hours such of such
Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of Accounts and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Parent and each Borrower hereby represents and warrants to Lender the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations by Lender to Borrowers:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Parent,
Atlantic North, each Borrower, and each Subsidiary of a Borrower, is a
corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on Parent's, Atlantic North's, such
Borrower's, or such Subsidiary's, financial condition, results of operation or
business or the rights of Lender in or to any of the Collateral. The execution,
delivery and performance of this Agreement, the other Financing Agreements and
the transactions contemplated hereunder and thereunder are all within Parent's,
each Borrower's, and each Subsidiary's corporate powers, have been duly
authorized and are not in contravention of law or the terms of Parent's, each
Borrower's, and each such Subsidiary's certificate of incorporation, by-laws, or
other organizational documentation, or any indenture, agreement or undertaking
to which Parent, any Borrower or any such Subsidiary is a party or by which
Parent, any Borrower or any such Subsidiary or its property are bound. This
Agreement and the other Financing Agreements constitute legal, valid and binding
obligations of Parent, each Borrower and each Subsidiary of a Borrower that is a
party hereto or thereto, enforceable in accordance with their respective terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting the enforcement of
creditors rights generally, and by general principles of equity (whether
considered at law or in equity). Neither Parent nor any Borrower has any
Subsidiaries except (a) as set forth on the Information Certificate or (b) any
Subsidiary which is created after the date hereof, which has been previously
disclosed to Lender in writing, and which either has become a Borrower
hereunder, or has guaranteed the Obligations and has granted to Lender a first
priority security interest in all of its property of the type that would
constitute Collateral if such Subsidiary was a Borrower hereunder, pursuant to
documentation in form and substance satisfactory to Lender.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to AETG, Parent, the Borrowers and their respective
Subsidiaries which have been or may hereafter be delivered by a Borrower or an
Obligor to Lender have been or will have been, when delivered, prepared in
accordance with GAAP and fairly present the financial condition and the results
of operation of the Persons covered thereby and their respective Subsidiaries as
at the dates and for the periods set forth therein. Except as disclosed in any
interim financial statements furnished by any Borrower or an Obligor to Lender
prior to the date of this Agreement, there has been no material adverse change
in the assets, liabilities, properties and condition, financial or otherwise, of
any Borrower or Obligor, since the date of the most recent audited financial
statements furnished by such Borrower or Obligor to Lender prior to the date of
this Agreement.
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8.3 Chief Executive Office; Collateral Locations. The chief executive
office of Parent and each Borrower and of Parent's and each Borrower's Records
concerning Accounts are located only at 7 North Street, Staten Island, New York
10302 and the only other places of business of Parent or any Borrower and the
only other locations of Collateral, if any, are the addresses set forth in the
Information Certificate, subject to the right of Parent or a Borrower to
establish new locations in accordance with Section 9.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by a
Borrower or Obligor and sets forth the owners and/or operators thereof and to
the best of Parent's and each Borrower's knowledge, the holders of any mortgages
on such locations.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Lender under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens permitted under Section 9.8
hereof. Each Borrower and each Subsidiary of such Borrower has good and
marketable title to all of its properties and assets subject to no liens,
mortgages, pledges, security interests, encumbrances or charges of any kind,
except those granted to Lender and such others as are specifically listed on
Schedule 8.4 hereto or permitted under Section 9.8 hereof.
8.5 Tax Returns. Each of AETG, Parent, each Borrower, and each Subsidiary
of each Borrower, has filed, or caused to be filed, in a timely manner all tax
returns, reports and declarations which are required to have been filed by it
(taking into account all proper extensions). All information in such tax
returns, reports and declarations was complete and accurate in all material
respects when they were filed. Each of AETG, Parent, each Borrower and each
Subsidiary of each Borrower has paid or caused to be paid all taxes due and
payable or claimed due and payable in any assessment received by it, except (a)
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to AETG, Parent, such Borrower or
such Subsidiary, (b) taxes accrued but not yet due and payable, (c) taxes that
are currently payable without penalty or interest and as to which no lien has
been filed or otherwise created, (d) [taxes remaining to be paid under Chapter
11 plan], and (e) taxes where the failure to duly and timely pay has not had and
could not reasonably be expected to have a material adverse effect on the
Collateral or Lender's security interest therein, or Borrowers' and Guarantors'
ability to pay and perform the obligations, or the business, assets, prospects,
or condition (financial or otherwise) of Parent, Borrowers, and Parent's other
Subsidiaries, taken as a whole, and as to which no lien has been filed or
otherwise created. As to all such unpaid taxes, adequate reserves have been set
aside on the applicable Person's books. Adequate provision has been made for the
payment of all accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on the Information Certificate, there
is no present investigation by any governmental agency pending, or to the best
of Parent's and each Borrower's knowledge threatened, against or affecting AETG,
Parent, or any Borrower or any other Subsidiary of Parent, its assets or
business and there is no action, suit, proceeding or claim by any Person
pending, or to the best of Parent's and each Borrower's knowledge threatened,
against AETG, Parent, or any Borrower or any other Subsidiary of Parent, or its
assets or goodwill, or against or affecting any transactions contemplated by
this Agreement, which if adversely determined against AETG, Parent, or such
Borrower or Subsidiary would result in any material adverse change in the
assets, business or prospects of Parent, such Borrower or Subsidiary or would
impair the ability of Parent, such Borrower or such Subsidiary to perform its
obligations hereunder or under any of the other Financing Agreements to which it
is a party or of Lender to enforce any Obligations or realize upon any
Collateral.
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8.7 Compliance with Other Agreements and Applicable Laws. None of Parent,
Borrowers and the Subsidiaries of any Borrower is in default in any material
respect under, or in violation in any material respect of any of the terms of,
any agreement, contract, instrument, lease or other commitment to which it is a
party or by which it or any of its assets are bound, and Parent, each Borrower
and each of the Subsidiaries of Borrower is in compliance in all material
respects with all applicable provisions of laws, rules, regulations, licenses,
permits, approvals and orders of any foreign, Federal, State or local
governmental authority.
8.8 Employee Benefits.
(a) Except with respect to a delinquency in filing reports with
respect to a 401(k) plan, neither Parent, any Borrower nor any Subsidiary of a
Borrower has engaged in any transaction in connection with which Parent, such
Borrower or such Subsidiary or any of their ERISA Affiliates could be subject to
either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Code, including any accumulated funding
deficiency described in Section 8.8(c) hereof and any deficiency with respect to
vested accrued benefits described in Section 8.8(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has
been or is expected by Parent, any Borrower or any Subsidiary of a Borrower to
be incurred with respect to any employee pension benefit plan of Parent, such
Borrower or any such Subsidiary or any of its ERISA Affiliates. There has been
no reportable event (within the meaning of Section 4043(c) of ERISA) or any
other event or condition with respect to any employee pension benefit plan of
Parent, any such Borrower or any such Subsidiary or any of their ERISA
Affiliates which presents a risk of termination of any such plan by the Pension
Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which Parent, any
Borrower or any Subsidiary of a Borrower or any of their ERISA Affiliates is
required under Section 302 of ERISA and Section 412 of the Code to have paid
under the terms of each employee pension benefit plan as contributions to such
plan as of the last day of the most recent fiscal year of such plan ended prior
to the date hereof, and no accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any employee pension benefit plan, including any penalty or tax
described in Section 8.8(a) hereof and any deficiency with respect to vested
accrued benefits described in Section 8.8(d) hereof.
(d) The current value of all vested accrued benefits under all
employee pension benefit plans maintained by Parent, any Borrower or any
Subsidiary of a Borrower that are subject to Title IV of ERISA does not exceed
the current value of the assets of such plans allocable to such vested accrued
benefits, including any penalty or tax described in Section 8.8(a) hereof and
any accumulated funding deficiency described in Section 8.8(c) hereof. The terms
"current value" and "accrued benefit" have the meanings specified in ERISA.
(e) Except for Amboy Bus Co., Inc., which is a party to a
"multiemployer plan" (as defined below) for members of Local 1181-1061 of the
Amalgamated Transit Union, none of Parent, any Borrower or any Subsidiary of a
Borrower or any of their ERISA Affiliates is or has ever been obligated to
contribute to any "multiemployer plan" (as such term is defined in Section
4001(a)(3) of ERISA) that is subject to Title IV of ERISA.
8.9 Environmental Compliance.
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(a) Except as set forth on Schedule 8.9 hereto, none of the
Borrowers or any of their respective Subsidiaries has generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off its premises (whether or not owned by it) in any
manner which at any time violates in any material respect any applicable
Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder and the operations of each such Borrower and Subsidiary
complies in all material respects with all Environmental Laws and all licenses,
permits, certificates, approvals and similar authorizations thereunder.
(b) Except as set forth on Schedule 8.9 hereto, there has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other person nor is any pending or
to the best of Parent's and each Borrower's knowledge threatened, with respect
to any non-compliance with or violation of the requirements of any Environmental
Law by Parent, any Borrower or any Subsidiary of a Borrower or the release,
spill or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which affects Parent, such Borrower or any such
Subsidiary or its business, operations or assets or any properties at which
Parent, such Borrower or any such Subsidiary has transported, stored or disposed
of any Hazardous Materials.
(c) None of Parent, the Borrowers or any of Subsidiaries of
Borrowers has any material liability (contingent or otherwise) in connection
with a release, spill or discharge, threatened or actual, of any Hazardous
Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
(d) Parent, each Borrower and each Subsidiary of Borrowers has all
licenses, permits, certificates, approvals or similar authorizations required to
be obtained or filed in connection with the operations of Parent or such
Borrower or Subsidiary under any Environmental Law and all of such licenses,
permits, certificates, approvals or similar authorizations are valid and in full
force and effect.
8.10 Accuracy and Completeness of Information. All information furnished
by or on behalf of Parent or a Borrower or any of its Subsidiaries in writing to
Lender in connection with this Agreement or any of the other Financing
Agreements or any transaction contemplated hereby or thereby, including, without
limitation, all information on the Information Certificate, is true and correct
in all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading. No event or circumstance has occurred which has had
or could reasonably be expected to have a material adverse affect on the
business, assets or prospects of Parent, any Borrower or any Subsidiary of a
Borrower, which has not been fully and accurately disclosed to Lender in
writing.
8.11 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Parent, any Borrower or any Obligor shall now or hereafter give, or cause to be
given, to Lender.
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SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Parent and each Borrower shall, and shall
cause Atlantic North and all of their respective Subsidiaries to, at all times
preserve, renew and keep in full, force and effect its corporate existence and
rights and franchises with respect thereto and maintain in full force and effect
all permits, licenses, trademarks, trade names, approvals, authorizations,
leases and contracts necessary to carry on the business as presently or proposed
to be conducted. Parent and each Borrower shall maintain and preserve, and shall
cause each of their respective Subsidiaries and Atlantic North to maintain and
preserve, in good working order and condition, subject to normal wear and tear,
all of the assets and properties necessary to the operation of their respective
businesses. Parent and each Borrower shall give Lender thirty (30) days prior
written notice of any proposed change in its corporate name, which notice shall
set forth the new name and Parent or such Borrower shall deliver to Lender a
copy of the amendment to the Certificate of Incorporation of Parent or such
Borrower providing for the name change certified by the Secretary of State of
the jurisdiction of incorporation of such Borrower as soon as it is available.
9.2 New Collateral Locations. Parent or any Borrower may open any new
location within the continental United States provided Parent or such Borrower
(a) gives Lender thirty (30) days prior written notice of the opening of any
such new location which (i) is in a jurisdiction in which Parent or such
Borrower does not already have a place of business or operations or (ii) will be
the chief executive office or location of Records of Parent or such Borrower and
(b) executes and delivers, or causes to be executed and delivered, to Lender
such agreements, documents, and instruments as Lender may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including, without limitation, UCC financing statements.
9.3 Compliance with Laws, Regulations, Etc.
(a) Parent and each Borrower shall, and shall cause all of their
respective Subsidiaries and Atlantic North to, at all times, comply in all
material respects with all laws, rules, regulations, licenses, permits,
approvals and orders applicable to it and duly observe all requirements of any
Federal, State or local governmental authority, including, without limitation,
the Employee Retirement Security Act of 1974, as amended, the Occupational
Safety and Hazard Act of 1970, as amended, the Fair Labor Standards Act of 1938,
as amended, and all statutes, rules, regulations, orders, permits and
stipulations relating to environmental pollution and employee health and safety,
including, without limitation, all of the Environmental Laws.
(b) Parent and each Borrower shall, and shall cause all of their
respective Subsidiaries to, establish and maintain, at its expense, a system to
assure and monitor its continued compliance with all Environmental Laws in all
of its operations, which system shall include annual reviews of such compliance
by employees or agents of Parent or such Borrower or Subsidiary, as the case may
be, who are familiar with the requirements of the Environmental Laws. Copies of
all environmental surveys, audits, assessments, feasibility studies and results
of remedial investigations with respect to Parent or a Borrower or any of their
Subsidiaries or any of their respective properties shall be promptly furnished,
or caused to be furnished, by Parent or the applicable Borrower to Lender.
Parent and each Borrower shall take prompt and appropriate action to respond to
any non-compliance of it or any of its Subsidiaries with any of the
Environmental Laws and shall regularly report to Lender on such response.
(c) Parent and each Borrower shall give both oral and written notice
to Lender immediately upon Parent's or such Borrower's receipt of any notice of,
or Parent or such Borrower
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otherwise obtaining knowledge of, (i) the occurrence of any event involving the
release, spill or discharge, threatened or actual, of any Hazardous Material
which could result in any material liability for remediation expenses or fines
or penalties or (ii) any investigation, proceeding, complaint, order, directive,
claims, citation or notice with respect to: (A) any non-compliance with or
violation of any Environmental Law by Parent or a Borrower or any of their
respective Subsidiaries or (B) the release, spill or discharge, threatened or
actual, of any Hazardous Material or (C) the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or (D) any other environmental, health or safety matter,
which affects Parent or a Borrower, any of their respective Subsidiaries or its
business, operations or assets or any properties at which Parent or a Borrower
or Subsidiary transported, stored or disposed of any Hazardous Materials;
provided, however, that notice shall not be required under clause (ii) of this
sentence if such investigation, proceeding, complaint, order, directive, claim,
citation, or notice, if resolved or applied adversely to Parent, a Borrower, or
one of their Subsidiaries, could not reasonably be expected to result in any
material liability to any such Person for remediation expenses or fines or
penalties.
(d) Without limiting the generality of the foregoing, whenever
Lender reasonably determines that there is non-compliance, or any condition
which requires any action by or on behalf of Parent or a Borrower or any of
their respective Subsidiaries in order to avoid any material non-compliance,
with any Environmental Law, Parent or such Borrower shall, at Lender's request
and at Parent's or such Borrower's expense: (i) cause an independent
environmental engineer acceptable to Lender to conduct such tests of the site
where such non-compliance or alleged non-compliance with such Environmental Laws
has occurred as to such non-compliance and prepare and deliver to Lender a
report as to such non-compliance setting forth the results of such tests, a
proposed plan for responding to any environmental problems described therein,
and an estimate of the costs thereof and (ii) provide to Lender a supplemental
report of such engineer whenever the scope of such non-compliance, or Parent's,
such Borrower's or such Subsidiary's response thereto or the estimated costs
thereof, shall change in any material respect.
(e) Parent and Borrowers shall jointly and severally indemnify and
hold harmless Lender, its directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to the
use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material,
including, without limitation, the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of Parent, a
Borrower or any Subsidiary of a Borrower and the preparation and implementation
of any closure, remedial or other required plans. All representations,
warranties, covenants and indemnifications in this Section 9.3 shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
9.4 Payment of Taxes and Claims. Parent and each Borrower shall, and shall
cause all of their respective Subsidiaries to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to
Parent or such Borrower or Subsidiary, as the case may be, and with respect to
which adequate reserves have been set aside on its books. Each Borrower shall be
liable for any tax or penalties imposed on Lender as a result of the financing
arrangements provided for herein and Borrowers agree jointly and severally to
indemnify and hold Lender harmless with respect to the foregoing, and to repay
to Lender on demand the amount thereof, and until paid by the Borrowers such
amount shall be
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added and deemed part of the Obligations, provided, that, nothing contained
herein shall be construed to require any Borrower to pay any income or franchise
taxes attributable to the income of Lender from any amounts charged or paid
hereunder to Lender. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
9.5 Insurance. Parent and each Borrower shall, and shall cause all of
their respective Subsidiaries to, at all times, maintain with financially sound
and reputable insurers insurance with respect to the Collateral and Parent's or
such Borrower's or Subsidiary's other property and assets against loss or damage
and all other insurance of the kinds and in the amounts customarily insured
against or carried by corporations of established reputation engaged in the same
or similar businesses and similarly situated. Said policies of insurance shall
be satisfactory to Lender as to form, amount and insurer. Parent and each
Borrower shall furnish, and shall cause their respective Subsidiaries to
furnish, certificates, policies or endorsements to Lender as Lender shall
require as proof of such insurance, and, if Parent or such Borrower or any such
Subsidiary fails to do so, Lender is authorized, but not required, to obtain
such insurance at the expense of Parent or such Borrower. All policies shall
provide for at least thirty (30) days prior written notice to Lender of any
cancellation or reduction of coverage and that Lender may act as attorney for
Parent or the applicable Borrower in obtaining, and at any time an Event of
Default exists or has occurred and is continuing, adjusting, settling, amending
and canceling such insurance. If Lender so requests, Parent and each Borrower
shall cause Lender to be named as a loss payee and an additional insured (but
without any liability for any premiums) under such insurance policies insofar as
they relate to any Collateral, and Parent and each Borrower shall obtain
non-contributory lender's loss payable endorsements to all insurance policies
insofar as they relate to any Collateral in form and substance satisfactory to
Lender. Such lender's loss payable endorsements shall specify that the proceeds
of such insurance shall be payable to Lender as its interests may appear and
further specify that Lender shall be paid regardless of any act or omission by
Parent or such Borrower or any of their Subsidiaries or affiliates. At its
option, Lender may apply any insurance proceeds received by Lender at any time
to the cost of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as Lender
may determine or hold such proceeds as cash collateral for the Obligations.
9.6 Financial Statements and Other Information.
(a) Parent and each Borrower shall, and shall cause their respective
Subsidiaries to, keep proper books and records in which true, current and
complete entries shall be made of all dealings or transactions of or in relation
to the Collateral and the business of Parent or such Borrower and its
Subsidiaries in accordance with GAAP, and Parent and each Borrower shall furnish
or cause to be furnished to Lender: (i) within forty (40) days after the end of
each fiscal month, monthly unaudited consolidated financial statements
(including in each case balance sheets, statements of income and loss and
statements of shareholders' equity), all in reasonable detail, fairly presenting
the financial position and the results of the operations of Parent and its
Subsidiaries as of the end of and through such fiscal month and (ii) within
ninety (90) days after the end of each fiscal year, audited consolidated
financial statements of Parent and its Subsidiaries (including in each case
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Parent and its Subsidiaries as of the end of and for such
fiscal year, together with the opinion of independent certified public
accountants, which accountants shall be an independent accounting firm selected
by Parent and reasonably acceptable to Lender, that such financial statements
have been prepared in accordance with GAAP, and present fairly the results of
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operations and financial condition of Parent and its Subsidiaries as of the end
of and for the fiscal year then ended.
(b) Parent and each Borrower shall promptly notify Lender in writing
of the details of (i) any loss, damage, investigation, action, suit, proceeding
or claim relating to any Collateral or other property which is security for the
Obligations, if the Collateral or other property affected had a fair value in
excess of $500,000, or which would result in any material adverse change in
Parent's or such Borrower's or any of their respective Subsidiaries' business,
properties, assets, goodwill or condition, financial or otherwise and (ii) the
occurrence of any Event of Default or event which, with the passage of time or
giving of notice or both, would constitute an Event of Default.
(c) Parent shall, and shall cause each Subsidiary to, promptly after
the sending or filing thereof, furnish or cause to be furnished to Lender copies
of all reports which Parent or any Borrower or other Subsidiary sends to its
stockholders generally and copies of all reports and registration statements
which Parent, any Borrower or any other Subsidiary files with the Securities and
Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(d) Parent and each Borrower shall furnish or cause to be furnished
to Lender such budgets, forecasts, projections and other information respecting
the Collateral and the business of Parent, such Borrower and/or their respective
Subsidiaries, as Lender may, from time to time, reasonably request. Parent and
each Borrower hereby irrevocably authorizes and directs all accountants or
auditors to deliver to Lender, at Parent's or such Borrower's expense, copies of
the financial statements of Parent or such Borrower and/or their respective
Subsidiaries and any reports or management letters prepared by such accountants
or auditors on behalf of Parent and such Borrower or any of their respective
Subsidiaries and to disclose to Lender such information as they may have
regarding the business of such Borrower or any such Subsidiary. Any documents,
schedules, invoices or other papers delivered to Lender may be destroyed or
otherwise disposed of by Lender one (1) year after the same are delivered to
Lender, except as otherwise designated by Parent or the applicable Borrower to
Lender in writing.
(e) Except as set forth below, Lender will not disclose to any
Person any information provided to Lender regarding AETG, Parent, any Borrower,
any Guarantor, or and other Subsidiary of Parent. Lender's agreement in the
preceding sentence shall not apply (i) to disclosures to Lender's directors,
officers, employees, and legal and other advisors in connection with the
administration, interpretation, or enforcement of the Financing Agreements, (ii)
if such information has become generally available to the public other than
through disclosure by Lender, (iii) if such information was independently
developed by Lender without violating its agreement herein or if such
information was made available to Lender by a third party having no obligation
of confidentiality to AETG, Parent, any Borrower or Guarantor, or any such other
Subsidiary, (iv) to the extent Lender is required to disclose such information
to comply with law or legal process, (v) as part of normal reporting or review
procedures to governmental authorities, (vi) to Lender's parent company or their
respective accountants and auditors, or (vii) to any participant or assignee or
prospective participant or assignee pursuant to Section 12.4.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. None of
Parent or Borrower shall, nor shall it permit or suffer any of their respective
Subsidiaries to, directly or indirectly:
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it unless
Parent or such Borrower is the surviving
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corporation, such merger or consolidation is permitted under Section 9.10, and
no Event of Default has occurred and is then continuing (after giving effect to
such merger or consolidation);
(b) sell, transfer, or otherwise dispose of all or substantially all
of its assets;
(c) make any Asset Sale unless (i) Parent or such Borrower or
Subsidiary receives consideration at the time of such Asset Sale at least equal
to the fair market value (as determined in good faith by Parent's Board of
Directors) of the assets subject to such Asset Sale, (ii) subject to the proviso
to this clause (ii), at least 85% of the consideration for such Asset Sale is in
the form of cash, Cash Equivalents, or liabilities of Parent, any Borrower, or
any such Subsidiary (other than liabilities that are by their terms subordinated
to the Obligations) that are assumed by the transferee of such assets (so long
as following such Asset Sale there is no further recourse to Parent, any
Borrower, or any other Subsidiary of Parent with respect to such liabilities),
provided, however, that in the case of any Asset Sale of Accounts or general
intangibles for money due or to become due, or chattel paper or instruments
related thereto, 100% of the consideration therefor shall be in the form of
cash, (iii) upon receipt of any Net Proceeds from an Asset Sale of Collateral,
such Net Proceeds of Collateral are paid to Lender to the extent of and for
application to the then outstanding principal balance of the Revolving Loans,
and (iv) at the time of such Asset Sale and after giving effect thereto, no
Event of Default has occurred and is continuing; or
(d) form or acquire any Subsidiaries not in existence on the date
hereof (unless each such Subsidiary has complied with the requirements set forth
Section 9.10(d)); or
(e) wind up, liquidate or dissolve or
(f) agree to do any of the foregoing.
9.8 Encumbrances. Neither Parent nor any Borrower shall, nor shall it
permit or suffer any of its Subsidiaries to, create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or other encumbrance
of any nature whatsoever on any of its assets or properties, including, without
limitation, the Collateral, except: (a) liens and security interests of Lender;
(b) liens securing the payment of taxes, either not yet overdue or the validity
of which are being contested in good faith by appropriate proceedings diligently
pursued and available to Parent or such Borrower or Subsidiary and with respect
to which adequate reserves have been set aside on its books; (c) non-consensual
statutory liens (other than liens securing the payment of taxes) arising in the
ordinary course of Parent's or such Borrower's or Subsidiary's business to the
extent: (i) such liens secure indebtedness which is not overdue or (ii) such
liens secure indebtedness relating to claims or liabilities which are fully
insured and being defended at the sole cost and expense and at the sole risk of
the insurer or being contested in good faith by appropriate proceedings
diligently pursued and available to Parent or such Borrower or Subsidiary, as
the case may be, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which adequate reserves have been set
aside on its books; (d) zoning restrictions, easements, licenses, covenants and
other restrictions affecting the use of real property which do not interfere in
any material respect with the use of such real property or ordinary conduct of
the business of Parent or such Borrower or Subsidiary, as the case may be, as
presently conducted thereon or materially impair the value of the real property
which may be subject thereto; (e) liens on property (other than property that
would constitute Collateral hereunder if it were property of a Borrower) of a
Person existing at the time such Person is acquired by, merged into or
consolidated with Parent or such Borrower or Subsidiary, provided that such
liens were not created in contemplation of such acquisition and do not extend to
assets other than those subject to such liens immediately prior to such
acquisition; (f) liens on
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property (other than property that would constitute Collateral hereunder if it
were property of a Borrower) existing at the time of acquisition thereof by
Parent or such Borrower or Subsidiary, provided that such liens were not created
in contemplation of such acquisition and do not extend to assets other than
those subject to such liens immediately prior to such acquisition; (g) liens
incurred in the ordinary course of business in respect of obligations incurred
to fix the interest rate on any variable rate indebtedness permitted hereunder;
(h) liens incurred in the ordinary course of business to secure the performance
of statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature (exclusive of obligations constituting
indebtedness), including, without limitation, cash retainages; (i) liens
incidental to the conduct of business or the ownership of properties incurred in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, bids, and government contracts and leases and subleases;
(j) liens for any interest or title of a lessor under any operating lease
permitted to be incurred hereunder, provided that such liens do not extend to
any property or asset that is not property subject to such lease, and liens to
secure Purchase Money Indebtedness permitted hereunder; (k) any extension,
renewal, or replacement (or successive extensions, renewals or replacements), in
whole or in part, of liens described in clauses (a) through (j) or (l) through
(n); (l) Liens in addition to those permitted otherwise by this Section 9.8,
which in the aggregate are secured by assets with a fair market value not in
excess of $100,000 at any time; (m) liens and security interests in the
Collateral or in the Capital Stock of Parent and its Subsidiaries for the
benefit of the holders of the Senior Notes but only so long as such liens and
security interests are subject to the Intercreditor Agreement, and provided that
none of Parent, any Borrower, or any other Subsidiary of Parent shall grant any
lien or security interest for the benefit of the holders of the Senior Notes in
any other property or assets unless Lender is granted a lien or security
interest in such property or assets that is prior to the lien or security
interest for the benefit of the holders of the Senior Notes to the same extent
as Lender's security interests in the Collateral, and the respective liens or
security interests of Lender and such holders or their agent are otherwise
subject to the Intercreditor Agreement; and (n) the security interests and liens
existing on the date hereof and set forth on the Information Certificate.
9.9 Indebtedness. Neither Parent nor any Borrower shall, nor shall it
permit or suffer any of its Subsidiaries to, incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any obligations or
indebtedness, except (a) the Obligations; (b) obligations and indebtedness that
Parent, such Borrower, or such Subsidiary is permitted to incur at the time
under Section 4.9(a) of the Indenture; (c) trade obligations and normal accruals
in the ordinary course of business not yet due and payable, or with respect to
which Parent or such Borrower or Subsidiary, as the case may be, is contesting
in good faith the amount or validity thereof by appropriate proceedings
diligently pursued and available to Parent or such Borrower or Subsidiary, and
with respect to which adequate reserves have been set aside on its books; (d)
Purchase Money Indebtedness in an aggregate amount not to exceed $10,000,000
outstanding at any time; (e) the Senior Notes and guarantees thereof, provided,
that, (i) Parent may, and shall cause its Subsidiaries to, only make regularly
scheduled payments of interest in respect of such indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
indebtedness as in effect on the date hereof, (ii) Parent shall, and shall cause
its Subsidiaries to, not directly or indirectly, (A) amend, modify, alter or
change the terms of such indebtedness or the terms of the Indenture or any other
agreement, document or instrument related thereto as in effect on the date
hereof, or (B) redeem, retire, defease, purchase or otherwise acquire such
indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, provided that Parent may purchase or redeem Senior Notes prior to their
stated maturity (under the terms thereof as in effect on the date hereof)
pursuant to clause (k) below or with the net cash proceeds of a Public Equity
Offering, and (iii) Parent and each Borrower shall furnish to Lender all notices
or demands in connection with such indebtedness either received by Parent or
such
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Borrower or any of its Subsidiaries or on its behalf, promptly after the
receipt thereof, or sent by Parent or such Borrower or any of its Subsidiaries
or on its behalf, concurrently with the sending thereof, as the case may be; (f)
performance bonds, appeal bonds, surety bonds, insurance obligations or bonds
and other similar bonds or obligations incurred in the ordinary course of
business and not in connection with borrowing money; (g) obligations incurred to
fix the interest rate on any variable rate indebtedness otherwise permitted
hereunder; (h) indebtedness owed by (i) a Borrower or any other Subsidiary of
Parent to Parent or to another Borrower or Subsidiary of Parent or (ii) Parent
to a Borrower or other Subsidiary of Parent; (i) indebtedness arising from the
honoring by a bank or other financial institution of a check, draft or similar
instrument inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business; provided, that
such indebtedness is extinguished within three Business Days of incurrence; (j)
other indebtedness in addition to any described above which is in existence on
the date hereof and is set forth on the Information Certificate; and (k)
indebtedness issued in exchange for, or the proceeds of which are
contemporaneously used to extend, refinance, renew, replace, or refund
(collectively, "Refinance") indebtedness referred to in clause (e) or (j) above
or this clause (k) ("Refinancing Indebtedness"); provided, that (i) the
principal amount of such Refinancing Indebtedness does not exceed the principal
amount of indebtedness so Refinanced (plus the premiums required to be paid, and
the out-of-pocket expenses (other than those payable to an Affiliate of Parent)
reasonably incurred, in connection therewith), (ii) the Refinancing Indebtedness
has a final scheduled maturity that exceeds the final stated maturity, and a
Weighted Average Life to Maturity that is equal to or greater than the Weighted
Average Life to Maturity, of the indebtedness being Refinanced and (iii) the
Refinancing Indebtedness ranks, in right of payment, no more favorable to the
Obligations than the indebtedness being Refinanced.
9.10 Loans, Investments, Guarantees, Etc. Neither Parent nor any Borrower
shall, nor shall it permit its Subsidiaries to, directly or indirectly, make any
loans or advance money or property to any person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the stock or
indebtedness or all or a substantial part of the assets or property of any
person, or guarantee, assume, endorse, or otherwise become responsible for
(directly or indirectly) the indebtedness, performance, obligations or dividends
of any Person or agree to do any of the foregoing, except: (a) the endorsement
of instruments for collection or deposit in the ordinary course of business; (b)
investments in Cash Equivalents; provided, that, as to any Cash Equivalents that
are of a type constituting Collateral, unless waived in writing by Lender, a
Borrower or Guarantor shall take such actions as are deemed necessary by Lender
to perfect the security interest of Lender in such investments; (c) the
guarantees set forth in the Information Certificate and guarantees of the
Obligations or the Senior Notes; (d) acquisitions of or investments in (i)
Subsidiaries of Parent which are Borrowers or Guarantors on the date hereof or
(ii) any Person which become a Subsidiary of Parent as a result of such
acquisition or investment, provided that in connection with such acquisition or
investment, such new Subsidiary either becomes a Borrower hereunder or
guarantees the Obligations and grants to Lender a first priority security
interest in all of its property of the type that would constitute Collateral if
such Subsidiary were a Borrower hereunder, pursuant to documentation in form and
substance satisfactory to Lender, and provided that no Event of Default shall
have occurred and be continuing after giving effect to such acquisition of or
investment in such Subsidiary; (e) any loan, advance, investment, or other
transaction described above if after giving effect thereto, no Event of Default
has occurred and is continuing and the aggregate amount of such transactions and
all payments permitted under Section 9.11(g) since the date hereof is less than
the Permitted Payment Amount; (f) obligations incurred to fix the interest rate
on any variable rate indebtedness permitted hereunder; (g) investments in
securities of customers received pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such customers; (h)
investments as a result of consideration received in an Asset Sale permitted
under Section 9.7; (i) investments in
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Atlantic North but only to the extent necessary under applicable law to permit
such entity to provide insurance policies to Parent and its Subsidiaries; and
(j) investments existing on the date hereof.
9.11 Dividends and Redemptions. Neither Parent nor any Borrower shall, or
and shall permit its Subsidiaries to, directly or indirectly, declare or pay any
dividends on account of any shares of class of Capital Stock of Parent or any
Borrower or any of its Subsidiaries now or hereafter outstanding, or set aside
or otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of such Capital
Stock (or set aside or otherwise deposit or invest any sums for such purpose) or
apply or set apart any sum, or make any other distribution (by reduction of
capital or otherwise) in respect of any such shares or agree to do any of the
foregoing, except: (a) dividends or distributions payable in Equity Interests
(other than Disqualified Capital Stock) of Parent or such Borrower or
Subsidiary; (b) dividends or distributions payable to Parent or a wholly owned
Subsidiary of Parent; (c) purchases or redemptions of Equity Interests owned by
Parent or a wholly owned Subsidiary of Parent; (d) payments by Parent to AETG
pursuant to the Tax Sharing Agreement; (e) distributions, loans, and advances to
AETG in an aggregate amount not to exceed during any fiscal year the sum of (i)
the Management Fees required to be paid by AETG under and as defined in the
Stockholders Agreement during such fiscal year; (ii) and amount equal to
$100,000 for the fiscal year ending June 30, 1997, and for each fiscal year
thereafter, 105% of the amount permitted under this subclause (ii) during the
immediately preceding fiscal year, provided, that the amounts permitted under
this clause (e) are used by AETG only to pay ordinary operating expenses and
Management Fees under the Stockholder's Agreement; (f) transactions permitted
under Section 9.12; (g) any dividend, distribution, redemption or purchase of or
in respect of Capital Stock if after giving effect thereto, no Event of Default
has occurred and is continuing and the aggregate amount of such payments and all
transactions permitted under Section 9.10(e) since the date hereof is less than
the Permitted Payment Amount; and (h) redemption, repurchase, retirement, or
other acquisition of Equity Interests of Parent in exchange for Equity Interests
of Parent (other than Disqualified Capital Stock).
9.12 Transactions with Affiliates. Neither Parent nor any Borrower shall,
or permit its Subsidiaries to, enter into any transaction for the purchase, sale
or exchange of property or the rendering of any service to or by any affiliate,
except (a) in the ordinary course of and pursuant to the reasonable requirements
of Parent's or such Borrower's or Subsidiary's business and upon fair and
reasonable terms no less favorable to Parent or such Borrower or Subsidiary than
it would obtain in a comparable arm's length transaction with an unaffiliated
person; (b) existing and future employment agreements entered into by Parent or
any Subsidiary of Parent in the ordinary course of business with the approval of
a majority of the disinterested members of Parent's Board of Directors; (c)
transactions between or among Parent, Borrowers, and Guarantors; (d) reasonable
and customary fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Parent or any Subsidiary of
Parent as determined in good faith by a majority of the disinterested directors
of Parent's Board of Directors or, if none, unanimously by such Board of
Directors; (e) the "Park & Ride Lease" between Showplace Bowling Center Inc., as
lessor, and Atlantic Express Coachway Inc., as lessee, and the lease between Dom
Rich Associates, Inc., as lessor, and Staten Island Bus Inc., as lessee, in each
case as in effect of the date hereof; and (f) annual premiums paid to Atlantic
North in the ordinary course of business for insurance, provided, that such
premiums do not exceed the annual aggregate deductibles on Parent's insurance
policies then in effect.
9.13 Costs and Expenses. Each Borrower shall jointly and severally pay to
Lender on demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing
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Agreements and all other documents related hereto or thereto, including any
amendments, supplements or consents which may hereafter be contemplated (whether
or not executed) or entered into in respect hereof and thereof, including, but
not limited to: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) all costs and expenses and fees for title insurance and other insurance
premiums, environmental audits, surveys, assessments, engineering reports and
inspections, appraisal fees and search fees; (c) costs and expenses of remitting
loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the Blocked Accounts, together with Lender's customary charges
and fees with respect thereto; (d) charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations; (e) costs and
expenses of preserving and protecting the Collateral; (f) costs and expenses
paid or incurred in connection with obtaining payment of the Obligations,
enforcing the security interests and liens of Lender, selling or otherwise
realizing upon the Collateral, and otherwise enforcing the provisions of this
Agreement and the other Financing Agreements or defending any claims made or
threatened against Lender arising out of the transactions contemplated hereby
and thereby (including, without limitation, preparations for and consultations
concerning any such matters); (g) when an Event of Default has occurred and is
continuing, all out-of-pocket expenses and costs incurred by Lender during the
course of field examinations of the Collateral and Borrowers' operations, plus a
per diem charge at the rate of $600 per person per day for Lender's examiners in
the field and office; and (h) the fees and disbursements of counsel (including
legal assistants) to Lender in connection with any of the foregoing.
9.14 Compliance with ERISA. Neither Parent nor any Borrower shall, and
shall not permit or suffer any of its Subsidiaries to, with respect to any
"employee pension benefit plans" maintained by Parent or such Borrower or
Subsidiary or any of their ERISA Affiliates:
(a) (i) terminate any of such employee pension benefit plans so as
to incur any liability to the Pension Benefit Guaranty Corporation established
pursuant to ERISA, (ii) allow or suffer to exist any prohibited transaction
involving any of such employee pension benefit plans or any trust created
thereunder which would subject Parent, such Borrower, such Subsidiary or such
ERISA Affiliate to a tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA, (iii) fail to pay
to any such employee pension benefit plan any contribution which it is obligated
to pay under Section 302 of ERISA, Section 412 of the Code or the terms of such
plan, (iv) allow or suffer to exist any accumulated funding deficiency, whether
or not waived, with respect to any such employee pension benefit plan, (v) allow
or suffer to exist any occurrence of a reportable event or any other event or
condition which presents a material risk of termination by the Pension Benefit
Guaranty Corporation of any such employee pension benefit plan that is a single
employer plan, which termination could result in any liability to the Pension
Benefit Guaranty Corporation or (vi) incur any withdrawal liability with respect
to any multiemployer pension plan.
(b) As used in this Section 9.14, the term "employee pension benefit
plans," "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transaction" shall have the meaning assigned to it in
Section 4975 of the Code and ERISA.
9.15 Further Assurances. At the request of Lender at any time and from
time to time, Parent and each Borrower shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or
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purposes of this Agreement or any of the other Financing Agreements. Lender may
at any time and from time to time request a certificate from an officer of a
Borrower representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied. In the
event of such request by Lender, Lender may, at its option, cease to make any
further Loans or provide any further Letter of Credit Accommodations until
Lender has received such certificate and, in addition, Lender has determined
that such conditions are satisfied. Where permitted by law, each Borrower hereby
authorizes Lender to execute and file one or more UCC financing statements
signed only by Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Any Borrower fails to pay when due any of the Obligations or
(ii) any Borrower or Obligor fails to perform any of the terms, covenants,
conditions or provisions contained in this Agreement or any of the other
Financing Agreements to which it is a party other than as described in Section
10.1 (a)(i) and such failure shall continue for five (5) Business Days;
provided, that, such five (5) Business Day period shall not apply in the case
of: (A) any failure to observe any such term, covenant, condition or provision
which is not capable of being cured at all or within such five (5) Business Day
period or which has been the subject of a prior failure within a six (6) month
period or (B) an intentional breach by a Borrower or any Obligor of any such
term, covenant, condition or provision, or (C) the failure to observe or perform
any of the covenants or provisions contained in Section 6.3, 6.6, 7.1(a),
7.1(b), 7.2, or 7.5, the first sentence of Section 9.1, or Section 9.2, 9.4, or
9.7 through 9.12 of this Agreement or any covenants or agreements covering
substantially the same matter as such sections in any of the other Financing
Agreements;
(b) any representation, warranty or statement of fact made by any
Borrower, any Subsidiary of a Borrower or any Obligor to Lender in this
Agreement, the other Financing Agreements or any other agreement, schedule,
confirmatory assignment or otherwise shall when made or deemed made be false or
misleading in any material respect;
(c) any Obligor revokes, terminates or fails in any material respect
to perform any of the terms, covenants, conditions or provisions of any
guarantee, endorsement or other agreement of such party in favor of Lender;
(d) (i) any judgment for the payment of money is rendered against
any Borrower, any Subsidiary of a Borrower or any Obligor in excess of $500,000
in any one case or in excess of $1,000,000 in the aggregate, which judgments are
not discharged, vacated, bonded, or stayed within a period of thirty (30) days,
or execution shall at any time not be effectively stayed, or (ii) any judgment
other than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower, any such Subsidiary or any Obligor
or any of their assets, if it would materially affect the business, assets,
prospects, or condition (financial or otherwise) of Parent or any Borrower;
(e) any Borrower or any Obligor, which is a partnership or
corporation, dissolves or suspends or discontinues doing business;
39
<PAGE>
(f) any Borrower or any Obligor makes an assignment for the benefit
of creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors; or any Borrower or Parent becomes insolvent
(however defined or evidenced);
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower, any Subsidiary of a Borrower or any
Obligor or all or any part of its properties and such petition or application is
not dismissed within thirty (30) days after the date of its filing or any
Borrower, any such Subsidiary or any Obligor shall file any answer admitting or
not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower, any Subsidiary of a Borrower or any Obligor
or for all or any part of its property; or
(i) any Event of Default, or event which with notice or the passage
of time or both, would become an Event of Default, under and as defined in the
Indenture, or any agreement securing or guaranteeing payment of the Senior
Notes, or (ii) default by any Borrower, any Subsidiary of a Borrower or any
Obligor under any agreement, document or instrument relating to any other
indebtedness for borrowed money owing to any person other than Lender, or any
capitalized lease obligations, contingent indebtedness in connection with any
guarantee, letter of credit, indemnity or similar type of instrument in favor of
any person other than Lender, in any case in an amount in excess of $500,000,
which default continues for more than the applicable cure period, if any, with
respect thereto, or any default by any Borrower, any such Subsidiary or any
Obligor under any material contract, lease, license or other obligation to any
person other than Lender, which default continues for more than the applicable
cure period, if any, with respect thereto;
(j) any Change of Control shall occur;
(k) the indictment of any Borrower, any Subsidiary of a Borrower or
any Obligor under any criminal statute, or commencement of criminal or civil
proceedings against any Borrower, any such Subsidiary or any Obligor, pursuant
to which statute or proceedings the penalties or remedies sought or available
include forfeiture of any of the property of such Borrower, Subsidiary or
Obligor;
(l) there shall be a material adverse change in the business, assets
or prospects of the Borrowers and the other Subsidiaries of Parent taken as a
whole;
(m) there shall be an event of default under any of the other
Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by any Borrower or any Obligor, except as such notice or
40
<PAGE>
consent is expressly provided for hereunder or required by applicable law. All
rights, remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by any Borrower of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly against any Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require any Borrower, at such Borrower's
expense, to assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender, (iv) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (v) remove
any or all of the Collateral from any premises on or in which the same may be
located for the purpose of effecting the sale, foreclosure or other disposition
thereof or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Lender or elsewhere) at such prices
or terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of any Borrower, which right or equity of
redemption is hereby expressly waived and released by each Borrower and/or (vii)
terminate this Agreement. If any of the Collateral is sold or leased by Lender
upon credit terms or for future delivery, the Obligations shall not be reduced
as a result thereof until payment therefor is finally collected by Lender. If
notice of disposition of Collateral is required by law, five (5) Business Days
prior notice by Lender to a Borrower designating the time and place of any
public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and each Borrower waives any other notice. In the event Lender
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, each Borrower waives the posting of any
bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Each Borrower shall remain liable
to Lender for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an Event
of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or arranging for Letter of Credit Accommodations or reduce
the lending formulas or amounts of Revolving Loans and Letter of Credit
Accommodations available to any Borrower and/or (ii) terminate any provision of
this Agreement
41
<PAGE>
providing for any future Loans or Letter of Credit Accommodations to be made by
Lender to any Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
(b) Each Borrower and Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the Supreme Court of the State of New York for New
York County and the United States District Court for the Southern District of
New York and waive any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this Agreement or any of
the other Financing Agreements or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this Agreement or
any of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agree that any dispute with respect to
any such matters shall be heard only in the courts described above (except that
Lender shall have the right to bring any action or proceeding against any
Borrower or its property in the courts of any other
jurisdiction which Lender deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against any Borrower or its
property).
(c) Each Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or,
at Lender's option, by service upon such Borrower in any other manner provided
under the rules of any such courts. Lender shall send a copy of any such service
to Silverman, Collura & Chernis, P.C., 381 Park Avenue South, Suite 1601, New
York, New York 10016, Attention: Peter R. Silverman, Esq., but the delivery of
such copy shall not be a condition to the effectiveness of service upon any
Borrower. Within thirty (30) days after such service, such Borrower shall appear
in answer to such process, failing which such Borrower shall be deemed in
default and judgment may be entered by Lender against such Borrower for the
amount of the claim and other relief requested.
(d) EACH BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH BORROWER AND
LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER
OR LENDER MAY FILE AN ORIGINAL COUNTERPART OR
42
<PAGE>
A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to any Borrower (whether in
tort, contract, equity or otherwise) for losses suffered by any Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender, that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement.
11.2 Waiver of Notices. Each Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on any Borrower which Lender may elect to give shall entitle any
Borrower to any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender. Lender shall not, by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
11.4 Waiver of Counterclaims. Each Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Each Borrower shall jointly and severally indemnify
and hold Lender, and its directors, agents, employees and counsel, harmless from
and against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel (provided, that Borrowers shall not be liable for
such indemnification with respect to any loss that is determined by a final and
non-appealable judgment or court order binding on Lender to have resulted from
Lender's gross negligence or wilful misconduct). To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, each Borrower shall
pay the maximum portion which it is permitted to pay under applicable law to
Lender in satisfaction of indemnified
43
<PAGE>
matters under this Section. The foregoing indemnity shall survive the payment of
the Obligations and the termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date three (3) years from the
date hereof (the "Expiration Date"). Borrowers may terminate this Agreement and
the other Financing Agreements effective any time prior to the Expiration Date
by giving to the Lender at least sixty (60) days prior written notice of such
termination; provided, that, this Agreement and all other Financing Agreements
must be terminated simultaneously and must be terminated as to all and not less
than all of the Borrowers. Upon the effective date of termination or non-renewal
of the Financing Agreements, Borrowers shall jointly and severally pay to
Lender, in full, all outstanding and unpaid Obligations and shall jointly and
severally furnish cash collateral to Lender in such amounts as Lender determines
are reasonably necessary to secure Lender from loss, cost, damage or expense,
including attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Lender has not yet received final and indefeasible payment. Such cash
collateral shall be remitted by wire transfer in Federal funds to such bank
account of Lender, as Lender may, in its discretion, designate in writing to
Borrowers for such purpose. Interest shall be due until and including the next
business day, if the amounts so paid by a Borrower to the bank account
designated by Lender are received in such bank account later than 12:00 noon,
New York City time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Lender's continuing security interest in the Collateral and the rights and
remedies of Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid.
(c) If for any reason this Agreement is terminated prior to the
Expiration Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits as a result thereof, Borrowers
shall jointly and severally pay to Lender, upon the effective date of such
termination, an early termination fee in the aggregate amount set forth below if
such termination is effective in the period indicated:
Amount Period
------ ------
(i) 3% of Maximum Credit February 4, 1997 to and including
February 3, 1998
(ii) 2% of Maximum Credit February 4, 1998 to and including
February 3, 1999
44
<PAGE>
(iii) 1% of Maximum Credit February 4, 1999 to and including
February 3, 2000;
provided, however, that if Borrowers terminate this Agreement in connection
with, and repay the Obligations with the net cash proceeds of, the initial
Public Equity Offering by the Company, then the early termination fee payable at
such time shall be reduced to one-half (1/2) of the fee that would otherwise
have been payable hereunder. Such early termination fee shall be presumed to be
the amount of damages sustained by Lender as a result of such early termination
and each Borrower agrees that it is reasonable under the circumstances currently
existing. The early termination fee provided for in this Section 12.1 shall be
deemed included in the Obligations.
12.2 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to each
Borrower at its chief executive office set forth below, or to such other address
as either party may designate by written notice to the other in accordance with
this provision, and (b) deemed to have been given or made: if delivered in
person, immediately upon delivery; if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt; if by
nationally recognized overnight courier service with instructions to deliver the
next business day, one (1) business day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. A copy of any notice
given to a Borrower shall be sent to Silverman, Collura & Chernis, P.C., 381
Park Avenue South, Suite 1601, New York, New York 10016, Attention: Peter R.
Silverman, Esq.
12.3 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.4 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrowers and their respective
successors and assigns, except that no Borrower may assign any of its rights
under this Agreement, the other Financing Agreements and any other document
referred to herein or therein without the prior written consent of Lender.
Lender may, after notice to Borrowers, assign its rights and delegate its
obligations under this Agreement and the other Financing Agreements and further
may assign, or sell participations in, all or any part of the Loans, the Letter
of Credit Accommodations or any other interest herein to another financial
institution or other person, in which event, the assignee or participant shall
have, to the extent of such assignment or participation, the same rights and
benefits as it would have if it were the Lender hereunder, except as otherwise
provided by the terms of such assignment or participation.
12.5 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written.
45
<PAGE>
IN WITNESS WHEREOF, Lender and each of the Borrowers have caused these
presents to be duly executed as of the day and year first above written.
LENDER BORROWERS
- ------ ---------
CONGRESS FINANCIAL CORPORATION
AMBOY BUS CO., INC.
By: /s/ By: /s/ Domenic Gatto
----------------------------- ----------------------------
Title: Senior Vice President Title: President
-------------------------- -------------------------
Address: Chief Executive Office:
1133 Avenue of the Americas 7 North Street
New York, New York 10036 Staten Island, New York 10302
ATLANTIC-CONN. TRANSIT, INC.
By: /s/ Domenic Gatto
----------------------------
Title: President
Chief Executive Office:
7 North Street
Staten Island, New York 10302
ATLANTIC-HUDSON, INC.
By: /s/ Domenic Gatto
----------------------------
Title: President
--------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
<PAGE>
ATLANTIC PARATRANS, INC.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
ATLANTIC PARATRANS OF KENTUCKY
INC.
By: /s/ Domenic Gatto
----------------------------
Title: President
--------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
ATLANTIC COACHWAYS, INC.
By: /s/ Domenic Gatto
----------------------------
Title: President
--------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
ATLANTIC EXPRESS OF MISSOURI, INC.
By: /s/ Domenic Gatto
----------------------------
Title: President
--------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
<PAGE>
ATLANTIC EXPRESS OF PENNSYLVANIA, INC.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
BROOKFIELD TRANSIT INC.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
COURTESY BUS CO., INC.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
K. CORR, INC.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
<PAGE>
MERIT TRANSPORTATION CORP.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
METROPOLITAN ESCORT SERVICE, INC.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
RAYBERN BUS SERVICE, INC.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
RAYBERN CAPITAL CORP.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
<PAGE>
RAYBERN EQUITY CORP.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
STATEN ISLAND BUS, INC.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
PARENT
ATLANTIC EXPRESS TRANSPORTATION
CORP.
By: /s/ Domenic Gatto
---------------------------
Title: President
------------------------
Chief Executive Office:
7 North Street
Staten Island, New York 10302
<PAGE>
Exhibit 10.3
EXECUTION COPY
GENERAL SECURITY AGREEMENT
This General Security Agreement dated February 4, 1997 is by and among
ATLANTIC EXPRESS TRANSPORTATION CORP., a New York corporation, BLOCK 7932, INC.,
a New York corporation, G.V.D. LEASING CO., INC., a New York corporation, 180
JAMAICA CORP., a New York corporation, METRO AFFILIATES, INC., a New York
corporation, MIDWAY LEASING INC., a New York corporation, and TEMPORARY TRANSIT
SERVICE, INC., a New York corporation, (each individually a "Guarantor" and any
two or more collectively, "Guarantors") in favor of Congress Financial
Corporation, a California corporation ("Lender").
W I T N E S S E T H:
WHEREAS, Lender has entered or is about to enter into certain financing
arrangements with AMBOY BUS CO., INC., a New York corporation, ATLANTIC-CONN.
TRANSIT, INC., a Connecticut corporation, ATLANTIC-HUDSON, INC., a New York
corporation, ATLANTIC PARATRANS, INC., a New York corporation, ATLANTIC
PARATRANS OF KENTUCKY INC., a Kentucky corporation, ATLANTIC EXPRESS COACHWAYS,
INC., a New Jersey corporation, ATLANTIC EXPRESS OF MISSOURI INC., a Missouri
corporation, ATLANTIC EXPRESS OF PENNSYLVANIA, INC., a Delaware corporation,
BROOKFIELD TRANSIT INC., a New York corporation, COURTESY BUS CO., INC., a New
York corporation, K. CORR, INC., a New York corporation, MERIT TRANSPORTATION
CORP., a New York corporation, METROPOLITAN ESCORT SERVICE, INC., a New York
corporation, RAYBERN BUS SERVICE, INC., a New York corporation, RAYBERN CAPITAL
CORP., a New York corporation, RAYBERN EQUITY CORP., a New York corporation, and
STATEN ISLAND BUS, INC., a New York corporation (each individually, a "Borrower"
and any two or more collectively, "Borrowers"), pursuant to which Lender may
make loans and provide other financial accommodations to one or more Borrowers;
and
WHEREAS, each Guarantor has executed and delivered or is about to execute
and deliver to Lender its guarantee in favor of Lender pursuant to which such
Guarantor absolutely and unconditionally guarantees to Lender the payment and
performance of all now existing and hereafter arising obligations, liabilities
and indebtedness of Borrowers to Lender; and
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code of the State of New York shall have the meanings given
therein unless otherwise defined in this Agreement. All references to the plural
herein shall also mean the singular and to the singular shall also mean the
plural. All references to a Guarantor, a Borrower and Lender pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns. The words "hereof",
"herein", "hereunder", "this Agreement" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced. An
Event of Default
<PAGE>
shall exist or continue or be continuing until such Event of Default is waived
in accordance with Section 7.3. Any accounting term used herein unless otherwise
defined in this Agreement shall have the meanings customarily given to such term
in accordance with GAAP. For purposes of this Agreement, the following terms
shall have the respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of a Guarantor to
payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "AETG" shall mean Atlantic Express Transportation Group Inc., a New
York corporation.
1.3 "Capital Stock" shall mean (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interest (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.5 "Environmental Laws" shall mean all federal, state, district, local
and foreign laws, rules, regulations, ordinances, and consent decrees relating
to health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to a Borrower's or
Guarantor's business and facilities or the business and facilities of a
Subsidiary of a Borrower or Guarantor (in each case, whether or not such
business or facilities are owned by it), including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination,
chemicals, or hazardous, toxic or dangerous substances, materials or wastes into
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals, or
hazardous, toxic or dangerous substances, materials or wastes.
1.6 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.7 "ERISA Affiliate" shall mean any person required to be aggregated with
Parent or any Borrower, Guarantor or any of their Subsidiaries under Sections
414(b), 414(c), 414(m) or 414(o) of the Code.
1.8 "Event of Default" shall have the meaning set forth in Section 6.1
hereof.
1.9 "Financing Agreements" shall mean, collectively, the Loan Agreement,
this Agreement and all notes, guarantees, security agreements and other
agreements, documents and instruments now or at any time hereafter executed
and/or delivered by any Borrower, any Guarantor or any Obligor in connection
with the Loan Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
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1.10 "Guarantors' Representative" shall mean Parent.
1.11 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied.
1.12 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation any that are or become classified as hazardous or toxic under any
Environmental Law).
1.13 "Information Certificate" shall mean the Information Certificate of
each Guarantor collectively constituting Exhibit A hereto containing material
information with respect to each Guarantor, its business and assets provided by
or on behalf of such Guarantor to Lender in connection with the preparation of
this Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.14 "Inventory" shall mean all of a Guarantor's now owned and hereafter
existing or acquired inventory consisting of fuel and oil and other supplies
used or useful in such Guarantor's business and spare parts for vehicles,
wherever located.
1.15 "Loan Agreement" shall mean the Loan and Security Agreement, dated
February 4, 1997, by and between the Borrowers, Parent and Lender, as the same
now exists and may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.16 "Obligations" shall mean any and all obligations, liabilities and
indebtedness of every kind, nature and description owing by any one or more
Guarantors to Lender and/or its affiliates, including principal, interest,
charges, fees, costs and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, whether arising under this Agreement
or otherwise, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of the Loan Agreement or this
Agreement or after the commencement of any case with respect to a Guarantor
under the United States Bankruptcy Code or any similar statute (including,
without limitation, the payment of interest and other amounts which would accrue
and become due but for the commencement of such case), whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, secured or unsecured, and however
acquired by Lender.
1.17 "Obligor" shall mean any other guarantor, endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, other than a Borrower.
1.18 "Parent" shall mean Atlantic Express Transportation Corp., a New York
corporation.
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1.19 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as amended),
business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency or instrumentality
or political subdivision thereof.
1.20 "Records" shall mean all of a Guarantor's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to any of the Collateral or any
account debtor, together with the tapes, disks, diskettes and other data and
software storage media and devices, file cabinets or containers in or on which
the foregoing are stored (including any rights of a Guarantor with respect to
the foregoing maintained with or by any other person).
1.21 "Subsidiary" shall mean with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Voting Stock is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of such Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof);
provided, however, that for the purposes of this Agreement, Atlantic North shall
not be considered a Subsidiary of Parent except as otherwise expressly provided
herein.
1.22 "Voting Stock" shall mean, with respect to any Person: (a) one or
more classes of the Capital Stock of such Person having general voting power to
elect at least a majority of the board of directors, managers, or trustees of
such Person (irrespective of whether or not at the time Capital Stock of any
other class or classes has or might have voting power by reason of the happening
of any contingency); and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
SECTION 2. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, each Guarantor
hereby grants to Lender a continuing security interest in, a lien upon, and a
right of set off against, and hereby assigns to Lender as security, the
following property and interests in property, whether now owned or hereafter
acquired or existing, and wherever located (collectively, the "Collateral"):
2.1 Accounts;
2.2 subject to the last paragraph of this Section 2, all present and
future contract rights (including, without limitation, all rights under service
contracts pursuant to which any Guarantor renders its services to its customers,
which rights shall include any and all rights to all retainages which may arise
thereunder), general intangibles (including, but not limited to, tax and duty
refunds, registered and unregistered patents, trademarks, service marks,
copyrights, trade names, applications for the foregoing, trade secrets,
goodwill, processes, drawings, blueprints, customer lists, licenses, whether as
licensor or licensee, choses in action and other claims), chattel paper,
documents, instruments, letters of credit, bankers' acceptances and guaranties;
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2.3 all present and future monies, securities, credit balances, deposits,
deposit accounts and other property of Guarantor now or hereafter held or
received by or in transit to Lender or its affiliates or at any other depository
or other institution from or for the account of Guarantor whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and all
present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Accounts and other Collateral, including,
without limitation, (a) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, (c) goods described in invoices, documents, contracts
or instruments with respect to, or otherwise representing or evidencing,
Accounts or other Collateral, including, without limitation, returned,
repossessed and reclaimed goods, and (d) deposits by and property of account
debtors or other persons securing the obligations of account debtors;
2.4 Inventory;
2.5 Records; and
2.6 all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and any claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
In no event shall Lender's security interest in a contract or agreement of any
Guarantor be deemed to be a present assignment, transfer, conveyance, subletting
or other disposition (an "Assignment") of such contract or agreement to Lender
within the meaning of any provision in such contract or agreement prohibiting,
or requiring any consent or establishing any other conditions for, an Assignment
thereof by such Guarantor. Lender acknowledges that any sale, transfer or
assignment of any such contract or agreement upon the enforcement of Lender's
security interest therein would be subject to the terms of such contract or
agreement governing Assignment, except as otherwise provided in Section 9-318 of
the Uniform Commercial Code. Lender's security interest in each contract or
agreement of a Guarantor shall attach from the date hereof to all of the
following, whether now existing or hereafter arising or acquired: (i) all of
such Guarantor's Accounts and general intangibles for money due or to become due
arising under such contract or agreement; (ii) all proceeds paid or payable to
such Guarantor from any sale, transfer or assignment of such contract or
agreement and all rights to receive such proceeds; and (iii) all other rights
and interests of such Guarantor in, to and under such contract or agreement to
the fullest extent that attachment thereto would not be a violation of such
contract or agreement directly or indirectly entitling a party thereto (other
than any Borrower, Guarantor or Affiliate thereof) to a legally enforceable
right to terminate such contract or agreement.
SECTION 3. COLLATERAL COVENANTS
3.1 Accounts Covenants.
(a) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise. When no Event of Default has
occurred and is continuing, Lender shall give Borrowers' Representative at least
one Business Day's prior telephonic notice of any such verification.
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(b) Each Guarantor shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to such
Guarantor, all chattel paper and instruments which such Guarantor now owns or
may at any time acquire immediately upon such Guarantor's receipt thereof,
except as Lender may otherwise agree.
(c) Lender may, at any time or times that an Event of Default exists
or has occurred and is continuing, (i) notify any or all account debtors that
the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all account debtors to make
payment of Accounts directly to Lender, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Lender shall not be liable for its failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Lender may deem necessary or
desirable for the protection of its interests. At any time that an Event of
Default exists or has occurred and is continuing, at Lender's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Lender and are payable directly
and only to Lender and each Guarantor shall deliver to Lender such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Lender may require.
3.2 Power of Attorney. Each Guarantor hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as such Guarantor's true
and lawful attorney-in-fact, and authorizes Lender, in such Guarantor's or
Lender's name, to: (a) at any time an Event of Default or event which with
notice or passage of time or both would constitute an Event of Default exists or
has occurred and is continuing (i) demand payment on Accounts or other
Collateral, (ii) enforce payment of Accounts by legal proceedings or otherwise,
(iii) exercise all of such Guarantor's rights and remedies to collect any
Account or other Collateral, (iv) sell or assign any Account upon such terms,
for such amount and at such time or times as the Lender deems advisable, (v)
settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Account, (vii) prepare, file and sign such Guarantor's name on any
proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the post office authorities to change the address for
delivery of such Guarantor's mail to an address designated by Lender, and open
and dispose of all mail addressed to such Guarantor, and (ix) do all acts and
things which are necessary, in Lender's determination, to fulfill such
Guarantor's obligations under this Agreement and the other Financing Agreements
and (b) at any time to (i) take control in any manner of any item of payment or
proceeds thereof, (ii) have access to any lockbox or postal box into which such
Guarantor's mail is deposited, (iii) endorse such Guarantor's name upon any
items of payment or proceeds thereof and deposit the same in the Lender's
account for application to the Obligations, (iv) endorse such Guarantor's name
upon any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Account or any goods pertaining thereto or any other
Collateral, and (v) sign such Guarantor's name on any verification of Accounts
and notices thereof to account debtors and (vi) execute in such Guarantor's name
and file any UCC financing statements or amendments thereto. Each Guarantor
hereby releases Lender and its officers, employees and designees from any
liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Lender's own gross negligence or wilful misconduct as determined pursuant to a
final non-appealable order of a court of competent jurisdiction.
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3.3 Right to Cure. Lender may, at its option, (a) cure any default by a
Guarantor under any agreement with a third party or pay or bond on appeal any
judgment entered against a Guarantor, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Lender's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Lender with respect thereto.
Lender may add any amounts so expended to the Obligations and charge the
applicable Guarantor's account therefor, such amounts to be repayable by such
Guarantor on demand. Lender shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of any Guarantor. Any payment made or other action taken
by Lender under this Section shall be without prejudice to any right to assert
an Event of Default hereunder and to proceed accordingly.
3.4 Access to Premises. From time to time as requested by Lender, at the
cost and expense of each Guarantor, (a) Lender or its designee shall have
complete access to all of each Guarantor's premises during normal business hours
and after reasonable notice to such Guarantor, or at any time and without notice
to Guarantor if an Event of Default exists or has occurred and is continuing,
for the purposes of inspecting, verifying and auditing the Collateral and all of
any one or more Guarantor's books and records, including, without limitation,
the Records, and (b) each Guarantor shall promptly furnish to Lender such copies
of such books and records or extracts therefrom as Lender may request, and (c)
use during normal business hours such of such Guarantor's personnel, equipment,
supplies and premises as may be reasonably necessary for the foregoing and if an
Event of Default exists or has occurred and is continuing for the collection of
Accounts and realization of other Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES
Each Guarantor hereby represents and warrants to Lender the following
(which shall survive the execution and delivery of this Agreement):
4.1 Corporate Existence, Power and Authority; Subsidiaries. Each Guarantor
and each Subsidiary of a Guarantor, is a corporation duly organized and in good
standing under the laws of its state of incorporation and is duly qualified as a
foreign corporation and in good standing in all states or other jurisdictions
where the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions in
which the failure to so qualify would not have a material adverse effect on
Parent's, Atlantic North's, a Borrower's, such Guarantor's, or such
Subsidiary's, financial condition, results of operation or business or the
rights of Lender in or to any of the Collateral. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder are all within such
Guarantor's and each such Subsidiary's corporate powers, have been duly
authorized and are not in contravention of law or the terms of Guarantor's, and
each such Subsidiary's, certificate of incorporation, by-laws, or other
organizational documentation, or any indenture, agreement or undertaking to
which Parent, any Borrower, any Guarantor or any such Subsidiary is a party or
by which Parent, any Borrower, any Guarantor or any such Subsidiary or its
property are bound. This Agreement and the other Financing Agreements constitute
legal, valid and binding obligations of each Guarantor and each Subsidiary of a
Guarantor that is a party hereto or thereto, enforceable in accordance with
their respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors rights generally, and by general principles of
equity (whether considered at law or in equity). No Guarantor has any
Subsidiaries except (a) as set forth on the Information Certificate or (b) any
Subsidiary which is created after the date hereof, which has been previously
disclosed to
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Lender in writing, and which either has become a Borrower under the Loan
Agreement, or has guaranteed the Obligations and has granted to Lender a first
priority security interest in all of its property of the type that would
constitute Collateral if such Subsidiary was a Borrower under the Loan
Agreement, pursuant to documentation in form and substance satisfactory to
Lender.
4.2 Financial Statements; No Material Adverse Change. All financial
statements relating to the Guarantors and their respective Subsidiaries which
have been or may hereafter be delivered by a Borrower, a Guarantor or an Obligor
to Lender have been or will have been, when delivered, prepared in accordance
with GAAP and fairly present the financial condition and the results of
operation of the Persons covered thereby and their respective Subsidiaries as at
the dates and for the periods set forth therein. Except as disclosed in any
interim financial statements furnished by any Borrower, Guarantor or an Obligor
to Lender prior to the date of this Agreement, there has been no material
adverse change in the assets, liabilities, properties and condition, financial
or otherwise, of any Borrower, Guarantor or Obligor, since the date of the most
recent audited financial statements furnished by such Borrower, Guarantor or
Obligor to Lender prior to the date of this Agreement.
4.3 Chief Executive Office; Collateral Locations. The chief executive
office of each Guarantor and each Guarantor's Records concerning Accounts are
located only at 7 North Street, Staten Island, New York 10302 and the only other
places of business of Guarantor and the only other locations of Collateral, if
any, are the addresses set forth in the Information Certificate, subject to the
right of a Guarantor to establish new locations in accordance with Section 5.1
below. The applicable Information Certificate correctly identifies any of such
locations which are not owned by a Guarantor or Obligor and sets forth the
owners and/or operators thereof and to the best of each Guarantor 's knowledge,
the holders of any mortgages on such locations.
4.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Lender under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 4.4
hereto and the other liens permitted under the Loan Agreement. Each Guarantor
and each Subsidiary of such Guarantor has good and marketable title to all of
its properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Lender
and such others as are specifically listed in the Information Certificate.
4.5 Tax Returns. Each Guarantor, and each Subsidiary of a Guarantor, has
filed, or caused to be filed, in a timely manner all tax returns, reports and
declarations which are required to have been filed by it (taking into account
all proper extensions). All information in such tax returns, reports and
declarations was complete and accurate in all material respects when they were
filed. Each Guarantor and each Subsidiary of a Guarantor has paid or caused to
be paid all taxes due and payable or claimed due and payable in any assessment
received by it, except (a) taxes the validity of which are being contested in
good faith by appropriate proceedings diligently pursued and available to such
Guarantor or such Subsidiary, (b) taxes accrued but not yet due and payable, (c)
taxes that are currently payable without penalty or interest and as to which no
lien has been filed or otherwise created, (d) [taxes remaining to be paid under
Chapter 11 plan], and (e) taxes where the failure to duly and timely pay has not
had and could not reasonably be expected to have a material adverse effect on
the Collateral or Lender's security interest therein, or Borrowers' and
Guarantors' ability to pay and perform the obligations, or the business, assets,
prospects, or condition (financial or otherwise) of Parent, Borrowers, and
Parent's other Subsidiaries, taken as a whole, and as to which no lien has been
filed or otherwise created. As to all such unpaid taxes, adequate reserves have
been set aside on the applicable Person's books. Adequate provision has been
made for the payment of all
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accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
4.6 Litigation. Except as set forth on the applicable Information
Certificate, there is no present investigation by any governmental agency
pending, or to the best of each Guarantor's knowledge threatened, against or
affecting AETG, Parent, any Borrower, any Guarantor or any other Subsidiary of
Parent, its assets or business and there is no action, suit, proceeding or claim
by any Person pending, or to the best of each Guarantor's knowledge threatened,
against AETG, Parent, or any Borrower or Guarantor or any other Subsidiary of
Parent, or its assets or goodwill, or against or affecting any transactions
contemplated by this Agreement or any other Financing Agreement, which if
adversely determined against AETG, Parent, or such Borrower, Guarantor or
Subsidiary would result in any material adverse change in the assets, business
or prospects of such Guarantor or Subsidiary or would impair the ability of such
Guarantor or such Subsidiary to perform its obligations hereunder or under any
of the other Financing Agreements to which it is a party or of Lender to enforce
any Obligations or realize upon any Collateral.
4.7 Compliance with Other Agreements and Applicable Laws. None of
Guarantors and the Subsidiaries of any Guarantor is in default in any material
respect under, or in violation in any material respect of any of the terms of,
any agreement, contract, instrument, lease or other commitment to which it is a
party or by which it or any of its assets are bound, and each Guarantor and each
of the Subsidiaries of each Guarantor is in compliance in all material respects
with all applicable provisions of laws, rules, regulations, licenses, permits,
approvals and orders of any foreign, Federal, State or local governmental
authority.
4.8 Employee Benefits.
(a) Except with respect to a delinquency in filing reports with
respect to a 401(k) plan, neither any Guarantor nor any Subsidiary of a
Guarantor has engaged in any transaction in connection with which such Guarantor
or such Subsidiary or any of their ERISA Affiliates could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, including any accumulated funding deficiency described
in Section 4.8(c) hereof and any deficiency with respect to vested accrued
benefits described in Section 4.8(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has been or
is expected by any Guarantor or any Subsidiary of a Guarantor to be incurred
with respect to any employee pension benefit plan of Parent, any Borrower, any
Guarantor or any Subsidiary of a Borrower or Guarantor or any of its ERISA
Affiliates. There has been no reportable event (within the meaning of Section
4043(c) of ERISA) or any other event or condition with respect to any employee
pension benefit plan of Parent, any Borrower, Guarantor or Subsidiary of a
Borrower or Guarantor or any of their ERISA Affiliates which presents a risk of
termination of any such plan by the Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which any Guarantor or any
Subsidiary of a Guarantor or any of their ERISA Affiliates is required under
Section 302 of ERISA and Section 412 of the Code to have paid under the terms of
each employee pension benefit plan as contributions to such plan as of the last
day of the most recent fiscal year of such plan ended prior to the date hereof,
and no accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists with respect to any
employee pension benefit plan, including any penalty or tax described in Section
4.8(a) hereof and any deficiency with respect to vested accrued benefits
described in Section 4.8(d) hereof.
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(d) The current value of all vested accrued benefits under all
employee pension benefit plans maintained by any Guarantor or any Subsidiary of
a Guarantor that are subject to Title IV of ERISA does not exceed the current
value of the assets of such plans allocable to such vested accrued benefits,
including any penalty or tax described in Section 4.8(a) hereof and any
accumulated funding deficiency described in Section 4.8(c) hereof. The terms
"current value" and "accrued benefit" have the meanings specified in ERISA.
(e) Except for Amboy Bus Co., Inc., which is a party to a
"multiemployer plan" (as defined below) for members of Local 1181-1061 of the
Amalgamated Transit Union, none of any Guarantor or any Subsidiary of a
Guarantor or any of their ERISA Affiliates is or has ever been obligated to
contribute to any "multiemployer plan" (as such term is defined in Section
4001(a)(3) of ERISA) that is subject to Title IV of ERISA.
4.9 Environmental Compliance.
(a) Except as set forth on Schedule 4.9 hereto, none of the
Guarantors or any of their respective Subsidiaries has generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off its premises (whether or not owned by it) in any
manner which at any time violates in any material respect any applicable
Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder and the operations of each such Guarantor and
Subsidiary complies in all material respects with all Environmental Laws and all
licenses, permits, certificates, approvals and similar authorizations
thereunder.
(b) Except as set forth on Schedule 4.9 hereto, there has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other person nor is any pending or
to the best of each Guarantor's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
any Guarantor or any Subsidiary of a Guarantor or the release, spill or
discharge, threatened or actual, of any Hazardous Material or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials or any other environmental, health or safety
matter, which affects Parent, any Borrower, any Guarantor or any Subsidiary of a
Borrower or Guarantor or its business, operations or assets or any properties at
which Parent, such Borrower, such Guarantor or any such Subsidiary has
transported, stored or disposed of any Hazardous Materials.
(c) None of the Guarantors or any of the Subsidiaries of any
Guarantor has any material liability (contingent or otherwise) in connection
with a release, spill or discharge, threatened or actual, of any Hazardous
Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
(d) Each Guarantor and each Subsidiary of the Guarantors has all
licenses, permits, certificates, approvals or similar authorizations required to
be obtained or filed in connection with the operations of such Guarantor or
Subsidiary under any Environmental Law and all of such licenses, permits,
certificates, approvals or similar authorizations are valid and in full force
and effect.
4.10 Accuracy and Completeness of Information. All information furnished
by or on behalf of Parent or a Borrower or Guarantor or any of its Subsidiaries
in writing to Lender in connection with this Agreement or any of the other
Financing Agreements or any transaction contemplated hereby or thereby,
including, without limitation, all information on each Information
-10-
<PAGE>
Certificate, is true and correct in all material respects on the date as of
which such information is dated or certified and does not omit any material fact
necessary in order to make such information not misleading. No event or
circumstance has occurred which has had or could reasonably be expected to have
a material adverse affect on the business, assets or prospects of Parent, any
Borrower, any Guarantor or any Subsidiary of a Borrower or Guarantor, which has
not been fully and accurately disclosed to Lender in writing.
4.11 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation under the Loan Agreement and shall be conclusively
presumed to have been relied on by Lender regardless of any investigation made
or information possessed by Lender. The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or
warranties which Parent, any Borrower, any Guarantor or any Obligor shall now or
hereafter give, or cause to be given, to Lender.
SECTION 5. AFFIRMATIVE AND NEGATIVE COVENANTS
5.1 New Collateral Locations. Any Guarantor may open any new location
within the continental United States provided such Guarantor (a) gives Lender
thirty (30) days prior written notice of the opening of any such new location
which (i) is in a jurisdiction in which such Guarantor does not already have a
place of business or operations or (ii) will be the chief executive office or
location of Records of such Guarantor and (b) executes and delivers, or causes
to be executed and delivered, to Lender such agreements, documents, and
instruments as Lender may deem reasonably necessary or desirable to protect its
interests in the Collateral at such location, including, without limitation, UCC
financing statements.
5.2 Costs and Expenses. Each Guarantor shall jointly and severally pay to
Lender on demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including, but not limited to: (a) all costs and expenses of filing or
recording (including Uniform Commercial Code financing statement filing taxes
and fees, documentary taxes, intangibles taxes and mortgage recording taxes and
fees, if applicable); (b) all title insurance and other insurance premiums,
appraisal fees and search fees; (c) costs and expenses of preserving and
protecting the Collateral; (d) costs and expenses paid or incurred in connection
with obtaining payment of the Obligations, enforcing the security interests and
liens of Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Lender arising out
of the transactions contemplated hereby and thereby (including, without
limitation, preparations for and consultations concerning any such matters); and
(e) the fees and disbursements of counsel (including legal assistants) to Lender
in connection with any of the foregoing.
5.3 Further Assurances. At the request of Lender at any time and from time
to time, each Guarantor shall, at its expense, at any time or times duly execute
and deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such further
acts as may be necessary or proper to evidence, perfect, maintain and enforce
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<PAGE>
the security interests and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement or any of the
other Financing Agreements. Where permitted by law, each Guarantor hereby
authorizes Lender to execute and file one or more UCC financing statements
signed only by Lender.
5.4 Compliance with Loan Agreement. Each Guarantor acknowledges that (i)
the Loan Agreement contains provisions whereby the Borrowers and the Parent are
required to cause the Guarantors to comply with certain covenants and terms set
forth therein and (ii) it is familiar with all such covenants and terms. Each
Guarantor shall take or refrain from all actions and do or refrain from all
things as may be necessary, including, without limitation, full cooperation with
Parent and/or any Borrower, in order to assure compliance with all covenants and
terms set forth in Section 9 of the Loan Agreement and compliance with all other
covenants and terms set forth in the Loan Agreement which pertain to such
Guarantor, as fully as if such Guarantor had expressly and directly agreed to be
bound by such covenants and terms as a direct party and signatory to the Loan
Agreement.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The occurrence or existence of any Event of Default
under the Loan Agreement is referred to herein individually as an "Event of
Default", and collectively as "Events of Default".
6.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by any Guarantor or any Obligor, except as such notice or consent
is expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by any Guarantor of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly against any Guarantor or any Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(g) or 10.1(h) of the Loan Agreement,
all Obligations shall automatically become immediately due and payable), (ii)
with or without judicial process or the aid or assistance of others, enter upon
any premises on or in which any of the Collateral may be located and take
possession of the Collateral or complete processing, manufacturing and repair of
all or any portion of the Collateral, (iii) require any Guarantor, at such
Guarantor's expense, to assemble and make available to Lender any part or all of
the Collateral at any place and time designated by Lender, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all Collateral,
(v) remove any or all of the Collateral from any premises on or in which the
same may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (vi) sell, lease, transfer,
assign, deliver or otherwise dispose of any and all Collateral (including,
without limitation, entering into contracts with respect thereto, public or
private
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<PAGE>
sales at any exchange, broker's board, at any office of Lender or elsewhere) at
such prices or terms as Lender may deem reasonable, for cash, upon credit or for
future delivery, with the Lender having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of any Guarantor, which right or equity
of redemption is hereby expressly waived and released by each Guarantor. If any
of the Collateral is sold or leased by Lender upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Lender. If notice of disposition of Collateral
is required by law, five (5) Business Days prior notice by Lender to a Guarantor
designating the time and place of any public sale or the time after which any
private sale or other intended disposition of Collateral is to be made, shall be
deemed to be reasonable notice thereof and each Guarantor waives any other
notice. In the event Lender institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of prejudgment remedy, each Guarantor
waives the posting of any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Each Guarantor shall remain liable
to Lender for the payment of any deficiency with interest at the highest rate
provided for in the Loan Agreement and all costs and expenses of collection or
enforcement, including attorneys' fees and legal expenses.
SECTION 7. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
7.1 Governing Law: Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
(b) Each Guarantor irrevocably consents and submits to the
non-exclusive jurisdiction of the Supreme Court of the State of New York for New
York County and the United States District Court for the Southern District of
New York and waives any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this Agreement or any of
the other Financing Agreements or in any way connected or related or incidental
to the dealings of any Guarantor and Lender in respect of this Agreement or the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agrees that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Lender
shall have the right to bring any action or proceeding against any Guarantor or
its property in the courts of any other jurisdiction which Lender deems
necessary or appropriate in order to realize on the Collateral or to otherwise
enforce its rights against any Guarantor or its property).
(c) Each Guarantor hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested, directed to its address set forth on
the signature pages hereof and service so made shall be deemed be completed five
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Lender's option, by service upon such Guarantor in any other manner provided
under the rules of any such courts. A copy of any service upon such Guarantor
shall be sent to Silverman, Collura & Chernis,
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<PAGE>
P.C., 381 Park Avenue South, Suite 1601, New York, New York 10016, Attention:
Peter R. Silverman, Esq., but the delivery of such copy shall not be a condition
to the effectiveness of service on any Guarantor. Within thirty (30) days after
such service, such Guarantor shall appear in answer to such process, failing
which such Guarantor shall be deemed in default and judgment may be entered by
Lender against such Guarantor for the amount of the claim and other relief
requested.
(d) EACH GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY
OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF ANY GUARANTOR AND LENDER IN RESPECT OF THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH GUARANTOR HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT SUCH GUARANTOR OR LENDER MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF SUCH GUARANTOR AND LENDER TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to any Guarantor (whether in
tort, contract, equity or otherwise) for losses suffered by such Guarantor in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or even
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender that the losses were
the result of acts or omissions consisting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement and the
other Financing Agreements.
7.2 Waiver of Notices. Each Guarantor hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on any Guarantor which Lender may elect to give shall entitle such
Guarantor or any other Guarantor to any other or further notice or demand in the
same, similar or other circumstances.
7.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender. Lender shall not, by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
7.4 Waiver of Counterclaims. Each Guarantor waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any
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<PAGE>
action or proceeding with respect to this Agreement, the Obligations, the
Collateral or any matter arising therefrom or relating hereto or thereto.
7.5 Indemnification. Each Guarantor shall jointly and severally indemnify
and hold Lender, and its directors, agents, employees and counsel, harmless from
and against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel (provided, that Guarantors shall not be liable for
such indemnification with respect to any loss that is determined by a final and
non-appealable judgment or court order binding on Lender to have resulted from
Lender's gross negligence or wilful misconduct). To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, each Guarantor shall
pay the maximum portion which it is permitted to pay under applicable law to
Lender in satisfaction of indemnified matters under this Section. The foregoing
indemnity shall survive the payment of the Obligations, the termination of this
Agreement and the termination or non-renewal of the Loan Agreement. All of the
obligations under the foregoing indemnity shall be part of the Obligations and
secured by the Collateral.
SECTION 8. MISCELLANEOUS
8.1 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at 1133 Avenue of the Americas, New York, New
York 10036 and to a Guarantor or to the Guarantors' Representative at its chief
executive office set forth below, or to such other address as such party may
designate by written notice to the others in accordance with this provision, and
(b) deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next business day, one (1)
business day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing. A copy of any notice given to a Guarantor shall be
sent to Silverman, Collura & Chernis, P.C., 381 Park Avenue South, Suite 1601,
New York, New York 10016, Attention: Peter R. Silverman, Esq.
8.2 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
8.3 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon each
Guarantor and its successors and assigns and inure to the benefit of and be
enforceable by Lender and its successors and assigns, except that no Guarantor
may assign its rights under this Agreement, the other Financing Agreements and
any other document referred to herein or therein without the prior written
consent of Lender.
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<PAGE>
8.4 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written.
8.5 Guarantors' Representative. Each of the Guarantors hereby appoints the
Guarantors' Representative as its agent and representative for the purposes of
all communications and authorizations between such Guarantor and Lender under
this Agreement or any of the other Financing Agreements, including, without
limitation, giving notices to Lender and receiving notices from Lender and
giving any direction or instruction to Lender contemplated by this Agreement.
Each of the Guarantors hereby authorizes and directs Lender to act in accordance
with any and every authorization, request, notice, instruction, or direction
received on such Guarantor's behalf from the Guarantors' Representative, without
requiring Lender to confirm such Guarantor's authorization therefor, and each
Guarantor hereby releases Lender from and indemnifies Lender and holds Lender
harmless against any liability, claim, loss, damages, cost, or expense arising
from or relating in any way to Lender's acting upon such authorization, request,
notice, instruction, or direction. Notwithstanding the foregoing, Lender may
require a Guarantor to confirm such request, notice, instruction, or direction,
or to execute personally any agreement or instrument between such Guarantor and
Lender, whenever Lender in its sole discretion deems it necessary or desirable
to do so. The Guarantors' Representative agrees irrevocably to act as such, as
outlined above.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused these presents to be
duly executed as of the day and year first above written.
GUARANTOR
ATLANTIC EXPRESS TRANSPORTATION CORP.
By: /s/ Domenic Gatto
----------------------
Title: President
--------------------
CHIEF EXECUTIVE OFFICE:
7 North Street
Staten Island, New York 10302
GUARANTOR
BLOCK 7932, INC.
By: /s/ Domenic Gatto
----------------------
Title: President
--------------------
CHIEF EXECUTIVE OFFICE:
7 North Street
Staten Island, New York 10302
GUARANTOR
G.V.D. LEASING CO., INC.
By: /s/ Domenic Gatto
----------------------
Title: President
--------------------
CHIEF EXECUTIVE OFFICE:
7 North Street
Staten Island, New York 10302
[General Security Agreement]
<PAGE>
GUARANTOR
180 JAMAICA CORP.
By: /s/ Domenic Gatto
----------------------
Title: President
--------------------
CHIEF EXECUTIVE OFFICE:
7 North Street
Staten Island, New York 10302
GUARANTOR
METRO AFFILIATES, INC.
By: /s/ Domenic Gatto
----------------------
Title: President
--------------------
CHIEF EXECUTIVE OFFICE:
7 North Street
Staten Island, New York 10302
GUARANTOR
MIDWAY LEASING, INC.
By: /s/ Domenic Gatto
----------------------
Title: President
--------------------
CHIEF EXECUTIVE OFFICE:
7 North Street
Staten Island, New York 10302
[General Security Agreement]
<PAGE>
GUARANTOR
TEMPORARY TRANSIT SERVICE, INC.
By: /s/ Domenic Gatto
----------------------
Title: President
--------------------
CHIEF EXECUTIVE OFFICE:
7 North Street
Staten Island, New York 10302
[General Security Agreement]
<PAGE>
Exhibit 10.4
COLLATERAL ASSIGNMENT OF TRADEMARKS
(SECURITY AGREEMENT)
COLLATERAL ASSIGNMENT OF TRADEMARKS (SECURITY AGREEMENT) dated as of
February 4, 1997, between ATLANTIC EXPRESS TRANSPORTATION CORP., a New York
corporation with offices at 7 North Street, Staten Island, New York 10302
("Assignor"), and THE BANK OF NEW YORK, a New York banking corporation, with
offices at 101 Barclay Street-- 21W, New York, New York 10286, as the trustee
under the Indenture (defined below) ("Assignee").
W I T N E S S E T H:
WHEREAS, Amboy Bus Co., Inc., Atlantic-Conn. Transit, Inc.,
Atlantic-Hudson, Inc., Atlantic Paratrans, Inc., Atlantic Paratrans of Kentucky
Inc., Atlantic Express Coachways, Inc., Atlantic Express of Missouri Inc.,
Atlantic Express of Pennsylvania, Inc., Brookfield Transit Inc., Courtesy Bus
Co., Inc., K. Corr, Inc., Merit Transportation Corp., Metropolitan Escort
Service, Inc., Raybern Bus Service, Inc., Raybern Capital Corp., Raybern Equity
Corp., Staten Island Bus, Inc., 180 Jamaica Corp., Block 7932, Inc., G.V.D.
Leasing Co., Inc., Metro Affiliates, Inc., Midway Leasing Inc., Temporary
Transit Service, Inc. (each a "Guarantor" and collectively, "Guarantors"),
Assignor, and Assignee have entered into an Indenture dated the date hereof
(together with all supplements and amendments thereto and all extensions,
renewals, restatements and replacements thereof, the "Indenture"), and a
Security and Pledge Agreement dated the date hereof (together with all
supplements and amendments thereto and all extensions, renewals, restatements
and replacements thereof, the "Security Agreement," and such Indenture and
Security Agreement together with all agreements, instruments and documents now
or hereafter entered into or delivered in connection therewith, collectively,
the "Financing Agreements"), pursuant to which Indenture Assignor has issued
certain Notes (as defined in the Indenture);
WHEREAS, Assignor is the sole stockholder of each Guarantor;
WHEREAS, Assignor owns all right, title and interest in and to,
among other things, certain United States and foreign trademarks and service
marks, trademark and service mark registrations, and trademark and service mark
applications and trade names, including, but not limited to, those set forth on
Exhibit 1 hereto (the "Trademarks"), which are used in the business of one or
more of the Guarantors, along with the goodwill of the business symbolized
thereby and the Licenses (as hereinafter defined);
WHEREAS, in order to secure its Obligations (as defined in the
Indenture), Assignor has agreed to grant to Assignee a security interest and
continuing lien in, to and under the Trade-
<PAGE>
marks, the goodwill and the Licenses and certain other assets with respect to
the Trademarks, the goodwill and the Licenses, as further set forth herein, and
Assignee has requested Assignor to enter into this Agreement to evidence such
security interest;
NOW THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that for valuable
consideration received and to be received, as security for the full payment and
performance of the Obligations, and to induce Assignee to act as trustee
pursuant to the Indenture, Assignor hereby grants to Assignee a security
interest in and continuing lien on Assignor's right, title and interest in, to
and under the following property of Assignor to the extent, and only the extent,
that the following property is part of, is related to, or arises in connection
with or from any "Accounts" or "Inventory" (as such terms are defined in the
Security Agreement):
(a) the Trademarks;
(b) all applications and registrations of the Trademarks in any
state of the United States and any foreign countries and
localities;
(c) all trade names, trademarks and service marks and trademark
and service mark applications and registrations hereafter
adopted or acquired and used by Assignor or any Guarantor in
its business, including, but not limited to, those which are
based upon or derived from the Trademarks or any variations
thereof (the "Future Trademarks");
(d) all extensions, renewals, and continuations of the Trade marks
and Future Trademarks and the registrations and applications
referred to in clause (b) above;
(e) all rights to sue for past, present and future infringements
of the Trademarks and Future Trademarks, and any trade marks
and service marks covered by any licenses of trademarks,
trademark applications or registrations, or trade names used
in the business of one or more of Guarantors and under which
Assignor is licensee, to the extent that the assignment
thereof will not result in Assignor's loss of the benefits
thereof ("Licenses");
(f) all packaging, labeling, trade names, service marks, logos,
and trade dress including or containing the Trademarks, Future
Trademarks, and the trademarks and service marks covered by
the Licenses, or a representation thereof, or any variation
thereof;
2
<PAGE>
(g) all licenses and other agreements under which Assignor is
licensor, and all fees, rents, royalties, proceeds or monies
thereunder, relating to the Trademarks, Future Trademarks, and
the trademarks and service marks covered by the Licenses, and
the use thereof, to the extent that the assignment thereof
will not result in Assignor's loss of the benefits thereof;
(h) all good will of Assignor's business connected with,
symbolized by or in any way related to the items set forth in
clauses (a) through (g) above; and
(i) all proceeds of the foregoing, including without limitation,
license royalties, income, payments, claims, damages and
proceeds of suit.
All of the foregoing items set forth in clauses (a) through (i) are hereinafter
referred to collectively as the "Collateral".
Assignor hereby covenants with Assignee as follows:
1. Defined Terms. As used herein, capitalized terms defined in the
Security Agreement and not otherwise defined herein are used herein as so
defined.
2. Assignor's Obligations. Assignor agrees that, notwithstanding
this Agreement, it will perform and discharge and remain liable for all its
covenants, duties, and obligations arising in connection with the Collateral and
any licenses and agreements related thereto. Assignee shall have no obligation
or liability in connection with the Collateral or any licenses or agreements
relating thereto by reason of this Agreement or any payment received by Assignee
relating to the Collateral and Assignee shall not be required to perform any
covenant, duty or obligation of Assignor arising in connection with the
Collateral or any license or agreement related thereto or to take any other
action regarding the Collateral or any such licenses or agreement, except and
only to the extent that Assignee has acquired absolute ownership of the
Collateral upon an exercise of its remedies under Section 5 hereof.
3. Representations and Warranties. Assignor represents and warrants
to Assignee that: (a) Assignor is the beneficial and record owner of the
Collateral, and no adverse claims have been made with respect to its title to or
the validity of the Collateral; (b) the Trademarks and the trademarks and
service marks covered by the Licenses are the only trademarks, service marks,
trademark and service mark registrations and applications therefor and trade
names in which Assignor has any or all right, title and interest; (c) none of
the Collateral is subject to any mortgage, pledge, lien, security interest,
lease, charge, encumbrance, settlement or consent,
3
<PAGE>
covenant not to sue, non-assertion assurance, release or license (by Assignor as
licensor), except as set forth on Exhibit 1; (d) Assignor has performed all acts
and has paid all renewal, maintenance and other fees and taxes required to
maintain each and every registration and application of the Collateral in full
force and effect; (e) no claims have been made that the use of any of the
Collateral violates the asserted rights of any third party; (f) to the best of
Assignor's knowledge, no third party is infringing upon any of the Collateral;
and (g) when this Agreement is filed in and recorded by the United States Patent
and Trademark Office (the "Trademark Office") and the Assignee has taken the
other actions contemplated by the Security Agreement and in this Agreement, this
Agreement will create a legal and valid perfected and continuing lien on and
security interest in the Collateral in favor of Assignee, enforceable against
Assignor and all third parties, subject to no other mortgage, lien, charge,
encumbrance, or security or other interest except as expressly permitted by the
Intercreditor Agreement.
4. Covenants. Assignor will maintain and renew all items of
Collateral necessary for the conduct of its or any Guarantor's business and all
registrations of the Collateral necessary for the conduct of its or any
Guarantor's business and will defend the Collateral against the claims of all
persons. Assignor will maintain, and will cause each Guarantor or other person
that uses the Collateral to maintain, the same standards of quality for the
goods and services in connection with which the Trademarks and the trademarks
covered by the Licenses are used as Assignor or such other persons maintained
for such goods and services prior to entering into this Agreement. Assignee
shall have the right to enter upon Assignor's premises at all reasonable times
to monitor such quality standards. Assignor shall promptly notify Assignee if it
knows or has reason to know that any of the Collateral may become subject to any
adverse determination or development (including the institution of proceedings)
in any action or proceeding in the United States Patent and Trademark Office or
any court. In the event that any of the Collateral is infringed or diluted by a
third party, promptly after Assignor becomes aware of such infringement or
dilution, Assignor shall take all reasonable actions to stop such infringement
or dilution and protect its exclusive rights in such Collateral including, but
not limited to, the initiation of a suit for injunctive relief and to recover
damages. Without limiting the generality of the foregoing, Assignor shall not
permit the expiration, termination or abandonment of any Trademark, Future
Trademark or License used in or necessary for the conduct of its or any
Borrower's business without the prior written consent of Assignee. If, before
the Obligations have been satisfied in full, Assignor shall obtain rights to or
be licensed to use any new trademark, or become entitled to the benefit of any
trademark or service mark application or trademark or service mark registration
not identified on Exhibit 1 hereto, the provisions of Section 2 hereof shall
automatically apply
4
<PAGE>
thereto and Assignor shall give Assignee prompt notice thereof in writing.
5. Remedies Upon Default. Whenever any Event of Default shall occur
and be continuing, Assignee shall have all the rights and remedies granted to it
in such event by the Security Agreement and the other Financing Agreements,
which rights and remedies are specifically incorporated herein by reference and
made a part hereof. Assignee in such event may collect directly any payments due
to Assignor in respect of the Collateral and, subject to any limitations imposed
under any license agreements constituting part of the Collateral, may sell,
license, lease, assign, or otherwise dispose of the Collateral in the manner set
forth in the Security Agreement or the other Financing Agreements. Assignor
agrees that, in the event of any disposition of the Collateral upon any such
Event of Default, it will duly execute, acknowledge, and deliver all documents
necessary or advisable to record title to the Collateral in any transferee or
transferees thereof, including, without limitation, valid, recordable
assignments of the Trademarks, Future Trademarks, and Licenses. In the event
Assignor fails or refuses to execute and deliver such documents, Assignor hereby
irrevocably appoints Assignee as its attorney-in-fact, with power of
substitution, to execute, deliver, and record any such documents on Assignor's
behalf. Notwithstanding any provision hereof to the contrary, during the
continuance of an Event of Default, Assignor may sell, and permit Guarantors to
sell, merchandise or services bearing the Trademarks, Future Trademarks, and
trademarks covered by the Licenses in the ordinary course of their respective
business and in a manner consistent with its past practices, until it receives
written notice from Assignee of an intended sale or disposition of the
Collateral. The preceding sentence shall not limit any right or remedy granted
to Assignee with respect to Assignor's inventory under the Security Agreement or
any other agreement now or hereinafter in effect.
6. Power of Attorney. Concurrently with the execution and delivery
hereof, Assignor shall execute and delivery to the Assignee, in the form of
Exhibit 2 hereto, five (5) originals of a Special Power of Attorney for the
implementation of the assignment, sale, license, lease or other disposition of
the Trademarks, Future Trademarks, and Licenses pursuant to Section 5. Assignor
hereby releases Assignee from any claims, causes of action and demands at any
time arising out of or with respect to any actions taken or omitted to be taken
by Assignee in accordance with Section 5 under the powers of attorney granted
therein, other than actions taken or omitted to be taken through the bad faith,
willful misconduct or gross negligence of Assignee, as determined by a final,
non-appealable order of a court of competent jurisdiction.
7. Cumulative Remedies. The rights and remedies provided herein are
cumulative and not exclusive of any other
5
<PAGE>
rights or remedies provided by law. The security interest granted hereby is
granted in conjunction with the security interest granted to Assignee under the
Security Agreement. The rights and remedies of Assignee with respect to the
security interest granted hereby are in addition to those set forth in the
Security Agreement and the other Financing Agreements and those which are now or
hereafter available to Assignee as a matter of law or equity. The exercise by
Assignee of any one or more of the rights, powers or remedies provided for in
this Agreement, in the Security Agreement, in the other Financing Agreements or
now or hereafter existing at law or in equity shall not preclude the
simultaneous or later exercise by any person, including Assignee, of any or all
other rights, powers or remedies. The rights and remedies provided herein are
intended to be in addition to and not in substitution of the rights and remedies
provided by the Security Agreement.
8. Amendments and Waivers. This Agreement may not be modified,
supplemented, or amended, or any of its provisions waived at the request of
Assignor, without the prior written consent of Assignee. Assignor hereby
authorizes Assignee to modify this Agreement by amending Exhibit 1 hereto to
include any Future Trademarks or additional licenses.
9. Waiver of Rights. No course of dealing between the parties to
this Agreement or any failure or delay on the part of any such party in
exercising any rights or remedies hereunder shall operate as a waiver of any
rights and remedies of such party or any other party, and no single or partial
exercise of any rights or remedies by one party hereunder shall operate as a
waiver or preclude the exercise of any other rights and remedies of such party
or any other party. No waiver by Assignee of any breach or default by Assignor
shall be deemed a waiver of any other previous breach or default or of any
breach or default occurring thereafter.
10. Assignment. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
parties hereto; provided, however, that no interest herein or in or to the
Collateral may be assigned by Assignor without the prior written consent of
Assignee; and, provided, further, that the Assignee may assign the rights and
benefits hereof to any party acquiring any interest in the Obligations or any
part hereof.
11. Further Acts. Assignor shall have the duty to prosecute
diligently any application for the Trademarks and Future Trademarks necessary
for the conduct of its or any Guarantor's business pending as of the date of
this Agreement or thereafter, until the Obligations shall have been paid in
full, and to make applications on material unregistered but registrable
trademarks necessary for the conduct of its or any Guarantor's business in any
location where Assignor does business and to preserve and maintain all rights in
the Trademarks and the other
6
<PAGE>
Collateral necessary for the conduct of its or any Guarantor's business. Any
expenses incurred in connection with such applications shall be borne by
Assignor. Assignor shall not abandon any right to file a trademark or service
mark application or registration for any trademark or service mark used in or
necessary for the conduct of its business, or abandon any such pending trademark
application or registration necessary for the conduct of its or any Guarantor's
business, without the consent of Assignee.
12. Enforcement. Upon Assignor's failure to do so after Assignee's
demand, or upon an Event of Default, Assignee shall have the right but shall in
no way be obligated to bring suit in its own name to enforce the Trademarks,
Future Trademarks, Licenses, or the trademarks covered by the Licenses, and any
license under any of the foregoing, in which event Assignor shall at the request
of Assignee do any and all lawful acts and execute any and all proper documents
that may be reasonably requested by Assignee in aid of such enforcement
including, but not limited to, joining as a plaintiff in any such enforcement
action and Assignor shall promptly, upon demand, reimburse and indemnify
Assignee or its agents for all reasonable costs and expenses incurred by
Assignee in the exercise of its rights under this Section 12.
13. Release and Re-Assignment. At such time as all of the
Obligations have been satisfied, and the Financing Agreements have been
terminated, other than upon enforcement of Assignee's remedies under the
Financing Agreements after an Event of Default, Assignee will execute and
deliver to Assignor all deeds, assignments and other instruments as may be
necessary or proper to release Assignor's lien in the Collateral and reassign to
Assignee any and all rights of Assignor therein which were granted to Assignor
hereunder, subject to any dispositions thereof which may have been made by
Assignee pursuant hereto.
14. Severability. If any clause or provision of this Agreement shall
be held invalid or unenforceable, in whole or in part, in any jurisdiction, such
invalidity or unenforceability shall attach only to such clause or provision, or
part thereof, in such jurisdiction, and shall not in any manner affect any other
clause or provision in any other jurisdiction.
15. Notices. All notices, requests and demands to or upon Assignor
or Assignee under this Agreement shall be given in the manner prescribed by
the Security Agreement.
16. Governing Law. This Agreement shall be governed by and
construed, applied, and enforced in accordance with the federal laws of the
United States of America applicable to trademarks and the laws of the State of
New York, except that no doctrine of choice of law shall be used to apply the
laws of any other state or jurisdiction.
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<PAGE>
17. Financing Agreement. This Agreement is one of the Financing
Agreements.
8
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement as
of the date first above written.
ATLANTIC EXPRESS TRANSPORTATION
CORP., Assignor
By: /s/ Domenic Gatto
-------------------------------
Name: Domenic Gatto
Title: President
THE BANK OF NEW YORK, as
Trustee, Assignee
By: /s/ Stephen J. Giurlando
-------------------------------
Name: Stephen J. Giurlando
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 4th day of February 1997 before me personally came
Domenic Gatto, to me known, who being by me duly sworn, did depose and say
that he is the President of ATLANTIC EXPRESS TRANSPORTATION CORP., the
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ J. Weston Peterson
-------------------------------
Notary Public
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the ____ day of February 1997 before me personally came
_______________, to me known, who being by me duly sworn, did depose and say
that he is a _______________ of THE BANK OF NEW YORK, the corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of said corporation.
_____________________________
Notary Public
<PAGE>
EXHIBIT 1
LIST OF ASSIGNOR'S TRADEMARKS
Registered Trademarks U.S. Date
and Service Marks Registration No. Registered
- ----------------- ---------------- ----------
ATLANTIC EXPRESS 1,964,915 4/2/96
AE (Stylized Letters) 1,667,874 12/10/91
Applications U.S.
for Registration Serial No. Date Filed
- ---------------- ---------- ----------
AE ATLANTIC EXPRESS
TRANSPORTATION GROUP 75-121,810 6/18/96
and DESIGN
Trade Names
- -----------
ATLANTIC EXPRESS
<PAGE>
STATE OF NEW YORK )
)ss:
COUNTY OF NEW YORK )
On the 4th day of February 1997 before me personally came Domenic Gatto, to me
known, who being be me duly sworn, did depose and say that he is the
President of ATLANTIC EXPRESS TRANSPORTATION CORP., the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said Corporation.
/s/ J. Weston Peterson
-------------------------------
Notary Public
<PAGE>
EXHIBIT 2
SPECIAL POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, THAT ATLANTIC EXPRESS TRANSPORTATION
CORP., a New York corporation with offices at 7 North Street, Staten Island, New
York 10302 (hereinafter called "Assignor"), hereby appoints and constitutes THE
BANK OF NEW YORK, a New York banking corporation with offices at 101 Barclay
Street -- 21W, New York, New York 10286 (hereinafter called "Assignee"), its
true and lawful attorney, with full power of substitution, and with full power
and authority to perform the following acts on behalf of Assignor:
1. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Assignor in and to any trademarks
and service marks, and all registrations, renewals, recordings and all pending
applications therefor, and all licenses therefor, and for the purpose of the
recording, registering and filing of, or accomplishing any other formality with
respect to, the foregoing, to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or advisable to
effect such purpose; and
2. To execute any and all documents, statements, certificates or
other papers necessary or advisable in order to obtain the purposes described
above as Assignee may in its sole discretion determine.
This power of attorney is made pursuant to a Collateral Assignment
of Trademarks (Security Agreement) dated the date hereof, between Assignor and
Assignee and takes effect solely for the purposes of Section 5 thereof and is
subject to the conditions thereof and may not be revoked until the payment in
full of all "Obligations" as defined in such Security Agreement.
Dated: February 4, 1997
ATLANTIC EXPRESS TRANSPORTATION
CORP.
By: /s/ Domenic Gatto
-------------------------------
Name: Domenic Gatto
Title: President
<PAGE>
Exhibit 10.5
EMPLOYMENT AGREEMENT dated as of January 21, 1997 (the "Agreement")
between Atlantic Express Transportation Corp., a New York corporation with an
office at 7 North Street, Staten Island, New York 10302 (the "Company"), and
Domenic Gatto, presently residing at 136 Monmouth Road, Spotswood, NJ 08884 (the
"Executive").
WHEREAS, the Executive is presently employed by Atlantic Express
Transportation Group Inc. ("Atlantic") the parent of the Company under an
employment agreement entered into as of February 28, 1994 (the "1994
Agreement");
WHEREAS, Atlantic has agreed to transfer (the "Transfer") to the Company,
all of the capital stock of the subsidiaries of Atlantic engaged in the
transportation business (the "Transportation Subsidiaries");
WHEREAS, in connection with the Transfer, the Company will become the
primary employer of the Executive and will provide all compensation and benefits
to Executive, although the Executive will continue to act for Atlantic pursuant
to an amendment to the 1994 Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES
1.1. General. The Company hereby employs the Executive, and the
Executive agrees to serve, as President and Chief Executive Officer of the
Company and upon the Board of Directors of the Company (the "Board") as Chairman
of the Board upon the terms and conditions herein contained, and in such
capacities the Executive agrees to serve the Company faithfully and to the best
of his ability under the direction of the Board. The Executive also agrees to
serve, if elected, at no compensation in addition to that provided for in this
Agreement, in the position of officer or director of Atlantic and of any
subsidiary of the Company; provided, however, that such position shall be of no
less status relative to such subsidiary as the position that the Executive holds
pursuant to the first sentence of this Section 1.1 is with respect to the
Company.
1.2. Exclusive Services. For so long as the Executive is employed by
the Company, he shall devote his fulltime working hours to his duties hereunder.
The Executive shall not, directly or indirectly, render services to any other
person or organization for which he receives compensation (with the exception of
services rendered on behalf of Atlantic or non Transportation Subsidiaries of
Atlantic) without the unanimous consent of the Board or otherwise engage in
activities which would interfere significantly with his faithful performance of
his duties hereunder.
1.3. Term of Employment. The Executive's employment under this
Agreement shall commence on January 15, 1997 (the "Effective Date") and shall
terminate on the
<PAGE>
earliest of (i) the fifth anniversary of the Effective Date, (ii) the death of
the Executive or (iii) the termination of the Executive's employment pursuant to
this Agreement; provided, however, that the term of the Executive's employment
under this Agreement may be extended for a period of up to three years by notice
of approval from the Board to the Executive at least six months prior to the
expiration of the then effective Employment Term but not earlier than the fourth
anniversary of the Effective Date (the period commencing on the Effective Date
and ending on the fifth anniversary of the Effective Date, or such later date to
which the term of the Executive's employment shall have been extended is
hereinafter referred to as the "Employment Term").
2. SALARY
2.1. Base Salary. From the Effective Date, the Executive shall be
entitled to receive a base salary ("Base Salary") at a rate of $510,935 per
annum, payable in arrears in equal installments not less frequently than weekly
in accordance with the Company's payroll practices, with such increases as may
be provided in accordance with the terms hereof. Once increased, such higher
amount shall constitute the Executive's annual Base Salary.
2.2. Annual Increases. Commencing one year from the Effective Date,
and annually on each anniversary thereafter, the Executive's base salary shall
be increased by the same percentage by which the regional consumer price index
as of the June immediately preceding such anniversary date shall have increased
over such consumer price index as of June of the prior year; provided, however,
that in no event shall such annual increase be more than five percent (5%) nor
less than three percent (3%) of such base salary. Regional consumer price index
shall mean the index as determined by the United States Department of Labor for
the New York, New York - Northeastern New Jersey area based upon the index for
all urban consumers.
3. EMPLOYEE BENEFITS
3.1. General Benefits. The Executive shall receive the following
benefits during the Employment Term:
(a) the Executive will be eligible to participate in benefit
programs of the Company consistent with those benefit programs provided to other
senior executives of the Company;
(b) a disability insurance policy providing $15,000 in monthly
benefits commencing six months after a disability which prevents the Executive
from performing the ordinary and necessary functions and duties of his
employment; provided that the premium therefore shall not exceed the usual and
customary rates charged by underwriters for such a policy for a person of the
Executive's age in good health. At the option of the Executive and in the place
of the disability policy, the Company shall pay the cash equivalent of the
premium for such policy to the Executive (the "Disability Equivalent Payment");
(c) an automobile allowance of $2,150 per month; and
2
<PAGE>
(d) a life insurance premium allowance of $35,000 payable annually
in February of each year of the term hereof.
3.2. Vacation. The Executive shall be entitled to 25 days' paid
vacation each year in accordance with the applicable policies of the Company;
provided, however, that the Executive must utilize at least five (5) vacation
days per contract year during the month of August.
3.3. Reimbursement of Expenses. The Company will reimburse the
Executive for reasonable, ordinary and necessary business expenses incurred by
him in the fulfillment of his duties hereunder upon presentation by the
Executive of an itemized account of such expenditures, in accordance with
Company practices consistently applied.
3.4. Non-Renewal of Agreement. In the event this Agreement is not
renewed by the Company as provided in Section 1.3, the Executive shall be
entitled to six months of his Base Salary as severance, payable in equal
installments on the same terms as at the end of the Employment Term ("Severance
Pay").
4. TERMINATION OF EMPLOYMENT
4.1. Termination for Cause; Resignation.
4.1.l. General. If, prior to the expiration of the Employment Term,
the Executive's employment is terminated by the Company for Cause, the Executive
shall be entitled only to his Severance Pay, unless such termination is for a
Disloyalty Termination Event, in which case the Executive shall be entitled only
to payment of his Base Salary as then in effect through and including the date
of termination. If the Executive resigns from his employment hereunder, the
Executive shall be entitled only to payment of his Base Salary as then in effect
through and including the date of resignation. The Executive shall have no
further right to receive any other compensation, or to participate in any other
plan, arrangement, or benefit, after such termination or resignation of
employment, subject to the terms of such plans or arrangements.
4.1.2. Date of Termination/Resignation. The date of termination for
a Felony Termination Event or a BOE Termination Event (as defined below) shall
be the date of the written Notice of Termination provided for in Section 4.1.3.
The date of termination for a Conduct, Performance or Disloyalty Termination
Event shall be as provided in Section 4.1.4. The date of resignation shall be
the date specified in the written notice of resignation from the Executive to
the Company, or if no date is specified therein, 10 business days after receipt
by the Company of written notice of resignation from the Executive.
4.l.3. Notice of Termination for Felony or BOE Termination Event.
Unless first terminated by a written notice of the Board, termination of the
Executive's employment for a Felony or BOE Termination Event (as defined below)
shall be effected by delivery of a written notice of termination from Busco
Capital, Inc., the holder of the Series A Preferred
3
<PAGE>
Stock of Atlantic ("Busco") to the Executive, which notice shall specify the
event or events set forth in Section 4.2 giving rise to such termination (the
"Notice of Termination").
4.l.4. Other Termination for Cause. Termination of the Executive's
employment for a Conduct, Performance or Disloyalty Termination Event shall be
determined by a single arbitrator selected from a list of three potential
arbitrators offered by ENDISPUTE of 300 Park Avenue, New York, New York
("ENDISPUTE"). Busco and the Executive shall each have 72 hours to object to no
more than one potential arbitrator. The remaining potential arbitrator (and if
more than one is remaining, then one shall be selected by lot) shall serve as
the single arbitrator, who shall conduct an arbitration proceeding in accordance
with ENDISPUTE's then current policies and procedures. In the event ENDISPUTE is
no longer conducting business as a dispute resolution firm at the time of the
Busco Notice (as defined below), the list of three arbitrators shall be supplied
by the American Arbitration Association ("AAA") and the single arbitrator shall
be selected in the same manner as set forth above; such arbitrator shall conduct
the arbitration proceeding in accordance with the AAA's then current policies
and procedures. The decision of the arbitrator shall be final and binding to the
extent permitted by law, and judgment thereon may be entered in any court having
jurisdiction thereof. Such arbitration shall be commenced by a notice by Busco
to the Executive requiring dismissal subject to the provisions of this Agreement
and to ENDISPUTE (the "Busco Notice"). ENDISPUTE shall be informed that the
determination of the arbitrator is sought within 60 days of the Busco Notice.
Each party agrees to complete its presentation to the arbitrator not later than
the 45th day after the Busco Notice. Should the arbitrator suspend the
proceedings upon a court order or request of a prosecutor arising out of a
criminal proceeding commenced or to be commenced against the Executive or should
the Executive decline to participate in such arbitration, the arbitration shall
be terminated and termination of the Executive's employment hereunder shall be
final and no longer subject to arbitration. Unless termination is decided by an
arbitrator, Busco shall be liable to the Executive for damages if such
termination under this Section 4.l.4 was wrongful.
4.2. Cause. Termination for "Cause" shall mean termination of the
Executive's employment because the Executive (a) has engaged in fraudulent or
criminal conduct in connection with the performance of his duties hereunder,
which conduct materially and adversely affects the Company (a "Conduct
Termination Event", except that the Executive's conduct related to the facts and
circumstances described under item 6 of Schedule 3.10 of the Stock Purchase
Agreement shall not be considered a Conduct Termination Event, which exception
shall not apply if a governmental authority shall commence a criminal suit
against the Executive based on charges arising out of the same facts and
circumstances as set forth in such item 6 of Schedule 3.10 of the Stock Purchase
Agreement), (b) admits to or has been convicted of a crime punishable by
imprisonment for more than one year (a "Felony Termination Event"), (c) has
failed to perform in all material respects (following a written warning
specifying such deficiency) the normal and customary duties required of his
position of employment (a "Performance Termination Event"), (d) has been
disloyal to the Company by assisting competitors of the Company to the
disadvantage of the Company by a breach of Section 6 or by otherwise actively
assisting competitors to the disadvantage of the Company (a "Disloyalty
Termination Event"), or (e) has been identified by the Board of Education of
4
<PAGE>
the City of New York in a notice to the Company (a "BOE notice") that the Board
of Education has elected either not to extend an existing transportation
contract or that it will not accept bids from the Company for a new
transportation contract unless the employment of the Employee is terminated
together with divestiture of the Employee's stock ownership (a "BOE Termination
Event").
5. PERMANENT DISABILITY
In the event the Executive shall fail because of illness, physical
or mental disability or other incapacity, for a period of six consecutive
months, or for shorter periods aggregating six months during any twelve-month
period, to render the services provided for by this Agreement, then the Company
shall, by written notice to the Executive after the last day of the six
consecutive months of disability or the day on which the shorter periods of
disability equal an aggregate of six months, reduce the Executive's compensation
hereunder for "Permanent Disability" as follows:
First Six Months No Reduction
Following 18 months 90% of compensation less
$15,000 per month
Following 12 months Fifty percent (50%) of
(or if less, the compensation
balance of the
Employment Term)
Balance of Employment Twenty-five percent (25%) of
Term compensation
The Executive will use his reasonable best efforts to cooperate with
any physician referred to the Company by the physicians referral service of the
Columbia Presbyterian Medical Center of 622 West 168th Street, New York, New
York to determine whether or not Permanent Disability exists, and the
determination of such physician made in writing to the Company and the Executive
shall be final and conclusive for all purposes of this Agreement; provided that
if such physician declines to make a determination as to medical disability, the
matter will be referred to ENDISPUTE for resolution, whereby ENDISPUTE shall
select a single arbitrator to make a determination based upon the evidence and
testimony submitted by such physician and no other expert testimony or medical
evidence shall be permitted or considered by such arbitrator. Any payments
provided for in this Section 5 shall be reduced to the extent that such
payments, together with any disability payments received by the Executive under
any plan, program or arrangements including any payment to the employee under
Section 3.1(b) exceed the Executive's Base Salary; provided that if disability
payments are received which are free of federal income tax, the payments
provided for in this Section 5 shall be reduced by an amount equal to the
pre-tax income which would have been required to produce such payment free of
tax based on the marginal tax rate for the previous tax year of the Executive.
5
<PAGE>
Except (i) as to continue to pay the Executive's medical insurance premiums for
a period of 18 months following delivery of the written notice of "Permanent
Disability" to the Executive or (ii) as otherwise provided in this Section 5,
upon delivery of such written notice, the Company shall have no further
obligation to the Executive under this Agreement.
6. NONCOMPETITION NONSOLICITATION AND CONFIDENTIALITY
6.1. Noncompetition/Nonsolicitation. The Executive shall not,
directly or indirectly, as a sole proprietor, member of a partnership,
stockholder or investor, officer or director of a corporation, or as an
employee, associate, consultant or agent of any person, partnership, corporation
or other business organization or entity other than the Company: (a) engage in
any business that is in competition with any business actively conducted by the
Company or any of its subsidiaries within (i) the counties then served by the
Company as well as adjacent counties, and (ii) any other counties in which the
Company has made a bid within 24 months prior to the Executive's termination and
any adjacent counties in which the Company conducts business; (b) solicit or
endeavor to entice away from the Company or any of its subsidiaries any person
who is, or was during the then most recent 24-month period, employed by or
associated with the Company or any of its subsidiaries; or (c) solicit or
endeavor to entice away from the Company or any of its subsidiaries any person
or entity who is, or was within the then most recent 24-month period, a
customer, client or prospect of the Company or any of its subsidiaries. The
obligations of this Section 6.l shall apply for 24 months after termination of
employment of the Executive as well as during employment and shall be extended
by a period of time equal to any period during which the Executive shall be in
breach of such obligations. The obligations of this Section 6.1 shall not be
applicable during any period in which the Company is not in compliance with
Executive's Put Right under the 1994 Agreement.
6.2. Confidentiality. The Executive covenants and agrees with the
Company that he will not at any time, except in performance of his obligations
to the Company hereunder or with the prior written consent of the Company,
directly or indirectly, disclose any secret or confidential information that he
may learn or has learned by reason of his association with the Company or any of
its subsidiaries and affiliates. The term "confidential information" includes
information not previously disclosed to the public or to the trade by the
Company's management, or otherwise in the public domain, with respect the
Company's, or any of its affiliates' or subsidiaries', products, services,
facilities, applications and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, product or service
price lists, customer lists, technical information, financial information
(including the revenues, costs or profits associated with any of the Company's
products), business plans, prospects or opportunities.
6.3. Exclusive Property. The Executive confirms that all
confidential information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by the
Executive relating to the business of the Company shall be and remain the
property of the Company.
6
<PAGE>
6.4. Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material and irreparable
injury to the Company or its affiliates or subsidiaries for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction restraining the Executive from engaging in
activities prohibited by this Section 6 or such other relief as may be required
specifically to enforce any of the covenants in this Section 6. If for any
reason a final decision of any court determines that the restrictions under this
Section 6 are not reasonable or that consideration therefor is inadequate, such
restrictions shall be interpreted, modified or rewritten by such court to
include as much of the duration and scope identified in this Section 6 as will
render such restrictions valid and enforceable.
7. MISCELLANEOUS
7.1. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
Atlantic Express
Transportation Corp.
7 North Street
Staten Island, NY 10302
Attention: President
To the Executive:
Domenic Gatto
136 Monmouth Road
Spotswood, NJ 08884
Any such notice or communication shall be sent certified or registered
mail, return receipt requested, addressed as above (or to such other address as
such party may designate in writing from time to time), and the actual date of
receipt, as shown by the receipt therefor, shall determine the time at which
notice was given.
7.2. Severability. If a court of competent jurisdiction determines
that any term or provision hereof is invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired and (b) such court shall have
the authority to replace such invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
7
<PAGE>
7.3. Assignment. This Agreement shall inure to the benefit of the
heirs and representatives of the Executive and the assigns and successors of the
Company, but neither this Agreement nor any rights hereunder shall be assignable
or otherwise subject to hypothecation by the Executive.
7.4. Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between the Company and the Executive, including
the 1994 Agreement. The Agreement may be amended at any time by mutual written
agreement of the parties hereto.
7.5. Withholding. The Company shall be entitled to withhold, or
cause to be withheld, from payment any amount of withholding taxes required by
law with respect to payments made to the Executive in connection with his
employment hereunder.
7.6. Governing Law. This Agreement shall be construed, interpreted,
and governed in accordance with the laws of New York without reference to rules
relating to conflict of law.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Executive has hereunto set his hand, as of the day and year
first above written.
ATLANTIC EXPRESS
TRANSPORTATION CORP.
By: /s/ Domenic Gatto
-------------------------------
Name: Domenic Gatto
Title: President and Chief Executive
Officer
DOMENIC GATTO
/s/ Domenic Gatto
-------------------------------
8
<PAGE>
Exhibit 10.6
EMPLOYMENT AGREEMENT dated as of January 21, 1997 (the "Agreement")
between Atlantic Express Transportation Corp., a New York corporation with an
office at 7 North Street, Staten Island, New York 10302 (the "Company"), and
Michael Gatto, presently residing at 1 Elm Court, Perrinville, NJ 08535100 (the
"Executive").
WHEREAS, the Executive is presently employed by Atlantic Express
Transportation Group Inc. ("Atlantic"), the parent of the Company under an
employment agreement entered into as of February 28, 1994 (the "1994
Agreement");
WHEREAS, Atlantic has agreed to transfer (the "Transfer") to the Company,
all of the capital stock of the subsidiaries of Atlantic engaged in the
transportation business (the "Transportation Subsidiaries"); and
WHEREAS, in connection with the Transfer, the Company will become the
primary employer of the Executive and will provide all compensation and benefits
to Executive, although the Executive will continue to act for Atlantic pursuant
to an amendment to the 1994 Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES
1.1. General. The Company hereby employs the Executive, and the
Executive agrees to serve, as Executive Vice President of the Company and upon
the Board of Directors of the Company (the "Board") upon the terms and
conditions herein contained, and in such capacities the Executive agrees to
serve the Company faithfully and to the best of his ability under the direction
of the Board. The Executive also agrees to serve, if elected, at no compensation
in addition to that provided for in this Agreement, in the position of officer
or director of Atlantic and of any subsidiary of the Company; Provided, however,
that such position shall be of no less status relative to such subsidiary as the
position that the Executive holds pursuant to the first sentence of this Section
1.1 is with respect to the Company.
1.2. Exclusive Services. For so long as the Executive is employed by
the Company, he shall devote his full-time working hours to his duties
hereunder. The Executive shall not, directly or indirectly, render services to
any other person or organization for which he receives compensation (with the
exception of services rendered on behalf of Atlantic or non transportation
subsidiaries of Atlantic) without the unanimous consent of the Board or
otherwise engage in activities which would interfere significantly with his
faithful performance of his duties hereunder.
1.3. Term of Employment. The Executive's employment under this
Agreement shall commence on January 15, 1997 (the "Effective Date") and shall
terminate on the earliest of (i) the fifth anniversary of the Effective Date,
(ii) the death of the Executive or
<PAGE>
(iii) the termination of the Executive's employment pursuant to this Agreement;
provided however that the term of the Executive's employment under to this
Agreement may be extended for a period of up to three years by notice of
approval from the Board to the Executive at least six months prior to the
expiration of the then effective Employment Term but not earlier than the fourth
anniversary of the Effective Date (the period commencing on the Effective Date
and ending on the fifth anniversary of the Effective Date, or such later date to
which the term of the Executive's employment shall have been extended is
hereinafter referred to as the "Employment Term").
2. SALARY
2.1. Base Salary. From the Effective Date, the Executive shall be
entitled to receive a base salary ("Base Salary") at a rate of $340,252 per
annum, payable in arrears in equal installments not less frequently than weekly
in accordance with the Company's payroll practices, with such increases as may
be provided in accordance with the terms hereof. Once increased, such higher
amount shall constitute the Executive's annual Base Salary.
2.2. Annual Increases. Commencing one year from the Effective Date,
and annually on each anniversary thereafter, the Executive's base salary shall
be increased by the same percentage by which the regional consumer price index
as of the June immediately preceding such anniversary date shall have increased
over such consumer price index as of June of the prior year; provided, however,
that in no event shall such annual increase be more than five percent (5%) nor
less than three percent (3%) of such base salary. Regional consumer price index
shall mean the index as determined by the United States Department of Labor for
the New York, New York - Northeastern New Jersey area based upon the index for
all urban consumers.
3. EMPLOYEE BENEFITS
3.1. General Benefits. The Executive shall receive the following
benefits during the Employment Term:
(a) the Executive will be eligible to participate in benefit
programs of the Company consistent with those benefit programs provided to other
senior executives of the Company;
(b) a disability insurance policy providing $10,000 in monthly
benefits commencing six months after a disability which prevents the Executive
from performing the ordinary and necessary functions and duties of his
employment; Provided that the premium therefore shall not exceed the usual and
customary rates charged by underwriters for such a policy for a person of the
Executive's age in good health. At the option of the Executive and in the place
of the disability policy, the Company shall pay the cash equivalent of the
premium for such policy to the Executive the "Disability Equivalent Payment");
(c) an automobile allowance of $1,434 per month; and
2
<PAGE>
(d) a life insurance premium allowance of $23,000 payable annually
in February of each year of the term hereof.
3.2. Vacation. The Executive shall be entitled to 16 days paid
vacation each year in accordance with the applicable policies of the Company;
provided, however, that the Executive must utilize at least five (5) vacation
days per contract year during the month of August.
3.3. Reimbursement of Expenses. The Company will reimburse the
Executive for reasonable, ordinary and necessary business expenses incurred by
him in the fulfillment of his duties hereunder upon presentation by the
Executive of an itemized account of such expenditures, in accordance with
Company practices consistently applied.
3.4. Non-Renewal of Agreement. In the event this Agreement is not
renewed by the Company as provided in Section 1.3, the Executive shall be
entitled to six months of his Base Salary as severance, payable in equal
installments on the same terms as at the end of the Employment Term ("Severance
Pay").
4. TERMINATION OF EMPLOYMENT
4.1. Termination for Cause; Resignation.
4.1.1. General. If, prior to the expiration of the Employment Term,
the Executive's employment is terminated by the Company for Cause, the Executive
shall be entitled only to his Severance Pay, unless such termination is for a
Disloyalty Termination Event, in which case the Executive shall be entitled only
to payment of his Base Salary as then in effect through and including the date
of termination. If the Executive resigns from his employment hereunder, the
Executive shall be entitled only to payment of his Base Salary as then in effect
through and including the date of resignation. The Executive shall have no
further right to receive any other compensation, or to participate in any other
plan, arrangement, or benefit, after such termination or resignation of
employment, subject to the terms of such plans or arrangements.
4.1.2. Date of Termination/Resignation. The date of termination for
a Felony Termination Event or a BOE Termination Event (as defined below) shall
be the date of the written Notice of Termination provided for in Section 4.1.3.
The date of termination for a Conduct, Performance or Disloyalty Termination
Event shall be provided in Section 4.1.4. The date of resignation shall be the
date specified in the written notice of resignation from the Executive to the
Company, or if no date is specified therein, 10 business days after receipt by
the Company of written notice of resignation from the Executive.
4.1.3. Notice of Termination for Felony or BOE Termination Event.
Unless first terminated by a written notice of the Board, termination of the
Executive's employment for a Felony or BOE Termination Event (as defined below)
shall be effected by delivery of a written notice of termination from Busco
Capital, Inc., the holder of the Series A Preferred
3
<PAGE>
Stock of Atlantic ("Busco") to the Executive, which notice shall specify the
event or events set forth in Section 4.2 giving rise to such termination (the
"Notice of Termination").
4.1.4. Other Termination for Cause. Termination of the Executive's
employment for a Conduct, Performance or Disloyalty Termination Event shall be
determined by a single arbitrator selected from a list of three potential
arbitrators offered by ENDISPUTE of 300 Park Avenue, New York, New York
("ENDISPUTE"). Busco and the Executive shall each have 72 hours to object to no
more than one potential arbitrator. The remaining potential arbitrator (and if
more than one is remaining, then one shall be selected by lot) shall serve as
the single arbitrator, who shall conduct an arbitration proceeding in accordance
with ENDISPUTE's then current policies and procedures. In the event ENDISPUTE is
no longer conducting business as a dispute resolution firm at the time of the
Busco Notice (as defined below), the list of three arbitrators shall be supplied
by the American Arbitration Association ("AAA"), and the single arbitrator shall
be selected in the same manner as set forth above; such arbitrator shall conduct
the arbitration proceeding in accordance with the AAA's then current policies
and procedures. The decision of the arbitrator shall be final and binding to the
extent permitted by law, and judgment thereon may be entered in any court having
jurisdiction thereof. Such arbitration shall be commenced by a notice by Busco
to the Executive requiring dismissal subject to the provisions of this Agreement
and to ENDISPUTE (the "Busco Notice"). ENDISPUTE shall be informed that the
determination of the arbitrator is sought within 60 days of the Busco Notice.
Each party agrees to complete its presentation to the arbitrator not later than
the 45th day after the Busco Notice. Should the arbitrator suspend the
proceedings upon a court order or request of a prosecutor arising out of a
criminal proceeding commenced or to be commenced against the Executive or should
the Executive decline to participate in such arbitration, the arbitration shall
be terminated and termination of the Executive's employment hereunder shall
thereupon be final and no longer subject to arbitration. Unless termination is
decided by an arbitrator, Busco shall be liable to the Executive for damages if
such termination under this Section 4.1.4 was wrongful.
4.2. Cause. Termination for "Cause" shall mean termination of the
Executive's employment because the Executive (a) has engaged in fraudulent or
criminal conduct in connection with the performance of his duties hereunder,
which conduct materially and adversely affects the Company (a "Conduct
Termination Event", except that the Executive's conduct related to the facts and
circumstances described under item 6 of Schedule 3.10 of the Stock Purchase
Agreement shall not be considered a Conduct Termination Event, which exception
shall not apply if a governmental authority shall commence a criminal suit
against the Executive based on charges arising out of the same facts and
circumstances as set forth in such item 6 of Schedule 3.10 of the Stock Purchase
Agreement), (b) admits to or has been convicted of a crime punishable by
imprisonment for more than one year (a "Felony Termination Event"), (c) has
failed to perform in all material respects (following a written warning
specifying such deficiency) the normal and customary duties required of his
position of employment (a "Performance Termination Event"), (d) has been
disloyal to the Company by assisting competitors of the Company to the
disadvantage of the Company by a breach of Section 6 or by otherwise actively
assisting competitors to the disadvantage of the Company (a "Disloyalty
Termination Event"), or (e) has been identified by the Board of Education of
4
<PAGE>
the City of New York in a notice to the Company (a "BOE Notice") that the Board
of Education has elected either not to extend an existing transportation
contract or that it will not accept bids from the Company for a new
transportation contract unless the employment of the Employee is terminated
together with divestiture of the Employee's stock ownership (a "BOE Termination
Event").
5. PERMANENT DISABILITY
In the event the Executive shall fail because of illness, physical
or mental disability or other incapacity, for a period of six consecutive
months, or for shorter periods aggregating six months during any twelve-month
period, to render the services provided for by this Agreement, then the Company
shall, by written notice to the Executive after the last day of the six
consecutive months of disability or the day on which the shorter periods of
disability equal an aggregate of six months, reduce the Executive's compensation
hereunder for "Permanent Disability" as follows:
First Six Months No Reduction
Following 18 months 90% of compensation less
$l0,000 per month
Following 12 months Fifty percent (50%) of
(or if less, the compensation
balance of the
Employment Term)
Balance of Employment Twenty-five percent (25%) of
Term compensation
The Executive will use his reasonable best efforts to cooperate with
any physician referred to the Company by the physicians referral service of the
Columbia Presbyterian Medical Center of 622 West 168th Street, New York, New
York to determine whether or not Permanent Disability exists, and the
determination of such physician made in writing to the Company and the Executive
shall be final and conclusive for all purposes of this Agreement; provided that
if such physician declines to make a determination as to medical disability, the
matter will be referred to ENDISPUTE for resolution, whereby ENDISPUTE shall
select a single arbitrator to make a determination based upon the evidence and
testimony submitted by such physician and no other expert testimony or medical
evidence shall be permitted or considered by such arbitrator. Any payments
provided for in this Section 5 shall be reduced to the extent that such
payments, together with any disability payments received by the Executive under
any plan, program or arrangements, including any payment to the employee under
Section 3.1(b) exceed the Executive's Base Salary; provided that if disability
payments are received which are free of federal income tax. The payments
provided for in this Section s shall be reduced by an amount equal to the
pre-tax income which would have been required to produce such payment free of
tax based on the marginal rate for the previous tax year of the Executive.
Except (i) as to continue to pay the
5
<PAGE>
Executive's medical insurance premiums for a period of 18 months following
delivery of the written notice of "Permanent Disability" to the Executive or
(ii) as otherwise provided in this Section 5, upon delivery of such written
notice, the Company shall have no further obligation to the Executive under this
Agreement.
6. NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY
6.1. Noncompetition/Nonsolicitation. The Executive shall not,
directly or indirectly, as a sole proprietor, member of a partnership,
stockholder or investor, officer or director of a corporation, or as an
employee, associate, consultant or agent of any person, partnership, corporation
or other business organization or entity other than the Company: (a) engage in
any business that is in competition with any business actively conducted by the
Company or any of its subsidiaries within (i) the counties then served by the
Company as well as adjacent counties, and (ii) any other counties in which the
Company has made a bid within 24 months prior to the Executive's termination and
any adjacent counties in which the Company conducts business; (b) solicit or
endeavor to entice away from the Company or any of its subsidiaries any person
who is, or was during the then most recent 24-month period, employed by or
associated with the Company or any of its subsidiaries; or (c) solicit or
endeavor to entice away from the Company or any of its subsidiaries any person
or entity who is, or was within the then most recent 24-month period, a
customer, client or prospect of the Company or any of its subsidiaries. The
obligations of this Section 6.1 shall apply for 24 months after termination of
employment of the Executive as well as during employment and shall be extended
by a period of time equal to any period during which the Executive shall be in
breach of such obligations. The obligations of this Section 6.1 shall not be
applicable during any period in which the Company is not in compliance with
Executive's Put Right under the 1994 Agreement.
6.2. Confidentiality. The Executive covenants and agrees with the
Company that he will not at any time, except in performance of his obligations
to the Company hereunder or with the prior written consent of the Company,
directly or indirectly, disclose any secret or confidential information that he
may learn or has learned by reason of his association with the Company or any of
its subsidiaries and affiliates. The term "confidential information" includes
information not previously disclosed to the public or to the trade by the
Company's management, or otherwise in the public domain, with respect the
Company's, or any of its affiliates' or subsidiaries', products, services,
facilities, applications and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, product or service
price lists, customer lists, technical information, financial information
(including the revenues, costs or profits associated with any of the Company's
products), business plans, prospects or opportunities.
6.3. Exclusive Property. The Executive confirms that all
confidential information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by the
Executive relating to the business of the Company shall be and remain the
property of the Company.
6
<PAGE>
6.4. Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material and irreparable
injury to the Company or its affiliates or subsidiaries for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction restraining the Executive from engaging in
activities prohibited by this Section 6 or such other relief as may be required
specifically to enforce any of the covenants in this Section 6. If for any
reason a final decision of any court determines that the restrictions under this
Section 6 are not reasonable or that consideration therefor is inadequate, such
restrictions shall be interpreted, modified or rewritten by such court to
include as much of the duration and scope identified in this Section 6 as will
render such restrictions valid and enforceable.
7. MISCELLANEOUS
7.1. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
Atlantic Express
Transportation Corp.
7 North Street
Staten Island, NY 10302
Attention: President
To the Executive:
Michael Gatto
1 Elm Court
Perrinville, NJ 08535
Any such notice or communication shall be sent certified or registered mail,
return receipt requested, addressed as above (or to such other address as such
party may designate in writing from time to time), and the actual date of
receipt, as shown by the receipt therefor, shall determine the time at which
notice was given.
7.2. Severability. If a court of competent jurisdiction determines
that any term or provision hereof is invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired and (b) such court shall have
the authority to replace such invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
7
<PAGE>
7.3. Assignment. This Agreement shall inure to the benefit of the
heirs and representatives of the Executive and the assigns and successors of the
Company, but neither this Agreement nor any rights hereunder shall be assignable
or otherwise subject to hypothecation by the Executive.
7.4. Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between the Company and the Executive, including
the 1994 Agreement. The Agreement may be amended at any time by mutual written
agreement of the parties hereto.
7.5. Withholding. The Company shall be entitled to withhold, or
cause to be withheld, from payment any amount of withholding taxes required by
law with respect to payments made to the Executive in connection with his
employment hereunder.
7.6. Governing Law. This Agreement shall be construed, interpreted,
and governed in accordance with the laws of New York without reference to rules
relating to conflict of law.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Executive has hereunto set his hand, as of the day and year
first above written.
ATLANTIC EXPRESS
TRANSPORTATION CORP.
By: /s/ Domenic Gatto
---------------------------------
Name: Domenic Gatto
Title: President and Chief Executive
Officer
MICHAEL GATTO
/s/ Michael Gatto
--------------------------------
8
<PAGE>
Exhibit 10.7
EMPLOYMENT AGREEMENT dated as of January 21, 1997 (the "Agreement")
between Atlantic Express Transportation Corp., a New York corporation with an
office at 7 North Street, Staten Island, New York 10302 (the "Company"), and
Patrick Gatto, presently residing at 100 Sandalwood Drive, Marlboro, NJ 07746
(the "Executive").
WHEREAS, the Executive is presently employed by Atlantic Express
Transportation Group Inc. ("Atlantic"), the parent of the Company under an
employment agreement entered into as of February 28, 1994 (the "1994
Agreement");
WHEREAS, Atlantic has agreed to transfer (the "Transfer") to the Company,
all of the capital stock of the subsidiaries of Atlantic engaged in the
transportation business (the "Transportation Subsidiaries"); and
WHEREAS, in connection with the Transfer, the Company will become the
primary employer of the Executive and will provide all compensation and benefits
to Executive, although the Executive will continue to act for Atlantic pursuant
to an amendment to the 1994 Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES
1.1. General. The Company hereby employs the Executive, and the
Executive agrees to serve, as Executive Vice President of the Company and upon
the Board of Directors of the Company (the "Board") as a director upon the terms
and conditions herein contained, and in such capacities the Executive agrees to
serve the Company faithfully and to the best of his ability under the direction
of the Board. The Executive also agrees to serve, if elected, at no compensation
in addition to that provided for in this Agreement, in the position of officer
or director of Atlantic and of any subsidiary of the Company; Provided, however,
that such position shall be of no less status relative to such subsidiary as the
position that the Executive holds pursuant to the first sentence of this Section
1.1 is with respect to the Company.
1.2. Exclusive Services. For so long as the Executive is employed by
the Company, he shall devote his full-time working hours to his duties
hereunder. The Executive shall not, directly or indirectly, render services to
any other person or organization for which he receives compensation (with the
exception of services rendered on behalf of Atlantic or non transportation
subsidiaries of Atlantic) without the unanimous consent of the Board or
otherwise engage in activities which would interfere significantly with his
faithful performance of his duties hereunder.
1.3. Term of Employment. The Executive's employment under this
Agreement shall commence on January 15, 1997 (the "Effective Date") and shall
terminate on the
<PAGE>
earliest of (i) the fifth anniversary of the Effective Date, (ii) the death of
the Executive or (iii) the termination of the Executive's employment pursuant to
this Agreement; provided, however, that the term of the Executive's employment
under this Agreement may be extended for a period of up to three years by notice
of approval from the Board to the Executive at least six months prior to the
expiration of the then effective Employment Term but not earlier than the fourth
anniversary of the Effective Date (the period commencing on the Effective Date
and ending on the fifth anniversary of the Effective Date, or such later date to
which the term of the Executive's employment shall have been extended is
hereinafter referred to as the "Employment Term").
2. SALARY
2.1. Base Salary. From the Effective Date, the Executive shall be
entitled to receive a base salary ("Base Salary") at a rate of $340,252 per
annum, payable in arrears in equal installments not less frequently than weekly
in accordance with the Company's payroll practices, with such increases as may
be provided in accordance with the terms hereof. Once increased, such higher
amount shall constitute the Executive's annual Base Salary.
2.2. Annual Increases. Commencing one year from the Effective Date,
and annually on each anniversary thereafter, the Executive's base salary shall
be increased by the same percentage by which the regional consumer price index
as of the June immediately preceding such anniversary date shall have increased
over such consumer price index as of June of the prior year; provided, however,
that in no event shall such annual increase be more than five percent (5%) nor
less than three percent (3%) of such base salary. Regional consumer price index
shall mean the index as determined by the United States Department of Labor for
the New York, New York - Northeastern New Jersey area based upon the index for
all urban consumers.
3. EMPLOYEE BENEFITS
3.1. General Benefits. The Executive shall receive the following
benefits during the Employment Term:
(a) the Executive will be eligible to participate in benefit
programs of the Company consistent with those benefit programs provided to other
senior executives of the Company;
(b) a disability insurance policy providing $10,000 in monthly
benefits commencing six months after a disability which prevents the Executive
from performing the ordinary and necessary functions and duties of his
employment; Provided that the premium therefore shall not exceed the usual and
customary rates charged by underwriters for such a policy for a person of the
Executive's age in good health. At the option of the Executive and in the place
of the disability policy, the Company shall pay the cash equivalent of the
premium for such policy to the Executive the "Disability Equivalent Payment");
(c) an automobile allowance of $1,434 per month; and
2
<PAGE>
(d) a life insurance premium allowance of $23,000 payable annually
in February of each year of the term hereof.
3.2. Vacation. The Executive shall be entitled to 16 days paid
vacation each year in accordance with the applicable policies of the Company;
provided, however, that the Executive must utilize at least five (5) vacation
days per contract year during the month of August.
3.3. Reimbursement of Expenses. The Company will reimburse the
Executive for reasonable, ordinary and necessary business expenses incurred by
him in the fulfillment of his duties hereunder upon presentation by the
Executive of an itemized account of such expenditures, in accordance with
Company practices consistently applied.
3.4. Non-Renewal of Agreement. In the event this Agreement is not
renewed by the Company as provided in Section 1.3, the Executive shall be
entitled to six months of his Base Salary as severance, payable in equal
installments on the same terms as at the end of the Employment Term ("Severance
Pay").
4. TERMINATION OF EMPLOYMENT
4.1. Termination for Cause; Resignation.
4.1.1. General. If, prior to the expiration of the Employment Term,
the Executive's employment is terminated by the Company for Cause, the Executive
shall be entitled only to his Severance Pay, unless such termination is for a
Disloyalty Termination Event, in which case the Executive shall be entitled only
to payment of his Base Salary as then in effect through and including the date
of termination. If the Executive resigns from his employment hereunder, the
Executive shall be entitled only to payment of his Base Salary as then in effect
through and including the date of resignation. The Executive shall have no
further right to receive any other compensation, or to participate in any other
plan, arrangement, or benefit, after such termination or resignation of
employment, subject to the terms of such plans or arrangements.
4.1.2. Date of Termination/Resignation. The date of termination for
a Felony Termination Event or a BOE Termination Event (as defined below) shall
be the date of the written Notice of Termination provided for in Section 4.1.3.
The date of termination for a Conduct, Performance or Disloyalty Termination
Event shall be provided in Section 4.1.4. The date of resignation shall be the
date specified in the written notice of resignation from the Executive to the
Company, or if no date is specified therein, 10 business days after receipt by
the Company of written notice of resignation from the Executive.
4.1.3. Notice of Termination for Felony or BOE Termination Event.
Unless first terminated by a written notice of the Board, termination of the
Executive's employment for a Felony or BOE Termination Event (as defined below)
shall be effected by delivery of a written notice of termination from Busco
Capital, Inc., the holder of the Series A Preferred
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Stock of Atlantic ("Busco") to the Executive, which notice shall specify the
event or events set forth in Section 4.2 giving rise to such termination (the
"Notice of Termination").
4.1.4. Other Termination for Cause. Termination of the Executive's
employment for a Conduct, Performance or Disloyalty Termination Event shall be
determined by a single arbitrator selected from a list of three potential
arbitrators offered by ENDISPUTE of 300 Park Avenue, New York, New York
("ENDISPUTE"). Busco and the Executive shall each have 72 hours to object to no
more than one potential arbitrator. The remaining potential arbitrator (and if
more than one is remaining, then one shall be selected by lot) shall serve as
the single arbitrator, who shall conduct an arbitration proceeding in accordance
with ENDISPUTE's then current policies and procedures. In the event ENDISPUTE is
no longer conducting business as a dispute resolution firm at the time of the
Busco Notice (as defined below), the list of three arbitrators shall be supplied
by the American Arbitration Association ("AAA"), and the single arbitrator shall
be selected in the same manner as set forth above; such arbitrator shall conduct
the arbitration proceeding in accordance with the AAA's then current policies
and procedures. The decision of the arbitrator shall be final and binding to the
extent permitted by law, and judgment thereon may be entered in any court having
jurisdiction thereof. Such arbitration shall be commenced by a notice by Busco
to the Executive requiring dismissal subject to the provisions of this Agreement
and to ENDISPUTE (the "Busco Notice"). ENDISPUTE shall be informed that the
determination of the arbitrator is sought within 60 days of the Busco Notice.
Each party agrees to complete its presentation to the arbitrator not later than
the 45th day after the Busco Notice. Should the arbitrator suspend the
proceedings upon a court order or request of a prosecutor arising out of a
criminal proceeding commenced or to be commenced against the Executive or should
the Executive decline to participate in such arbitration, the arbitration shall
be terminated and termination of the Executive's employment hereunder shall
thereupon be final and no longer subject to arbitration. Unless termination is
decided by an arbitrator, Busco shall be liable to the Executive for damages if
such termination under this Section 4.1.4 was wrongful.
4.2. Cause. Termination for "Cause" shall mean termination of the
Executive's employment because the Executive (a) has engaged in fraudulent or
criminal conduct in connection with the performance of his duties hereunder,
which conduct materially and adversely affects the Company (a "Conduct
Termination Event", except that the Executive's conduct related to the facts and
circumstances described under item 6 of Schedule 3.10 of the Stock Purchase
Agreement shall not be considered a Conduct Termination Event, which exception
shall not apply if a governmental authority shall commence a criminal suit
against the Executive based on charges arising out of the same facts and
circumstances as set forth in such item 6 of Schedule 3.10 of the Stock Purchase
Agreement), (b) admits to or has been convicted of a crime punishable by
imprisonment for more than one year (a "Felony Termination Event"), (c) has
failed to perform in all material respects (following a written warning
specifying such deficiency) the normal and customary duties required of his
position of employment (a "Performance Termination Event"), (d) has been
disloyal to the Company by assisting competitors of the Company to the
disadvantage of the Company by a breach of Section 6 or by otherwise actively
assisting competitors to the disadvantage of the Company (a "Disloyalty
Termination Event"), or (e) has been identified by the Board of Education of
4
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the City of New York in a notice to the Company (a "BOE Notice") that the Board
of Education has elected either not to extend an existing transportation
contract or that it will not accept bids from the Company for a new
transportation contract unless the employment of the Employee is terminated
together with divestiture of the Employee's stock ownership (a "BOE Termination
Event").
5. PERMANENT DISABILITY
In the event the Executive shall fail because of illness, physical
or mental disability or other incapacity, for a period of six consecutive
months, or for shorter periods aggregating six months during any twelve-month
period, to render the services provided for by this Agreement, then the Company
shall, by written notice to the Executive after the last day of the six
consecutive months of disability or the day on which the shorter periods of
disability equal an aggregate of six months, reduce the Executive's compensation
hereunder for "Permanent Disability" as follows:
First Six Months No Reduction
Following 18 months 90% of compensation less
$l0,000 per month
Following 12 months Fifty percent (50%) of
(or if less, the compensation
balance of the
Employment Term)
Balance of Employment Twenty-five percent (25%) of
Term compensation
The Executive will use his reasonable best efforts to cooperate with
any physician referred to the Company by the physicians referral service of the
Columbia Presbyterian Medical Center of 622 West 168th Street, New York, New
York to determine whether or not Permanent Disability exists, and the
determination of such physician made in writing to the Company and the Executive
shall be final and conclusive for all purposes of this Agreement; provided that
if such physician declines to make a determination as to medical disability, the
matter will be referred to ENDISPUTE for resolution, whereby ENDISPUTE shall
select a single arbitrator to make a determination based upon the evidence and
testimony submitted by such physician and no other expert testimony or medical
evidence shall be permitted or considered by such arbitrator. Any payments
provided for in this Section 5 shall be reduced to the extent that such
payments, together with any disability payments received by the Executive under
any plan, program or arrangements, including any payment to the employee under
Section 3.1(b) exceed the Executive's Base Salary; provided that if disability
payments are received which are free of federal income tax. The payments
provided for in this Section s shall be reduced by an amount equal to the
pre-tax income which would have been required to produce such payment free of
tax based on the marginal rate for the previous tax year of the Executive.
Except (i) as to continue to pay the
5
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Executive's medical insurance premiums for a period of 18 months following
delivery of the written notice of "Permanent Disability" to the Executive or
(ii) as otherwise provided in this Section 5, upon delivery of such written
notice, the Company shall have no further obligation to the Executive under this
Agreement.
6. NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY
6.1. Noncompetition/Nonsolicitation. The Executive shall not,
directly or indirectly, as a sole proprietor, member of a partnership,
stockholder or investor, officer or director of a corporation, or as an
employee, associate, consultant or agent of any person, partnership, corporation
or other business organization or entity other than the Company: (a) engage in
any business that is in competition with any business actively conducted by the
Company or any of its subsidiaries within (i) the counties then served by the
Company as well as adjacent counties, and (ii) any other counties in which the
Company has made a bid within 24 months prior to the Executive's termination and
any adjacent counties in which the Company conducts business; (b) solicit or
endeavor to entice away from the Company or any of its subsidiaries any person
who is, or was during the then most recent 24-month period, employed by or
associated with the Company or any of its subsidiaries; or (c) solicit or
endeavor to entice away from the Company or any of its subsidiaries any person
or entity who is, or was within the then most recent 24-month period, a
customer, client or prospect of the Company or any of its subsidiaries. The
obligations of this Section 6.1 shall apply for 24 months after termination of
employment of the Executive as well as during employment and shall be extended
by a period of time equal to any period during which the Executive shall be in
breach of such obligations. The obligations of this Section 6.1 shall not be
applicable during any period in which the Company is not in compliance with
Executive's Put Right under the 1994 Agreement.
6.2. Confidentiality. The Executive covenants and agrees with the
Company that he will not at any time, except in performance of his obligations
to the Company hereunder or with the prior written consent of the Company,
directly or indirectly, disclose any secret or confidential information that he
may learn or has learned by reason of his association with the Company or any of
its subsidiaries and affiliates. The term "confidential information" includes
information not previously disclosed to the public or to the trade by the
Company's management, or otherwise in the public domain, with respect the
Company's, or any of its affiliates' or subsidiaries', products, services,
facilities, applications and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, product or service
price lists, customer lists, technical information, financial information
(including the revenues, costs or profits associated with any of the Company's
products), business plans, prospects or opportunities.
6.3. Exclusive Property. The Executive confirms that all
confidential information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by the
Executive relating to the business of the Company shall be and remain the
property of the Company.
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6.4. Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material and irreparable
injury to the Company or its affiliates or subsidiaries for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction restraining the Executive from engaging in
activities prohibited by this Section 6 or such other relief as may be required
specifically to enforce any of the covenants in this Section 6. If for any
reason a final decision of any court determines that the restrictions under this
Section 6 are not reasonable or that consideration therefor is inadequate, such
restrictions shall be interpreted, modified or rewritten by such court to
include as much of the duration and scope identified in this Section 6 as will
render such restrictions valid and enforceable.
7. MISCELLANEOUS
7.1. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
Atlantic Express
Transportation Corp.
7 North Street
Staten Island, NY 10302
Attention: President
To the Executive:
Patrick Gatto
100 Sandalwood Drive
Marlboro, NJ 07746
Any such notice or communication shall be sent certified or registered mail,
return receipt requested, addressed as above (or to such other address as such
party may designate in writing from time to time), and the actual date of
receipt, as shown by the receipt therefor, shall determine the time at which
notice was given.
7.2. Severability. If a court of competent jurisdiction determines
that any term or provision hereof is invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired and (b) such court shall have
the authority to replace such invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
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<PAGE>
7.3. Assignment. This Agreement shall inure to the benefit of the
heirs and representatives of the Executive and the assigns and successors of the
Company, but neither this Agreement nor any rights hereunder shall be assignable
or otherwise subject to hypothecation by the Executive.
7.4. Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between the Company and the Executive, including
the 1994 Agreement. The Agreement may be amended at any time by mutual written
agreement of the parties hereto.
7.5. Withholding. The Company shall be entitled to withhold, or
cause to be withheld, from payment any amount of withholding taxes required by
law with respect to payments made to the Executive in connection with his
employment hereunder.
7.6. Governing Law. This Agreement shall be construed, interpreted,
and governed in accordance with the laws of New York without reference to rules
relating to conflict of law.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Executive has hereunto set his hand, as of the day and year
first above written.
ATLANTIC EXPRESS
TRANSPORTATION CORP.
By: /s/ Domenic Gatto
---------------------
Name: Domenic Gatto
Title: President and Chief Executive
Officer
PATRICK GATTO
/s/ Patrick Gatto
------------------------
8
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Exhibit 10.8
EMPLOYMENT AGREEMENT dated as of January 21, 1997 (the "Agreement")
between Atlantic Express Transportation Corp., a New York corporation with an
office at 7 North Street, Staten Island, New York 10302 (the "Company"), and
Nathan Schlenker, presently residing at 136 Bushnell Road, Mayfield, New York
12117 (the "Executive").
WHEREAS, the Executive is presently employed by Atlantic Express
Transportation Group Inc. ("Atlantic") under an employment agreement entered
into as of February 28, 1994 (the "1994 Agreement");
WHEREAS, Atlantic has agreed to transfer (the "Transfer") to the Company,
all of the capital stock of the subsidiaries of Atlantic engaged in the
transportation business (the "Transportation Subsidiaries"); and
WHEREAS, in connection with the Transfer, the Company will become the
primary employer of the Executive and will provide all compensation and benefits
to Executive, although the Executive will continue to act for Atlantic
hereunder;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES
1.1. General. The Company hereby employs the Executive, and the
Executive agrees to serve, as Chief Financial Officer of the Company upon the
terms and conditions herein contained, and in such capacities the Executive
agrees to serve the Company faithfully and to the best of his ability under the
direction of the Board of Directors of the Company (the "Board"). The Executive
also agrees to serve, if elected, at no compensation in addition to that
provided for in this Agreement, in the position of officer or director of
Atlantic and any subsidiary of the Company; provided, however, that such
position shall be of no less status relative to such subsidiary as the position
that the Executive holds pursuant to the first sentence of this Section 1.1 is
with respect to the Company. Both the Company and the Executive acknowledge that
the 1994 Agreement with Atlantic is terminated as of January 15, 1997 and
neither party shall have rights under it thereafter.
1.2. Exclusive Services. For so long as the Executive is employed by
the Company, he shall devote his full-time working hours to his duties
hereunder. Except for financial consulting services offered to Ronald
Richardson, RTA Corp. and its affiliates and services rendered on behalf of
Atlantic or non Transportation Subsidiaries of Atlantic, the Executive shall
not, directly or indirectly, render services to any other person or organization
for which he receives compensation without the unanimous consent of the Board or
otherwise
<PAGE>
engage in activities which would interfere significantly with his faithful
performance of his duties hereunder.
1.3. Term of Employment. The Executive's employment under this
Agreement shall commence on January 15, 1997 (the "Effective Date") and shall
terminate on the earliest of (i) the first anniversary of the Effective Date,
(ii) the death of the Executive or (iii) the termination of the Executive's
employment pursuant to this Agreement; Provided, however, that the term of the
Executive's employment under this Agreement may be extended for a period of up
to three years subject to the approval of the Executive by notice of approval
from the Board to the Executive at least six months prior to the expiration of
the then effective Employment Term (the period commencing on the Effective Date
and ending on the first anniversary of the Effective Date, or such later date to
which the term of the Executive's employment shall have been extended is
hereinafter referred to as the "Employment Term".)
2. SALARY
2.1. Base Salary. From the Effective Date, the Executive shall be
entitled to receive a base salary ("Base Salary") at a rate of $191,227 per
annum, payable in eual installments not less freuently than monthly in
accordance with the Company's payroll practices, with such increases as may be
provided in accordance with the terms hereof. Once increased, such higher amount
shall constitute the Executive's annual Base Salary.
2.2. Annual Increases. Commencing one year from the Effective Date,
and annually on each anniversary thereafter, the Executive's base salary shall
be increased by the same percentage by which the regional consumer price index
as of the June immediately preceding such anniversary date shall have increased
over such consumer price index as of June of the prior year; provided, however,
that in no event shall such annual increase be more than five percent (5%) nor
less than three percent (3%) of such base salary. Regional consumer price index
shall mean the index as determined by the United States Department of Labor for
the New York, New York - Northeastern New Jersey area based upon the index for
all urban consumers.
3. EMPLOYEE BENEFITS
3.1. General Benefits. The Executive shall receive the following
benefits during the Employment Term:
(a) the Executive will be eligible to participate in benefit
programs of the Company consistent with those benefit programs provided to other
senior executives of the Company;
(b) a disability insurance policy providing $6,000 in monthly
benefits commencing six months after a disability which prevents the Executive
from performing the
2
<PAGE>
ordinary and necessary functions and duties of his employment; Provided that the
premium therefore shall not exceed the usual and customary rates charged by
underwriters for such a policy for a person of the Executive's age in good
health. At the option of the Executive and in the place of the disability
policy, the Company shall pay the cash euivalent of the premium for such policy
to the Executive (the "Disability Euivalent Payment");
(c) an automobile allowance of $250 per month plus a company car (as
approved by the Board);
(d) a life insurance premium allowance of $2,500 payable annually in
February of each year of the term hereof; and
(e) a travel allowance not to exceed $7,500 annually.
3.2. Vacation. The Executive shall be entitled to 15 days' paid
vacation each year in accordance with the applicable policies of the Company;
provided, however, that the Executive must utilize at least five (5) vacation
days per contract year during the month of August.
3.3. Reimbursement of Expenses. The Company will reimburse the
Executive for reasonable, ordinary and necessary business expenses incurred by
him in the fulfillment of his duties hereunder upon presentation by the
Executive of an itemized account of such expenditures, in accordance with
Company practices consistently applied.
3.4. Severance Payment Upon Termination. Upon expiration of the term
of the Executive's employment, the Executive shall be entitled to severance pay
in the amount of $2,000 per month for a total of 96 consecutive months. In
addition thereto, in the first sixty months following expiration of the term,
the Company shall pay to the Executive an amount which shall eual 50% of the
annual premiums paid by the Executive for major medical health insurance for his
family, provided that in no event shall the Company's payment for such medical
insurance exceed $3,000 per year.
4. TERMINATION OF EMPLOYMENT
4.1. Termination for Cause: Resignation.
4.1.1. General. If, prior to the expiration of the Employment Term,
the Executive's employment is terminated by the Company for Cause, the Executive
shall be entitled only to twelve months of his Base Salary as severance, payable
in arrears in eual installments not less freuently than monthly, unless such
termination is for a Disloyalty Termination Event, in which case the Executive
shall be entitled only to payment of his Base Salary as then in effect through
and including the date of termination. If the Executive resigns from his
employment hereunder, the Executive shall be entitled only to payment of his
Base Salary as then in effect through and including the date of resignation. The
Executive shall
3
<PAGE>
have no further right to receive any other compensation, or to participate in
any other plan, arrangement, or benefit, after such termination or resignation
of employment, subject to the terms of such plans or arrangements.
4.1.2. Date of Termination/Resignation. The date of termination for
Cause shall be the date of the written Notice of Termination provided for in
Section 4.1.3. The date of resignation shall be the date specified in the
written notice of resignation from the Executive to the Company, or if no date
is specified therein, 10 business days after receipt by the Company of written
notice of resignation from the Executive.
4.1.3. Notice of Termination. Termination of the Executive's
employment for Cause shall be effected by delivery of a written notice of
termination from the Board to the Executive, which notice shall specify the
event or events set forth in Section 4.2 giving rise to such termination (the
"Notice of Termination")
4.2. Cause. Termination for "Cause" shall mean termination of the
Executive's employment because the Executive (a) has engaged in fraudulent or
criminal conduct in connection with the performance of his duties hereunder,
which conduct materially and adversely affects the ComPany (a "Conduct
Termination Event"), (b) admits to or has been convicted of a crime punishable
by imprisonment for more than one year (a "Felony Termination Event"), (c) has
failed to perform in all material respects (following a written warning
specifying such deficiency) the normal and customary duties reuired of his
position of employment (a "Performance Termination Event"), (d) has been
disloyal to the Company by assisting competitors of the Company to the
disadvantage of the Company by a breach of Section 6 or by otherwise actively
assisting competitors to the disadvantage of the Company (a "Disloyalty
Termination Event"), or (e) has been identified by the Board of Education of the
City of New York in a notice to the Company (a "BOE notice") that the Board of
Education has elected either not to extend an existing transportation contract
or that it will not accept bids from the Company for a new transportation
contract unless the employment of the Employee is terminated together with
divestiture of the Employee's stock ownership (a "BOE Termination Event")
4.3. Termination Without Cause. If the Executive is terminated
without Cause, he shall be entitled to the severance provided for in Section
3.4.
5. PERMANENT DISABILITY
In the event the Executive shall fail because of illness, physical
or mental disability or other incapacity, for a period of six consecutive
months, or for shorter periods aggregating six months during any 12-month
period, to render the services provided for by this Agreement, then the Company
shall, by written notice to the Executive after the last day of the six
consecutive months of disability or the day on which the shorter periods of
disability eual an aggregate of six months, reduce the Executive's compensation
hereunder for "Permanent Disability" as follows:
4
<PAGE>
First Six Months No Reduction
Following 18 months 50% of compensation
The Executive will use his reasonable best efforts to cooperate with
any physician referred to the Company by the physicians referral service of the
Columbia Presbyterian Medical Center of 622 West 168th Street, New York, New
York, to determine whether or not Permanent Disability exists, and the
determination of such physician made in writing to the Company and the Executive
shall be final and conclusive for all purposes of this Agreement; Provided that
if such physician declines to make a determination as to medical disability, the
matter will be referred to ENDISPUTE of 300 Park Avenue, New York, New York for
resolution, whereby ENDISPUTE shall select a single arbitrator to make a
determination based upon the evidence and testimony submitted by such physician
and no other expert testimony or medical evidence shall be permitted or
considered by such arbitrator. Any payments provided for in this Section 5 shall
be reduced to the extent that such payments, together with any disability
payments received by the Executive under any plan, program or arrangements
including any payment to the employee under Section 3.1(b) exceed the
Executive's Base Salary; provided that if disability payments are received which
are free of federal income tax, the payments provided for in this Section 5
shall be reduced by an amount eual to the pre-tax income which would have been
reuired to produce such payment free of tax based on the marginal tax rate for
the previous tax year of the Executive. Except (i) as to continue to pay the
Executive's medical insurance premiums for a period of 18 months following
delivery of the written notice of "Permanent Disability" to the Executive or
(ii) as otherwise provided in this Section 5, upon delivery of such written
notice, the Company shall have no further obligation to the Executive under this
Agreement.
6. NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY
6.1. Noncompetition/Nonsolicitation. The Executive shall not,
directly or indirectly, as a sole proprietor, member of a partnership,
stockholder or investor, officer or director of a corporation, or as an
employee, associate, consultant or agent of any person, partnership, corporation
or other business organization or entity other than the Company: (a) engage in
any business that is in competition with any business actively conducted by the
Company or any of its subsidiaries within (i) the counties then served by the
Company as well as adjacent counties, and (ii) any other counties in which the
Company has made a bid within 24 months prior to the Executive's termination and
any adjacent counties in which the Company conducts business; (b) solicit or
endeavor to entice away from the Company or any of its subsidiaries any person
who is, or was during the then most recent 24-month period, employed by or
associated with the Company or any of its subsidiaries; or (c) solicit or
endeavor to entice away from the Company or any of its subsidiaries any person
or entity who is, or was within the then most recent 24-month period, a
customer, client or prospect of the Company or any of its subsidiaries. The
obligations of this Section 6.1 shall apply for 24 months after termination of
employment of the Executive as well as during employment
5
<PAGE>
and shall be extended by a period of time eual to any period during which the
Executive shall be in breach of such obligations.
6.2. Confidentiality. The Executive covenants and agrees with the
Company that he will not at any time, except in performance of his obligations
to the Company hereunder or with the prior written consent of the Company,
directly or indirectly, disclose any secret or confidential information that he
may learn or has learned by reason of his association with the Company or any of
its subsidiaries and affiliates. The term "confidential information" includes
information not previously disclosed to the public or to the trade by the
Company's management, or otherwise in the public domain, with respect the
Company's, or any of its affiliates' or subsidiaries', products, services,
facilities, applications and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, product or service
price lists, customer lists, technical information, financial information
(including the revenues, costs or profits associated with any of the Company's
products), business plans, prospects or opportunities.
6.3. Exclusive Property. The Executive confirms that all
confidential information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by the
Executive relating to the business of the Company shall be and remain the
property of the Company.
6.4. Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material and irreparable
injury to the Company or its affiliates or subsidiaries for which there is no
adeuate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction restraining the Executive from engaging in
activities prohibited by this Section 6 or such other relief as may be reuired
specifically to enforce any of the covenants in this Section 6. If for any
reason a final decision of any court determines that the restrictions under this
Section 6 are not reasonable or that consideration therefor is inadeuate, such
restrictions shall be interpreted, modified or rewritten by such court to
include as much of the duration and scope identified in this Section 6 as will
render such restrictions valid and enforceable.
7. MISCELLANEOUS
7.1. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
Atlantic Express
Transportation Corp.
6
<PAGE>
7 North Street
Staten Island, NY 10302
Attention: President
To the Executive:
Nathan Schlenker
136 Bushnell Road
Mayfield, NY 12117
Any such notice or communication shall be sent certified or registered mail,
return receipt reuested, addressed as above (or to such other address as such
party may designate in writing from time to time), and the actual date of
receipt, as shown by the receipt therefor, shall determine the time at which
notice was given.
7.2. Severability. If a court of competent jurisdiction determines
that any term or provision hereof is invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired and (b) such court shall have
the authority to replace such invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
7.3. Assignment. This Agreement shall inure to the benefit of the
heirs and representatives of the Executive and the assigns and successors of the
Company, but neither this Agreement nor any rights hereunder shall be assignable
or otherwise subject to hypothecation by the Executive.
7.4. Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between the Company and the Executive, including
the Prior Agreement. The Agreement may be amended at any time by mutual written
agreement of the parties hereto.
7.5. Withholding. The Company shall be entitled to withhold, or
cause to be withheld, from payment any amount of withholding taxes reuired by
law with respect to payments made to the Executive in connection with his
employment hereunder.
7.6. Governing Law. This Agreement shall be construed, interpreted,
and governed in accordance with the laws of New York without reference to rules
relating to conflict of law.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Executive has hereunto set his hand, as of the day and year
first above written.
7
<PAGE>
ATLANTIC EXPRESS
TRANSPORTATION CORP.
/s/ Domenic Gatto
By: ________________________________
Name: Domenic Gatto
Title: President and Chief
Executive Officer
NATHAN SCHLENKER
/s/ Nathan Schlenker
____________________________________
8
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Exhibit 10.9
LEASE AGREEMENT
PARTIES THIS LEASE AGREEMENT, made this 5th day of August, 1986, between
BONNIE HEIGHTS REALTY CORP. having an office at 1 Edgewater
Plaza, Staten Island, hereinafter referred to as "Landlord", and
AMBOY BUS CO. a New York corporation having an address at 52 Bay
View Avenue, Staten Island, New York, hereinafter referred to as
"Tenant".
WITNESSETH:
1. Landlord, in consideration of the rents to be paid and the
covenants and agreements to be performed by Tenant, hereby lets
and Tenant hereby leases the parcel or parcels of land with
appurtenances, and improvements thereon thereunto belonging,
DESCRIPTION hereinafter collectively referred to as the "premises", located
at l752 Shore Parkway Brooklyn, New York and more particularly
the office building, garage and appurtenances and vacant land as
per the survey attached hereto marked Exhibit A excepting there
from so much of the demised premises as are presently occupied
by Midwood Carting Co. in the rear of the property used as a
tranfer station until such time as Midwood Carting Co. ceases to
be a tenant.
Landlord represents that Midwood is a month to month tenant;
that Midwood is obligated to remove debris from portions of the
premises pursuant to a certain order or orders of the Department
of Environmental Conservation; landlord will not enter a lease
with Midwood and shall deliver occupancy to such portions of the
premises to Tenant within 90 days after such orders are
satisfied or vacated.
AUTHORIZED Primarily for use as a storage, parking, maintenance, and
RENT service establishment of omnibuses including dispatch and
general offices and all other purposes incidental to such
service and for any other lawful purpose not injurious to the
TERM reversion for a term of five (5) years, beginning on the 20th
day of August, 1986 and ending on the 19th day of August, 1991,
RENT at a base rental of $3.50 per square foot for the garage and
office consisting of ______ square feet; $1.25 per square foot
for the first 80,000 square feet of vacant land and $.90 per
square foot for the balance
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of the square footage of vacant land comprising the above
described premises but at no time during the initial term of
this lease shall the total rental exceed $310,000 which rent
shall be payable in equal monthly installments of $25,833
payable in advance on the first business day of each month
during the term. It is understood that the rent on vacant land
does not include that portion on which the garage and office are
situated. Tenant will commence to pay rent on that portion of
the premises occupied by Midwood Carting Co. or a portion
thereof, on the first day of the month after Midwood vacates
such premises or a portion thereof, but in no event less than
two (2) weeks after such vacating. Landlord shall use its best
efforts to require Midwood to clear and vacate 50,000 square
feet of land within a period of 18 months including commencing
litigation to compel same.
ADDITIONAL Tenant agrees during the initial term of this lease to pay, as
RENT additional rent, all real estate taxes assessed against the
demised premises in excess of the amount of real estate taxes
assessed in the "base year." The base year for the purpose of
this lease shall be the 1986-87 tax year. The Landlord shall be
responsible for paying the real estate tax on the demised
premises and will, upon receipt of the tax bill, notify the
Tenant in writing of the amount of excess that the Tenant shall
be required to pay as additional rent. The tenant shall remit to
the Landlord, within thirty (30) days of the receipt of such tax
bill, the additional amount of real estate tax on its part to be
paid.
RIGHT TO LET 2. Landlord covenants and warrants that it has the right to let
AND CONDITION the premises for the aforesaid use and term on the terms and
OF PREMISES conditions herein contained.
POSSESSION 3. Landlord covenants and agrees that the premises will be
delivered to the Tenant at the commencement of the term, free
from all tenancies and occupancies except as set forth in
Schedule B annexed hereto. The Landlord Agrees to assign to the
tenant all of its rights to remove and dispossess any tenant now
in possession on expiration of its lease or if the tenant is an
holdover tenant or a month to month tenancy or hold possession
of the premises under any other legal right and will agree to
execute any and all legal documents necessary to give effect to
this
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paragraph. It is specifically understood that the removal of the
tenants and/or occupants by the Tenant herein shall be at
Tenant's cost and expense unless otherwise agreed to by the
Landlord.
COVENANT TO 4. Tenant shall make all repairs necessary to keep the premises
REPAIR AND and the buildings and appurtenances situated thereon in as good
TAKE CARE OF order and condition as when delivered to it, Tenant represents
PREMISES that it has inspected the office building and garage prior to
occupancy and is satisfied with the conditions of the structure
and the exterior of the building including the roof and agrees
to accept same as is.
COVENANT TO 5. Tenant shall pay the specified rent subject to Paragraph One
PAY RENT (1) and upon expiration of the term remove all personal property
not attached to the premises and such personal property that may
be attached that can be readily removed provided the Tenant
restores the premises to good condition and peacefully yield up
the premises to the Landlord.
ASSIGNMENT 6. Tenant shall not assign this Lease. The Tenant shall not
sublet the premises without the written consent of the Landlord,
which consent shall not be unreasonably withheld. Should the
Tenant sublet the whole of the demised premises, then this lease
shall terminate and the Landlord shall have the right to enter
into a lease with the proposed subleasee upon such terms and
conditions as the Landlord may specify. Any such sublease shall
bind the sublessor to perform all of the obligations of the
Tenant the same as required by the primary lease. In the event
the sublessee should default in the performance of any
obligation on its part required to be performed which under the
primary lease is the obligation of the Tenant, then such
default, unless cured by the Tenant within fifteen (15) days,
after the Landlord notifies the Tenant of such default such
default will be considered a default under this lease. Tenant
will supply Landlord with a fully executed copy of the
sub-lease.
MAJOR CHANGES 7. Tenant shall have the right, with the written consent of the
IN PREMISES Landlord, which consent shall not be unreasonably withheld, at
its sole cost and expense, to make additions and related
modifications to the existing building(s) and to the premises at
any time after the commencement of and during the term of this
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Lease, subject only to the restriction that such improvements
shall be constructed in accordance with all applicable laws,
statutes, ordinances, rulings and codes and Tenant shall not
permit any mechanic's liens to remain on the premises for a
period in excess of thirty (30) days from date of filing
thereof. Tenant in such event shall furnish all appropriate
insurance and insure Landlord against loss or damages and will
hold harmless and indemnify Landlord against any liability on
account thereof. Upon termination of this Lease, title to all
such improvements shall vest in Landlord.
LANDLORD'S 8. Landlord warrants and represents that the premises may be
REPRESENTATION used for the purposes herein set forth in Pargraph One (1) of
OF LAWFUL USE this lease. If any judicial decree, law, ordinance, ruling,
order or regulation of the United States, State, municipal or
other governmental unit or agency which now exists or is
hereafter enacted or created which prohibits, restricts or
alters the proposed use of the premises by Tenant or its
subtenant for any one or more of the foregoing purposes, or
creates or levies any fine or penalty, Tenant may, at its
option, terminate this Lease and all of its liability hereunder
shall cease from and after the date of such law, ordinance,
ruling, regulation, prohibition or penalty becomes effective and
prepaid rental or other sums prepaid by Tenant shall be
apportioned and paid to Tenant.
FIRE AND 9. (a) If the premises shall be so damaged by fire, casualty or
OTHER CASUALTY other cause of happening so as to render the premises unfit for
Tenant's proposed use, then this Lease shall terminate at the
option of Tenant and, if terminated, Tenant's obligation to pay
rent shall cease and any unearned rent paid in advance shall be
refunded to Tenant.
(b) If the demised premises shall be partially destroyed by
fire, casualty, or other cause or happening, but not to such an
extent as to render the premises unfit for Tenant's proposed
use, then the premises shall be with reasonable dispatch
restored by Landlord and a portion of the rent specified shall
abate until the premises shall have been restored. If the
parties are unable to agree on the amount of such abatement of
rent, then such dispute shall be settled by arbitration in
accordance with the rules of the American Arbitration
Association, with each
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party paying one-half (1/2) of the cost thereof. In determining
what constitutes reasonable dispatch consideration shall be
given to delays caused by strikes, adjustment of insurance and
other causes beyond the Landlord's control.
(c) Notwithstanding the provisions set forth in
subparagraphs (a) and (b) above, in the event of any such loss,
Tenant shall not be obligated to replace or rebuild such
improvements as it may have placed on the premises during the
term hereof. In the event that the Tenant elects not to
reconstruct or replace such improvements, applicable insurance
proceeds shall belong to Tenant and Tenant shall promptly remove
all debris, walls, footings and any vestige of such
improvements, fill any excavations with clean fill sand and
level the area upon which such improvements were located to
prevailing grade levels.
CONDEMNATION 10. (a) If all of the premises shall be condemned or taken by
AND UNSAFE lawful authority or if such portion of the premises be so
CONDITION condemned or taken making it unreasonable or imprudent to use
the remaining portion for its intended use, this Lease shall
terminate at Tenant's option as of the date when possession is
required to be given in such condemnation or taking. The rent
shall be prorated to such date and all further rights and
liabilities of the parties under this Lease shall terminate.
(b) If a portion of the demised premises shall be condemned
or taken and such taking does not make it unreasonable or
imprudent to use the remaining portion for the purposes for
which the premises were leased, this Lease shall continue as to
the part not so taken, and Landlord shall, forthwith at its
expense, restore and reconstruct the original buildings and
improvements situated on the premises to substantially the same
extent, quality, condition and functional character, as existed
prior to such condemnation or taking, to the extent possible on
the real property thus remaining excluding any improvements
added by Tenant. The rent specified in Paragraph One (1) shall
be reduced as of the date of condemnation or taking to an amount
determined by multiplying said rent by a fraction the numerator
of which is the value of the premises immediately after such
condemnation or taking and denominator of which is the value
immediately before such condemnation or
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taking. Said rent, as reduced, shall be increased as of the date
restoration is completed to an amount which bears the same
proportion to said rent, as reduced, as the value of the
premises immediately after completion of restoration bears to
the value immediately after such condemnation or taking. Changes
in value occurring during the period of restoration not related
to such restoration shall be disregarded in computing said
increase. Said rent, as increased, shall not exceed the rent set
out in Paragraph One (1). Improvements added by Tenant that are
condemned or taken shall be restored by Tenant at its option.
(c) If any lawful authority shall declare the premises
unsafe and/or order demolition or removal of any structure
covered by this Lease so as to render the premises unfit for
Tenant's proposed used, then this Lease at Tenant's option shall
terminate and the Landlord shall not be required to reconstruct
any structure demolished or removed. If such declaration or
order does not render 50% or more of the premises unfit for
Tenant's proposed use, then Landlord shall promptly comply with
such declaration or order and commence reconstruction of any
premises demolished or removed but only as to Landlord's
improvements and not as to any improvements or additions made by
Tenant and a portion of the rent specified shall abate until
such compliance and reconstruction is complete. The rent to be
paid during the abatement period shall be reduced to an amount
which bears the same proportion to the rent specified as the
square footage of the portion of the premises demolished or
removed bears to the square footage of the entire demised
premises of the building thereon.
If the parties are unable to agree on the amount of their shares
of awards or the amount of adjustments of rent provided for in
this Paragraph Eleven (11), then such dispute shall be settled
by arbitration in accordance with the rules of the American
Arbitration Association, with each party paying one-half (1/2)
of the cost thereof. Improvements added by Tenant shall be
disregarded in computing such adjustments of rent.
RIGHT OF ENTRY 11. Landlord may, during the term of this Lease, at reasonable
OF LANDLORD times and during usual business hours, enter the premises to
view them, and except, in the event of renewal or extension,
may, at any time within two (2) months next preceding the
expiration of
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the specified term, during normal business hours, show the
premises to others for the purpose of rental
"FOR SALE" or sale and may affix to any suitable parts of the
AND "TO LET" premises a notice for lease or sale thereof, provided
SIGNS such sign or notice shall not interfere with the usual and
ordinary conduct to Tenant's business operations.
ALTERATIONS 12. If any alterations or improvements, except painting or wall
OR IMPROVE- papering, are made at Tenant's expense or if Tenant shall
MENTS BY install or acquire ownership of previously installed shelving,
TENANT, TRADE lighting fixtures, removable partitions, trade fixtures,
FIXTURES, INC. machinery and equipment or advertising signs, they shall remain
Tenant's property and may be removed prior to termination of
Tenant's occupancy; provided, however, that Tenant shall repair
any damage occasioned by removal thereof and shall, at
Landlord's option, restore or replace any structural parts or
improvements which may previously have been removed by Tenant.
LANDLORD'S 13. If Tenant shall fail to observe or perform any of its
REMEDIES IN obligations under this Lease and shall fail to cure its default
EVENT OF within thirty (30) days after notice from Landlord to do so or
DEFAULT, if Tenant shall be adjudicated bankrupt or become insolvent or
BANKRUPTCY, shall make an assignment for the benefit of creditors, then in
OR INSOLVENCY any of said events, Landlord may lawfully enter into and upon
OF TENANT the premises or any part thereof and repossess the same and
expel the Tenant and persons claiming under and through it, and
remove any effects, forcibly if necessary, without being guilty
of trespass and without prejudice to any remedies which may be
available for arrears or rent or for Tenant's breach of
covenent. Upon entry as aforesaid, this Lease shall terminate
and wholly expire, and Tenant covenants that in the event of
such termination it will indemnify Landlord against all loss of
rent, which Landlord may incur by reason of such termination
during the residue of the specified term.
INDEMNIFICA- 14. Tenant agrees to indemnify Landlord against any actions or
TION OF CLAIMS claims which may be asserted or brought by third parties
AGAINST LAND- against Landlord and which are based upon Tenant's negligent
LORD acts or omissions in connection with its use and occupancy of
the premises.
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OPTION TO 15. The Tenant is hereby granted an option to renew the lease
RENEW after the initial term thereof for an additional period or five
(5) years upon the same terms and conditions except that the
rent reserved as base rent as herein set forth in Paragraph One
(1) shall be increased by the percentage increase of the
Consumer Price Index from the inseption of the lease to the time
of the renewal or by an additional 15% of the annual rent so
reserved, whichever is less. The Tenant agrees to pay during
such renewal term of five (5) years as additional rent, real
estate taxes assessed against the demised premises in excess of
the real estate taxes in the base year which for the purposes of
this lease shall be the year 1986/1987. The Landlord shall be
responsible for paying all of the real estate taxes on the
demised premises and will promptly, upon receipt of the tax
bill, notify the Tenant in writing, of the amount of excess that
the Tenant shall be required to pay as additional rent. The
Tenant shall remit to the Landlord, within thirty (30) days of
the receipt of such tax bill, the additional amount of real
estate taxes on its part required to be paid.
The Tenant is hereby granted an option to renew for a second
additional period of five years. Upon the same terms and
conditions except that the rent reserved as base rent as herein
set forth in Paragraph 1 shall be increased by percentage
increase of the Consumer Price Index from the inception of the
lease to the time of renewal. The Tenant agrees to pay during
such renewal term of five years as additional rent, real estate
taxes assessed against the demised premises in excess of real
estate taxes in the base year which for the purpose of this
lease shall be the year 1986/1987. The procedure for paying such
taxes shall be the same as previously set forth in this
paragraph.
Tenant shall be responsible for the payment of all utilities, to
wit: gas, electric, water, fuel, on the demised premises and
shall maintain the buildings thereon at its own cost and
expense.
The Consumer Price Index referred to in this Paragraph 15, shall
be the Consumer Price Index for the New York Metropolitan area.
<PAGE>
Any option to renew must be exercised in writing 60 days prior
the expiration date of this lease or any additional term thereof
by notice to the Landlord at 1 Edgewater Plaza, Staten Island,
New York.
SUBORDINATION 16. This Lease and all rights of Tenant hereunder are and shall
OF MORTGAGE be subject and subordinate to the lien of any mortgage or
mortgages constituting a first lien on the premises, or any part
thereof, at the date hereof, and to any mortgage or mortgages,
consolidated or otherwise, constituting a first lien on the
premises, hereafter placed on the premises, or any part thereof,
and made to and accepted by a savings bank, bank, trust or
insurance company, or other reputable institution, private or
public, authorized to make mortgage loans in the State of New
York, and to any and all renewals, modifications, consolidations
or extensions of any such mortgage or mortgages. Tenant shall,
upon demand, at any time or times, execute, acknowledge and
deliver to Landlord, any and all instruments that may be
necessary or proper to subordinate this Lease and all rights of
Tenant hereunder to the lien of any such mortgage or mortgages.
The subordination of this Lease to any such existing or new
mortgage is expressly conditioned upon the existing or new
mortgagee, simultaneously with the making of this Lease or of
such new mortgage, entering into an agreement, in recordable
form, but its terms binding upon the mortgagee, its successors
and assigns whereby the mortgagee agrees that in the event that
it should become necessary to foreclose said mortgage, it will
cause the sale of said premises to be made subject to this
Lease, provided that the Tenant is not in default under any of
the terms, conditions or covenants of this Lease at the time of
such foreclosure and, in the event of condemnation or damage by
fire, casualty or other causes as covered by fire and extended
coverage insurance, the condemnation award or proceeds of such
insurance shall be used for reconstruction or otherwise
disbursed as provided herein.
TENANT'S 17. At any time during the term of this Lease, including any
RIGHT OF renewal or extension hereof, Tenant may, at its option,
TERMINATION terminate this Lease. In the event that Tenant so elects to
terminate, it shall notify Landlord or such termination by
Registered or Certified United States Mail, Return Receipt
Requested, and this Lease shall cease and terminate ninety (90)
days
<PAGE>
following the postdate of such notice of termination.
Not more than fifteen (15) days prior to the Lease termination
date, as provided hereinabove, and as consideration for such
cancellation, Tenant shall pay to Landlord the present value of
the remainder of the base rent due for the balance of the lease
term then in effect, including taxes, insurance, special
assessment or any other additional sums payable hereunder and
excluding any increase in basic rental which may be effective
subsequent to the termination date. Upon delivery of such funds,
Landlord shall execute a termination agreement releasing and
absolving Tenant from any and all obligations, past or future,
under and pursuant to this Lease. Any prepaid or unpaid rent,
taxes, insurance, special assessments or similar items shall be
prorated as of the termination date with payment to Landlord or
Tenant, as the case may be.
NOTICES 18. All notices to be given hereunder by either party shall be
in writing and given by personal delivery, certified or
registered mail to Landlord or to an officer of the Tenant, and
the date of any notice by certified or registered mail shall be
deemed to be the date of registration thereof.
MEMORANDUM 19. For the purposes of recording some of the basic terms and
OF LEASE conditions of this Lease, Landlord and Tenant agree to execute,
as soon as the commencement date of the original term has been
determined, a short form of lease. It is understood that such
short form of Lease is for purposes of recordation only and is
not intended and shall not in any way modify, amend, supersede
or otherwise affect this Lease. Tenant agrees not to record this
lease or memorandum of lease for a period of three (3) years
after execution of this lease.
SURRENDER 20. Tenant shall, on the last day of the term hereof or of any
extension or renewal thereof or upon any earlier termination of
this Lease, surrender and deliver up the premises into the
possession of the Landlord in the same order, condition and
repair as when delivered to Tenant, wear and tear, damage by
fire, explosion or the element excepted.
<PAGE>
QUIET 21. Landlord covenants that if and so long as Tenant pays the
ENJOYMENT rent, additional rent and other sum or sums of money and charges
as herein provided and upon performance of all of the covenants,
conditions and agreements aforesaid, Tenant shall and may
preaceably and quietly have, hold and enjoy the premises for the
term aforesaid, subject, however, to the terms of this Lease.
22. That if the said premises, or any part thereof shall be
deserted or become vacant during said term, or if any default be
made in the payment of the said rent or any part thereof, or if
any default be made in the performance of any of the covenants
herein contained, the Landlord or representatives may re-enter
the said premises by force, summary proceedings or otherwise,
and remove all persons therefrom, without being liable to
prosecution therefor, and the Tenant hereby expressly waives the
service of any notice in writing of intention to re-enter, and
the Tenant shall pay at the same time as the rent becomes
payable under the terms hereof a sum equivalent to the rent
reserved herein, and the Landlord may rent the premises on
behalf of the Tenant, reserving the right to rent the premises
for a longer period of time than fixed in the original lease
without releasing the original Tenant from any liability,
applying any moneys collected, first to the expense of resuming
or obtaining possession, second to restoring the premises to
rentable condition, and then to the payment of the rent and all
other charges due and to grow due to the landlord, any surplus
to be aid to the Tenant, who shall remain liable for any
deficiency.
23. That the Landlord is exempt from any and all liability for
any damage or injury to person or property caused by or
resulting from steam, electricity, gas, water, rain, ice or
snow, or any leak or flow from or into any part of said building
or from any damage or injury resulting or arising from any other
cause or happening whatsoever unless said damage or injury be
caused by or be due to the negligence of the Landlord.
24. The Tenant has this day deposited with the Landlord the sum
of $ 25,833.00 as security for the full and faithful performance
by the Tenant of all the terms, covenants and conditions of this
lease
<PAGE>
upon the Tenant's part to be performed, which said sum shall be
returned to the Tenant after the time fixed as the expiration of
the term herein, provided the Tenant has fully and faithfully
carried out all of said terms, covenants and conditions on
Tenant's part to be performed. In the event of a bona fide sale,
subject to this lease, the Landlord shall have the right to
transfer the security to the vendee for the benefit of the
Tenant and the Landlord shall be considered released by the
Tenant from all liability for the return of such security; and
the Tenant agrees to look to the new Landlord solely for the
return of said security, and it is agreed that this shall apply
to every transfer or assignment made of the security to a new
Landlord.
25. That the security deposited under this lease shall not be
mortgaged, assigned or encumbered by the Tenant without the
written consent of the Landlord.
26. It is expressly understood and agreed that in case the
demised premises shall be deserted or vacated, or if default be
made in the payment of the rent or any part thereof as herein
specified, or if, without the consent of the Landlord, the
Tenant shall sell, assign or mortgage this lease or if default
be made in the performance of any of the covenants and
agreements in this lease contained on the part of the Tenant to
be kept performed, or if the Tenant shall fail to comply with
any of the statutes, ordinances, rules, orders, regulations and
requirements of the Federal, State and City Government or of any
and all their Departments and Bureaus, applicable to said
premises, or hereafter established as herein provided, or if the
Tenant shall file a petition in bankruptcy or be adjudicated a
bankrupt, or make an assignment for the benefit of crditors to
take advantage of any insolvency act, the Landlord may, if the
Landlord so elects, at any time thereafter temrinate this lease
and the term hereof, on giving to the Tenant five days' notice
in writing of the Landlord's intention so to do, and this lease
and the term hereof shall expire and come to an end on the date
fixed in such notice as if the said date were the date
originally fixed in this lease for hte expiration hereof. Such
notice may be given by mail to the Tenant addressed to the
demised premises.
<PAGE>
27. That the Tenant will not nor will the Tenant permit
undertenants or other persons to do anything in said premises,
or bring anything into said premises, or permit anything to be
brought into said premises or to be kept therein, which will in
any way increase the rate of fire insurance on said demised
premises, nor use the demised premises or any part thereof, nor
suffer or permit their use for any business or purpose which
would cause an increase in the rate of fire insurance on said
building, and the Tenant agrees to pay on demand any such
increase.
28. The failure of the Landlord to insist upon a strict
performance of any of the terms, conditions and covenants
herein, shall not be deemed a waiver of any rights or remedies
that the Landlord may have, and shall not be deemed a waiver of
any subsequent breach or default in the terms, conditions and
covenants herein contained. This instrument may not be changed,
modified or discharged orally.
29. In the event that the relation of the Landlord and Tenant
may cease or terminate by reason of the re-entry of the Landlord
under the terms and covenants contained in this lease or by the
ejectment of the Tenant by summary proceedings or otherwise, or
after the abandonment of the premises by the Tenant, it is
hereby agreed that the Tenant shall remain liable and shall pay
in monthly payments the rent which accrues subsequent to the
re-entry by the Landlord, and the Tenant expressly agrees to pay
as damages for the breach of the covenants herein contained, the
difference between the rent reserved and the rent collected and
received, if any, by the Landlord during the remainder of the
unexpired term, such difference or deficiency between the rent
herein reserved and the rent collected if any, shall become due
and payable in monthly payments during the remainder of the
unexpired term, as the amounts of such difference of deficiency
shall from time to time be ascertained; and the Tenant waives
and will waive all rights to trial by jury in any summary
proceedings hereafter instituted by the Landlord against the
Tenant in respect to the demised premises or in any action
brought to recover rent or damages hereunder.
<PAGE>
30. Landlord states that it has a report of the New York Testing
Laboratory, that the land fill is non-toxic in nature.
INSURANCE 31. (a) Tenant is to maintain, throughout the term of the lease
both bodily injury and property damage liability insurance for
the mutual benefit of the Landlord and Tenant, naming the
Landlord as an additional insured against claims for bodily
injury, death or property damage occurring on, in or about the
premises, sidewalks, adjoining streets, property and
passageways. Such insurance shall be a general, all risk
liability policy of not less than $1,000,000 per person for
bodily injury or wrongful death and not less than $100,000
property damage.
b) All insurance policies maintained by the Tenant shall name
the Landlord and Tenant as insureds as their respective
interests may appear. Such insurance shall be written by
companies of recognized financial standing. All insurance
maintained by Tenant shall provide that no cancellation,
reduction or other material changes thereof shall be effective
until at least ten (10) days after receipt of written notice
thereof by Landlord, and Tenant will, at the Landlord's request,
furnish to Landlord certificates of such insurance.
c) Tenant is to maintain, throughout the term of the lease, fire
insurance covering the premises in an amount equal to the fair
market value of the building and structures thereon presently
and in the event the tenant makes improvements or constructs
additional structures on the premises, the tenant shall supply
coverage of such additional structures in an amount not less
than the replacement value. The policy shall name Landlord as an
insured under the policy as its interest may appear. The tenant
shall furnish to the Landlord, at Landlord's request,
certificates of insurance.
32. Tenant has inspected said premises and is thoroughly
acquainted with its condition and is leasing said premises "as
is" and in their present condition.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Lease in person or by
a duly authorized officer on the day and year stated in the commencement.
SIGNED, SEALED AND DELIVERED LANDLORD; Bonnie Heights Realty
IN THE PRESENCE OF: Corp.
BY: [ILLEGIBLE]
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______________________________ ITS: Vice Pres.
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TENANT:
______________________________ BY: [ILLEGIBLE]
------------------------------
ITS: Pres.
-----------------------------
<PAGE>
AMBOY BUS CO., INC.
7 North Street
Staten Island, New York 10302
May 10, 1996
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Bonnie Heights Realty Corp.
One Edgewater Plaza
Staten Island, New York 10305
Re: Lease Agreement dated August 5, 1986
between Bonnie Heights Realty Corp.
as Landlord and Amboy Bus Co., Inc. as Tenant
Gentlemen:
Reference is made to the above-captioned lease and more particularly to
paragraph 15 thereof entitled "Option to Renew". Please be advised that the
tenant hereby exercises its option to renew the lease for an additional period
of five years.
Very truly yours,
AMBOY BUS CO., INC.
By: /s/ Domenic Gatto
----------------------------
Domenic Gatto, President
DG/cz
cc: Kenneth Lee Raisch, Esq.
<PAGE>
AMBOY BUS CO., INC.
52 Bayview Avenue
Staten Island, New York 10309
December 26, 1989
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Bonnie Heights Realty Corp.
One Edgewater Plaza
Staten Island, New York 10305
Re: Lease Agreement dated August 5, 1986
between Bonnie Heights Realty Corp.
as Landlord and Amboy Bus Co., Inc. as Tenant
Gentlemen:
Reference is made to the above-captioned lease and more particularly to
paragraph 15 thereof entitled "Option to Renew". Please be advised that the
tenant hereby exercises its option to renew the lease for an additional period
of five years.
Very truly yours,
AMBOY BUS CO., INC.
By: /s/ Domenic Gatto
----------------------------
Domenic Gatto
President
cc: James Dowling, Esq.
<PAGE>
Exhibit 10.10
LEASE
This Lease made and entered into as of this 30th day of June, 1993, by and
between Rockhill Limited Partnership, and its successors and assigns (the
"Lessor") and Mayflower Contract Services, Inc. (the "Lessee"),
WITNESSETH:
1. LEASED PREMISES: LESSOR hereby agrees to lease to LESSEE and LESSEE
hereby agrees to lease from LESSOR the premises owned by LESSOR commonly known
as 6810 Prescott, St. Louis, Missouri, as more particularly described on
Exhibit A attached hereto (the "Leased Premises".).
2. TERM, RENT AND OPTIONS: This Lease covering the Leased Premises shall
be for an original term commencing July 15, 1993, through June 30, 1996. Rent
shall be payable monthly in advance, on the first day of each month in the
following amounts: July 15, 1993, to June 30, 1994, at a rate of $7,500 per
month; July 1, 1994, to June 30, 1995, at a rate of $7,800 per month; and July
1, 1995, to June 30, 1996, at a rate of $8,l00 per month.
LESSOR or LESSEE shall have the option between March 1 and March, 31
of each year to cancel or terminate this lease agreement effective June 30 of
that specific year.
Any monthly payment during the original term of this Lease, or any
renewal term which is not received by the LESSOR by the tenth day of the month
in which such payment is due shall be accompanied by an additional payment equal
to five percent (5%) of the delinquent payment. The additional payment shall
constitute additional rent under this Lease and shall be immediately due and
payable.
3. SECURITY DEPOSIT: LESSEE shall deliver to LESSOR upon commencement of
this Lease a security deposit in the amount of $15,O00. LESSOR shall hold the
security deposit without liability for interest thereon and shall return said
security deposit, less any rents or additional rents due hereunder and less any
amounts necessary to repair damages to the Leased Premises, to the LESSEE
promptly upon termination of this Lease.
4. POSSESSION AT BEGINNING OF TERM: LESSOR shall give possession at the
beginning of the term of this Lease.
5. INSURANCE: LESSEE shall, at its own cost and expense, obtain and
maintain extended coverage insurance for fire, windstorm, hail, earthquake,
vandalism and malicious mischief, in an amount not less than 100% of the Leased
Premises' replacement value, subject to a deductible amount of One Hundred
Thousand Dollars ($100,000), and will keep such insurance in full force
<PAGE>
and effect during the entire term of the Lease, including all extension periods.
All insurance against damage to the Leased Premises against fire or other
casualty provided by LESSEE as required in this Paragraph shall be carried in
favor of LESSOR and LESSEE as their interests may appear. LESSEE also agrees to
maintain public liability insurance on the Premises in an amount not less than
One Million Dollars ($1,000,000) combined single limit, for property damage,
bodily injury and death. Lessor shall be an additional insured under the public
liability policy.
LESSEE is self-insured to the extent of any deductible permitted by
this Paragraph and shall indemnify LESSOR from and against any loss, cost,
expense or damage arising out of the existence of any such deductible. LESSEE
shall furnish LESSOR certificates indicating that the insurance policies are in
full force and effect and that the policies may not be canceled unless ten (10)
day's prior written notice of the proposed cancellation has been given to
LESSOR.
6. ASSIGNMENT AND SUBLEASE: LESSEE shall not assign, transfer, or encumber
this Lease and shall not sublease the Leased Premises or any part thereof or
allow any other person to be in possession thereof without the prior written
consent of LESSOR. LESSOR shall not unreasonably withhold consent for LESSEE to
sublease the whole or any part of the Leased Premises.
7. ACCEPTANCE, MAINTENANCE, AND REPAIR: LESSEE has inspected and knows the
condition of the Leased Premises and accepts the same in their present condition
(subject to ordinary wear, tear, and deterioration in the event the term
commences after the date hereof and to the rights of present or former occupant
or occupants, if any, to remove movable property).
LESSEE shall take good care of the Leased Premises and the equipment
and fixtures therein (including heating and air conditioning equipment) and
shall keep the same in good working order and condition, including particularly
protecting water pipes, heating and air conditioning equipment, plumbing,
fixtures, appliances, and sprinkler system from becoming frozen, and shall keep
the Leased Premises and the approaches, sidewalks, fences, parking lots and the
alleys adjacent thereto, if any, clean and sightly and free from ice, snow,
trash and weeds. At the expiration of the term, LESSEE shall surrender the
premises broom clean, in as good condition as the reasonable use thereof will
permit.
LESSEE shall keep in repair, the roof, exterior and walls, gutters
and downspouts of the premises in any building of which they are a part.
LESSEE shall bear the entire cost of routine maintenance and repair
of the Leased Premises. LESSEE shall bear only that pro rata portion of the cost
of major repair of a piece of equipment on the Leased Premises with a cost in
excess of $1,500
<PAGE>
and with a useful life of five (5) or more years, which shall apply to the
remainder of the term of the Lease, including available options, at the time
such repair costs are incurred; provided LESSOR shall not be liable to pay any
portion of the cost of such repairs due and owing to LESSEE'S failure to
maintain the Leased Premises in accordance with the terms of this Lease.
Should LESSEE fail within 30 days after written notice from LESSOR
to LESSEE to make any maintenance or repairs required by this Lease, LESSOR may
arrange to make the same on LESSEE'S behalf and the cost of said maintenance and
repairs shall be additional rent under this Lease and shall be immediately due
and payable.
8. LESSOR'S RIGHT OF ENTRY: LESSOR or LESSOR's agent may enter the Leased
Premises at reasonable hours to examine the same and to do any LESSOR may be
required to do hereunder or which LESSOR may deem necessary for the good of the
Leased Premises or any building of which they are a part; and, during the last
180 days of this Lease, LESSOR may display a "For Rent" sign on, and show the
Leased Premises.
9. DAMAGE BY CASUALTY: In case, during the term created or previous
thereto, the Leased Premises hereby let, or the building on which said Leased
Premises are a part, shall be destroyed or shall be so damaged by fire or other
casualty, as to become untenantable, then in such event, at the option of the
LESSOR, the term hereby created shall cease, and this Lease shall become null
and void from the date of such damage or destruction and the LESSEE shall
immediately surrender said Leased Premises and all interest therein to LESSOR,
and LESSEE shall pay rent within said term only to the time of such surrender;
provided, however, that LESSOR shall exersize such option to so terminate this
Lease by notice in writing delivered to LESSEE within one hundred twenty (120)
days after such damage or destruction. In case LESSOR shall not so elect to
terminate this Lease, in such event, this Lease shall continue in full force and
effect and the LESSOR shall repair the leased premises within one hundred eighty
(180) days, placing the same in approximately as good a condition as they were
at the time of the damage or destruction, and for that purpose may enter said
Leased Premises and rent shall abate in proportion to the extent and duration of
untenantability. In either event, LESSEE shall remove all rubbish, debris,
merchandise, furniture, equipment and other of its personal property, within
five (5) days after the request of the LESSOR. If the Leased Premises shall be
but slightly injured by fire the elements so as not to render the same
untenantable and unfit for occupancy, then the LESSOR shall repair the same
within ninety (90) days, and in that case the rent shall not abate. No
compensation or claim shall be made by or allowed to the LESSEE by reason of any
inconvenience or annoyance arising from the necessity of repairing any portion
of the building or the Leased Premises, however the necessity may occur. In the
event the
<PAGE>
LESSOR elects to repair the Leased Premises but fails to complete the repairs as
required herein, then LESSEE may terminate the Lease upon sixty (60) day's
written notice to LESSOR.
10. PERSONAL PROPERTY: LESSOR shall not be liable for any loss or damage
to any merchandise or personal property in or about the Leased Premises,
regardless of the cause of such loss or damage.
11. PERSONAL INJURY: LESSOR shall not be liable for any personal injury
occurring on the Leased Premises, regardless of the cause of such personal
injury. LESSEE shall indemnify and hold LESSOR harmless for any such personal
injury.
12. ALTERATIONS: LESSEE shall not make any alterations or additions in or
to the Leased Premises without the prior written consent of LESSOR.
13. UTILITIES AND SERVICES: LESSEE shall furnish and pay for all
electricity, gas, fuel, sewer, water and any services or utilities used in or
assessed against the Leased Premises.
14. PUBLIC REQUIREMENTS: LESSEE shall comply with all laws, orders,
ordinances and other public requirements now or hereafter affecting the Leased
Premises or the use thereof (including, but not limited to, fueling equipment),
and save LESSOR harmless from expense or damage resulting from failure to do so.
The provisions of this Paragraph shall not apply to the fueling equipment
currently installed on the Leased Premises unless placed in use by LESSEE.
15. FIXTURES: All building, repairs, alterations, additions, improvements,
installations, equipment and fixtures, by whomsoever installed or erected
(except such business trade fixtures belonging to LESSEE as can be removed
without damage to or leaving incomplete the Leased Premises or building) shall
belong to LESSOR and remain on and be surrendered with the Leased Premises as a
part thereof, at the expiration of this lease or any extension thereof, unless
LESSOR shall request removal of such and the repair of the damage caused
thereby.
16. REAL ESTATES TAXES: LESSEE shall pay the real estate taxes, both
general and special, payable with respect to the Leased Premises during any
lease year during the term hereof. Should LESSEE fail to pay the real estate
taxes prior said taxes becoming delinquent, LESSOR may pay said taxes on
LESSEE'S behalf and the cost of said taxes shall be additional rent under this
Lease and shall be immediately due and payable.
17. EMINENT DOMAIN: If the Leased Premises or any substantial part thereof
shall be taken by any competent authority under the power of eminent domain or
be acquired for any public or quasi public use or purpose, the term of this
Lease shall cease and terminate upon the date when the possession of
<PAGE>
said Leased Premises or the part thereof so taken shall be required for such use
or purpose and without apportionment of the award, and LESSEE shall have no
claim against LESSOR for the value of any unexpired term of this Lease. If any
condemnation proceeding shall be instituted in which it is sought to take or
damage any part of LESSOR'S building or the land under it or if the grade of any
street or alley adjacent to the building is changed by any competent authority
and such change of grade makes it necessary or desirable to remodel the building
to conform to the changed grade, LESSOR shall have the right to cancel this
Lease after having given written notice of cancellation to LESSEE not less than
ninety (90) days prior to the date of cancellation designated in the notice. In
either of said events, rent at the then current rate shall be apportioned as the
date of the termination. No money or other consideration shall be payable by the
LESSOR to the LESSEE for the right of cancellation and the LESSEE shall have no
right to share in the condemnation award or in any judgment for damages caused
by the taking or the change of grade. Nothing in this Paragraph shall preclude
an award being made to LESSEE by the condemning authority for loss of business
or depreciation to and cost of removal of equipment or fixtures.
18. SUBROGATION: As part of the consideration of this Lease, each of the
parties hereto does hereby release the other party hereto from all liability for
damage due to any act or neglect of the other party (except as hereinafter
provided) occasioned to property owned by said parties which is or might be
incident to or the result of a fire or any other casualty against loss for which
either of the parties is now carrying on hereafter may carry insurance;
provided, however, that the releases herein contained shall not apply to any
loss or damage occasioned by the willful, wanton, or premeditated negligence of
either of the parties hereto, and the parties hereto further covenant that any
insurance that they obtain on their respective properties shall contain an
appropriate provision whereby the insurance company or companies consent to the
mutual release of liability contained in this Paragraph.
19. DEFAULT: If default is made in the payment of any installment of rent
on the due date thereof, or if LESSEE shall default in the performance of any
other Agreement (other than payment of rent) and such default (other than
payment of rent) continues for 30 days after written notice thereof, or if the
Leased Premises be vacated or abandoned in violation of the terms hereof, then
in any such event this Lease shall terminate, at the option of the LESSOR, and
LESSOR may re-enter the Leased Premises and take possession thereof, with or
without force or legal process and without notice or demand, the service of
notice, demand or legal process being hereby expressly waived, and upon such
entry, as aforesaid, this Lease shall terminate and the LESSOR may exclude
LESSEE from the Leased Premises, changing the lock on the door or doors if
deemed necessary, without being liable to LESSEE for any damages or for
prosecution therefore, LESSOR's rights in such event may be enforced by action
in
<PAGE>
unlawful detainer or other proper legal action, and the LESSEE shall remain
liable for a sum equal to the entire rent payable to the end of the term hereof
and shall pay any loss or deficiency sustained by the LESSOR on account of the
Leased Premises being let for the remainder of the then current term for a sum
less than the amount due hereunder. LESSOR, as agent for LESSEE without notice,
may re-let the Leased Premises or any part thereof for the remainder of the then
current term for a sum less than the amount due hereunder. LESSOR, as agent for
LESSEE without notice, may re-let the Leased Premises or any part thereof for
the remainder of the term or for any longer or shorter period as opportunity may
offer, and at such rentals as may be obtained, and LESSEE agrees to pay the
difference between a sum equal to the amount of rent payable during the residue
of the term and the net rent actually received by the LESSOR during the term
after deducting all expenses of every kind for repairs, recovering possession
and re-letting the same, which difference shall accrue and be payable monthly.
20. WAIVER: The rights and remedies of the LESSOR under this Lease, as
well as those provided or accorded by law, shall be cumulative, and none shall
be exclusive of any other rights or remedies hereunder or allowed by law. A
waiver by LESSOR of any breach or breaches, default or defaults, of LESSEE
hereunder shall be in writing and shall not be deemed or construed to be a
continuing waiver of such breach or default nor as a waiver of or permission,
expressed or implied, for any subsequent breach or default, and it is agreed
that the acceptance by LESSOR of any installment of rent subsequently to the
date the same should have been paid hereunder, shall in no manner alter or
affect the covenant and obligation of LESSEE to pay subsequent installments for
rent promptly upon the due date thereof. No receipt of money by LESSOR after the
termination of this Lease shall reinstate, continue or extend the term hereof.
21. NOTICES: Any notice required to be given by either party to the other
shall be deposited in the United States mail, certified, postage prepaid,
addressed to the following:
To LESSOR:
Rockhill Limited Partnership
10435 Baur Blvd.
St. Louis, MO 63132
To LESSEE:
Barry Bland
Vice President
Mayflower Contract Services, Inc.
544 Clark
Kirkwood, MO 63122
<PAGE>
with a copy to:
Paul D. Larson
Senior Vice President
Mayflower Contract Services, Inc.
5360 College Blvd.
Overland Park, KS 66211
22. SUCCESSORS: The provisions, covenants and conditions of this Lease
shall bind and inure to the benefit of the legal representatives, heirs,
successors and assigns of each of the parties hereto, except that no assignment
or subletting may be made by LESSEE without the written consent Of LESSOR.
23. QUIET POSSESSION: LESSOR agrees that so long as LESSEE fully complies
with all of the terms, covenants and conditions here contained on LESSEE's part
to be kept and performed, LESSEE shall and may peaceably and quietly have, hold
and enjoy the said Leased Premises for the term aforesaid, it being expressly
understood and agreed that, however, the aforesaid covenent of quiet enjoyment
shall be binding upon the LESSOR only so long as LESSOR remains the owner in fee
or leasehold of the Leased Premises, anything to the contrary in this instrument
notwithstanding. LESSOR and LESSEE covenants and represents to each other that
each has full right, title, power and authority to make, execute and deliver
this Lease.
24. BANKRUPTCY: Neither this Lease nor any interest therein nor any estate
hereby created shall pass to any trustee or receiver in bankruptcy or to any
other receiver or assignee for the benefit of creditors or otherwise by
operation of law during the term of this Lease or any renewal thereof.
25. REMEDIES: If LESSEE should default under the terms of this Lease and
such default is not cured in accordance with the terms hereof, LESSOR shall be
entitled to take any available action, in law or in equity and shall also be
entitled to all reasonable costs, charges, expenses and attorney's fees incurred
in connection therewith.
26. ENTIRE AGREEMENT; SEVERABILITY: This Lease contains the entire
Agreement between the parties, and no modification of this Lease shall be
binding upon the parties unless evidenced by an agreement in writing signed by
the LESSOR and the LESSEE after the date hereof. If any provision of this Lease
shall be held invalid, the remaining provisions be unaffected by such invalidity
and shall be enforceable in accordance with their terms.
<PAGE>
27. HAZARDOUS WASTES AND ENVIRONMENTAL MATTERS.
(A) LESSEE hereby waives and relinquishes any indemnification by or
from LESSOR, expressed or implied, for any costs or liabilities arising out of
or related to the discharge, release or presence of any hazardous or toxic
waste, substance, or constituent or other substances on, in, or from the Leased
Premises, which discharge, release or presence first occurs on or after July 15,
1995, and before the end of the Lease term or any extensions or renewals
thereof. LESSEE shall indemnify, hold harmless and defend LESSOR against and in
respect of any and all liability, claim, loss, cost, damage, expense (including
attorneys' fees and remedial costs), fine, penalty, suit, demand or other
action, including but not limited to those matters related to the death,
dismemberment or other injury to any person, asserted against LESSOR resulting
from, arising out of, related to or in connection with the (i) release by
LESSEE, its agents, contractors or employees, from or upon the Leased Premises
of any hazardous or toxic substance, waste, constituent or other substance into
the environment; (ii) any arrangement by LESSEE, its affiliates, or agents for
the treatment, recycling, storage or disposal at any facility owned or operated
by any person or entity of a hazardous or toxic substance, waste, constituent or
other substance which has been or may be deposited at, disposed on, or released
onto the Leased Premises; and (iii) cleanup or other remedial measures with
regard to environmental pollution caused by LESSEE, its affiliates or agents,
which may be required by any governmental agency pursuant to federal, state or
local statutes or regulations, including with limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. et
seq. ("CERCLA").
(B) LESSOR hereby waives and relinquishes any indemnification by or
from LESSEE, express or implied, for any costs or liabilities arising out of or
related to the presence, discharged or release of any hazardous or toxic waste,
substance, or constituent or other substances on, in, or from the Leased
Premises, which presence, discharge, or release occurs before July 15, 1995, or
after the expiration of this Lease including any extensions or renewals hereof.
LESSOR shall indemnify, hold harmless and defend LESSEE against and in respect
of any and all liability, claim, loss, cost, damage, expense (including
attorneys' fees and remedial costs), fine, penalty, suit, demand or other
action, including but not limited to those matters related to the death,
dismemberment or other injury to any person, asserted against LESSEE resulting
from, arising out of, related to or in connection with the: (i) release from or
upon the Leased Premises of any hazardous or toxic substance, waste, constituent
or other substance into the environment, (ii) the treatment, recycling, storage
or disposal at any facility owned or operated by any person or entity of a
hazardous or toxic substance, waste, constituent or other substance which has
been deposited at, disposed on, or released onto the Leased Premises;
<PAGE>
and (iii) cleanup or other remedial measures with regard to environmental
pollution caused by LESSOR, its predecessors in title, affiliates, agents or
lessees which may be required by any governmental agency pursuant to federal,
state, or local statues or regulations, including with limitation, CERCLA.
(C) To the extent any provision of this Paragraph 27 is inconsistent
with any other term of this Lease, this Paragraph 27 shall prevail.
(D) The provisions of this Paragraph 27 shall survive the expiration
or earlier termination of this Lease.
IT WITNESS WHEREOF, the parties have signed triplicate copies
hereof.
MAYFLOWER CONTRACT SERVICES, INC.
By /s/ [ILLEGIBLE]
----------------------------------------
LESSEE
ROCKHILL LIMITED PARTNERSHIP
By /s/ Harry T. Bussmann, III
----------------------------------------
Harry T. Bussmann, III,
General Partner
LESSOR
<PAGE>
EXHIBIT "A"
The real estate and improvements located at 6810 Prescott, St. Louis City,
Missouri 63110, said property being more particularly described as follows:
A parcel of CB 3511 Bulwer with approximately 6.601 acres of the O'Falon Estate
Addition bounded on the South 640 feet NNL of Newman, plus a parcel of CB 4200
W. N. Front with .773 acres bounded W 425 feet E E.L. of Broadway, plus a parcel
of CB 4200 N Front with .056 acres survey 926 addition bounded W 292 feet E of
Broadway.
<PAGE>
SUBLEASE
THIS SUBLEASE is made and entered into this 28th day of May, 1996, by and
between Mayflower Contract Services, Inc. doing business as Laidlaw Transit,
Inc., hereinafter referred to as "SUBLESSOR" and Atlantic Express of Missouri,
hereinafter referred to as "SUBLESSEE".
WHEREAS, SUBLESSOR is a Tenant under a Lease dated June 30, 1993, and
Amendment to Lease dated April 28, 1995, (hereinafter said Lease and Amendment
shall be referred to as the "Prime Lease"), for a property located at 6810
Prescott, St. Louis, Missouri (hereinafter referred to as the "Premises"),
wherein Rockhill Partnership (hereinafter referred to as the "Landlord") is the
Lessor and SUBLESSOR is the Lessee; and
WHEREAS, SUBLESSEE wishes to sublease the Premises subject to said Prime
Lease from SUBLESSOR.
NOW, THEREFORE, for and in consideration of the above premises and the
mutual promises and covenants contained herein, the parties agree as follows:
1. SUBLESSOR does hereby Sublease the Premises subject to the Prime Lease
upon the terms and conditions as set forth herein.
2. SUBLESSEE, by its acceptance of this Sublease, assumes the performance
of all SUBLESSOR'S duties and obligations under the assigned Prime Lease, and
will hold SUBLESSOR harmless, including any attorneys fees, from any liability
or loss resulting from the performance or nonperformance of SUBLESSEE'S duties
and obligations under said Prime Lease.
3. This Sublease is conditioned upon the approval of Rock Hill
Partnership, the Landlord to this Sublease.
4. Notwithstanding the foregoing, SUBLESSOR shall retain ownership of the
security deposit as set forth in Paragraph 1 of the Prime Lease Addenda. The
Landlord shall be entitled to retain a security deposit of $8,400 from Atlantic
Express of Missouri and a security deposit of $6,600 from Laidlaw Transit, Inc.
totaling $15,000 throughout the term of the Prime Lease, pursuant to the terms
and conditions of the Prime Lease and to secure the performance of SUBLESSEE'S
duties and obligations under the Prime Lease. Should, at the termination of the
Prime Lease, SUBLESSEE have completed all of its duties and obligations and the
security deposit be refundable, then, any security deposit so refunded shall be
refunded to SUBLESSOR, pursuant to the terms of this Sublease.
5. SUBLESSEE shall pay all rents due under said Prime Lease directly to
the Landlord under said Prime Lease commencing July 1,1996 through June 30,
1998. The rent due under the Prime Lease shall be as follows:
July 1, 1996 - June 30, 1997 = $8,400/month
July 1, 1997 - June 30, 1998 = $8,700/month
6. In case of default of SUBLESSEE under the terms of the Prime Lease or
this Sublease, SUBLESSOR may terminate this Sublease and retake possession of
the Premises using
SUBLESSOR INITIAL /s/ [ILLEGIBLE] -Page 1- SUBLESSEE INITIAL /s/ [ILLEGIBLE]
<PAGE>
any and all lawful means. SUBLESSEE shall be accountable to SUBLESSOR for any
and all damages incurred by SUBLESSOR, including attorneys fees, arising from
SUBLESSEE'S breach of this Sublease or the Prime Lease.
7. In the event SUBLESSEE shall breach this Sublease or fail to perform
any of the covenants assumed herein, the Landlord may assert claims for damages
suffered by the Landlord against SUBLESSEE and such claims shall not preclude or
limit the Landlord from asserting claims for additional damages or asserting
other remedies against the SUBLESSOR or SUBLESSOR'S security deposit as referred
to in Paragraph 4 above. In the event the Landlord is required to institute any
such claims, the SUBLESSEE agrees to pay the reasonable cost and attorney's fees
incurred by the Landlord in connection therewith.
8. This Sublease is binding upon the parties hereto and shall inure to the
benefit of the parties hereto and the Landlord and their respective heirs,
personal representatives, successors and assigns. This Sublease may not be
amended or cancelled, the Premises may not be further subleased, and neither
SUBLESSOR or SUBLESSEE may assign their rights hereunder, without the prior
written consent of Landlord.
IN WITNESS WHEREOF, the parties have executed this Sublease on the day and
year first above written.
SUBLESSOR: SUBLESSEE:
MAYFLOWER CONTRACT SERVICES,
INC. DOING BUSINESS AS LAIDLAW
TRANSIT, INC. ATLANTIC EXPRESS OF MISSOURI
By: /s/ [ILLEGIBLE] By: /s/ David T. [ILLEGIBLE]
-------------------------- -------------------------
<PAGE>
This First Amendment to Lease ("First Amendment") is entered into the 28th
of April, 1995, by and between Rock Hill Limited Partnership, a Missouri limited
partnership ("Landlord"), whose address is 10435 Baur Blvd., St. Louis, Missouri
63132, and Laidlaw Transit, Inc., a Missouri corporation, ("Tenant"), whose
address is 2210 S. 7th Street, St. Louis, Missouri 63104.
RECITALS
Tenant currently leases from Landlord certain real property and
improvements thereon located in City of St. Louis, Missouri, known as 6810
Prescott pursuant to a Lease dated June 30, 1993.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Landlord and Tenant agree to amend the Lease as follows:
1. Rent. The rent which Tenant is obligated to pay pursuant to the Lease,
shall be as follows:
o July 1, 1995, through June 30, 1996, $8,l00.00/month.
o July 1, 1996, through June 30, l997, $8,400.00/month.
o July 1, 1997, through June 30, 1998, $8,700.00/month.
2. Incorporation of Recitals. The Recitals to this First Amendment are
incorporated herein and made a part hereof.
3. Incorporation of Lease. The terms and conditions of this First
Amendment shall be deemed incorporated into the Lease and shall be governed,
enforced and interpreted in accordance therewith.
4. No Additional Amendments. The Lease shall be amended and modified only
to the extent and as specifically provided for in this First Amendment; it is
otherwise ratified and affirmed.
5. Drafting of First Amendment. This First Amendment is a product of the
negotiations of both parties. For convenience, it has been drafted by one of the
parties and it shall not be construed in favor of, or against, either party
simply because it was drafted by one party.
<PAGE>
6. No Default Waiver. This First Amendment does not waive any prior,
present or future default by either party hereto which has occurred or may occur
under the terms of the Lease.
7. Counterparts. This First Amendment may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.
LANDLORD TENANT
Rock Hill Limited Partnership, Laidlaw Transit, Inc., a Missouri Corporation
a Limited Partnership
by /s/ [ILLEGIBLE] by /s/ [ILLEGIBLE]
----------------------------- -------------------
Title Gen'l Partner Title Dist Dir of Maint
<PAGE>
ACCEPTANCE OF SUBLEASE
COMES NOW Rock Hill Partnership and hereby accepts the terms and
conditions of the Sublease by and between Mayflower Contract Services, Inc.
doing business as Laidlaw Transit, Inc., SUBLESSOR and Atlantic Express of
Missouri, SUBLESSEE. The Landlord does not release Laidlaw Transit, Inc. from
liability under said Prime Lease, but hereby accepts the Sublease and Assignment
and accepts Atlantic Express of Missouri, first, for all duties and obligations
of Tenant under said Prime Lease, but should Atlantic Express of Missouri fail
to fulfill said obligations, then Rock Hill Partnership may look to Laidlaw
Transit, Inc. for fulfillment of said terms and obligations. Notwithstanding the
foregoing, should Atlantic Express of Missouri, as Tenant, fully perform all of
its duties and obligations under said Prime Lease and should the security
deposit, as set forth in Paragraph 1 of said Prime Lease Addenda, be due and
owing at the termination of the initial term of the Prime Lease, then $8,400 of
the security deposit shall be returned to Atlantic Express of Missouiri and the
balance of $6,600 of the security deposit shall be returned to Laidlaw Transit,
Inc.
Notwithstanding the foregoing, Rock Hill Partnership, may not make any
agreement with SUBLESSEE which would increase the duties and obligations of
SUBLESSEE or SUBLESSOR without the written approval of SUBLESSOR. Furthermore,
no option to extend said Prime Lease shall be made between SUBLESSEE and
SUBLESSOR.
Any and all notices to be sent under the terms of the Prime Lease by Rock
Hill Partnership shall be sent to both Laidlaw Transits, Inc. at _______________
and Atlantic Express of Missouri at 6810 Prescott, St. Louis, Missouri.
ROCK HILL PARTNERSHIP L.P.
By /s/ Harry T. Bussmann, III
----------------------------------------
General Partner
<PAGE>
SUBLEASE
THIS SUBLEASE is made and entered into this 28th day of May, 1996, by and
between Mayflower Contract Services, Inc. doing business as Laidlaw Transit,
Inc., hereinafter referred to as "SUBLESSOR" and Atlantic Express of Missouri,
hereinafter referred to as "SUBLESSEE".
WHEREAS, SUBLESSOR is a Tenant under a Lease dated June 30, 1993, and
Amendment to Lease dated April 28, 1995, (hereinafter said Lease and Amendment
shall be referred to as the "Prime Lease"), for a property located at 6810
Prescott, St. Louis, Missouri (hereinafter referred to as the "Premises"),
wherein Rockhill Partnership (hereinafter referred to as the "Landlord") is the
Lessor and SUBLESSOR is the Lessee; and
WHEREAS, SUBLESSEE wishes to sublease the Premises subject to said Prime
Lease from SUBLESSOR.
NOW, THEREFORE, for and in consideration of the above premises and the
mutual promises and covenants contained herein, the parties agree as follows:
1. SUBLESSOR does hereby Sublease the Premises subject to the Prime Lease
upon the terms and conditions as set forth herein.
2. SUBLESSEE, by its acceptance of this Sublease, assumes the performance
of all SUBLESSOR'S duties and obligations under the assigned Prime Lease, and
will hold SUBLESSOR harmless, including any attorneys fees, from any liability
or loss resulting from the performance or nonperformance of SUBLESSEE'S duties
and obligations under said Prime Lease.
3. This Sublease is conditioned upon the approval of Rock Hill
Partnership, the Landlord to this Sublease.
4. Notwithstanding the foregoing, SUBLESSOR shall retain ownership of the
security deposit as set forth in Paragraph 1 of the Prime Lease Addenda. The
Landlord shall be entitled to retain a security deposit of $8,400 from Atlantic
Express of Missouri and a security deposit of $6,600 from Laidlaw Transit, Inc.
totaling $15,000 throughout the term of the Prime Lease, pursuant to the terms
and conditions of the Prime Lease and to secure the performance of SUBLESSEE'S
duties and obligations under the Prime Lease. Should, at the termination of the
Prime Lease, SUBLESSEE have completed all of its duties and obligations and the
security deposit be refundable, then, any security deposit so refunded shall be
refunded to SUBLESSOR, pursuant to the terms of this Sublease.
5. SUBLESSEE shall pay all rents due under said Prime Lease directly to
the Landlord under said Prime Lease commencing July 1,1996 through June 30,
1998. The rent due under the Prime Lease shall be as follows:
July 1, 1996 - June 30, 1997 = $8,400/month
July 1, 1997 - June 30, 1998 = $8,700/month
6. In case of default of SUBLESSEE under the terms of the Prime Lease or
this Sublease, SUBLESSOR may terminate this Sublease and retake possession of
the Premises using
SUBLESSOR INITIAL /s/ [ILLEGIBLE] -Page 1- SUBLESSEE INITIAL /s/ [ILLEGIBLE]
<PAGE>
any and all lawful means. SUBLESSEE shall be accountable to SUBLESSOR for any
and all damages incurred by SUBLESSOR, including attorneys fees, arising from
SUBLESSEE'S breach of this Sublease or the Prime Lease.
7. In the event SUBLESSEE shall breach this Sublease or fail to perform
any of the covenants assumed herein, the Landlord may assert claims for damages
suffered by the Landlord against SUBLESSEE and such claims shall not preclude or
limit the Landlord from asserting claims for additional damages or asserting
other remedies against the SUBLESSOR or SUBLESSOR'S security deposit as referred
to in Paragraph 4 above. In the event the Landlord is required to institute any
such claims, the SUBLESSEE agrees to pay the reasonable cost and attorney's fees
incurred by the Landlord in connection therewith.
8. This Sublease is binding upon the parties hereto and shall inure to the
benefit of the parties hereto and the Landlord and their respective heirs,
personal representatives, successors and assigns. This Sublease may not be
amended or cancelled, the Premises may not be further subleased, and neither
SUBLESSOR or SUBLESSEE may assign their rights hereunder, without the prior
written consent of Landlord.
IN WITNESS WHEREOF, the parties have executed this Sublease on the day and
year first above written.
SUBLESSOR: SUBLESSEE:
MAYFLOWER CONTRACT SERVICES,
INC. DOING BUSINESS AS LAIDLAW
TRANSIT, INC. ATLANTIC EXPRESS OF MISSOURI
By: /s/ [ILLEGIBLE] By: /s/ David Kessler
-------------------------- -------------------------
<PAGE>
Exhibit 10.11
STANDARD FORM OF STORE LEASE
The Real Estate Board of New York, Inc.
Agreement of lease, made as of this 1st day of August 1995, between Stamar
Realty Corp. party of the first part, hereinafter referred to as OWNER, and or
Landlord, and 180 Jamaica Corp. party of the second part, hereinafter referred
to as TENANT. Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires
from Owner the building (approximately 21,000 square feet) known as 107-10 180th
Street and the land (consisting of approximately 201,000 square feet) as set
forth on the site plan annexed hereto in the Borough of Queens, City of New
York, for the term of (or until such term shall sooner cease and expire as
hereinafter provided) to commence on the 1st day of August nineteen hundred and
ninety-five, and to end on the 31st day of July two thousand and ten, unless
terminated sooner both dates inclusive, at an annual rental rate of ____ as
hereinafter provided see rider which Tenant agrees to pay in lawful money of the
United States which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, in equal monthly installments in
advance on the first day of each month during said term, at the office of Owner
or such other place as Owner may designate, without any set off or deduction
whatsoever, except that Tenant shall pay the first monthly installment(s) on
the execution hereof (unless this lease be a renewal). In the event that, at the
commencement of the term of this lease, or thereafter, Tenant shall be in
default in the payment of rent to Owner pursuant to the terms of another lease
with Owner or with Owner's predecessor in interest, Owner may at Owner's option
and without notice to Tenant add the amount of such arrears to any monthly
installment of rent payable hereunder and the same shall be payable to Owner as
additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent: 1. Tenant shall pay the rent as above and as hereinafter provided.
Occupancy: 2. Tenant shall use and occupy demised premises for a vehicle storage
and maintenance facility and offices.
Tenant shall at all times conduct its business in a high grade and reputable
manner, shall not violate Article 37 hereof, and shall keep show windows and
signs in a neat and clean condition.
Alterations: 3. Tenant shall make no changes in or to the demised premises of
any nature without Owner's prior written consent. Subject to the prior written
consent of Owner, and to the provisions of this article, Tenant, at Tenant's
expense, may make alterations, installations, additions or improvements which
are non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved in each instance by Owner. Tenant shall,
before making any alterations, additions, installations or improvements, at its
expense, obtain all permits, approvals and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Owner and Tenant agrees to carry and will
cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as Owner
may require. If any mechanic's lien is filed against the demised premises, or
the building of which the same forms a part, for work claimed to have done for,
or materials furnished to, Tenant, whether or not done pursuant to this article,
the same shall be discharged by Tenant within 30 days thereafter, at Tenant's
expense, by payment or filing the bond required by law. All fixtures and all
paneling, partitions, railings and like installations installed in the premises
at any time, either by Tenant or by Owner on Tenant's behalf, shall, upon
installation, become the property of Owner and shall, upon installation, become
the property of Owner and shall remain upon and be surrendered with the demised
premises unless Owner by notice to Tenant no later than twenty days prior to the
date fixed as the termination of this lease, elects to relinquish Owners rights
thereto and to have them removed by Tenant, in which event, the same shall be
removed from the premises by Tenant prior to the expiration of the lease, at
Tenant's expense. Nothing in this article shall be construed to give Owner title
to or to prevent Tenant's removal of trade fixtures, moveable office furniture
and equipment, but upon removal of any such from the premises or upon removal of
other installation as may be required by Owner, Tenant shall immediately and at
its expense, repair and restore the premises to the condition existing prior to
installation and repair any damage to the demised premises or the building due
to such removal. All property permitted or required to be removed by Tenant at
the end of the term remaining in the premises after Tenant's removal shall be
deemed abandoned and may, at the election of Owner, either be retained as
Owner's property or may be removed from the premises by Owner at Tenant's
expense.
Repairs: 4. Owner shall maintain and repair the public portions of the building,
both exterior and interior, except that if Owner allows Tenant to erect on the
outside of the building a sign or signs, or a hoist, lift or sidewalk elevator
for the exclusive use of Tenant, Tenant shall maintain such exterior
installations in good appearance and shall cause the same to be operated in a
good and workmanlike manner and shall make all repairs thereto necessary to keep
same in good order and condition at Tenant's own cost and expense, and shall
cause the same to be covered by the insurance provided for hereafter in Article
8. Tenant shall, throughout the term of this lease, take good care of the
demised premises and the fixtures and appurtenances therein, and the sidewalks
adjacent thereto, and at its sole cost and expense, make all non-structural
repairs thereto as and when needed to preserve them in good working order and
condition, reasonable wear and tear, obsolescence and damage from the elements,
fire or other casualty, excepted. If the demised premises be or become infested
with vermin, Tenant shall at Tenant's expense, cause the same to be exterminated
from time to time to the satisfaction of Owner. Except as specifically provided
in Article 9 or elsewhere in this lease, there shall be no allowance to the
Tenant for the diminution of rental value and no liability on the part of Owner
by reason of inconvenience, annoyance or injury to business arising from Owner,
Tenant or others making or failing to make any repairs, alterations, additions
or improvements in or to any portion of the building including the erection or
the operation of any crane, derrick or sidewalk shed, or in or to the demised
premises or the fixtures, appurtenances or equipment thereof. It is specifically
agreed that Tenant shall be not entitled to any set off or reduction of rent by
reason of any failure of Owner to comply with the covenants of this or any other
article of this lease. Tenant agrees that Tenant's sole remedy at law in such
instance will be by way of an action for damages for breach of contract. The
provisions of this Article 4 with respect to the making of repairs shall not
apply in the case of fire or other Casualty which are dealt with in Article 9
hereof.
Window Cleaning: 5. Tenant will not clean nor require, permit, suffer or allow
any window in the demised premises to be cleaned from the outside in violation
of Section 202 of the New York State Labor Law or any other applicable law or of
the Rules of the Board of Standards and Appeals, or of any other Board or body
having or asserting jurisdiction.
Requirements of Law, Fire Insurance: 6. Prior to the commencement of the lease
term, if Tenant is then in possession, and at all times thereafter, Tenant, at
Tenant's sole cost and expense, shall promptly comply with all present and
future laws, orders and regulations of all state, federal, municipal and local
governments, departments, commissions and boards and any direction of any public
officer pursuant to law, and all orders, rules and regulations of the New York
Board of Fire Underwriters or the Insurance Services Office, or any similar body
which shall impose any violation, order or duty upon Owner or Tenant with
respect to the demised premises, and with respect to the portion of the sidewalk
adjacent to the premises, if the premises are on the street level, whether or
not arising out of Tenant's use or manner of use thereof, or with respect to the
building if arising out of Tenant's use or manner of use of the premises or the
building (including the use permitted under the lease). Except as provided in
Article 29 hereof, nothing herein shall require Tenant to make structural
repairs or alterations unless Tenant has by its manner of use of the demised
premises or method of operation therein, violated any such laws, ordinances,
orders, rules, regulations or requirements with respect thereto. Tenant shall
not do
<PAGE>
or permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall pay all costs, expenses, fines, penalties or
damages, which may be imposed upon Owner by reason of Tenant's failure to comply
with the provisions of this article. If the fire insurance rate shall, at the
beginning of the lease or at any time thereafter, be higher than it otherwise
would be, then Tenant shall reimburse Owner, as additional rent hereunder, for
that portion of all fire insurance premiums thereafter paid by Owner which shall
have been charged because of such failure by Tenant to comply with the terms of
this article. In any action or proceeding wherein Owner and Tenant are parties,
a schedule or "make-up" of rate for the building or demised premises issued by a
body making fire insurance rates applicable to said premises shall be conclusive
evidence of the facts therein stated and of the several items and charges in the
fire insurance rate then applicable to said premises.
Subordination: 7. This lease is subject and subordinate to all ground or
underlying leases and to all mortgages which may now or hereafter affect such
leases or the real property of which demised premises are a part and to all
renewals, modifications, consolidations, replacements, and extensions of any
such underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
request.
Tenant's Liability Insurance Property Loss, Damage, Indemnity: 8. Owner or its
agents shall not be liable for any damage to property of Tenant or of others
entrusted to employees of the building, nor for loss of or damage to any
property of Tenant by theft or other wise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees. Owner
or its agents will not be liable for any such damage caused by other tenants or
persons in, upon or about said building or caused by operations in construction
of any private, public or quasi public work. Tenant agrees, at Tenant's sole
costs and expense, to maintain general public liability insurance in standard
form in favor of Owner and Tenant against claims for bodily injury or death or
property damage occurring in or upon the demised premises, effective from the
date Tenant enters into possession and during the term of this lease. Such
insurance shall be in an amount and with carriers acceptable to the Owner. Such
policy or policies shall be delivered to the Owner. On Tenant's default in
obtaining or delivering any such policy or policies or failure to pay the
charges therefor, Owner may secure or pay the charges for any such policy or
policies and charge the Tenant as additional rent therefor. Tenant shall
indemnify and save harmless Owner against and from all liabilities, obligations,
damages, penalties, claims, costs and expenses for which Owner shall not be
reimbursed by insurance, including reasonable attorneys fees, paid, suffered or
incurred as a result of any breach by Tenant, Tenant's agent, contractors,
employees, invitees, or licensees, of any covenant on condition of this lease,
or the carelessness, negligence or improper conduct of the Tenant, Tenant's
agents, contractors, employees, invitees or licensees. Tenant's liability under
this lease extends to the acts and omissions of any subtenant, and any agent,
contractor, employee, invitee or licensee of any subtenant. In case any action
or proceeding is brought against Owner by reason of any such claim, Tenant, upon
written notice from Owner, will, at Tenant's expense, resist or defend such
acton or proceeding by counsel approved by Owner in writing, such approval not
to be unreasonably withheld.
Destruction, Fire, and other Casualty: 9. (a) If the demised premises or any
part thereof shall be damaged by fire or other casualty, Tenant shall give
immediate notice thereof to owner and this lease shall continue in full force
and effect except as hereinafter set forth. (b) If the demised premises are
partially damaged or rendered partially unusable by fire or other casualty, the
damages therein shall be repaired by and at the expense of owner and the rent
and other items of additional rent, until such repair shall be substantially
completed, shall be apportioned from the day following the casualty according to
the part of the premises which is usable. (c) If the demised premises are
totally damaged or rendered wholly unusable by fire or other casualty, then the
rent and other items of additional rent as hereinafter expressly provided shall
be proportionately paid up to the time of the casualty and thenceforth shall
cease until the date when the premises shall have been repaired and restored by
Owner (or sooner reoccupied in part by Tenant then rent shall be apportioned as
provided in subsection (b) above), subject to Owner's right to elect not to
restore the same as hereinafter provided. (d) If the demised premises are
rendered wholly unusable or (whether or not the demised premises are damaged in
whole or in part) if the building shall be so damaged that Owner shall decide to
demolish it or to rebuild it, then, in any of such events, Owner may elect to
terminate this lease by written notice to Tenant given within 90 days after such
fire or casualty or 30 days after adjustment of the insurance claim for such
fire or casualty, whichever is sooner, specifying a date for the expiration of
the lease, which date shall not be more than 60 days after the giving of such
notice, and upon the date specified in such notice the term of this lease shall
expire as fully and completely as if such date were the date set forth above for
the termination of this lease and Tenant shall forthwith quit, surrender and
vacate the premises without prejudice however, to Owner's rights and remedies
against Tenant under the lease provisions in effect prior to such termination,
and any rent owing shall be paid up to such date and any payments of rent made
by Tenant which were on account of any period subsequent to such date shall be
returned to Tenant. Unless Owner shall serve a termination notice as provided
for herein, Owner shall make the repairs and restoration under the conditions of
(b) and (c) hereof, with all reasonable expedition subject to delays due to
adjustment of insurance claims, labor troubles and causes beyond Owner's
control. After any such casualty, Tenant shall cooperate with Owner's
restoration by removing from the premises as promptly as reasonably possible,
all of Tenant's salvageable inventory and movable equipment, furniture, and
other property. Tenant's liability for rent shall resume five (5) days after
written notice from Owner that the premises are substantially ready for Tenant's
occupancy. (e) Nothing contained hereinabove shall relieve Tenant from liability
that may exist as a result of damage from fire or other casualty.
Notwithstanding the foregoing, including Owner's obligation to restore under
subparagraph (b) above, each party shall look first to any insurance in its
favor before making any claim against the other party for recovery for loss or
damage resulting from fire or other casualty, and to the extent that such
insurance is in force and collectible and to the extent permitted by law, Owner
and Tenant each hereby releases and waives all right of recovery with respect to
subparagraphs (b), (d), and (e) above, against the other or anyone claiming
through or under each of them by way of subrogation or otherwise. The release
and waiver herein referred to shall be deemed to include any loss or damage to
the demised premises and/or any personal property, equipment, trade fixtures,
goods and merchandise located therein. The foregoing release and waiver shall be
in force only if both releasors' insurance policies contain a clause providing
that such a release or waiver shall not invalidate the insurance. Tenant
acknowledges that Owner will not carry insurance on Tenant's furniture and/or
furnishings or any fixtures or equipment, improvements, or appurtenances
removable by Tenant and agrees that Owner will not be obligated to repair any
damage thereto or replace the same. (f) Tenant hereby waives the provisions of
Section 227 of the Real Property Law and agrees that the provisions of this
article shall govern and control in lieu thereof.
Eminent Domain: 10. If the whole or any part of the demised premises shall be
acquired or condemned by Eminent Domain for any public or quasi public use or
purpose, then and in that event, the term of this lease shall cease and
terminate from that date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said lease. Tenant shall
have the right to make an independent claim to the condemning authority for the
value of Tenant's moving expenses and personal property, trade fixtures and
equipment, provided Tenant is entitled pursuant to the terms of the lease to
remove such property, trade fixtures and equipment, at the end of the term and
provided further such claim does not reduce Owner's award.
Assignment, Mortgage, Etc.: 11. Tenant, for itself, its heirs, distributees,
executors, administrators, legal representatives, successors and assigns
expressly covenants that it shall not assign, mortgage or encumber this
agreement, nor underlet, or suffer or permit the demised premises or any part
thereof to be used by others, without the prior written consent of Owner in each
instance. Transfer of the majority of the stock of a corporate tenant or the
majority partnership interest of a partnership tenant shall be deemed an
assignment. If this lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than Tenant, Owner may, after
default by Tenant, collect rent from the assignee, under-tenant or occupant, and
apply the net amount collected to the rent herein reserved, but no such
assignment, underletting, occupancy or collection shall be deemed a waiver of
the covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.
Electric Current: 12. Rates and conditions in respect to submetering or rent
inclusion, as the case may be, to be added in RIDER attached hereto. Tenant
covenants and agrees that at all times its use of electric current shall not
exceed the capacity of existing feeders to the building or the risers or wiring
installation and Tenant may not use any electrical equipment which, in Owner's
opinion, reasonably exercised, will overload such installations or interfere
with the use thereof by other tenants of the building. The change at any time of
the character of electric service shall in no wise make Owner liable or
responsible to Tenant, for any loss, damages or expenses which Tenant may
sustain.
Access to Premises: 13. Owner or Owner's agents shall have the right (but shall
not be obligated) to enter the demised premises in any emergency at any time,
and, at other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Owner may deem necessary and reasonably
desirable to any portion of the building or which Owner may elect to perform, in
the premises, following Tenant's failure to make repairs or perform any work
which Tenant is obligated to perform under this lease, or for purpose of
complying with laws, regulations and other directions of governmental
authorities. Tenant shall permit Owner to use and maintain and replace pipes and
conduits in and through the demised premises and to erect new pipes and conduits
therein, provided they are concealed within the walls, floors or ceiling,
wherever practicable. Owner may, during the progress of any work in the demised
premises, take all necessary materials and equipment into said premises without
the same constituting an eviction nor shall the Tenant be entitled to any
abatement of rent while such work is in progress nor to any damages by reason of
loss or interruption of business otherwise. Throughout the term hereof Owner
shall have the right to enter the demised premises at reasonable hours for the
purpose of showing the same to prospective purchasers or mortgagees of the
building, and during the last six months of the term for the purpose of showing
the same to prospective tenants and may, during said six months period, place
upon the demised premises the usual notice "To Let" and "For Sale" which notices
Tenant shall permit to remain thereon without molestation. If Tenant is not
present to open and permit an entry into the demised premises, Owner or Owner's
agents may enter the same whenever such entry may be necessary or permissible by
master key or forcibly and provided reasonable care is exercised to safeguard
Tenant's property, such entry shall not render Owner or its agents liable
therefor, nor in any event shall the obligations of Tenant hereunder be
affected. If during the last month of term Tenant shall have removed all or
substantially all of Tenant's property therefrom, Owner may immediately enter,
alter, renovate or redecorate the demised premises without limitation or
abatement of rent, or incurring liability to Tenant for any compensation and
such act shall have no effect on this lease or Tenant's obligations hereunder.
Owner shall have the right at any time, without the same constituting an
eviction and without incurring liability to Tenant therefor to change the
arrangement and/or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets, or other public parts of the building and
to change the name, number or designation by which the building may be known.
Vault, Vault Space, Area: 14. No vaults, vault space or area, whether or not
enclosed or covered, not within the property line of the building is leased
hereunder, anything contained in or indicated on any sketch, blue print or plan,
or anything contained elsewhere in this lease to the contrary notwithstanding.
Owner makes no representation as to the location of the property line of the
- ----------
Rider to be added if necessary.
<PAGE>
building. All vaults and vault space and all such areas not within the property
line of the building, which Tenant may be permitted to use and/or occupy, is to
be used and/or occupied under a revocable license, and if any such license be
revoked, or if the amount of such space or area be diminished or required by any
federal, state or municipal authority or public utility, Owner shall not be
subject to any liability nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant.
Occupancy: 15. Tenant will not at any time use or occupy the demised premises in
violation of Articles 2 or 37 hereof, or of the certificate of occupancy issued
for the building of which the demised premises are a part. Tenant has inspected
the premises and accepts them as is, subject to the riders annexed hereto with
respect to owner's work, if any. In any event, Owner makes no representation as
to the condition of the premises and Tenant agrees to accept the same subject to
violations whether or not of record.
Bankruptcy: 16. (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Landlord by the sending of a
written notice to Tenant within a reasonable time after the happening of any one
or more of the following events: (1) the commencement of a case in bankruptcy or
under the laws of any state naming Tenant as the debtor; or (2) the making by
Tenant of an assignment or any other arrangement for the benefit of creditors
under any state statute. Neither Tenant nor any person claiming through or under
Tenant, or by reason of any statute or order of court, shall thereafter be
entitled to possession of the premises demised but shall forthwith quit and
surrender the premises. If this lease shall be assigned in accordance with its
terms, the provisions of this Article 16 shall be applicable only to the party
then owning Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the termination of this
lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any other
provisions of this lease to the contrary, be entitled to recover from Tenant as
and for liquidated damages an amount equal to the difference between the rent
reserved hereunder for the unexpired portion of the term demised and the fair
and reasonable rental value of the demised premises for the same period. In the
computation of such damages the difference between any installment of rent
becoming due hereunder after the date of termination and the fair and reasonable
rental value of the demised premises for the period for which such installment
was payable shall be discounted to the date of termination at the rate of four
percent (4%) per annum. If such premises or any part thereof be re-let by the
Owner for the unexpired term of said lease, or any part therof, before
presentation of proof of such liquidated damages to any court, commission or
tribunal, the amount of rent reserved upon such re-letting shall be deemed to be
the fair and reasonable rental value for the part or the whole of the premises
so re-let during the term of the re-letting. Nothing herein contained shall
limit or prejudice the right of the Owner to prove for and obtain as liquidated
damages by reason of such termination, an amount equal to the maximum allowed by
any statute or rule of law in effect at the time when, and governing the
proceedings in which, such damages are to be proved, whether or not such amount
be greater, equal to, or less than the amount of the difference referred to
above.
Default: 17. (1) If Tenant defaults in fulfilling any of the covenants of this
lease other than the covenants for the payment of rent or additional rent; or if
the demised premises become vacant or deserted; or if any execution or
attachment shall be issued against Tenant or any of Tenant's property whereupon
the demised premises shall be taken or occupied by someone other than Tenant; or
if this lease be rejected under Section 365 of Title 11 of the U.S. Code
(Bankruptcy Code) or if Tenant shall fail to move into or take possession of
the premises within thirty (30) days after the commencement of the term of this
lease, of which fact Owner shall be the sole judge; then, in any one or more of
such events, upon Owner serving a written fifteen (15) days notice upon Tenant
specifying the nature of said default and upon the expiration of said fifteen
(15) days, if Tenant shall have failed to comply with or remedy such default, or
if the said default or omission complained of shall be of a nature that the same
cannot be completely cured or remedied within said fifteen (15) day period, and
if Tenant shall not have diligently commenced curing such default within such
fifteen (15) day period, and shall not thereafter with reasonable diligence and
in good faith proceed to remedy or cure such default, then owner may serve a
written * days notice of cancellation of this lease upon Tenant, and upon the
expiration of said * days ** this lease and the term thereunder shall end and
expire as fully and completely as if the expiration of such * day period were
the day herein definitely fixed for the end and expiration of this lease and the
term thereof and Tenant shall then quit and surrender the demised premises to
Owner but Tenant shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given, and the term
shall expire as aforesaid; or if Tenant shall make default in the payment of the
rent reserved herein or any item of additional herein mentioned or any part of
either or in making any other payment herein required; then and in any of such
events Owner may without notice, re-enter the demised premises either by force
or otherwise, and dispossess Tenant by summary proceedings or otherwise, and the
legal representative of Tenant or other occupant of demised premises and remove
their effects and hold the premises as if this lease had not been made, and
Tenant hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end.
Remedies of Owner and Waiver of Redemption: 18. In case of any such default,
re-entry, expiration and/or dispossess by summary proceedings or other wise, (a)
the rent, and additional rent, shall become due thereupon and be paid up to the
time of such re-entry, dispossess and/or expiration, (b) Owner may re-let the
premises or any part or parts therof, either in the name of Owner or otherwise,
for a term or terms, which may at Owner's option be less than or exceed the
period which would otherwise have constituted the balance of the term of this
lease and may grant concessions or free rent or charge a higher rental than that
in this lease, and/or (c) Tenant or the legal representatives of Tenant shall
also pay Owner as liquidated damages for the failure of Tenant to observe and
perform said Tenant's covenants herein contained, any deficiency between the
rent hereby reserved and/or covenanted to be paid and the net amount, if any, of
the rents collected on account of the subsequent lease or leases of the demised
premises for each month of the period which would otherwise have constituted the
balance of the term of this lease. The failure of Owner to re-let the premises
or any part or parts thereof shall not release or affect Tenant's liability for
damages. In computing such liquidated damages there shall be added to the said
deficiency such expenses as Owner may incur in connection with re-letting, such
as legal expenses, reasonable attorneys' fees, brokerage, advertising and for
keeping the demised premises in good order or for preparing the same for
re-letting. Any such liquidated damages shall be paid in monthly installments by
Tenant on the rent day specified in this lease. Owner, in putting the demised
premises in good order or preparing the same for re-rental may, at Owner's
option, make such alterations, repairs, replacements, and/or decorations in the
demised premises as Owner, in Owner's sole judgement, considers advisable and
necessary for the purpose of re-letting the demised premises, and the making of
such alterations, repairs, replacements, and/or decorations shall not operate or
be construed to release Tenant from liability. Owner shall in no event be liable
in any way whatsoever for failure to re-let the demised premises, or in the
event that the demised premises are re-let, for failure to collect the rent
thereof under such re-letting, and in no event shall Tenant be entitled to
receive any excess, if any, of such net rent collected over the sums payable by
Tenant to Owner hereunder. In the event of a breach or threatened breach by
Tenant or any of the covenants or provisions hereof, Owner shall have the right
of injunction and the right to invoke any remedy allowed at law or in equity as
if re-entry, summary proceedings and other remedies were not herein provided
for. Mention in this lease of any particular remedy, shall not preclude Owner
from any other remedy, in law or in equity. Tenant hereby expressly waives any
and all rights of redemption granted by or under any present or future laws.
Fees and Expenses: 19. If Tenant shall default in the observance or performance
of any term or covenant on Tenant's part to be observed or performed under or by
virtue of any of the terms or provisions in any article of this lease after
notice if required and upon expiration of any applicable grace period if any,
(except in an emergency), then, unless otherwise provided elsewhere in this
lease, Owner may immediately or at any time thereafter and without notice
perform the obligation of Tenant thereunder, and if Owner, in connection
therewith or in connection with any default by Tenant in the covenant to pay
rent hereunder, makes any expenditures or incurs any obligations for the payment
of money, including but not limited to reasonable attorney's fees, in
instituting, prosecuting or defending any actions or proceeding and prevails in
any such action or proceeding, such sums so paid or obligations incurred with
interest and costs shall be deemed to be additional rent hereunder and shall be
paid by Tenant to Owner within ten (10) days of rendition of any bill or
statement to Tenant therefor, and if Tenant's lease term shall have expired at
the time of making of such expenditures or incurring of such obligations, such
sums shall be recoverable by owner as damages.
No Representations by Owner: 20. Neither Owner nor Owner's agent have made any
representations or promises with respect to the physical condition of the
building, the land upon which it is erected or the demised premises, the rents,
leases, expenses of operation, or any other matter or thing affecting or related
to the premises except as herein expressly set forth and no rights, easements or
licenses are acquired by Tenant by implication or other wise except as expressly
set forth in the provisions of this lease. Tenant has inspected the building and
the demised premises and is thoroughly acquainted with their condition, and
agrees to take the same "as is" and acknowledges that the taking of possession
of the demised premises by Tenant shall be conclusive evidence that the said
premises and the building of which the same form a part were in good and
satisfactory condition at the time such possession was so taken, except as to
latent defects. All understandings and agreements heretofore made between the
parties hereto are merged in this contract, which alone fully and completely
expresses the agreement between Owner and Tenant and any executory agreement
hereafter made shall be ineffective to change, modify, discharge or effect an
abandonment of it in whole or in part, unless such executory agreement is in
writing and signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
End of Term: 21. Upon the expiration or other termination of the term of this
lease, Tenant shall quit and surrender to Owner the demised premises, broom
clean, in good order and condition, ordinary wear excepted, and Tenant shall
remove all its property. Tenant's obligation to observe or perform this covenant
shall survive the expiration or other termination of this lease. If the last day
of the term of this lease or any renewal thereof, falls on Sunday, this lease
shall expire at noon on the preceding Saturday unless it be a legal holiday in
which case it shall expire at noon on the preceding business day.
Quiet Enjoyment: 22. Owner covenants and agrees with Tenant that upon Tenant
paying the rent and additional rent and observing and performing all the terms,
covenants and conditions, on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease including, but not
limited to, Article 33 hereof and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.
Failure to Give Possession: 23. If Owner is unable to give possession of the
demised premises on the date of the commencement of the term hereof, because of
the holding over or retention of possession of any tenant, undertenant or
occupants, or if the premises are located in a building being constructed
because such building has not been sufficiently completed to make the premises
ready for occupancy or because of the fact that a certificate of occupancy has
not been procured or for any other reason, Owner shall not be subject to any
liability for failure to give possession on said date and the validity of the
lease shall not be impaired under such circumstances, nor shall the same be
construed in any wise to extend the term of this lease, but the rent payable
hereunder shall be abated (provided Tenant is not responsible for the inability
to obtain possession or complete construction) until after Owner shall have
given Tenant written notice that the Owner is able to deliver possession in the
condition required by this lease. If permission is given to Tenant to enter into
the possession of the demised premises or to occupy premises other than the
demised premises prior to the date specified as the commencement of the term of
this lease,Tenant covenants and agrees that such possession and/or occupancy
shall be deemed to be under all the terms, covenants, conditions and provisions
of this lease except the obligation to pay the fixed annual rent set forth in
page
* ten (10)
** unless tenant has cured such default
<PAGE>
one of this lease. The provisions of this article are intended to constitute "an
express provision to the contrary" within the meaning of Section 223-a of the
New York Real Property Law.
No Waiver: 24. The failure of Owner to seek redress for violation of, or to
insist upon the strict performance of any covenant or condition of this lease or
of any of the Rules or Regulations set forth or hereafter adopted by Owner,
shall not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of an original violation. The
receipt by Owner of rent and/or additional rent with knowledge of the breach of
any covenant of this lease shall not be deemed a waiver of such breach and no
provision of this lease shall be deemed to have been waived by Owner unless such
waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any endorsement
or statement of any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the balance of such rent
or pursue any other remedy in this lease provided. No act or thing done by Owner
or Owner's agents during the term hereby demised shall be deemed in acceptance
of a surrender of said premises and no agreement to accept such surrender shall
be valid unless in writing signed by Owner. No employee of Owner or Owner's
agent shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
Waiver of Trial by Jury: 25. It is mutually agreed by and between Owner and
Tenant that the respective parties hereto shall and they hereby do waive trial
by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other (except for personal injury or property damage)
on any matters whatsoever arising out of or in any way connected with this
lease, the relationship of Owner and Tenant, Tenant's use of or occupancy of
said premises, and any emergency statutory or any other statutory remedy. It is
further mutually agreed that in the event Owner commences any proceeding for
action or possession including a summary proceeding for possession of the
premises, Tenant will not interpose any counterclaim of whatever nature or
description in any such proceeding, including a counterclaim under Article 4
except for statutory mandatory counterclaims.
Inability to Perform: 26. This lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in no wise be affected, impaired or excused
because Owner is unable to fulfill any of its obligations under this lease or to
supply or is delayed in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any repair, additions,
alterations or decorations or is unable to supply or is delayed in supplying any
equipment, fixtures or other materials if Owner is prevented or delayed from so
doing by reason of strike or labor troubles, government preemption or
restrictions or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency or by reason of the conditions of
which have been or are affected, either directly or indirectly, by war or other
emergency, or when, in the judgement of Owner, temporary interruption of such
services is necessary by reason of accident, mechanical breakdown or to make
repairs, alterations or improvements.
Bills and Notices: 27. Except as otherwise in this lease provided, a bill,
statement, notice or communication which Owner may desire or be required to
give to Tenant, shall be deemed sufficiently given or rendered if, in
writing, delivered to Tenant personally or sent by registered or certified
mail addressed to Tenant at the building of which the demised premises form a
part or at the last known residence address or business address of Tenant or
left at any of the aforesaid premises addressed to Tenant, and the time of
the rendition of such bill or statement and of the giving of such notice or
communication shall be deemed to be the time when the same is delivered to
Tenant, mailed, or left at the premises as herein provided. Any notice by
Tenant to Owner must be served by registered or certified mail addressed to
Owner at the address first hereinabove given or at such other address as
Owner shall designate by written notice.
Water Charges: 28. If Tenant requires, uses or consumes water for any purpose in
addition to ordinary lavatory purposes (of which fact Tenant constitutes Owner
to be the sole judge) Owner may install a water meter and thereby measure
Tenant's water consumption for all purposes. Tenant shall pay Owner for the cost
of the meter and the cost of installation thereof and throughout the duration of
Tenant's occupancy Tenant shall keep said meter and installation equipment in
good working order and repair at Tenant's own cost and expense. Tenant agrees to
pay for water consumed, as shown on said meter as and when bills are rendered.
Tenant covenants and agrees to pay the sewer rent, charge or any other tax,
rent, levy or charge which now or hereafter is assessed, imposed or a lien upon
the demised premises or the realty of which they are part pursuant to law, order
or regulation made or issued in connection with the use, consumption,
maintenance or supply of water, water system or sewage or sewage connection or
system. The bill rendered by Owner shall be payable by Tenant as additional
rent. If the building or the demised premises or any part thereof be supplied
with water through a meter through which water is also supplied to other
premises Tenant shall pay to Owner as additional rent, on the first day of each
month, _______ % ($______) of the total meter charges, as Tenant's portion.
Independently of and in addition to any of the remedies reserved to Owner
hereinabove or elsewhere in this lease, Owner may sue for and collect any monies
to be paid by Tenant or paid by Owner for any of the reasons or purposes
hereinabove set forth.
Sprinklers: 29. Anything elsewhere in this lease to the contrary
notwithstanding, if the New York Board of Fire Underwriters or the Insurance
Services Office or any bureau, department or official of the federal, state or
city government require or recommend the installation of a sprinkler system or
that any changes, modifications, alterations, or additional sprinkler heads or
other equipment be made or supplied in an existing sprinkler system by reason of
Tenant's business, or the location of partitions, trade fixtures, or other
contents of the demised premises, or for any other reason, or if any such
sprinkler system installations, changes, modifications, alterations, additional
sprinkler heads or other such equipment, become necessary to prevent the
imposition of a penalty or charge against the full allowance for a sprinkler
system in the fire insurance rate set by any said Exchange or by any fire
insurance company, Tenant shall, at Tenant's expense, promptly make such
sprinkler system installations, changes, modifications, alterations, and supply
additional sprinkler heads or other equipment as required whether the work
involved shall be structural or non-structural in nature. Tenant shall pay to
Owner as additional rent the sum of $_____, on the first day of each month
during the term of this lease, as Tenant's portion of the contract price for
sprinkler supervisory service.
Elevators, Heat, Cleaning: 30. As long as Tenant is not in default under any of
the covenants of this lease beyond the applicable grace period provided in this
lease for the curing of such defaults, Owner shall, if and insofar as existing
facilities permit furnish heat to the demised premises, when and as required by
law, on business days from 8:00 a.m. to 6:00 p.m. and on Saturdays from 8:00
a.m. to 1:00 p.m. Tenant shall at Tenant's expense, keep demised premises clean
and in order, to the satisfaction to Owner, and if demised premises are situated
on the street floor, Tenant shall, at Tenant's own expense, make all repairs and
replacements to the sidewalks and curbs adjacent thereto, and keep said
sidewalks and curbs free from snow, ice, dirt and rubbish. Tenant shall pay to
Owner the cost of removal of any of Tenant's refuse and rubbish from the
building. Bills for the same shall be rendered by Owner to Tenant at such times
as Owner may elect and shall be due and payable, when rendered, and the amount
of such bills shall be deemed to be, and be paid as, additional rent. Tenant
shall, however, have the option of independently contracting for the removal of
such rubbish and refuse in the event that Tenant does not wish to have same done
by employees of Owner. Under such circumstances, however, the removal of such
refuse and rubbish by others shall be subject to such rules and regulations as,
in the judgement of Owner, are necessary for the proper operation of the
building.
Security: 31. Tenant has deposited with Owner the sum of $30,667.50 as security
for the faithful performance and observance by Tenant of the terms, provisions
and conditions and of this lease; it is agreed that in the event Tenant defaults
in respect of any of the terms, provisions and conditions of this lease,
including, but not limited to, the payment of rent and additional rent, Owner
may use, apply or retain the whole or any part of the security so deposited to
the extent required for the payment of any rent and additional rent or any other
sum as to which Tenant is in default or for any sum which Owner may expend or
may be required to expend by reason of Tenant's default in respect of any of the
terms, covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the re-letting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Owner. In the
event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Owner shall have the right to transfer the
security to the vendee or lessee and Owner shall thereupon be released by Tenant
from all liability for return of said security, and Tenant agrees to look to the
new Owner solely for return of such security; and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
Captions: 32. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provisions thereof.
Definitions: 33. The terms "Owner" as used in this lease means only the Owner,
or the mortgagee in possession, for the time being of the land and building (or
the Owner of a lease of the building or of the land and building) of which the
demised premises form a part, so that in the event of any sale or sales of said
land and building or of said lease, or in the event of a lease of said building,
or of the land and building, the said Owner shall be and hereby is entirely
freed and relieved of all covenants and obligations of Owner hereunder, and it
shall be deemed and construed without further agreement between the parties of
their successors in interest, or between the parties and the purchaser, at any
such sale, or the said lessee of the building, or of the land and building, that
the purchaser or the lessee of the building has assumed and agreed to carry out
any and all covenants and obligations of Owner hereunder. The words "re-enter"
and "re-entry" as used in this lease are not restricted to their technical legal
meaning. The term "business days" as used in this lease shall exclude Saturdays,
Sundays and all days designated as holidays by the applicable building service
union employees service contract or by the applicable Operating Engineers
contract with respect to HVAC service. Wherever it is expressly provided in this
lease that consent shall not be unreasonably withheld, such consent shall not be
unreasonably delayed.
Adjacent Excavation-Shoring: 34. If an excavation shall be made upon land
adjacent to the demised premises, or shall be authorized to be made, Tenant
shall afford to the person causing or authorized to cause such excavation,
license to enter upon the demised premises for the purpose of doing such work as
said person shall deem necessary to preserve the wall or the building of which
demised premises form a part from injury or damage and to support the same by
proper foundations without any claim for damages or indemnity against Owner, or
diminution or abatement of rent.
Rules and Regulations: 35. Tenant and Tenant's servants, employees, agents,
visitors, and licensees shall observe faithfully, and comply strictly with the
Rules and Regulations and such other and further reasonable Rules and
Regulations as Owner and Owner's agents may from time to time adopt. Notice of
any additional rules or regulations shall be given in such manner as Owner may
elect. In case Tenant disputes the reasonableness or any additional Rule or
Regulation hereafter made or adopted by Owner or Owner's agents, the
<PAGE>
parties hereto agree to submit the question of the reasonableness of such Rule
or Regulation for decision to the New York office of the American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing, upon Owner within fifteen (15) days
after the giving of notice thereof. Nothing in this lease contained shall be
construed to impose upon Owner any duty or obligation to enforce the Rules and
Regulations or terms, covenants or conditions in any other lease, as against any
other tenant and Owner shall not be liable to Tenant for violation of the same
by any other tenant, its servants, employees, agents, visitors or licensees.
Glass: 36. Owner shall replace, at the expense of Tenant, any and all plate and
other glass damaged or broken from any cause whatsoever in and about the demised
premises. Owner may insure, and keep insured, at Tenant's expense, all plate and
other glass in the demised premises for an in the name of Owner. Bills for the
premiums therefor shall be rendered by Owner to Tenant at such times as Owner
may elect, and shall be due from, and payable by, Tenant when rendered, and the
amount thereof shall be deemed to be, and be paid as, additional rent.
Pornographic Uses Prohibited: 37. Tenant agrees that the value of the demised
premises and the reputation of the Owner will be seriously injured if the
premises are used for any obscene or pornographic purposes or any sort of
commercial sex establishment. Tenant agrees that Tenant will not bring or permit
any obscene or pornographic material on the premises, and shall not permit or
conduct any obscene, nude, or semi-nude live performances on the premises, not
permit use of the premises for nude modeling, rap sessions, or as a so called
rubber goods shops, or as a sex club of any sort, or as a "massage parlor."
Tenant agrees further that Tenant will not permit any of these uses by any
subleasee or assignee of the premises. This Article shall directly bind any
successors in interest to the Tenant. Tenant agrees that if at any time Tenant
violates any of the provisions of this Article, such violation shall be deemed a
breach of a substantial obligation of the terms of this lease and objectionable
conduct. Pornographic material is defined for purposes of this Article as any
written or pictorial manner with prurient appeal or any objects of instrument
that are primarily concerned with lewd or prurient sexual activity. Obscene
material is defined here as it is in Penal law SS235.00.
Estroppel Certificate: 38. Tenant, at any time, and from time to time, upon at
least 10 days prior notice by Owner, shall execute, acknowledge and deliver to
Owner, and/or to any other person, firm or corporation specified by Owner, a
statement certifying that this lease is unmodified and in full force and effect
(or, if there have been modifications, that the same is in full force and effect
as modified and stating the modifcations), stating the dates which the rent and
additional rent have been paid, and stating whether or not there exists any
defaults by Owner under this lease, and, if so, specifying each such default.
Successors and Assigns: 39. The covenants, conditions and agreements contained
in this lease shall bind and inure to the benefit of Owner and Tenant and their
respective heirs, distributees, executors, administrators, successors, and
except as otherwise provided in this lease, their assigns. Tenant shall look
only to Owner's estate and interest in the land and building for the
satisfaction of Tenant's remedies for the collection of a judgment (or other
judicial process) against Owner in the event of any default by Owner hereunder,
and no other property or assets of such Owner (or any partner, member, officer
or director thereof, disclosed or undisclosed), shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this lease, the relationship of Owner and
Tenant hereunder, or Tenant's use and occupancy of the demised premises.
In Witness Whereof, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
Witness for Owner: _____________________________________
STAMAR REALTY CORP.
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------------------------- --------------------------------------
BY:
Witness for Tenant: ______________________________________
180 JAMAICA CORP.
- --------------------------------- --------------------------------------
BY:
ACKNOWLEDGEMENTS
CORPORATE OWNER
STATE OF NEW YORK, ss.:
County of New York
On this ___ day of ______, 19 _, before me personally came ______________ to me
known, who being by me duly sworn, did depose and say that he resides in _____
that he is the _________ of _________________ the corporation described
in and which executed the foregoing instrument, as OWNER; that he knows the seal
of said corporation; the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation,
and that he signed his name thereto by like order.
--------------------------------------
INDIVIDUAL OWNER
STATE OF NEW YORK, ss.:
County of
On this _______ day of ________, 19__, before me personally came _______________
to be known and known to me to be the individual _______________________________
described in and who, as OWNER, executed the foregoing instrument and
acknowledged to me that ______________ he executed the same.
______________________________________
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of New York
On this ____ day of ________, 19__, before me personally came ___________ to me
known, who being duly sworn, did depose and say that he resides in _________
that he is the _________ of 180 _____________ the corporation described in and
which executed the foregoing instrument, as TENANT; that he knows the seal of
said corporation, the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation,
and that he signed his name thereto by like order.
/s/ [ILLEGIBLE]
--------------------------------------
INDIVIDUAL TENANT
STATE OF NEW YORK, s.s.:
County of
On this _______ day of ________, 19__, before me personally came _______________
to be known and known to me to be the individual _______________________________
described in and who, as OWNER, executed the foregoing instrument and
acknowledged to me that ______________ he executed the same.
______________________________________
<PAGE>
Guaranty
The undersigned Guarantor guarantees to Owner, Owner's successors and assigns,
the full performance and observance of all the agreements to be performed and
observed by Tenant in the attached Lease, including the "Rules and Regulation"
as therein provided, without requiring any notice to Guarantor of nonpayment, or
nonperformance, or proof, or notice of demand, to hold the undersigned
responsible under this guaranty, all of which the undersigned hereby expressly
waives and expressly agrees that the legality of this agreement and the
agreements of the Guarantor under this agreement shall not be ended, or changed
by reason of the claims to Owner against Tenant of any of the rights or remedies
given to Owner as agreed in the attached Lease. The Guarantor further agrees
that this guaranty shall remain and continue in full force and effect as to any
renewal, change or extension of the Lease. As a further inducement to Owner to
make the Lease Owner and Guarantor agree that in any action or proceeding
brought by either Owner or the Guarantor against the other on any matters
concerning the Lease or of this guaranty that Owner and the undersigned shall
and do waive trial by jury.
Dated:_________________________ 19___
- ------------------------------------
Guarantor
- -------------------------------------
Witness
- -------------------------------------
Guarantor's Residence
- -------------------------------------
Business Address
- -------------------------------------
Firm Name
STATE OF NEW YORK ) ss.:
COUNTY OF ________ )
On this _______ day of ________, 19__, before me personally came _____________
to me known and known to me to be the individual described in, and who executed
the foregoing Guaranty and acknowledged to me that he executed the same.
- ----------------------------
Notary
IMPORTANT PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN ACCORDANCE
WITH ARTICLE 35.
1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or encumbered by any
Tenant or used for any purpose other than for ingress or egress from the demised
premises and for delivery of merchandise and equipment in a prompt and efficient
manner using elevators and passageways designated for such delivery by Owner.
There shall not be used in any space, or in the public hall of the building,
either by any tenant or by jobbers, or others in the delivery or receipt of
merchandise, any hand trucks except those equipped with rubber tires and
safeguards.
2. If the premises are situated on the ground floor of the building, Tenant
thereof shall further, at Tenant's expense, keep the sidewalks and curb in front
of said premises clean and free from ice, snow, etc.
3. The water and wash closets and plumbing fixtures shall not be used for any
purposes other than those for which they were designed or constructed.
4. Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the demised premises, or permit or suffer the demised
premises to be occupied or used in a manner offensive or objectionable to Owner
or other occupants of the building by reason of noise, odors and/or vibrations
or interfere in any way with other Tenants or those having business therein.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Signs on interior
doors and directory tablet shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part of the
demised premises or the building of which they form a part. No boring, cutting
or stringing of wires shall be permitted, except with the prior written consent
of Owner, and as Owner may direct. No Tenant shall lay linoleum, or other
similar floor covering, so that the same shall come in direct contact with the
floor of the demised premises, and, if linoleum or other similar floor covering
is desired to be used an interlining of builder's deadening felt shall be first
affixed to the floor, by a paste or other material, soluble in water, the use of
cement or other similar adhesive material being expressly prohibited.
7. Freight, furniture, business equipment, merchandise and bulky matter of any
description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations or the
lease of which these Rules and Regulations are a part.
8. Owner reserves the right to exclude from the building between the hours of 6
P.M. and 8 A.M. and at all hours on Sundays, and holidays all persons who do not
present a pass to the building signed by Owner. Owner will furnish passes to
persons for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he requests such pass and shall be liable
to Owner for all acts of such person.
9. Owner shall have the right to prohibit any advertising by any Tenant which,
in Owner's opinion, tends to impair the reputation of Owner or its desirability
as a building for stores or offices, and upon written notice from Owner, Tenant
shall refrain from or discontinue such advertising.
10. Tenant shall not bring or permit to be brought or kept in or on the demised
premises, any inflammable, combustible, or explosive, or hazardous fluid,
material, chemical or substance, or cause or permit any odors of cooking or
other processes, or any unusual or other objectionable odors to permeate in or
emanate from the demised premises.
11. Tenant shall not place a load on any floor of the demised premises exceeding
the floor load per square foot area which it was designed to carry and which is
allowed by law. Owner reserves the right to prescribe the weight and position of
all safes, business machines, and mechanical equipment. Such installations shall
be placed and maintained by Tenant at Tenant's expense in setting sufficient in
Owner's judgement to absorb and prevent vibration, noise and annoyance.
12. Refuse and Trash - Tenant covenants and agrees, at its sole cost and
expense, to comply with all present and future laws, orders and regulations of
all state, federal, municipal and local governments, departments, commissions
and boards regarding the collection, sorting, separation and recycling of waste
products, garbage, refuse and trash. Tenant shall pay all costs, expenses,
fines, penalties or damages that may be imposed on Owner or Tenant by reason of
Tenant's failure to comply with the provisions of this Building Rule 12, and, at
Tenant's sole cost and expense, shall indemnify, defend and hold Owner harmless
(including reasonable legal fees and expenses) from and against any actions,
claims and suits arising from such non-compliance, utilizing counsel reasonably
satisfactory to Owner.
Address
Premises
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TO
============================
STANDARD FORM OF
STORE LEASE
The Real Estate Board of New York, Inc.
(C)Copyright 1994. All rights Reserved.
Reproduction in whole or in part prohibited.
==============================
Dated_______________ 19
Rent Per Year_____________
Rent Per Month____________
Term
From
To
Drawn by______________________
Checked by_____________________
Entered by______________________
Approved by_____________________
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<PAGE>
RIDER TO STANDARD FORM OF STORE LEASE,
BY AND BETWEEN
STAMAR REALTY CORP., AS LANDLORD,
AND
180 JAMAICA CORP., AS TENANT.
40. RIDER PROVISIONS PREVAIL. The Tenant and Landlord herein agree
that, in the event of a conflict between the provisions contained in the printed
Standard Form of Store Lease and the attached Rider and Schedule, then, and in
such event, the provisions of the Rider and Schedule shall prevail as to the
intent of the parties.
41. AS-IS POSSESSION.
A. Tenant acknowledges that it has inspected the demised premises and
Landlord, or Landlord's agent, has made no representation or promises with
regard to the demised premises for the term herein demised. The taking of
possession of the Demised Premises by Tenant for the term herein demised shall
be conclusive evidence as against Tenant that Tenant accepts the same subject to
any and all defects therein, latent, patent or otherwise in its "as-is"
condition. Landlord shall not be obligated to perform any work or make any
repairs, alterations, improvements in additions to said demised premises for
Tenant's occupancy.
B. It is understood , that in consideration of Tenants renting the premises
in "as is" condition that the Landlord shall offer Tenant a rent reduction in
the sum of $220,000.00 which reduction has been calculated into the base rent
over a Seventy Two (72) month period as set forth in paragraph "77" entitled
"Base Rent" herein. Further, Tenant has agreed to perform certain work in the
premises as elaborated in paragraph 43 herein.
C. The landlord shall retain 200 square feet of storage space in the
basement,
42. INTENTIONALLY OMITTED
43. TENANT'S WORK, INSTALLATION AND ALTERATIONS. At all
times during the term of this Lease, except for Landlord's Work, if any, all
work necessary or desirable to make the demised premises suitable for Tenant's
use and occupancy shall be performed by Tenant at Tenant's own cost and expense
(hereinafter called "Tenant's Work"). At all times during the term of this
Lease; Tenant's Work shall be subject to the following conditions:
A. Tenant shall comply with all the laws, orders, rules and regulations of
all
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governmental authority, and of the fire insurance rating organization having
jurisdiction thereof, and the local board of fire underwriters, and the
recommendation of any insurance company or any similar body, and Tenant shall
have procured and paid for, so far as the same may be required, all governmental
permits and authorizations;
B. Prior to commencing Tenant's Work, all plans and specification therefor
shall be submitted to Landlord for Landlord's prior written approval, said
approval shall not be unreasonably withheld. The approval by Landlord of any of
Tenant's plans and specifications shall not constitute an assumption of any
liability on the part of the Landlord for their accuracy or their conformity
with applicable law and Tenant shall be solely responsible therefor. Approval by
Landlord of any of Tenant's plans and specifications shall not constitute a
waiver by Landlord of the right to thereafter require Tenant to amend same to
provide for omissions or errors therein later discovered by Landlord;
C. Tenant's Work shall be completed (i) with reasonable dispatch, (ii) in
accordance with the plans and specifications submitted to, and approved in
writing by, Landlord pursuant to subparagraph (B) hereof and (iii) only with the
use of new first class materials and supplies. Landlord reserves the right, from
time to time, to inspect work in progress for the purposes of approving or
disapproving the quality of workmanship and its conformity with approved plans,
specifications and drawings;
D. Except as otherwise expressly provided for herein, the cost of such
Tenant's Work shall be paid by Tenant in cash, or its equivalent, so that the
demised premises and Building shall at all times be free of liens for labor and
materials supplied in connection with the Tenant's Work. Tenant shall not permit
a mechanic's lien to be placed on the premises, and shall have same removed
within seven days if placed on the premises due to work performed or materials
supplied on behalf of Tenant. Tenant shall obtain release of lien(s) from all of
its contractors, subcontractors, materialmen and laborers furnishing work and
materials to the Tenant for construction and/or alterations at the Demised
Premises.
E. Prior to commencing Tenant's Work, Tenant shall at its own cost and
expense deliver to Landlord an endorsement of its policy of comprehensive
general liability insurance referred to in Article 50 of this Lease, covering
the risk during the course of performance of Tenant's Work, which policy as
endorsed shall protect Landlord in the same amounts against any claims or
liability arising out of Tenant's Work and Tenant's contractors shall obtain
Worker's Compensation Insurance to cover all persons engaged in Tenant's Work
and liability insurance covering the work done at Tenant's premises in the
amounts of $500,000 in respect of property damage and $1,000,000 in respect of
any one person, not less than $3,000,000 of any one accident, and a certificate
thereof shall be furnished to the Landlord before commencement of any work by
any contractor, subcontractors, their agents, servants or employees. Tenant's
contractor shall name Landlord and any such other party as Landlord may request,
as additional insured under the amid insurance policies.
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F. Notwithstanding anything herein contained to the contrary, Tenant shall
make all repairs to the Demised Premises necessitated by Tenant's Work, and
shall keep and maintain in good order and condition all of the installation in
connection with Tenant's Work, and shall make all necessary replacements
thereto.
G. Tenant at its own cost and expense, and with no charge or obligation by
the Landlord, shall furnish and install all work and materials necessary to
grade and repave all parking areas with in the Premises, install area lighting
,remove and enlarge garage doors, install three underground diesel fuel tanks,
remove existing above ground tanks on the premises and dispose of same in a
manner that conforms with all relevant laws, and renovate the office areas. The
Landlord by execution of this lease grants its approval to such work.
H. Landlord shall not be required to furnish any labor, equipment or
materials or reimburse Tenant for any costs or expenses in connection therewith.
44. UTILITIES
A. It is expressly understood that Landlord shall not supply to the demised
premises any utilities or building services of any kind. Tenant agrees to make
its own arrangements with the public utility company servicing the demised
premises for the furnishing of and payment of all charges for electricity and
other utilities consumed by Tenant in the demised premises, and for the
installation of separate meters therefor. In no event shall Landlord be
responsible for charges for electricity, water or any other utilities consumed
in the demised premises by Tenant. All meters at the demised premises for the
purpose of measuring Tenant's consumption of the respective utilities
(electricity, water, steam, etc.) shall be installed and maintained by Tenant,
at Tenant's sole cost and expense, in good order and condition. Tenant
acknowledges that it has inspected the demised premises and the Building, and is
fully aware of the availability or the unavailability of utilities for use by
Tenant in the operation of its business. Landlord makes no representations to
Tenant as to the availability or unavailability of said utilities. Tenant shall
have the right to use any existing meters.
B. Interruption or curtailment of any utility or service shall not
constitute a constructive or partial eviction, nor entitle Tenant to any
compensation or abatement of rent. In no event shall Tenant in any way interfere
with or tie in to any electrical feeders, risers or other electrical
installations within the Building.
45. TAXES.
A. Tenant shall pay as additional rent an amount equal to the taxes, which
shall include all taxes related to the demised premises including but not
limited to real estate taxes, water charges or taxes, and sewer taxes or
charges, for each fiscal tax period, or pro rata portion thereof during the term
of this Lease for which Landlord shall be obligated in excess of the Real Estate
Taxes for the Premises for the fiscal year 1995/1996 (the amount payable by the
Tenant is hereinafter referred to us as the "Excess Tax Payment"). The Excess
Tax Payment shall be
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prorated, if necessary, to correspond with that portion of a fiscal tax year
occurring within the lease term. The Excess Tax Payment shall be payable by
Tenant within ten days after receipt from the Landlord of a statement for the
Excess Tax Payment due accompanied by a copy of the Landlord's tax bill.
B. In the event that the Landlord, or the Tenant as agent for the Landlord,
shall institute tax reduction or other proceedings to reduce the assessed
valuation of the Premises and as a result thereof obtain a rebate or a reduction
in assessment for periods during which Tenant has paid or is obligated to pay
the Excess Tax, Landlord shall, after deducting any expenses it has incurred
with respect to such proceedings, including without limitation reasonable
attorneys fees and disbursements in connection therewith, return to Tenant the
Tenant's share of any such estate which shall be based upon the Excess Tax
Payment which would have been due in accordance with the reduced assessment.
C. As soon as reasonably practical after the expiration of each tax year,
the Landlord shall furnish to Tenant a statement setting forth Tenant's Excess
Tax Payment and shall also deliver to Tenant a copy of the applicable tax bill.
46. MECIIANIC'S LIENS.
A. Notwithstanding anything in the contrary contained in this Lease,
Tenant, its successors and assigns, warrant and guarantee to Landlord, its
successors and assigns, that if any mechanic's lien shall be filed against the
Building, the work claimed to have been done for, or materials claimed to have
been furnished to, Tenant, (i) the same shall be discharged by Tenant; by
payment, by bond or otherwise, at the sole cost and expense of Tenant, within
seven (7) days of the giving of notice thereof by Landlord, (ii) either a
release or a satisfaction of lien, as the case may be, shall be filed with the
County Clerk of the county in which the Building is situated within such seven
(7) day period, and (iii) a copy of such release or satisfaction, as the case
may be, certified to by such County Clerk shall be delivered to Landlord within
three (3) days after such filing.
B. In the event such mechanic's lien is not discharged timely, as
aforesaid, Landlord may discharge same for the account of and at the expense of
Tenant by payment, bonding or otherwise, without investigation as to the
validity thereof or of any offsets or defenses thereto, and Tenant, within ten
(10) days after being billed therefor, shall promptly reimburse Landlord, as
Additional Rent, for all costs, disbursements, fees and expenses, including
without limitation, Landlord's reasonable legal fees, incurred in connection
with so discharging said mechanic's lien, together with interest thereon from
the time or times of payment until reimbursement by Tenant.
C. In the event such mechanic's lien is not discharged timely, as
aforesaid, Landlord, in addition to all other rights granted to Landlord in this
Lease and without limitation, may institute a dispossess summary proceeding
based upon such failure to discharge any such lien.
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D. It is further understood and agreed between the parties hereto that
Landlord may apply all or a portion of the security deposit made by Tenant
hereunder toward discharging any such mechanic's lien and the cost, expenses,
fees and disbursements, including without limitation, reasonable legal fees, in
connection therewith. Upon notification by Landlord of the application of all or
a portion of the security deposited by Tenant, Tenant shall, within ten (10)
days after receipt of said notice, restore the security deposit to such amount
held by Landlord prior to application thereof. Tenant's failure or refusal to
restore the security as aforesaid shall constitute a material default under this
Lease.
47. INTENTIONALLY OMITTED
48. INTENTIONALLY OMITTED
49. INTENTIONALLY OMITTED
50. INDEMNITY-LIABILITY INSURANCE.
A. Tenant covenants and agrees to indemnify and save Landlord and its
principals, disclosed or undisclosed, harmless from and against any and all
claims, losses, damages or expenses (including reasonable attorney's fees) or
other liability arising during the term of this Lease out of or in connection
with (i) the construction, possession, use, occupancy, management, repair,
maintenance or control of the Demised Premises or any part thereof or any other
part of the Building used by Tenant, or (ii) any act or omission of Tenant or
Tenant's agents, employees, contractors, concessionaires, licenses, invitees,
subtenants or assignees, or (iii) any default, breach, violation or
non-performance of this Lease or any provision hereof by Tenant, or (iv) any
Injury to person or property or loss of life sustained in or about the Demised
Premises or any part thereof, except such claims found to be the result of the
negligence of Landlord, its agents, employees or contractors. Tenant shall, at
its own cost and expense, defend any and all actions, suits and proceedings
which may be brought against, and Tenant shall pay, satisfy and discharge any
and all judgments, orders and decree which may be made or entered against,
Landlord, its principals, disclosed or undisclosed, with respect to, or in
connection with, any of the foregoing. The comprehensive general liability
coverage maintained by Tenant pursuant to this Lease shall specifically insure
the contractual obligations of Tenant as set forth in this Article and/or as
provided in this Lease.
B. Tenant covenants to provide on or before the Commencement Date of the
term hereof and to keep in force during the term hereof for the benefit of
Landlord, STAMAR REALTY Corp. And Tenant a comprehensive policy of liability
insurance protecting Landlord and Tenant against any liability whatsoever
occasioned by accident on or about the demised premises or any appurtenances
thereto. Such policy is to be written by new York admitted insurance companies
in good standing, and the amounts of liability thereunder shall not be less than
the amount of $3,000,000 in respect of any one person, in the amount of
$3,000,000 in respect of any one accident, and in the amount of $1,000,000.00 in
respect of property damages. Prior to the time
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such insurance is first required to be carried by Tenant, and, thereafter,
at least sixty (60) days prior to the expiration of any such policy. Tenant
agrees to deliver to Landlord either a duplicate original of the aforesaid
policy or a certificate evidencing such insurance provided said certificate
contains an endorsement that such insurance may not be canceled or modified
except upon thirty (30) days written notice to Landlord. Tenant's failure to
provide and keep in force the aforementioned insurance shall be regarded as a
material default hereunder, entitling Landlord to exercise any or all of the
remedies as provided in this lease in the event of Tenant's default.
C. Notwithstanding anything contained in this Lease to the contrary,
Landlord shall have the right, at anytime during the term of this Lease, upon
ten (10) days written notice to Tenant, to request Tenant to furnish to
Landlord, a duplicate original of the insurance policy(s), or certificate(s) of
insurance, which are required to be maintained pursuant to the terms of the
Lease.
D. Tenant shall be solely responsible for payment of premiums with respect
to all such insurance. In the event of loss or damage to the Premises, the
proceeds of such insurance must be applied for the cost of repair an/or
replacement of the Premises.
51. INTENTIONALLY OMITTED
52. TENANT'S CERTIFICATION. Tenant shall, without charge at any time
and from time to time, within ten (10) days after request by Landlord, certify
by written instrument, duly executed, acknowledged and delivered, to any
mortgages, assignee of any mortgage or purchaser, or any proponent mortgagee,
assignee of any mortgage or purchaser, or any other person, firm or corporation
specified by Landlord:
A. that this Lease is unmodified and in full force and effect (or, if there
has been modification, that the same is in full force and effect as modified and
stating the modifications);
B. whether or not there are then existing any setoffs or defenses against
the enforcement of any of the agreements, terms, covenants or conditions hereof
upon the part of Tenant to be performed or complied with (and, if so, specifying
the same); and
C. the dates, if any, to which the rental, additional rent and other
charges hereunder have been paid in advance.
53. SUBORDINATION AND ATTORNMENT.
A. This Lease is subject and subordinate to all ground or underlying Lease
and to all mortgages which may now or hereafter affect such leases or the real
property of which the Demised Premises are a part, and to all renewals,
modifications, consolidations, replacements and extensions of any such ground or
underlying leases or mortgages. This clause shall be self-operative and so
further instrument or subordination shall be required by any ground or
underlying leasee or by any mortgages affecting any lease or the real property
of which the
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Demised Premises are a part. However, in confirmation of such subordination,
Tenant shall execute promptly any certificate the Landlord may request and
Tenant hereby irrevocably constitutes and appoints Landlord as Tenant's
attorney-in-fact to execute any such certificate or instrument for and on behalf
of Tenant.
B. Tenant covenants and agrees that, if by reason of a default on the part
of Landlord, as leasee under any ground or underlying lease, in the performance
of any of the terms or provisions of such ground or underlying lease, or for any
other reason of any nature whatsoever, such ground or underlying lease and
leasehold estate of Landlord as leasee thereunder is terminated by summary
proceeding or otherwise, or if such ground or underlying lease and such
leasehold estate is terminated through foreclosure proceedings brought by the
holder of any mortgage to which such ground or underlying lease is subject or
subordinate, or in case of any foreclosure of any mortgages affecting the real
property of which the Demised Premises is a part. Tenant will attorn to the
lessor under such proceedings, as the case may be and still recognize such
lessor or such purchaser as Tenant's landlord under this Lease. Tenant agrees to
execute and deliver at any time and from time to time, upon the request of
Landlord, the lessor under any such ground or underlying lease, or such
mortgagee or purchaser any instrument which may be necessary or appropriate to
evidence such attornment and Tenant hereby irrevocably constitutes and appoints
Landlord as Tenant's attorney-in-fact to execute and deliver any such instrument
for and on behalf of Tenant. Such attornrnent by Tenant shall contain, among
other things, provisions to the effect that in no event shall such lessor,
mortgagee or purchaser as landlord, (i) be obligated to repair, replace or
restore the Building or the Demised Premises in the event of damage or
destruction, beyond such repair, replacement or restoration as can be reasonably
accomplished from the net proceeds of insurance actually received by or made
available to such landlord, (ii) be responsible for any previous act or omission
of the landlord or the tenant under such ground or underlying lease or for the
return of any security deposit unless actually received by such landlord, (iii)
be subject to any liability or offset accruing to Tenant against Landlord, (iv)
be bound by any previous modification or extension of this Lease unless
previously consented to, or (v) by bound by any previous prepayment of more than
one month's rent or other charge. Tenant further waives the provisions of any
statute or rule of law now or hereafter in effect which may give or purport to
give Tenant any right of election to terminate this Lease or to surrender
possession of the Demised Premises in the event such ground or underlying lease
terminates or any such summary proceeding or foreclosure proceeding is brought
by the lessor under any such ground or underlying lease or the holder of any
such and agrees that, unless and until any such lessor under any such ground or
underlying lease or holder of any such mortgage in connection with any such
proceeding shall elect to terminate this Lease and to extinguish the leasehold
estate of Tenant hereunder this Lease shall not be affected in any way
whatsoever by any such proceeding or termination.
54. INTENTIONALLY OMITTED
55. BROKER. Landlord and Tenant each represent to each other that they
have not entered into any agreement or incurred any obligation in connection
with this transaction
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which might result in the obligation to pay a brokerage fee to any broker other
tan C.B. Commercial Realty Agency. Landlord shall pay all fees and commissions
when due according to a separate brokerage agreement. Each party shall indemnify
and hold harmless the other party from and against any claims or demand by any
other broker, for bringing about this lease who claims to have dealt with the
indemnifying party, including all expenses incurred in defending any such claim
or demand including reasonable attorneys fees.
56. CLEANING, REMOVAL OF SNOW AND GARBAGE. Tenant agrees that it will
independently contract for the removal of all rubbish, refuse, garbage and waste
from the Demised Premises, and will either remove or cause to be removed any
snow or ice that accumulates in or around the demised premises. Tenant further
agrees not to permit the accumulation (unless in concealed metal or plastic
containers) of any rubbish or garbage in, on or about any part of the demised
premises to arrange for the daily removal of any accumulated rubbish or garbage.
Tenant shall indemnify and hold blameless the landlord from any and all claims
relating to or arising out of the removal of any: garbage, rubbish, snow or ice.
Tenant shall not encumber or obstruct, or permit to be encumbered or obstructed,
the street and sidewalk adjacent to or abutting upon the Demised Premises.
57. TENANT'S REMEDIES. In any action by Landlord against Tenant for
dispossess or other lease violation, Tenant shall not claim any money damages by
way of setoff, counterclaim or defense, based upon any claim or assertion by
Tenant, of whatever nature, that Landlord has unreasonably withheld or
unreasonably delayed any consent or approval.
58. INTENTIONALLY OMITTED
59. TENANT'S OPERATING OBLIGATIONS. Tenant covenants and agrees that
during the term of this Lease:
A. If any governmental license or permit shall be required for the proper
and lawful conduct of Tenant's business in the Demised Premises, or any part
thereof, and if failure to secure such license or permit would in any way affect
Landlord, then Tenant, at its sole cost and expense, shall duly procure and
therefore maintain such license or permit and submit the same to inspection by
Landlord. Tenant shall at all times comply with the terms and conditions of each
such license or permit.
B. Tenant shall maintain any sanitary lines in the Demised Premises and
shall not misuse plumbing facilities or dispose of any foreign substances
therein. Tenant shall not permit any food, waste, or other foreign substances to
be thrown or drawn into the pipes. Tenant shall maintain the plumbing that it
installs in good order, repair and condition, and repair any damage resulting
from any violation of this paragraph. At Tenant's sole cost and expense Tenant
shall make any repairs to the other plumbing in the Building, if damage results
from Tenant's improper use of the plumbing in the Building or Demised Premises.
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C. Tenant shall retain a licensed professional exterminating service which
will service the Demised Premises on a regular basis throughout the term so as
to keep the Demised Premises free of vermin.
D. Tenant shall, throughout the term of this Lease, maintain, repair,
service and replace when necessary, all doors leading into and out of the
Demised Premises and all hardware appurtenant thereto, including, but not
limited to, locks, hinges, silencers, door stops, door jams, door closers,
latchsets, flushbolts, door frames, thresholds and door knobs. Landlord shall
have no liability or obligation whatsoever regarding the maintenance, repair,
service and replacement of the foregoing.
E. Tenant shall not subject any fixtures or equipment in or on the Demised
Premises which are affixed to the reality, to any mortgage, liens, conditions
sales agreements, security interests or encumbrances.
F. Tenant shall not perform any act or carry on any practice which may
damage, mar or deface the Demised Premises or any other part of the Building.
G. Tenant shall not install, operate or maintain in the Demised Premises
any electrical equipment which will overload the electrical system, therein, or
any part thereof, beyond its reasonable capacity for proper and safe operation,
as determined by Landlord, in light of the overall system and requirements
therefor in the Building, or which does not adhere to underwriters' approval.
60. INTENTIONALLY OMITTED
61. HOLDING OVER. If Tenant shall default in surrendering the Demised
Premises upon the expiration or termination of the term. Tenant's occupancy
subsequent to such expiration or termination, whether or not with the consent or
acquiescence of Landlord, shall be deemed to be that of a tenancy at will and in
no event from month-to-month or from year-to-year, and it shall be subject to
all terms, covenants and conditions of this Lease applicable thereto, except the
Base Rent shall be twice the amount payable in the last year of the term, and no
extension or renewal of this Lease shall be deemed to have occurred by such
holding over. In the event Landlord shall commence proceedings to dispossess
Tenant by reason of Tenant's holding over or other default Tenant shall pay, in
addition to costs and disbursements, reasonable legal fees for each proceeding
as Additional Rent hereunder. Tenant shall also be liable to Landlord for all
claims made by any succeeding tenants against Landlord or otherwise resulting
from the failure of Tenant to timely surrender and vacate the Demised Premises.
62. NON-WAIVER AND SURVIVAL OF ADDITIONAL RENT OBLIGATIONS. Landlord's
failure during the Lease term to prepare and deliver any of the tax bills,
statements, notices or bills set forth in this Lease, or Landlord's failure to
make a demand,
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shall not in any way cause Landlord to forfeit or surrender its rights to
collect any of the foregoing items of Additional Rent which may become due
during the term of this Lease. Tenant's liability for the amounts due under this
Lease shall survive the expiration of the Lease term.
63. ADDITIONAL RENT. "Additional Rent" shall mean and consist of all
sums of money and charges that shall become due and payable by Tenant to
Landlord hereunder other than base rent. In the event of the default of payment
of additional rent, the Landlord shall have the same remedies as if the Tenant
defaulted in the payment of the Base Rent.
64. LATE CHARGE. Should Tenant fail to pay when due any installment of
Base Rent, Additional Rent, or any other sum payable to Landlord under the terms
of this Lease, within ten (10) days after the date it is due, then interest
shall accrue from and after the date on which any such sum shall be due and
payable, together with a late charge of six cents ($.06) per every dollar
overdue, to cover the extra expense involved in handling such delinquency shall
be paid by Tenant to Landlord at the time of payment of the delinquent sum. If
Tenant shall be late in making any payment due under this Lease more than three
(3) times in any Lease Year, Landlord shall be entitled to demand from Tenant
and Tenant agrees to tender to Landlord additional Security in the amount of one
month's then current rent to be held in accordance with the terms of Article 31
hereof.
65. CHEMICAL WASTE. Tenant agrees that Tenant shall not pour or
otherwise dispose of any chemical, chemical waste, chemical by products, or
other such material, through the drainage (plumbing) system of the Building or
Demised Premises.
66. INTENTIONALLY OMITTED
67. WATER CHARGES. Tenant shall install a water meter and thereby
measure Tenant's water consumption for all purposes. Tenant shall pay for the
cost of the meter and the cost of the installation Tenant shall keep said meter
and installation equipment in good working order and repair a Tenant's own cost
and expense. Tenant agrees to pay for water consumed as shown on said meter.
Tenant covenants and agrees to pay the sewer rent charge or any other tax, rent,
levy or charge which now or hereafter is assessed, imposed or a lien upon the
Demised Premises or the realty of which they are post pursuant to law, order or
regulation made or issued in connection with the use consumption, maintenance or
supply of water, water system or sewage or sewage connection of system. Landlord
may sue for and collect any monies to be paid by Tenant or paid by Landlord for
any of the reasons or purposes hereinabove set forth.
68. ASSIGNMENT. Transfer, sale assignment or other disposition of any
portion or all of the capital stock of the Tenant, including legal or beneficial
title or interest therein shall be the equivalent of to an assignment of this
lease and shall be subject to the prior
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written approval of the landlord as well as to the restrictions set forth in
this lease including but not limited to Article 11. Landlord agrees not to
unreasonably withhold its consent to a proposed assignment of this Lease.
Landlord shall have the right to demand and the assignee shall produce audited
financial statements that said assignee can undertake the obligations of the
lease including but not limited to the payment of Base rent as well as
additional rent and the Real Estate Taxes.
69. NOTICES. Notwithstanding anything contained in this Lease to the
contrary, notices sent by Landlord's attorney on behalf of Landlord shall be
valid service pursuant to the terms of this Lease, provided, however, that the
manner in which the notice is sent is in accordance with the terms of the Lease.
In addition, Tenant shall not have any recourse nor the right to contest the
fact that Landlord's attorney sent any such notice. All notices or other
communications required or desired to be sent by either Landlord or Tenant under
this Lease shall be in writing and shall be sent by (i) Registered or Certified
Mail, Return Receipt Requested, or (ii) personal deliver; or (iii) Federal
Express or other national overnight courier service; at the addresses set forth
at the beginning of this Lease. Notices shall be deemed served four days
following the date of registration with the postal authorities, if sent by
Registered Mail and four days following the date of mailing, if sent by
Certified Mail; when received if sent by personal delivery; and on the date
delivered if sent by Federal Express or other national overnight courier
service.
Service of any notice on the Landlord shall be made upon
Mr. Sheldon Schiff
CIO New York Life Insurance
40 West 57th Street
Suite 3200
New York, N.Y. 10019
and upon
Finkelstein and Newman
185 Madison Avenue- Eighth Floor
New York, N.Y. 10016
Service of any notice on the Tenant shall be made upon the Tenant at the
premises, and upon
Silverman, Collura & Chernis, P.C.
381 Park Avenue South
New York, New York 10016
Attn: Peter Silverman, Esq.
70. RECORDATION. Landlord and Tenant will execute a statutory short
form lease for recording purpose containing the names of the lessor and lessee,
identification of
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the premises, the terms of the lease, and such provisions of this Lease as
Landlord, in its sole discretion, shall deem necessary.
71. LANDLORD'S CONSENT. If Tenant requests Landlord's consent or
approval to alterations, assignment, subletting or any other matter or doing
requiring Landlord's consent or approval under this Lease, and if in connection
with such request Landlord seeks the advice of its attorneys, accountants,
architect, engineer or other professional, then Landlord, as a condition
precedent to granting its consent or approval, may require (in addition to any
other requirements of Landlord in connection with such request) that Tenant pay
the reasonable fees of Landlord's attorney's, accountant, architect, engineer or
other professional in connection with the consideration of such request and/or
the preparation of any documents pertaining thereto. Landlord's consent when
properly requested in conformity with this lease and this rider, shall not be
unreasonably withheld.
72. INTENTIONALLY OMITTED
73. ADDENDUM TO ARTICLE 6 (COMPLIANCE WITH LAWS).
A. Supplementing the provisions of Article 6 hereof, Tenant shall give
prompt notice to Landlord of any notice it receives of the violation of any law
or requirement of any public authority with respect to the Demised Premises or
the use or occupation thereof. Tenant shall promptly comply with all present and
future laws, orders and regulations of all state, federal, municipal and local
governments, departments, commissions and boards or any lawful direction of any
public officer pursuant to law, and all orders, rules and regulations of the New
York Board of Fire Underwriters, any insurance company or any similar body which
shall impose any violations, order or duty upon Landlord or Tenant with respect
to the Demised Premises. It is understood and agreed that in the event of the
imposition of any such order the Tenant shall be responsible for the cost of
such compliance whether said work is performed by Tenant or by Landlord.
B. Tenant acknowledges with respect to the Demised Premises or any portion
of the Building affecting the Demised Premises or relating thereto, that it
shall be Tenant's responsibility and obligation to comply with all requirements
and controls imposed by all Federal , state municipal and Local Laws of the City
of New York, as same now exists or may hereafter be amended, as well as with any
and all other laws, rules and regulations of the City of New York or of any
governmental agency or department thereof having jurisdiction over the Building
including without limitation the partitioning, layout, exit signs, telephone
communications, fire extinguishers, electrical outlets, sprinklers,
pressurization, HVAC systems, electrical controls, wiring, public address
systems, conduits and additions to the Building electrical system. Tenant
further acknowledges and agrees, if Landlord shall have performed Tenant's
installation or alteration work for Tenant pursuant to any work letter agreement
or pursuant to Tenant's request, the Landlord's sole responsibility with respect
thereto shall be limited to the workmanlike manner of such installation or
alteration and it is the responsibility of Tenant and Tenant's architect insofar
as the legality of any such installation or alteration is
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concerned, i.e., the drawing of plans to compliance with law and the obtaining
of all permits relating thereto, including without limitation, all necessary
approvals and signoffs, as well as any subsequent required, by law,
modification(s) of any such installation or alteration made within the Demised
Premises or alteration of the Building required as a result of such installation
or alteration, which shall be solely the responsibility of Tenant, at Tenant's
sole cost and expense, and Landlord shall have no obligation or duty with
respect thereto. The performance of any of the foregoing Laws required work,
installations and alterations shall be performed by Tenant in accordance with
and subject to all applicable provisions of this Lease.
C. (I.) If the National Board of Fire Underwriters or any local Board of
Fire Underwriters or Insurance Exchange (or other bodies hereafter exercising
similar functions) shall require or recommend the installation of fire
extinguishers, a "sprinkler system", fire detection and prevention equipment
(including but not limited to, smoke detectors and heat sensors), or any
changes, modifications, alterations, or the installations of additional
sprinkler heads or other equipment for any existing sprinkler system, fire
extinguishing system, and/or fire detection system for any reason, whether or
not attributable to Tenant's use of the Demised Premises or alterations
performed by Tenant; or
(II.) If any law, regulation or order or if any bureau, department, or
official of the federal, state, and/or municipal governments shall require or
recommend the installation of fire extinguishers, a "sprinkler system", fire
detection and prevention equipment (including, but not limited to, smoke
detectors and heat sensors), or any changes, modifications, alterations, or the
installation of additional sprinkler heads or other equipment for an existing
sprinkler system, fire extinguishing system, and/or fire detection system for
any reason, whether or not attributable to Tenant's use of the Demised Premises
or Alterations performed by Tenant: or
(III) If any such installation, changes, modifications, alterations,
sprinkler heads, or other equipment become necessary to prevent the imposition
of a penalty, an additional charge, or an increase in the fire insurance rate as
fixed by said Board of Exchange from time to time, or by any fire insurance
company as a result of the use of the Demised Premises whether or not the same
is a Permitted Use under Paragraph #2 (the Use clause), then, Tenant shall, at
Tenant's sole cost and expense, promptly make such installations within the
Demised Premises and make such changes, modifications, alterations, or the
installation of additional sprinkler heads or other required or recommended
equipment.
74. AIR CONDITIONING. All maintenance, repair, and replacement of the
air conditioning and ventilation system if any, serving the Demised Premises
shall be the responsibility of the Tenant, at the Tenant's sole cost and
expense. Landlord shall not be liable to Tenant to damages or otherwise nor
shall Tenant be entitled to any abatement or diminution of the Minimum Rent or
any Additional Rent payable under this Lease if the operation of the air
conditioning and/or ventilating system is interrupted, impaired, suspended or
terminated because of failures, repairs, installations or improvements in or
about the Demised Premises, nor shall any such interruptions, impairment,
suspension, or termination release Tenant from the
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performance of any of its obligations hereunder.
A. If either the quantity or character of cooling and/or ventilating
service furnished to the Demised Premises shall change or cease to be available
or suitable for Tenant's requirements, no such change, unavailability or
unsuitability shall constitute an actual or constructive eviction, in whole or
in part, or entitle Tenant to impose any liability upon Landlord or Landlord's
agents.
B. Tenant shall not, without prior written consent of Landlord, which
consent shall not be unreasonably withheld, make or permit to be made any
additions to or modifications of the existing air conditioning and ventilating
system. Any such additions or modifications permitted to be made hereunder shall
be performed by Tenant at Tenant's expense.
C. Tenant acknowledges that at the end of the Lease term, or earlier
termination, the air conditioning system shall remain in the Demised Premises.
In addition, at end of the Lease term, Tenant will leave the air conditioning
unit in good condition and good working order.
D. Anything contained herein to the contrary notwithstanding, it is
expressly agreed that Tenant shall pay the cost of any and all permits required
by any branch or department of the borough, county, city, state or federal
government in connection with any air conditioning presently or hereinafter
installed in the Demised Premises.
75. INTENTIONALLY OMITTED
76. PERMITS AND FEES.
A. Tenant covenants and agrees that, upon request of the Landlord, it
shall, within ten (10) days from the date of the request, furnish Landlord with
an up-to-date copy of any permit or license required by any authority having
jurisdiction therein for Tenant to conduct business at the Demised Premises.
B. In addition, Tenant further covenants and agrees that, upon request of
the Landlord, it shall, within ten (10) days from the date of the request,
furnish Landlord evidence which supports payment of current tax, assessment or
fee, for personal property, fees or other impositions which is imposed upon the
Tenant, other than the Real Estate Tax.
77. BASE RENT. The payments reserved under this Lease for the term
hereof shall be and consist of "Base Rent", which shall be as follows:
(i) $245,340.00 per annum ($ 20,445.00 per month) during the period
commencing upon the Tenant's possession of the premises, and continuing
thereafter to and including the 31st day of July, 2000;
(ii) $273,540.00 per annum ($22,795.00 per month) during the period
commencing upon the 1st of August, 2000, and continuing thereafter to and
including the 31st day of July, 2001;
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(iii) $310,200.00 per annum ($25,850.00 per month) during the period
commencing upon the 1st day of August, 2001 , and continuing thereafter to and
including the 31st day of July, 2005;
(iv) $341,220.00 per annum ($28,435.00 per month) during the period
commencing upon the 1st day of August, 2005, and continuing thereafter to and
including the 31st day of July, 2010;
78. OPTION TO RENEW.
A. Provided that the Tenant is not in default of any of the provisions of
this immediate lease and rider, Tenant shall have the option to extend the terms
of this lease for two (2) successive five (5) year periods, hereinafter known as
"Extension Term I" and Extension Term II.
B. Tenant shall notify the landlord in writing pursuant to the notice
provision contained herein, at least 6 months prior to the expiration of the
then existing term that it has elected to exercise its option for the following
extension term.
C. Both Extension Term I and Extension Term II shall be on the same terms,
covenants and conditions as provided in this immediate lease and rider thereto.
Payment of all Base Rent and additional rent and all other charges shall
continue to be made during each of the Extension Terms.
D. During Extension Term I, the Base Rent shall be as follows:
(i) $349,750.05 per annum ($29,145.83 per month) during the period
commencing upon the 1st day of August, 2010, and continuing thereafter to and
including the 31st day of July, 2011;
(ii) $358,494.26 per annum ($29,874.52 per month) during the period
commencing upon the 1st day of August, 2011, and continuing thereafter to and
including the 31st day of July, 2012;
(iii) $367,456.61 per annum ($30,621.38 per month) during the period
commencing upon the 1st day of August, 2012 , and continuing thereafter to and
including the 31st day of July, 2013
(iv) $376,643.03 per annum ($31,386.91 per month) during the period
commencing upon the 1st day of August, 2013 and continuing thereafter to and
including the 31st day of July, 2014;
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(v) $386,059.10 per annum ($32,171.59 per month) during the period
commencing upon the 1st day of August, 20l4 and continuing thereafter to and
including the 31st day of July, 2015;
E. During Extension Term II, the Base rent shall be:
(i) $395,710.57 per annum ($32,975.88 per month) during the period
commencing upon the 1st day of August, 2015, and continuing thereafter to and
including the 31st day of July, 2016;
(ii) $405,603.34 per annum ($ 33,800.27 per month) during the period
commencing upon the 1st day of August ,2016 , and continuing thereafter to and
including the 31st day of July, 2017
(iii) $415,743.42 per annum ($34,645.28 per month) during the period
commencing upon the 1st day of August,2017, and continuing thereafter to and
including the 31st day of July, 2018
(iv) $426,137.01 per annum ($35,511.41 per month) during the period
commencing upon the 1st day of August, 2018 and continuing thereafter to and
including the 31st day of July, 2019
(v) $436,790.43 per annum ($36,399.20 per month) during the period
commencing upon the 1st day of August, 2019 , and continuing thereafter to and
including the 31st day of July, 2020.
79. SECURITY DEPOSIT
A. Landlord hereby acknowledges receipt of the sum of THIRTY THOUSAND SIX
HUNDRED SIXTY SEVEN DOLLARS FIFTY CENTS ($30,667.50), hereinafter referred to as
"Security Deposit"), which Security Deposit is to be held by Landlord as
security for the full and faithful performance by Tenant of each and every term,
condition and covenant of this Lease on the part of Tenant to be observed and
performance, it being expressly understood that such Security Deposit is not an
advance payment of rental or a measure of Landlord's damages in the case of
default by Tenant. Landlord will be required to account for the use of such
Security Deposit, to keep such Security Deposit sequestered and shall pay
interest on such Security Deposit. Such Security Deposit shall not be mortgaged,
assigned, transferred or encumbered by Tenant without the consent of Landlord
and any such act on the part of Tenant shall be without force and effect and
shall not be binding upon Landlord. If any of the Base Rent or any item of
Additional Rent payable by Tenant to Landlord shall be overdue and unpaid or
should Landlord make payments on behalf of Tenant, or should Tenant fail to
perform any of the terms of this Lease, then Landlord may, at its option, and
without prejudice to any other remedy which
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Landlord may have on account thereof, appropriate and apply said entire Security
Deposit, or so much thereof as may be necessary to compensate Landlord toward
the payment of Base Rent or any item of Additional Rent due from Tenant or
towards any loss, damage or expense sustained by Landlord resulting from such
default on the part of Tenant and, in such event, Tenant shall forthwith, upon
demand, restore said Security Deposit to the original sum deposited. In the
event Tenant shall fully and faithfully comply with all of the terms, covenants
and conditions of this Lease, any remaining balance of such Security Deposit
shall be returned by Landlord to Tenant following the date of the expiration or
termination of this Lease and the surrender of the Demised Premises by Tenant in
compliance with the provisions of this Lease. In the event any bankruptcy,
insolvency, reorganization or other creditor-debtor proceedings shall be
instituted by or against Tenant, or its successors or assigns, or any Surety of
this Lease, such Security Deposit shall be deemed to be applied first to the
payment of any Base Rent and any item of Additional Rent due Landlord for all
periods prior to the institutions of such proceedings, and the balance, if any,
of such Security Deposit may be retained by Landlord in partial liquidation of
Landlord's damages. Landlord may deliver the Security Deposit by Tenant
hereunder to the purchaser of Landlord's interest in the Demised Premises, in
the event that such interest be sold or transferred and, thereupon, Landlord
shall be discharged and released from all further liability with respect to such
Security Deposit or the return thereof to Tenant, and Tenant shall look solely
to the new Landlord for the return of said Security Deposit, and this provision
shall also apply to any subsequent transferees. The interest which accrues shall
accrue as principal thereby increasing the principal amount of the Security
Deposit which shall be used in accordance with and be subject to all the terms
of this Article. Landlord shall have the rights to deduct annually from the
account the legal maximum rate permissible for reimbursement of its
administrative expenses.
B. Tenant shall upon the request of the Landlord furnish such additional
sums as are required to keep the security deposit value at the total of one and
one half (1.5) months Base Rent.
80. SAVING PROVISION. If any provision of the Lease, or its
application to any situation, shall be invalid or unenforceable to any extent,
the remainder of this Lease, or the application thereof to situations other than
that as to which it is invalid or unenforceable , shall not be affected thereby,
and every provision of this Lease shall be valid and enforceable to the fullest
extent permitted by law.
81. LEASE NOT BINDING UNLESS EXECUTED. Submission by Landlord of the
within Lease for execution by Tenant shall confer no rights nor impose any
obligations on either party unless and until both Landlord and Tenant shall have
executed this Lease and duplicate originals thereof shall have been delivered to
the respective parties.
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82. ENTIRE AGREEMENT. No earlier statement by Landlord, its agents or
employees regarding this Lease in the Demised Premises or prior written matter,
regarding this Lease in the Demised Premises shall have any force or effect.
Tenant agrees that it is not relying on any representations or agreements other
than those contained in this Lease. This agreement shall not be modified or
canceled by writing subscribed by all parties.
83. INTENTIONALLY OMITTED
84. INTENTIONALLY OMITTED
85. SORTING AND SEPARATION OF REFUSE AND TRASH: Tenant covenants and
agrees, at its sole cost and expense, to comply with all present and future
laws, orders and regulations of all state, federal, municipal and local
governments, departments, commissions and boards regarding the collection,
sorting, separation and recycling of waste products, garbage, refuse and trash.
Tenant shall sort and separate such waste products, garbage, refuse and trash
into such categories as provided by law. Tenant shall pay all costs, expenses,
fines, penalties or damages which may be imposed on Landlord or Tenant to reason
of Tenant's failure to comply with the provisions of this article, and, at
Tenant's sole cost and expense, shall indemnify, defend and hold Landlord
harmless (including legal fees and expenses) from and against any actions,
claims and suits arising from such not-compliance, utilizing counsel reasonably
satisfactory to Landlord.
86. TENANTS RIGHT OF FIRST REFUSAL: During the course of the term
herein or any Extension Term, the Landlord shall not accept any offer to
purchase the premises unless: (i) the Landlord has provided the Tenant with
written notice of the terms of any proposed sale or offer, affording the Tenant
the right to purchase the property upon the same terms and conditions contained
therein; and (ii) the Tenant shall not have accepted such offer within 30 days
after such notice. The sale of more than 50% of the capital stock of the
Landlord shall be deemed to be a sale requiring the giving of the notice
provided for herein to the tenant. However, for purposes of this paragraph, the
transfer conveyance or sale of the premises or any part thereof, to members of
the immediate family of the principal shareholder of the Landlord shall not be
deemed a sale.
87. INTENTIONALLY OMITTED
88. ENVIRONMENTAL HAZARDS
A. Landlord shall indemnify and hold blameless Tenant and its successors
and assigns
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from all costs damages expenses liability and harm resulting from any spill,
release or presence of toxic or hazardous materials, (hereinafter an
"environmental condition"), and the violation of any federal state or local laws
addressing environmental matters (hereinafter "environmental law")occurring or
existing prior to the commencement of the term of the lease.
B. The tenant shall indemnify and hold the Landlord harmless for and from
any and all damage resulting from the occurrence of any environmental condition
or the violation of any environmental law during the term of the tenancy.
89. CONDEMNATION. If the whole of the demised premises or more than
40% of the land area thereof, and/or the building on the demised premises shall
be lawfully taken by condemnation, then this lease shall at the option of the
Tenant terminate upon 60 days Notice of Termination based upon condemnation,
which notice may be served upon Landlord at any time after the date of vesting
of title in such taking and the rent shall be prorated and adjusted as of such
date. If the Tenant does not exercise such option, the rent of the remaining
portion of the term shall be reduced in proportion to the square footage of
parking area and/or square footage of building which has been taken in
condemnation. In the event that the parties cannot agree upon the amount of such
reduction, the issue concerning the pro rata rent reduction shall be submitted
to binding arbitration by one arbitrator in accordance with the rules of the
American Arbitration Association.
90. TENANT'S CHANGES. Tenant, at its sole cost and expense, shall have
the right, at any time from time to time during the term of the lease to make
changes and alterations to the demised premises provided that the Tenant shall
furnish the Landlord with prior written notice concerning the nature and extent
of any such changes, which consent shall not be unreasonably withheld.
91. WARRANTIES OF LANDLORD. The Landlord warrants that the Premises
shall be vacant and free of all tenancies, including but not limited to the
current occupancy of Jamaica Towing and/or its affiliates by October 15, 1995.
Landlord shall commence a summary holdover proceeding against the present
occupants on or about August 1, 1995, and shall diligently prosecute such
proceeding to conclusion. In the event the Landlord is unable to deliver the
Premises to the Tenant vacant and free of all tenancies on or before October 15,
l995, the Tenant shall have the option to terminate this lease upon 10 days
written notice to the Landlord. Upon such termination neither Landlord nor
Tenant shall have any further obligation or liability hereunder, with the
exception of the return to the Tenant of the first month's lease and security
deposit paid hereunder. The foregoing option shall expire in the event that such
option has not been exercised prior to the earlier to occur of the following:
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(i) written notification by the Landlord to the Tenant that the Premises are
vacant and free of all tenancies; or
(ii) December 1, 1995.
In the event that the Landlord shall be unable to deliver the Premises to the
Tenant vacant and free of all tenancies, on or before December 1, 1995, this
Lease shall terminate as of such date and neither Landlord nor Tenant shall have
any further obligation or responsibility hereunder with the exception of the
return of Tenant's first month's rent and security deposit. The Tenant's
obligation to pay rent or additional rent shall not commence until the Landlord
has delivered possession of the Premises to Tenant vacant and free of all
tenancies.
92. NON-DISTURBANCE:
(A) West Side Corp., as the owner of the Premises, hereby consents to the
entry into the lease agreement between Stamar Realty Corp. and 180 Jamaica Corp.
(B) West Side Corp. waives any and all present and future defaults which
may exist under the lease agreement between West Side Corp. and Stamar Realty
Corp. dated July 31, 1995 ("July Lease"). This waiver shall remain in full force
and effect during the term of this Lease between Stamar Realty Corp. and 180
Jamaica Corp.
(C) No other lease or other form of agreement has been executed by West
Side Corp. which grants any rights in and/or to the Premises with the exception
of the July Lease.
(D) West Side Corp. is the sole record and beneficial owner of the
Premises.
(E) Notwithstanding anything else contained in this Lease to the contrary,
so long as this Lease is in full force and effect and Tenant is not in default
hereunder beyond all applicable grace and notice periods, (a) Tenant shall not
be evicted from the Premises by West Side Corp., any owner of the Premises,
and/or any holder of a mortgage or deed of trust encumbering the building and/or
the Demised Premises ("Mortgagee") or any assignee or other successor whose
rights derive or are claimed to derive from, under or through Mortgagee and, in
addition thereto, Tenant's right of possession and other rights under this
Lease, including, without limitation, its right to use and occupy the Demised
Premises in accordance with this Lease and its rights in and
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to the other areas of the building shall not be terminated, disturbed,
diminished, interfered with or in any way affected by: (i) any action of West
Side Corp. Or any owner of the premises; and/or (ii) the foreclosure of a
mortgage encumbering the building and/or Demised Premises or any renewal,
modification, consolidation, extension or replacement thereof(" Mortgage"); and
(b) Tenant shall not be named or joint as a panty defendant in any foreclosure
action or proceeding which may be instituted or taken by the Mortgagee unless
same is required by a court of competent jurisdiction and then only with respect
to the foreclosure and not to evict Tenant from the demised premises; and (c)
any sale or transfer of title to the building, the Demised Premises or any part
thereof pursuant to the exercise of any rights or remedies under the Mortgage or
otherwise, shall be made subject to this Lease and the rights of Tenant
hereunder.
(F) On or before March 15, 1996, (i) a non-disturbance agreement in a form
reasonably satisfactory to the Tenant, must be delivered to the Tenant by the
Mortgagee and (ii) Tenant must be satisfied as to the inability of tax agencies
and judgement creditors to commence foreclosure proceedings against the
property. In the event that the foregoing is not met, Tenant would have the
option to terminate the lease on 120 days written notice to Landlord. In
addition, in the event that foreclosure proceedings are commenced against the
property prior to March 15, 1996, Tenant would also have the option to terminate
the lease on 120 days written notice to the Landlord, or make rental payments
directly to the Court.
93. GUARANTY: Atlantic Express Transportation Group Inc. (the
"Guarantor") hereby unconditionally guarantees the payment of rent and
additional rent for so long as either the Tenant or any sublessee or assignee
of the Tenant shall remain in occupancy of the Premises. Upon receipt of written
notice of non payment of rent or additional rent and demand for payment thereof,
the Guarantor shall pay such rent or additional rents to Landlord and shall
remain liable for all sums due or to become due for rent or additional rent
during the period in which the Tenant or any sublessee or assignee of the Tenant
shall remain in possession of the Premises.
94. SUBLEASE TO AFFILIATE: Landlord consents to the sublease of a
portion or all of the Premises to any affiliate of the Tenant. For purposes of
this paragraph "affiliate of the Tenant" shall include any corporation or entity
which is wholly owned by Atlantic Express Transportation Group Inc.
95. ECONOMIC DEVELOPMENT ZONE PROGRAM: The Landlord and the Tenant, at
Tenant's option, shall promptly make application for certification as a
21
<PAGE>
qualified business under the Economic Development Zone Program for South
Jamaica, Queens. All fees and expenses incurred or to be incurred in connection
with the making of such application or the maintenance of such certification
shall be paid by the Tenant. The Landlord and Tenant shall cooperate with each
other with respect to the making of any application for benefits under such
Economic Development Zone program including application for investment tax
credit, real property tax exemptions and land tax abatements, provided that the
Tenant shall pay all fees and expenses in connection with any and all such
matters. In the event the Landlord shall receive a real property tax exemption
or land tax abatement which shall reduce the amount of real estate taxes payable
on the Premises to an amount which shall be less than the real property taxes
payable as of the date hereof for the 1995/96 tax year, the Tenant shall receive
a rent abatement which shall be equal to 75% of the annual tax savings resulting
thereby and the monthly rent hereunder shall be reduced accordingly to reflect
such abatement.
IN WITNESS WHEREOF the parties hereto have respectively executed this agreement,
This the 21st day of August 1995.
Landlord: Tenant
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ---------------------------------- -----------------------------
Stamar Realty Corp. 180 Jamaica Corporation
By: By:
/s/ [ILLEGIBLE] Guarantor:
- ----------------------------------
West Side Corp.
By.
/s/ [ILLEGIBLE]
-----------------------------
Atlantic Express Transportion
Group Inc.
By:
22
<PAGE>
[Logo] Hentz-Dor
Real Estate, Inc.
Industrial/Commercial
CONSULTANT RETAINER AGREEMENT
59-01 Avenue D, Brooklyn, NY 11203
Energy Discount Program/Property Tax Abatement
This Agreement made this 26th day of July 1996, between Atlantic Express Inc.
(ATLANTIC), party of the first part, and Hentz-Dor Real Estate, Inc. (HD), party
of the second part, as follows:
WHEREAS, ATLANTIC recognizes that the Financial Services Department of HD has
specialized personnel with ability and expertise in the field of industrial and
commercial project planning;
WHEREAS, ATLANTIC has the need for special knowledge and advice in the
industrial and commercial project planning and desires assistance in the
preparation of documentation for submission to the New York City Department of
Business Services, Department of Finance, Economic Development Corp.,
("Consultation Services") and others, and;
WHEREAS, ATLANTIC is planning the renovation of their building on 107-10 180th
Street, Jamaica, N.Y. and is desirous of receiving benefits from various
agencies, if possible;
A. NOW, THEREFORE, Hentz-Dor Real Estate, Inc. agrees to render the Consultation
Services to ATLANTIC for a period of 12 months from the date hereof and will
make its best efforts to secure ATLANTIC the Energy Cost Savings Program
Discount and Department of Finance ICIP Program, and ATLANTIC hereby agrees to
pay Hentz-Dor Real Estate, Inc. the sum of twelve thousand dollars ($ 12,000)
payable as follows:
(1) ATLANTIC agrees to pay HD the sum of three thousand dollars ($ 3,000)
as the initial non-refundable retainer fee for such Consultation
Services.
(2) ATLANTIC agrees to pay HD the sum of four thousand five hundred
dollars ($ 4,500) in the event that ATLANTIC receives a preliminary
Certificate of Eligibility from the New York City Industrial and
Commercial Incentive Program (ICIP), whether or not such Certificate
is received after the termination of this agreement.
(3) ATLANTIC agrees to pay HD an additional sum of four thousand five
hundred dollars ($ 4,500) in the event that ATLANTIC receives a
Certificate of Eligibility from the New York City Economic Development
Corporation EDC), Energy Cost Savings Reduction Program, whether or
not such approval is received after the termination of this agreement.
B. HD herewith acknowledges receipt of the initial non-refundable retainer fee
of three thousand dollars ($3,000).
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ---------------------------------- -----------------------------
WITNESS ATLANTIC, EXPRESS, INC
- ---------------------------------- -----------------------------
WITNESS HENTZ-DOR REAL ESTATE, INC.
10-51 48th Avenue, Long Islad City, N.Y. 11101 Tel. 718-786-5151
Fax: 718-786-6914
<PAGE>
SILVERMAN, COLLURA & CHERNIS, P.C.
381 PARK AVENUE SOUTH
NEW YORK, N.Y. 1OOI6
----------
(212) 779-8600
TELECOPIER: (212) 779-8858
PETER R. SILVERMAN
ANTHONY M. COLLURA August 14, 1995
PAUL CHERNIS
* RONALD A. BALZANO
__________
** MICHELLE J. COHN
* NEW YORK AND CONNECTICUT BARS
** NEW YORK AND PENNSYLVANIA BARS
VIA FACSIMILE 212 725-3711
Finkelstein & Newman
185 Madison Avenue
New York, New York 10016
Attn: John Newman, Esq.
Re: Stamar Realty Corp./180 Jamaica Corp.
Lease for 107-10 180th Street
Jamaica, Queens
Dear John:
This letter shall confirm the agreement and understanding between our
respective clients as Landlord and Tenant under the above captioned Lease
concerning the improvements which the Tenant intends to make following the
delivery of the Premises to the Tenant, vacant and free of all tenancies.
The Landlord, by execution of this Letter Agreement, grants its approval to
the making of the improvements referenced on the annexed schedule dated July 7,
1995, as well as the installation of three 4,000 gallon diesel fuel tanks and
temporary grading of the property, and shall require no further compliance by
Tenant with the terms of the Lease with respect to the making of such
improvements. The Tenant in its sole discretion shall decide when such
improvements shall be made.
The Tenant, by execution of this Letter Agreement, agrees to indemnify and
hold harmless the Landlord with respect to any damage, claim and expense,
including reasonable counsel fees, which may arise as a result of or in
connection with the Tenant's making of the said improvements, including but not
limited to any municipal or other governmental fines, violations or orders.
<PAGE>
SILVERMAN, COLLURA & CHERNIB, P.C.
John Newman, Esq.
August 22, 1995
Page 2
I would appreciate it if you would arrange for your client to countersign a
copy of this letter to acknowledge the foregoing.
Very truly yours,
SILVERMAN, COLLURA & CHERNIS, P.C.
By: /s/ Peter R. Silverman
----------------------
Peter R. Silverman
Consented and Agreed to:
180 JAMAICA CORP., TENANT
By: /s/ [ILLEGIBLE]
----------------------------
STAMAR REALTY CORP., LANDLORD
By: /s/ [ILLEGIBLE]
----------------------------
PRS/cz
cc: Domenic Gatto
Nathan Schlenker
William McVeigh
James Beatty
<PAGE>
REVISED February 22, 1979 Exhibit 10.12
Serial No. 0070
BOARD OF EDUCATION [SEAL] CITY OF NEW YORK
CONTRACT PROPOSAL
Sealed bids will be received by the Director of the Bureau of Supplies of the
Board of Education of the City of New York, at his office. Room 513, 44-36
Vernon Blvd., Long Island City, New York, 11101.
Until 10:00 A.M., on Wednesday, February 28, 1979
Bids will be publicly opened and read at 10:00 A.M. on the date and place stated
above.
FOR THE TRANSPORTATION OF HANDICAPPED PUPILS
FOR THE PERIOD FROM SEPTEMBER 1979 THROUGH JUNE 1982
1. Name of Bidder Amboy Bus, Inc.
.............................................................
Address of Bidder 36A-6 St., Garden City, N.Y. 11040
...........................................................
2. Page Number(s) Containing Bid Prices:
.............................................................................
.............................................................................
.............................................................................
.............................................................................
.............................................................................
<PAGE>
TABLE OF CONTENTS
CONTRACT
TRANSPORTATION OF HANDICAPPED PUPILS
FOR THE PERIOD FROM SEPTEMBER 1979 THROUGH JUNE 1982
Page
General Instructions for Bidders..........................................
Form to be Used...................................................... 1
Presentation of Bids................................................. 1
Bid Opening.......................................................... 1
Late Bids............................................................ 1
Bid Deposit or Bid Bond.............................................. 1
Verification......................................................... 2
Quotation............................................................ 2
Additional Information............................................... 2
Equal Employment Opportunities....................................... 2
Withdrawal of Bids................................................... 3
Ability to Perform................................................... 4
Financial Statement.................................................. 4
Equipment............................................................ 4
Insurance and Performance Bond....................................... 5
Award................................................................ 7
Notice of Award...................................................... 7
Return of Bid Deposit................................................ 7
Bid Certification.................................................... 8
Individual Verification.............................................. 11
Corporate Verification............................................... 12
<PAGE>
Schedule of Items, Specifications and Bid Blank:
Page
I. Intent and Scope .................................................. 13
II. Period of Contract ................................................ 13
III. Number of Days of Service ......................................... 13
IV. Period of Operation ............................................... 14
V. Payment ........................................................... 14
VI. Items ............................................................. 15
VII. Transportation of Pupils .......................................... 15
VIII. Schedule of Vehicles .............................................. 15
IX. Vehicle Specifications ............................................ 16
X. Vehicle Safety Requirements ....................................... 17
XI. Spare Vehicles and Vehicle Performance Monitoring ................. 18
XII. Use of Vehicles ................................................... 19
XIII. Increase or Decrease in the Number of Vehicles .................... 20
XIV. Facilities and Maintenance ........................................ 23
XV. Gasoline .......................................................... 23
XVI. Records to be Transmitted ......................................... 23
XVII. Vehicle Operator Standards ........................................ 23
XVIII. Operational Supervision ........................................... 25
XIX. Escorts ........................................................... 26
XX. Audit of Invoices and Financial Records ........................... 29
XXI. Liquidated Damages ................................................ 29
<PAGE>
General Terms and Conditions
Page
Definitions ........................................................ 1
1. Subject Matter .................................................. 2
2. Contract ........................................................ 2
3. Interpretation .................................................. 2
4. Modifications ................................................... 2
5. Compliance With Laws ............................................ 3
6. Non-Assignment of Contract ...................................... 3
7. Cancellation .................................................... 3-4-5
8. Notices ......................................................... 5
9. No Estoppel ..................................................... 5
10. Claims - Limitation of Action ................................... 6
11. Maintenance of Records .......................................... 6
12. Discrimination .................................................. 6-7
13. Equal Employment Opportunity Requirements for
Non-Construction Contractors, Vendors and Suppliers ............ 8 thru 13
14. Indemnification ................................................. 14
15. Workmen's Compensation .......................................... 14
16. Prevention of Delay, Suspension or Strikes ...................... 14
17. Inspectors ...................................................... 14
18. Rejection of Vehicles ........................................... 15
19. Payments ........................................................ 15
20. Acceptance of Final Payment ..................................... 15
21. Comptroller's Certificate ....................................... 16
22. Reserved Rights ................................................. 16
<PAGE>
Page
23. Anti-Trust ...................................................... 16
24. Merger .......................................................... 16
25. Venue ........................................................... 16
Signature Page ...................................................... 17
Affidavit of Acknowledgement of Contract - (By Board of
Education) ........................................................ 18
Affidavit of Acknowledgement of Contract ( By an Individual) ........ 19
Affidavit of Acknowledgement of Contract (By a Corporation) ......... 20
Appropriation - Certificates of Unexpended Balance .................. 21
Performance Bond .................................................... 22-23
<PAGE>
BOARD OF EDUCATION
CITY OF NEW YORK
NOTICE: The attention of the bidder is particularly called to the fact that,
unless the bid is made in strict conformity with the directions given in this
proposal as provided for herein, the bid may be rejected.
PROPOSAL FOR BIDS
FOR THE TRANSPORTATION OF HANDICAPPED PUPILS
FOR THE PERIOD FROM SEPTEMBER 1979 THROUGH JUNE 1982
(Serial No. 0070)
GENERAL INSTRUCTIONS FOR BIDDERS
FORM TO BE USED
Bidder must submit his bid upon the blank forms included herein, which set forth
the schedule of items, quantities, specifications and form of Contract. The
forms provide for quotations for extended and regular service, and each bidder
is required to bid on both for each item bid upon. Partial item bids will not be
accepted.
PRESENTATION OF BID
The person, firm or corporation making a bid shall furnish such bid in a sealed
envelope to the Director of the Bureau of Supplies or his designated
representative at the place herein mentioned on or before the day and time
herein named, and the envelope shall be endorsed on the face thereof with the
name of the person, firm or corporation making such bid, the date of its
presentation and the title of the services for which such bid is made.
BID OPENING
At the time and place herein stated, the bids received will be publicly opened
and read by the Director of the Bureau of Supplies or his duly designated
representative. The Board of Education reserves the right to waive any
formalities in a bid if it is deemed to be in the best interests of the Board to
do so.
LATE BIDS
Bids which arrive after the time stated for the opening of bids cannot be
accepted. This includes bids sent by mail, which, if so sent, are sent at the
risk of the bidder, and will not be considered if they arrive after the time
stated for the bid opening.
BID DEPOSIT OR BID BOND
Every bid shall be accompanied by a bid bond or by a deposit in the amount of
two (2) times the daily rate for regular service per vehicle for each vehicle in
all items bid. Such deposit shall consist of a certified check upon a state or
national bank or trust company or a check of such bank or trust company signed
by a duly authorized officer thereof, drawn to the order of the Comptroller of
the City of New York.
-1-
<PAGE>
The bid deposit shall be enclosed in a sealed envelope within the envelope
containing the bid. Receipt for the bid deposit will not be given, as bids will
be publicly opened and read, and the amount of bid deposits publicly announced
at the time of opening of bids.
VERIFICATION
Each bid shall be verified by the oath in writing of the party or parties making
it, that the several matters stated therein are in all respects true. If the
bidder is a corporation, the verification shall be made by an officer of such
corporation with knowledge of the facts and having authority to make such a
sworn statement.
QUOTATION
The bidder shall insert the prices he proposes to furnish for each item in the
schedules herein contained or annexed, as well as all other information required
on the bid blank.
ADDITIONAL INFORMATION
Further information, interpretation or clarification relative to the terms or
conditions of the Contract should be requested in writing prior to the
submission of the bid from the Director or duly designated representative of the
Bureau of Pupil Transportation at 28-11 Queens Plaza North, Long Island City,
New York, 11101.
EQUAL EMPLOYMENT OPPORTUNITIES
The particular attention of bidders is called to the section entitled "Equal
Employment Opportunities and Practices" on Pages 8 through 13 of the General
Terms and Conditions. The provisions and terms therein will be strictly enforced
by the Board of Education. It is recommended that you contact the Director of
the Office of Equal Opportunity, Room 641, 110 Livingston St., Brooklyn, N.Y.
11201 for forms and other information that his office would require in the event
of possible consideration of award to your company.
-2-
<PAGE>
WITHDRAWAL OF BIDS
A. After the opening of bids, a request by a bidder to the Board of Education
for consent to the withdrawal of his bid because of error made by said
bidder, will be considered only under the following terms and conditions:
-
1. Request to withdraw bid must be in writing, addressed to the
Director of the Bureau of Supplies and must give reasons for the
request.
2. Request must be sent by registered mail and must be post-marked not
later than 48 hours following the opening of bids.
3. All requests will be referred to the Board of Review.
4. Contractors requesting consent to the withdrawal of bids shall
appear and testify before the Board of Review and shall make
available to the Board of Review all work sheets, summary sheets,
and other data requested by the Board of Review as pertinent to its
inquiry. Failure to appear or to make available data as requested by
the Board of Review will result in refusal of consent to the
withdrawal of bids.
5. After the Board of Review has considered a request by a bidder to
withdraw its bid after an award has been made by the Board of
Education, the Board of Education may grant such request in any case
which it deems just and proper, but such request shall be made and
such consent to withdraw shall be accepted by the bidder upon the
express conditions that said bidder shall be excluded from bidding
again on the readvertisement of bids for the same item or proposal.
Should any bidder request the withdrawal of more than one bid in any
twelve month period, he shall be disqualified from bidding on Board
of Education work for a period of one (1) year from the date of the
second request.
B. If the Contract award is not made within forty-five days after the date of
bid opening, a bidder has the right to withdraw his bid, provided such
withdrawal is made prior to Contract award. Such withdrawal must be in
writing and shall be filed with the Secretary of the Board of Education
and the Director of the Bureau of Supplies.
A withdrawal of bid pursuant to this paragraph is not subject to the
provisions stated in paragraph "A" above.
-3-
<PAGE>
ABILITY TO PERFORM
Upon demand of the Director of the Bureau of Pupil Transportation, any bidder
for this Contract shall furnish testimonials or evidence in such form as the
Director may indicate, as to his financial ability, prior experience, past
performance, ability to perform (which includes permitting investigation and
evaluation by the Board of bidder's facilities, equipment, personnel), etc. No
award will be made to a bidder who shall fail to submit testimonials, setting
forth the facts required to be set forth, or to a bidder whose statements set
forth in such testimonials are found to be untrue. Any statement or declaration
made by the bidder which shall be found to be untrue will be sufficient cause
for rejecting his bid and forfeiting his bid deposit to the Board. The Director
will determine whether the evidence of ability to perform is satisfactory and
will recommend awards only when such evidence is deemed satisfactory, and
reserves the right to reject bids where evidence is submitted, or investigation
and evaluation is determined by the Director, to indicate inability of the
bidder to perform.
FINANCIAL STATEMENT
The bidder must submit with its bid a balance sheet and profit and loss
statement of its operations for the past three annual tax periods or for the
number of tax years which the bidder has been in business, with a certification
by an independent Certified Public Accountant licensed by the State of New York.
The individual, firm, or corporation employed to prepare the financial
statements will have no interests in the bid and must so certify. Each bidder
shall submit a statement under oath disclosing and clearly identifying all its
stockholders owning 5% or more of the outstanding equity, its officers,
partners, creditors, and every person, firm or corporation who has any interest
directly or indirectly in the bid or the bidder at the time the bid is
submitted; and shall report to the Director any change in control or ownership
during the period of this Contract within 5 days. If the bidder has not been in
business within the past three (3) years, the bidder shall submit a satisfactory
certified financial statement outlining its qualifications to perform
satisfactorily.
EQUIPMENT
The bidder must submit with his bid the following data if such information is
available at the time of bid, in connection with each vehicle intended to be
used for transportation of pupils:
1. Make, year of manufacture and identification number of each vehicle.
2. Pupil seating capacity.
3. Name of owner of each vehicle.
The bidder shall supply satisfactory evidence that he will have the required
number of vehicles prior to the beginning of the Contract period or beginning of
service. Such evidence may be a signed statement from an acceptable vehicle
manufacturer, dealer, or rental corporation to the effect that he will furnish
the required number of vehicles. If the vehicles are leased or rented, the
vehicle operator (driver) cannot be the owner.
-4-
<PAGE>
A successful bidder must furnish this data with reference to each vehicle being
furnished and used for the transportation of pupils under the Contract both at
the inception of the Contract and for any additional vehicle acquired
thereafter. The successful bidder must also inform the Board of Education of any
vehicle withdrawn from service or replaced during the life of the Contract.
INSURANCE AND PERFORMANCE BOND
The bidder must submit, with his bid, certifications from acceptable insurors to
the effect that said insurors will furnish to the bidder public liability
insurance, property damage coverage and a performance bond as follows:
1. Public Liability for bodily injury, including death shall be in the
amount of $500,000.00 for each person and $5,000,000.00 for each
accident. Property damage coverage shall be in the amount of
$50,000.00 to cover the claim of one person and $100,000.00 to cover
the claim of two or more people for each accident. These policies
shall be endorsed to include the Board of Education and City of New
York, as named insureds. A copy of said policies shall be supplied
to the Director of the Bureau of Pupil Transportation upon request.
This written proof must be issued by a company licensed by the
Superintendent of Insurance of the State of New York to do business
in New York.
2. Performance Bond to cover the faithful performance of the Contract
in the amount of the Contract where required. This written proof
must be issued by a company licensed by the Superintendent of
Insurance of the State of New York to do business in New York.
The amount of the initial performance bond to be provided, when
required, by the successful bidder for the first year of the
Contract shall be one hundred and eighty times the daily rate for
regular service per vehicle for all vehicles for which the Contract
is awarded. This performance bond shall guarantee the full and
faithful performance for the initial first year period of such
Contract as may be awarded to bidder. The initial performance bond
shall be filed with the Secretary of the Board of Education by the
day set for the execution of the Contract. Thereafter, the
contractor shall provide an equal and identical bond guaranteeing
performance for each additional year beyond the operation of the
first year of said Contract by April 1, 1980, and 1981 respectively.
Inability or failure on the part of the contractor to obtain the
bond guaranteeing performance as required herein on or before April
1, as stated above, shall be deemed sufficient cause for the
cancellation of the balance of the Contract.
-5-
<PAGE>
3. Waiver of Performance Bond.
(a) Any bidder who initially receives an award of Contract for fifteen
(15) or fewer vehicles is not required to furnish a performance
bond, nor shall there by any retainage withheld by the Board of
Education.
(b) Any bidder who initially receives an award of Contract for sixteen
(16) to twenty-five (25) may elect between the following
alternatives:
1. File a performance bond as stated herein; or
2. Authorize the Board of Education to retain 10% of each payment
made to the contractor from the first five (5) months payments
of each year of the contract in an interest bearing account to
assure full and faithful performance of this Contract. This
retainer shall be paid to the contractor with interest at the
conclusion of each one (1) year period of full and faithful
performance under this Contract.
4. During the period of the Contract, if there is an increase in the total
number of vehicles furnished by one contractor to more than fifteen (15),
but less than twenty-six (26), then the contractor shall comply with the
terms and conditions outlined in 3(b) above.
During the period of the Contract, if there is an increase in the total
number of vehicles furnished by one contractor to more than twenty-five
(25), then the contractor shall immediately notify the Director and shall
furnish a performance bond as required herein for those vehicles in excess
of twenty-five (25) within twenty (20) days and must furnish such
performance bond for the remaining portion of the Contract period for
those vehicles in excess of twenty-five (25) in accordance with the
conditions stated herein.
5. For the purposes of 3 and 4 above, corporate bidders who are subject to
common control as determined by the Board based upon an analysis of:
(a) ownership of the corporations' assets,
(b) coincidence of corporate officers and directors, and
(c) such other factors as the Board determines to be relevant, are
deemed to be one bidder.
-6-
<PAGE>
AWARD
The award of Contract, if made, will be made according to law, as soon after the
opening of bids as practicable, by item, to the lowest responsible bidder
offering the lowest weighted average daily rate per vehicle for extended and
regular service as specified in each item.
The Board of Education reserves the right to reject any or all bids. No award of
Contract shall be binding until the Contract has been duly approved by the New
York State Department of Education, the Comptroller of the City of New York and
the Financial Control Board.
NOTICE OF AWARD
Mailing to the bidder of a notice from the Secretary of the Board of Education
that, at a meeting of the Board of Education, held on the day specified in such
notice, awards were made for the services herein specified, shall be sufficient
notice to the bidder of the acceptance by the Board of the bids on items on
which the bidder was the successful bidder as stated in such resolution.
RETURN OF BID DEPOSIT
After the award of contract, the Comptroller shall return all the bid deposits
received to the persons, firms, or corporations submitting the same, except the
bid deposit made by the bidder whose bid has been accepted. The successful
bidder must sign the proposed contract and execute the affidavit of verification
in quadruplicate within five days after receipt of notice by mail of the award
of Contract to him for any of the items herein bid upon. If the successful
bidder shall sign the Contract and execute the affidavit of verification or
sworn statement and furnish the required policies of insurance and performance
bond, as required or elected within the time aforesaid, the amount of his bid
deposit will be returned to him, unless otherwise provided.
-7-
<PAGE>
BID CERTIFICATION
BID TO THE BOARD OF EDUCATION OF THE CITY OF NEW YORK
Made by
Name of Bidder _________________________________________________________________
(Individual, firm or corporation)
Place of Business of Bidder ____________________________________________________
Date of Bid _________________________________ Telephone No. ____________________
If Bidder is an individual or partnership, state here:
Name of Individual or Partners Residence of Individual or Partners
1.______________________________________________________________________________
2.______________________________________________________________________________
3.______________________________________________________________________________
If Bidder is a corporation, fill in the following blanks:
Organized under the laws of the State of _______________________________________
Name and Residence of President ________________________________________________
________________________________________________________________________________
Name and Residence of Secretary ________________________________________________
Name and Residence of Treasurer ________________________________________________
The bidder above mentioned declares and certifies:
First: That the said bidder is of lawful age and the only one interested in this
bid, and that no one other than hereinabove named has any interest in this bid,
or in the contract proposed to be entered into.
Second: By submission of this bid, each bidder and each person signing on behalf
of any bidder certifies, and in the case of a joint bid each party thereto
certifies as to its own organization, under penalty of perjury, that to the best
of its knowledge and belief -
(1) The prices in this bid have been arrived at independently without
collusion, consultation, communication, or agreement for the purpose
of restricting competition, as to any matter relating to such prices
with any other bidder or with any competitor;
(2) Unless otherwise required by law, the prices which have been quoted
in this bid have not been knowingly disclosed by the bidder and will
not knowingly be disclosed by the bidder prior to opening, directly
or indirectly, to any other bidder or to any competitor; and
-8-
<PAGE>
BID CERTIFICATION
BID TO THE BOARD OF EDUCATION OF THE CITY OF NEW YORK
Made by
Name of Bidder Amboy Bus Inc.
-----------------------------------------------------------------
(Individual, firm or corporation)
Place of Business of Bidder 36-A 6th St., Garden City Park, N.Y. 11040
----------------------------------------------------
Date of Bid Feb. 28 1979 Telephone No. 516-747-2248
--------------------------------- ---------------------
If Bidder is an individual or partnership, state here:
Name of Individual or Partners Residence of Individual or Partners
1.______________________________________________________________________________
2.______________________________________________________________________________
3.______________________________________________________________________________
If Bidder is a corporation, fill in the following blanks:
Organized under the laws of the State of New York
--------------------------------------
Name and Residence of President Michael Gatto 10 Emerson Dr.
------------------------------------------------
Morganville, N.J. 07751
- --------------------------------------------------------------------------------
Name and Residence of Secretary Same as above
-----------------------------------------------
Name and Residence of Treasurer Same as above
-----------------------------------------------
The bidder above mentioned declares and certifies:
First: That the said bidder is of lawful age and the only one interested in this
bid, and that no one other than hereinabove named has any interest in this bid,
or in the contract proposed to be entered into.
Second: By submission of this bid, each bidder and each person signing on behalf
of any bidder certifies, and in the case of a joint bid each party thereto
certifies as to its own organization, under penalty of perjury, that to the best
of its knowledge and belief -
(1) The prices in this bid have been arrived at independently without
collusion, consultation, communication, or agreement for the purpose
of restricting competition, as to any matter relating to such prices
with any other bidder or with any competitor;
(2) Unless otherwise required by law, the prices which have been quoted
in this bid have not been knowingly disclosed by the bidder and will
not knowingly be disclosed by the bidder prior to opening, directly
or indirectly, to any other bidder or to any competitor; and
-8-
<PAGE>
(3) No attempt has been made or will be made by the bidder to induce any
other person, partnership or corporation to submit or not to submit
a bid for the purpose of restricting competition.
Third: That no Councilman of the City of New York, member of the Board of
Education of the City of New York, or any officer or employee or person whose
salary is payable in whole or in part from the treasury of the City of New York
is directly or indirectly interested in this bid or in the supplies, materials,
equipment, work or labor to which it relates, or in any portion of the profits.
Fourth: That said bidder is not in arrears to the City of New York or the Board
of Education of the City of New York upon debt, contract, or taxes and is not a
defaulter as surety or otherwise, upon any obligations to the City of New York,
and has not been declared not responsible, or disqualified, by any agency of the
City of New York, or State of New York, nor is there any proceeding pending
relating to the responsibility or qualification of the bidder to receive public
contract, except
(None)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(If none, bidder will insert "none")
Fifth: That said bidder has carefully examined the standard form of contract
proposal, including the instructions to bidders, specifications, and the
schedule of bid items, and will, if successful, perform all its terms, covenants
and conditions, and will furnish and deliver at the prices bid, within the time
stated, all the materials, supplies, apparatus, goods, wares, merchandise,
services or labor named and described therein for which bid is made.
Sixth: The bidder expressly undertakes and agrees, if successful, to comply
fully with any and all applicable laws, orders, or regulations, of any federal,
state or municipal authority or agency.
The undersigned, if any individual bidder, or if the bidder be a firm,
partnership or corporation, the undersigned executing this document as a member,
partner, director or officer and on behalf of such firm, partnership or
corporation, expressly warrants and represents that neither he, nor any member,
partner, director or officer of said firm, partnership or corporation has, prior
to the date of execution of this bid, been called before a grand jury, head of a
state department, temporary state commission or other state agency, head of a
city department, or other city agency, to testify in an investigation concerning
any transaction or contract had with the State of New York, any political
subdivision thereof, a public authority or with any public department, agency or
official of the State of New York or of any political subdivision thereof, or of
a public authority or any fire district, and refused to sign a waiver of
immunity against subsequent criminal prosecution or to answer any relevant
question concerning such transaction or contract. If there has been a refusal to
sign a waiver or to answer, the bidder must state the time and place of such
refusal on the bid form submitted.
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The amount of the bid deposit or bid bond furnished with this bid is the
sum of eleven thousand four hundred and fifty dollars 00/00 Dollars ($11,450)
---------------------------------------------------- ---------
Signature Michael Gatto
----------------------------------------------------------------------
(Individual, firm or corporation)
By Amboy Bus Inc., 36-A 6th St., Garden City Park, N.Y. 11040
-----------------------------------------------------------------------------
(Where bidder is corporation add:)
Attest:
Michael Gatto
- --------------------------------
(Secretary (Seal)
(Please note that affidavit of verification on following pages must be executed)
Notes: 1. Where bidder is a firm, the bid must be signed in the name of
the firm by a member thereof, who must sign his own name immediately thereunder,
as A. & B. Co., By C.A., Partner.
2. Where the bidder is a corporation, each bid must be signed in the
name of the corporation by some duly authorized officer or agent thereof
having knowledge of the matters stated in the bid, and such officer or
agent shall also subscribe his own name, as: A.B. Company, by C.D.,
President. The seal of the corporation should also be affixed.
3. An individual doing business under a trade name must present the
bid in such individual's correct name. The style "Thomas Jonas, doing
business as (d/b/a) Celestial Bus Co." may be used.
4. Each bid must be verified by the bidder submitting same by
execution of one of the following proper forms.
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<PAGE>
INDIVIDUAL VERIFICATION
County of Richmond )
State of New York ) ss:
Michael Gatto, being duly sworn, deposes and says; he is the person who
executed the foregoing bid, that deponent has read the declarations contained in
said bid and knows the contents thereof; that the same are true to deponent's
own knowledge.
/s/ Michael Gatto
---------------------------------------------
(Signature of person verifying bid)
Subscribed and sworn to before me this
27th day of February, 1979 Paul Lafata
Notary Public, State of New York
No. 24-7401823
/s/ Paul Lafata Qualified in Kings County
- -------------------------------------- Certificate Filed in New York County
Commission Expires March 30, 1080
- - - - - 0- - - -
BY A FIRM OR PARTNERSHIP
County of )
State of New York ) ss:
____________________________________________, being duly sworn, says:
I am a member of _______________________________________________________,
the firm described in and which executed the foregoing bid. I subscribed the
name of the said firm thereto on behalf of the firm and the several matters
therein stated are in all respects true.
____________________________________
(Signature of person verifying bid)
Subscribed and sworn to before me this
day of
____________________________________
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<PAGE>
CORPORATE VERIFICATION
County of Richmond )
State of New York ) ss:
Michael Gatto, being duly sworn, says:
I am the president of Amboy Bus Inc. the corporation whose name is
subscribed to and which executed the foregoing bid.
I reside at 109 Emerson Dr., Morganville, N.J. 07751
I have knowledge of the several matters therein stated and they are in all
respects true.
/s/ Michael Gatto
----------------------------------
(Signature of person verifying bid)
Subscribed and sworn to before me this
27th day of February 1979
Paul Lafata
Notary Public, State of New York
No. 24-7401823
/s/ Paul Lafata Qualified in Kings County
- -------------------------------------- Certificate Filed in New York County
Commission Expires March 30, 1080
- - - - - 0 - - - - -
The officer taking the acknowledgement shall enter his title, the date of
expiration of his commission, etc.
IMPORTANT NOTE:
Those found making intentionally false or misleading statements are liable for
prosecution for perjury.
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<PAGE>
SCHEDULE OF ITEMS, SPECIFICATIONS AND BID BLANK
FOR THE TRANSPORTATION OF HANDICAPPED PUPILS
FOR THE PERIOD SEPTEMBER 1979 TO JUNE 1982
I. INTENT AND SCOPE
This Contract is intended to cover requirements for the transportation of
handicapped pupils whose transportation is provided by the Board of Education of
the City of New York, and for such other uses as provided for herein.
II. PERIOD OF CONTRACT
The time for the performance of the work herein scheduled is for the period of
three (3) years beginning with the first official scheduled public school day in
September, 1979 and ending with the last official scheduled public school day in
June, 1982. Thereafter, the Contract may be extended for one or more additional
years in conformance with the requirements of the State Education Law and the
regulations of the Commissioner of Education of the State of New York.
III. NUMBER OF DAYS OF SERVICE
The contractor must conform to the public school calendar and time schedules of
all the different schools involved in the item(s) bid upon, including daily time
schedules. The public school calendar shall be furnished prior to the opening of
each school year. It is the responsibility of the contractor to adhere to this
calendar at all times unless notified otherwise by the Director of the Bureau of
Pupil Transportation (hereinafter the "Director"). This shall include
responsibility for adhering to any special schedules or shortened schedules. The
Board reserves the right to change the school hours or days of attendance of any
or all grades, or of any or all schools any time prior to the letting of the
Contract and at any time thereafter. No change in compensation will be made for
such adjustments, unless they necessitate the use of additional vehicles by the
bidder.
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<PAGE>
IV. PERIOD OF OPERATION
Extended and regular service shall be provided pursuant to the terms and
conditions of this Contract. Extended service shall be defined as being provided
by those vehicles that are available for the transportation of pupils beginning
with the initial pick-up time of 7:00 A.M. and concluding with the delivery of
the last pupil to his or her home on the return trip.
Regular service shall be defined as being provided by those vehicles that are
available for the transportation of pupils beginning with the initial pick-up
time of 7:00 A.M., and delivery to school for the morning session which will
commence no later than 9:00 A.M. In addition, a regular vehicle shall pick up
pupils for the homeward trip no earlier than 2:00 P.M. and no later than 3:30
P.M., and shall complete its service with the delivery of the last pupil to his
or her home. Vehicles providing regular service shall be assigned runs not
exceeding two (2) hours for intraborough operation, of two and one half (2 1/2)
hours for inter-borough operation and runs extending beyond New York City
limits, from the time of the initial pickup for the homeward trip.
V. PAYMENT
Payment will be made based upon the daily rate per vehicle quoted by the
contractor for the number of vehicles and the number of days for the type of
service provided by the contractor for each vehicle. The Board reserves the
right to adjust the number of extended and regular vehicles required to be
provided within any item upon five (5) days notice to the contractor. However,
in no event will the Board adjust the use of vehicles so as to reduce the
extended use of vehicles other than buses below ten percent (10%) of the total
number of such vehicles originally awarded to any contractor, or the extended
use of buses below twenty-five percent (25%) of the total number of buses
originally awarded to any contractor. In no event will the contractor be paid
for days on which the vehicles are not operating pursuant to this Contract
except for those days upon which the contractor was scheduled to provide service
and schools were ordered closed by the Chancellor or Community Superintendents
due to weather conditions or other emergency situations. Invoices shall be
submitted at the end of each calendar month for the number of vehicles and the
number of days on which services were rendered during the preceding month. No
adjustment in compensation will be made other than for: (1) assessment of
liquidated damages, (2) assessment of expenses arising from default pursuant to
paragraph 7(c) of the General Terms and Conditions of this Contract, (3) charges
for additional use of the vehicle, (4) charges for escort service when the
contractor provides such, and (5) increases or decreases in the number of
vehicles or extended service.
Charges for additional use of the vehicle shall be defined as the requirement
that the contractor pick up its first pupil prior to 7:00 A.M. or any pupil
after 3:30 P.M. for the homeward trip. Such a requirement may result from the
scheduling by the Bureau of Pupil Transportation. Additional charges for use of
extended service vehicles shall be at an hourly rate equal to ten percent (10%)
of the daily rate for extended service vehicles. Charges for less than one hour
in additional service will be pro-rated.
The Board of Education reserves the right to deduct two per cent (2%) from the
prices quoted herein if payment is made within thirty days from the date the
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<PAGE>
Board shall have received the invoice accompanied by acceptable proof of
delivery.
The discount herein provided for shall not be a consideration in determination
of award.
VI. ITEMS
The contractor shall complete the item(s) bid upon first. At the discretion of
the Director the vehicle may be assigned for a secondary use outside of the item
bid upon in accordance with the provisions of Section XII entitled, Use of
Vehicles, but within the hours contracted for the specific vehicle.
VII. TRANSPORTATION OF PUPILS
The pupils who will require transportation under this Contract are to be
provided with curb-to-curb service and/or additional service in accordance with
the provisions of Section XII. On the trip to school each child will be picked
up at the curb at a point as close to the front entrance to his home as
possible. In the unusual case where, because the child lives on a dead-end
street or because of traffic regulations, it is impossible for the vehicle to
pick up at the curb in front of the pupil's home, the pick-up and drop-off point
will be at the nearest intersecting street to the street on which the child
resides. On the homeward trip, the pupil will be discharged from the vehicle at
the same point from which the child was picked up unless instructed otherwise by
the Director. Vehicles will load and unload at the school at the point
designated by the Principal of the school.
Except in an emergency, no pupil will be required to transfer from one vehicle
to another vehicle either on the trip to school or on the homeward trip.
VIII. SCHEDULE OF VEHICLES
The Bureau of Pupil Transportation will prepare the vehicle schedules to be
operated by each vehicle to be used under this Contract. The schedule will show
the name, address, and the time of the initial pick up, name, address, sequence
of pick up for each additional pupil on the route, the school and its address,
and the scheduled arrival at each school. On the return trip the schedule will
indicate the departure time from the school and the sequence in which the
children will be delivered to their homes. These schedules will be subject to
frequent changes as the school schedule or session is altered, or as schools or
pupils' names and addresses are added to or deleted from the transportation
lists. The contractor will be required to comply with the changes in the
schedule within the time frame stipulated by the Bureau of Pupil Transportation.
The contractor shall not alter the schedule or the vehicle servicing such
schedule without prior approval of the Director.
A copy of such schedule shall be furnished to the Principal of each school.
Vehicles must not leave a pick-up point until the scheduled time and shall not
wait past the schedule time unless the operator sees a pupil approaching to
board the vehicle for the trip to school. No vehicle shall leave the school at
dismissal time until all students are aboard. Contractors are not to permit
their employees to make stops at unauthorized locations.
If a toll is involved it will be the responsibility of the contractor to pay
such toll at his own expense.
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<PAGE>
IX. VEHICLE SPECIFICATIONS
All vehicles to be used and all transportation operations must comply with the
regulations of the New York State Department of Education, the New York State
Department of Transportation, the New York State Department of Motor Vehicles,
as well as with all applicable laws and regulations of any agency of the federal
government, State of New York and the City of New York.
Four different type vehicles are required to perform the services under this
Contract. In addition to complying with all governmental laws and regulations
the vehicles must also comply with the following standards:
1. "Standard school buses" must have a minimum seating capacity for
thirty-six handicapped students with seat belts, excluding the
driver and escort. Any vehicle with the capacity of more than
sixteen pupils is deemed to be a bus.
2. "Hydraulic lift buses" shall be designed so that an escort can
assist the pupil in a wheelchair into and out of the vehicle by use
of the lift without discomfort or danger to the pupil and so that
the escort can securely anchor the wheelchair to the vehicle. The
contractor must be able safely to accommodate various types of
wheelchairs. The minimum capacity with seat belts must be eight
wheelchair passengers and eight ambulatory passengers. These seating
configurations are subject to adjustment by removal or addition of
seats as required by the Director of the Bureau of Pupil
Transportation.
3. "Mini-bus station wagons" must have a minimum seating capacity of
fourteen (14) for vehicles acquired prior to January 1, 1979 and a
seating capacity of fifteen (15) for vehicles acquired after January
1, 1979.
4. "Mini-bus or station wagons equipped with ramps to accommodate
wheelchairs" must have a minimum capacity for four wheelchair
passengers and minimum seating capacity for four ambulatory
passengers and must be so equipped so that the escort can securely
anchor the wheelchairs to the vehicles. The contractor must be able
to accommodate safely various types of wheelchairs. These seating
configurations are subject to adjustment by the removal or addition
of seats as required by the Director.
No standees will be permitted at any time on any vehicle used in the
performance of this Contract.
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<PAGE>
All vehicles being used in performance of this Contract that were manufactured
more than five years prior to the date of execution of this Contract shall be
equipped with two-way radios.
Vehicles shall be given a number suitable for identification purposes. Such
numbers shall be not less than four inches high displayed on both sides, front
and rear of vehicles. Also displayed on each vehicle shall be the name and
address of the contractor providing the service in letters not less than three
inches high. Numbers and letters shall be applied with black paint. The run
number, which will be supplied to the contractor by the Bureau of Pupil
Transportation, shall be placed inside the side front window of the vehicle and
shall be sufficiently large so that it can be clearly seen from a distance of
not less than fifteen feet. The run number shall not obscure the driver's
vision. The color of all vehicles used in the performance on the Contract shall
be National School Bus chrome yellow.
X. VEHICLE SAFETY REQUIREMENTS
The interior of each vehicle shall be cleaned and swept or vacummed at least
once a day. The exterior shall be washed weekly and kept as clean as possible,
weather and other conditions permitting.
All vehicles shall be equipped with individual safety belts for each passenger
carried. Such safety belt shall conform to the motor vehicle code of the State
of New York. All vehicles shall be equipped with an all purpose fire
extinguisher, dry chemical or CO 2 type, rated at least 10-B:c, equipped with a
calibrated or marked guage. The fire extinguisher shall be mounted in automotive
bracket located in the driver's front compartment in full view and easily
accessible.
All vehicles shall be equipped with a first aid kit in a dust proof medical
container easily removable, located in the driver's front compartment which
shall contain the following items:
2 bandages (1" by 10 yards)
6 sterile gauze pads (3" by 3")
1 adhesive tape (1" by 25 yards)
12 plastic bandaid strips
1 pair scissors
2 triangular bandages with 2 safety pins
(approximately 40" by 30" by 54")
3 single units of sterile eye pads (one per unit)
When a vehicle operator is not in his seat and pupils are in the vehicle, the
motor must be shut off, ignition key removed, the brakes set and the front
wheels turned against the curb. If the vehicle is parked and the motor shut off
for any reason, the ignition key must be removed and the brakes set with wheels
turned towards the curb.
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<PAGE>
To protect against carbon monoxide concentration or buildup, no idling of the
motor is permitted while: (1) awaiting school dismissal; (2) loading or
unloading pupils at school; (3) parked or not moving for an excessive length of
time.
XI. SPARE VEHICLES AND VEHICLE PERFORMANCE MONITORING
The contractor will provide all of the vehicles necessary to do all of the work
as contracted for in the item(s) contained in his Contract. The contractor must
have available sufficient approved vehicles and qualified personnel to enable
him to dispatch and place spare vehicles into operation promptly if, when and
where necessary to ensure continuous uninterrupted service in the event one or
more of the vehicles in regular use cannot function.
The contractor shall provide one spare vehicle for every twenty (20) vehicles of
a specific type contracted for. If a contractor provides between sixteen (16)
and twenty (20) vehicles of a specific type, then it must provide one spare
vehicle for each type. In the event a contractor provides less than fifteen (15)
vehicles of any specific type, then the contractor shall document to the
satisfaction of the Director that it has access to one spare vehicle for each
type. For these purposes, corporate bidders who are subject to common control as
determined by the Board based on an analysis of:
(a) ownership of the corporations' assets,
(b) coincidence of corporate officers and directors, and
(c) such other factors as the Board determines to be relevant, are
deemed to be one contractor.
The maximum number of spare vehicles required to be available and
provided by one contractor shall not exceed ten vehicles for any
specific type of vehicle.
Vehicles must be staffed with personnel qualified to handle emergency service.
Spare vehicles must be located at strategic points during the hours that pupils
are being transported under this Contract.
The person on the spare vehicle shall also act as expeditor, whose
responsibilities, beside performing emergency service shall include, but not be
limited to the following:
1. Dispatching or expediting vehicles to ensure a smooth operating
fleet.
2. Prompt dispatching of spare vehicles in the event of breakdown of
vehicles.
3. Maintaining a log in a form approved by the Director, in which he
will enter reports of disruptions of service or delays. A transcript
of such log shall be furnished to the Director at the end of each
school week.
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All maintenance or spare vehicles of a contractor providing 20 or more vehicles
shall be equipped with two-way radios and shall have continually open contact
with contractor's garage. In addition, the contractor shall assign its other
vehicles equipped with two-way radios among its routes so that the contractor
can dispatch the vehicles expeditiously to replace vehicles with breakdowns,
after these vehicles have completed their regular run. All equipment and
personnel referred to herein shall be supplied by the contractor and maintained
by the contractor at his own expense. A list of equipment and personnel used for
this service shall be submitted to the Director.
The contractor shall ensure direct telephone access to the contractor's
garage during the hours of operation. Answering services shall not qualify as
direct telephone access. The Bureau of Pupil Transportation will supply the
contractor with parent telephone numbers of each pupil. As a vehicle varies
from its schedule at any time for more than one hour, the contractor shall
telephone parents of the pupils involved in the delay. The contractor shall
have available sufficient telephone accessibility to handle problems and
inquiries properly.
The contractor is responsible for monitoring operator and escort performance in
the field and to resolve problems with parents.
Field supervision shall include but is not limited to the following:
1. Spot checking operator and escort performance at specific pick-up
points and at schools.
2. Riding a specific run where problems have occurred.
3. Providing on-the-job training to operators and escorts.
4. Resolving problems between the contractor's personnel and school
officials or parents.
5. Assisting expediting vehicles and continuing service where bus
breakdowns occur.
XII. USE OF VEHICLES
Passengers other than pupils assigned by the Bureau of Pupil Transportation
shall not be carried in the vehicles used under this Contract while they are
being used to transport pupils except as otherwise stated or as authorized in
writing by the Director.
In the event that a school principal requests permission for parents or other
adults to ride on the vehicle to maintain order, such permission may be granted
by the Director only, and the contractor will be notified accordingly.
The vehicles contract for extended service are subject to use for field trips,
special events, emergency situations, or any other use as prescribed by the
Director. The use of the vehicles for such purposes may only be for hours that
will not interfere with the schedules established for the pupils transported to
and from school under the Contract. Use of these vehicles shall not be
restricted to physically handicapped, mentally retarded, emotionally disturbed
or other classifications of pupils, nor shall use of the vehicles for such
purposes be limited to schools specified herein. The vehicles under Contract for
extended service
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shall provide transportation services to any other public agency or private
organization upon instruction of the Director.
In the case of field trips and other special trips where the routes are not
provided by the Director, these routes shall be established by the contractor in
advance, using the most efficient routing for the vehicle.
When vehicles are used for field trips, the pupil groups will be accompanied by
one or more adults. At least one of these adults will be a teacher. If the route
requested by a teacher in charge requires that a toll be paid, or if the teacher
should request the operator to park the vehicle in an area where a parking fee
is charged, it will be the responsibility of the teacher to pay such toll or
parking fee. Operators are not to be reimbursed by the teacher for any other
reason. Operator will not solicit tips or gratuities.
XIII. INCREASE OR DECREASE IN THE NUMBER OF VEHICLES
A. Decrease. At any time during the period of the Contract the number of
vehicles required may be reduced and the schedules may be adjusted due to change
in pupil population, or change in policy or directive adopted by the Board of
Education, the City of New York, the State Education Department, and/or the
Financial Control Board, or other factors; provided, however, that in no event
shall the total number of any type of vehicle originally awarded to a contractor
be reduced: (1) by more than ten percent (10%) of the total number of any type
of vehicle originally awarded in the first year of this Contract; (2) in the
second year of this Contract, by more than twenty percent (20%) of the total
number of any type of vehicle originally awarded; and (3) in the third year of
this Contract by more than thirty percent (30%) of the total number of any type
of vehicle originally awarded. Compensation to the contractor shall be reduced
to the number of vehicles actually used in the performance of this Contract, and
the Board of Education shall not be liable for payments for any vehicles
eliminated to the extent provided above.
Upon determination by the Director that there is a decrease in the number of
vehicles required for a specific type of service (service area and type of
vehicle) during the period of this Contract, the Board of Education reserves the
right to reduce the number of vehicles for a specific type of service as
follows:
(1) If the total number of vehicles at the time of decrease does not
exceed the total number of vehicles originally contracted for, such
reduction shall apply to the contractor who quoted the highest
weighted average daily rate per vehicle and shall apply subsequently
to the contractors who quoted the next highest weighted average
daily rates per vehicle until all necessary reductions are made.
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(2) If the total number of vehicles at the time of the decrease exceeds
the number of vehicles originally contracted for, such reduction
shall first be made from the additional vehicles contracted for
during the performance of this Contract and shall apply first to the
highest weighted average daily rate per vehicle, and subsequently to
the contractors who quoted the next highest weighted average daily
rates per vehicle until all necessary reductions are made. After the
reduction of these additional vehicles is exhausted, the Director
may reduce the number of vehicles originally contracted for in
accordance with XIII.A(1) above.
B. Increase. If at any time during the period of the Contract the number of
vehicles required for a specific type of service increases, the Board of
Education reserves the right to increase the number of vehicles for a specific
type of service as follows:
(1) If the total number of vehicles at the time of the increase is the
total number or in excess of the total number of vehicles originally
contracted for, the increase shall first be offered to that
contractor who quoted the lowest weighted average daily rate per
vehicle. Opportunity to furnish such vehicles as the initial offeree
cannot furnish may then be offered to the next contractor with the
next lowest weighted average daily rate per vehicle. If no
contractors providing a specific type of service are found willing
to supply additional service of the same type, then the Board may
offer the opportunity to provide the additional vehicles to a
contractor in any adjacent borough in the manner set forth. The
initial offer will be made to that contractor with the lowest
weighted average daily rate for that type of vehicle for which none
of the successful bidders for that type of service were willing to
provide additional vehicles as provided above.
(2) If the total number of vehicles at the time of the increase is less
than the total number of vehicles originally contracted for, and
there is a subsequent need for these vehicles, the contracts who had
their number of vehicles reduced shall be afforded the right of
first refusal for reinstatement of the use of these vehicles in
inverse order to that by which they were reduced pursuant to XIII.A
above.
All additional vehicles provided throughout the entire period of the
Contract must comply with all the terms, conditions and
specifications of the Contract set forth herein. The contractor will
be compensated for such additional vehicles as provided for herein.
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C. Notice and Liability. The contractor shall be notified at least five (5)
school days in advance of the date the above changes are effective. If the
contractor is willing to furnish the required additional vehicles, he shall
confirm such agreement in writing to the Director within five (5) business days
of receipt of the offer.
If the above changes, when effective, terminate the need for any part of the
services rendered by a particular contractor, the Board of Education and the
City of New York (or any political or governmental subdivision thereof) shall
not be liable for any damages or cost of the contractor as a consequence
thereof.
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XIV. FACILITIES AND MAINTENANCE
The bidder shall have sufficient storage and access to maintenance facilities
with sufficient equipment and trained personnel to satisfy New York State
Department of Transportation requirements. The facilities shall be subject to
periodic inspection and approval by the Board of Education during the period of
the Contract.
The contractor shall provided a program of preventive maintenance which meets
the approval of the Director and shall maintain records as evidence that the
vehicles are receiving acceptable periodic maintenance.
The Board of Education reserves the right to demand withdrawal from service of
any vehicle which in the opinion of the inspectors of the Bureau of Pupil
Transportation presents a hazard to the safe transportation of pupils.
XV. GASOLINE
All gasoline required will be provided by the contractor at his own expense.
XVI. RECORDS TO BE TRANSMITTED
The contractor shall submit, on Tuesday of each week, a list of the names and
addresses of pupils to be transported on the contractor's vehicles, but who have
not appeared for transportation for the entire preceding week. A record of
vehicles incorporating a Daily Record of Crews (operators and escorts) used each
day for the transportation of pupils under this Contract shall be maintained in
duplicate on forms to be prescribed by the Director, and the contractor shall
furnish to the Director the duplicate copies by Wednesday of each week. The
contractor shall supply such other information or documentation as may be
requested by the Director.
XVII. VEHICLE OPERATOR STANDARDS
To protect the safety and welfare of pupils, the contractor shall only employ
persons of good moral character to serve as vehicle operators. The contractor
shall send all applications for employment to the Director, and follow
procedures established by the Director for submission of the fingerprint record
and medical certificate for each applicant. The contractor shall certify to the
Director that he has checked the references of the applicant and that to the
best of his knowledge and belief the applicant is a person of good moral
character. No operator shall be employed on Board of Education work until his
references and fingerprint record have been approved by the Director, and his
medical certificate has been approved by both the Director and Medical Director.
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Vehicle operators shall have valid appropriate operator's licenses for the
vehicles they operate, and must be competent, reliable and between the ages of
21 and 65. Operators shall be physically fit and properly qualified by
experience, driving record and training to perform their duties. The contractor
shall certify to the Director that he has reviewed New York State Department of
Motor Vehicles driver abstract records to determine the fitness and driving
record of its operators.
All vehicle operators shall be examined by a licensed physician. The results of
the physical examination shall be immediately reported to the Director and
Medical Director of the Board of Education on forms approved by the New York
State Department of Education and provided by the Director. These forms shall
constitute the medical certificate. The written report of the physician shall be
considered by the Medical Director in determining the fitness of the driver.
Each operator who is to be initially employed shall be examined within the four
weeks prior to the beginning of service.
Each operator shall receive an annual physical examination which shall include a
tubercular test. The results of this examination and the tubercular test shall
be recorded on forms approved by the New York State Department of Education and
provided by the Director.
These examinations shall be at no cost to the Board of Education.
Section 156.13(d)(2) of the Regulations of the New York State Commissioner of
Education shall be complied with in full and states: "Each school bus driver
initially employed by a Board of Education or transportation contractor
subsequent to July 1, 1973, shall have received at least two hours of
instruction on school bus safety practices. Each driver of a vehicle
transporting handicapped pupils exclusively who was initially employed
subsequent to January 1, 1976, shall have received an additional hour of
instruction concerning the special needs of a handicapped pupil. During the
first year of employment, each driver shall complete a course of instruction in
school bus safety practices approved by the Commissioner, which shall include
two hours of instruction concerning the special needs of a handicapped pupil.
All school bus drivers shall receive a minimum of two hours or refresher
instruction in school bus safety at least two times a year, at sessions
conducted prior to the first day of school and prior to February 1st of each
year. Refresher courses for drivers of vehicles transporting handicapped pupils
exclusively shall also include instructions relating to the special needs of a
handicapped pupil."
Each contractor must utilize instructors approved by the New York State
Education Department for conducting the training sessions for drivers. All
training programs must be approved by the New York State Education Department
and the Bureau of Pupil Transportation before the program
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is offered. In addition, all new vehicle operators must have a total of twenty
hours of classroom instruction prior to driving on any Board of Education
business. All vehicle operators having two or more accidents while driving on
Board of Education business must also attend an accident repeater course
conducted by a defensive driving specialist. Certification will be required from
the contractor stating that each operator has received appropriate training as
specified in this Contract.
If the Director determines that an operator's competency falls below acceptable
standards, or that any operator has made an unauthorized stop or an unauthorized
change in established route for which the operator may or may not have accepted
additional remuneration from other than his employer, or that the driver has a
previous record of careless or unsafe driving, the contractor, upon receiving
written notice from the Director to that effect, shall not again employ this
operator on any part of the work to be performed hereunder, or on any part of
any work the contractor may perform for the Board of Education under any other
contract.
Vehicle operators must be dressed in uniform attire provided by the contractor
and wear a photo identification badge which clearly shows the operator's name,
company's name, and operator's identification number assigned by the contractor.
The identification badge should be visible from a distance of ten feet.
XVIII. OPERATIONAL SUPERVISION
The requirements entitled "Bus Company and Bus Driver Responsibilities"
contained in Pupil Transportation Handbook No. 1, "School Bus Information for
Drivers, Escorts, Schools and Parents of Handicapped Children," dated April of
1977 and drafted by the Bureau of Pupil Transportation is incorporated herein by
reference and is made part of this Contract as if fully set forth herein in its
entirety.
In addition to the requirements set forth in Pupil Transportation Handbook No.
1, operators must drive the scheduled route assigned to them at least one time
prior to start of school. If at any time during the school year a new operator
is assigned to a schedule route, that operator must drive the schedule before
being permitted to transport students on that schedule.
All operators employed in the transportation of handicapped pupils shall be
given permanent route assignments at the commencement of each school year.
All accidents involving vehicles operating under this Contract shall be reported
to the Director immediately.
The emergency drills required by the State Education Law shall include practice
and instruction in the location, use and operation of the emergency door, fire
extinguisher, first aid equipment, and use of the windows as a means of escape
in case of fire or accident. Drills shall include situations which might result
from both fire and accidents. Such instruction
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and the conduct of drills shall be given by a member or members of the teaching
staff as arranged between the contractor and the principal of each school. No
emergency drills shall be conducted when vehicles are on routes. The Director
shall be notified of arrangements for, and execution of, emergency drills. The
contractor and operator shall make arrangements for emergency drills so as to
minimize disruptions in service.
XIX. ESCORTS
The contractor shall provide escort service in addition to the operator to the
extent required by the Board.
A. The Board may determine to: (1) employ escorts directly, (2) contract
separately for the employment of escorts with the contractor herein or
with a separate contractor, or (3) require the contractor to provide
escort service in addition to the operator. Should the Board determine to
employ escorts directly, or contract separately with the contractor or
with a separate contractor to provide escort service, the Board and/or the
contractor providing the escort service, as the case may be, shall assume
sole responsibility for any claims made for acts of negligence,
carelessness or incompetence perpetrated by the escorts or by the employer
of the escorts in connection with performance or failure to perform of
such escorts or employers of escorts; and shall indemnify and hold
harmless the contractor herein, if a separate contractor, from the
contractor providing the escort service from all suits, actions, damages
or costs of every kind and description, as may arise under the terms of
this contract or otherwise, to which the contractor herein may be
subjected because of such negligence, carelessness or incompetence. In
addition, should the Board determine to employ escorts directly, or
contract separately for the provision of escort service with a contractor
other than the contractor herein, the provisions of B. through E. herein,
reference to escort service in Paragaph XXI of the Specifications, and any
other reference to escort service in this contract other than as provided
in Paragraph XIX (A), shall be deemed to be of no force and effect with
respect to the contractor herein.
Should the Board determine to require the contractor to provide escort
service in addition to the operator, (1) the contractor shall be
compensate in the manner provided herein in the amount of forty dollars
($40) per day per escort providing service on a vehicle in regular service
and sixty dollars ($60) per day per escort providing service on a vehicle
in extended service, with the daily rate per escort increased by ten (10%)
percent in each of the second and third years of this Contract,
(establishing the rate as forty-four dollars and sixty-six dollars in the
second year, and forty-eight dollars and seventy-two dollars in the third
year), which amount shall be in addition to any and all other compensation
to which the contractor is entitled under the terms of this Contract, and
(2) all references to escort service in provisions B. through E. below.
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Paragraph XXI of the Specifications, and any other reference to escort service
in this contract other than the first two options described above, shall be of
full force and effect with respect to the contractor herein.
B. Standards. To provide for the safety and welfare of children, the contractor
shall only employ persons of good moral character to serve as escorts. Escorts
must be competent, reliable, over twenty-one years of age, physically fit and
properly qualified to perform their duties. The contractor shall send all
applications for employment to the Director and follow procedures established by
the Director for submission of the fingerprint record and medical certificate
for each applicant before the date the escort services are to be provided;
allowing sufficient time for review and approval by the Director and Medical
Director. The contractor will certify that he has checked the references of the
applicant and to the best of his knowledge and belief the applicant is a person
of good moral character. No escort shall be employed on Board of Education work
until the references and fingerprint record have been approved by the Director,
and the medical certificate has been approved by the Medical Director and the
Director.
Each regular or substitute escort shall be examined by a licensed physician. A
report concerning the physical examination shall be submitted immediately on the
forms prescribed to the Director and the Medical Director of the Board of
Education. The physical examination shall include, as a minimum, those
requirements specified on the prescribed physical examination report. The
written report of the physician shall be considered by the Medical Director to
determine the fitness of the escort to perform the duties set forth herein. Each
escort who is to be initially employed shall be examined within the four weeks
prior to the beginning of service. Each escort shall receive an annual physical
examination. In no case shall the interval between physical examinations exceed
a twelve month period. This examination will be at no additional cost to the
Board of Education. The result of this examination and of an annual tubercular
test shall be recorded on forms approved by the Director. These forms shall
constitute the medical certificate.
The Board of Education specifically reserves the right to reject any person who
fails to meet the minimum physical requirements as specified on the medical
certificate. If the Director determines that an escort's performance is
unsatisfactory, the contractor, upon receiving written notice from the Director
of such unsatisfactory performance shall not employ this escort on any work
performed for the Board of Education.
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C. Training and Instruction. All escorts shall attend five one and one-half hour
training sessions for a total of seven and one-half hours each year concerning
the transportation of handicapped pupils. The training sessions shall be
scheduled by the contractor with the approval of the Director, and are to be
held at an hour and location convenient to the contractor and the escorts. The
contractor shall furnish the premises required at his own cost and expense, and
shall not be entitled to any additional compensation from the Board for these
training sessions. All training programs must be approved by the Director before
being offered.
D. Identification. Escorts shall wear uniform attire supplied by the contractor.
Escort shall wear a photo identification badge on the outside of his or her
uniform which shows clearly the name, escort identification number assigned by
the contractor, and the name of the contractor which employs the escort. The
identification badge should be visible from a distance of ten feet.
E. Responsibilities. The section entitled "Escort Responsibilities" contained in
Pupil Transportation Handbook No. 1, entitled "School Bus Information for
Drivers, Escorts, Schools and Parents of Handicapped Children," dated April,
1977 is incorporated herein by reference as if it is set forth herein in its
entirety. Pupil Transportation Handbook No. 1 is available upon request from the
Director of Pupil Transportation.
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XX. AUDIT OF INVOICES & FINANCIAL RECORDS
Invoices will be audited for payment after each month in which the services are
rendered.
The contractor hereby consents to an audit of any and all financial records
relating to this Contract by the Department of Audit and Control. During the
period of the Contract and upon the request of the Department of Audit and
Control, the Office of Auditor General of the New York City Board of Education,
the Comptroller of the City of New York or the Department of Investigation of
the City of New York, the contractor shall furnish information and documents as
specified by any of these agencies, including but not limited to the
contractor's income tax forms filed with the City, State and Federal government
for the term of this Contract.
XXI. LIQUIDATED DAMAGES
In view of the difficulty of ascertaining the loss which the Board or City will
suffer by reason of these defaults on the part of the contractor, the following
sums are hereby agreed upon, fixed and determined by the parties hereto as the
liquidated damages the Board or City will suffer by reason of said delay and
default, and not by way of penalty, and such liquidated damages may be imposed
in the amounts provided below upon the following findings of the Director or his
or her designee:
A. One and one-half times the appropriate daily rate per vehicle paid to the
contractor shall be deducted from the subsequent month's payment due the
contractor for the following:
1. Each failure to provide the number of vehicles required each day to
convey to and from the school the number of pupils specified.
2. Each vehicle providing extended service which does not service a
field trip or provide the services required by Section XII (Use of
Vehicles), on the schedule established in advance either by the
Director or a school or the community school district office.
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B. The appropriate daily rate per vehicle shall be deducted from the subsequent
month's payment due the contractor for the following:
1. Each day that the contractor permits an employee to service a route
for whom the required medical certificate, fingerprint record and
applications for employment were not submitted to and approved by
the Bureau of Pupil Transportation.
2. Each time an escort is not provided on a vehicle, if required.
3. Each time it is found that the contractor did not provide telephone
access from the time the first vehicle is scheduled to leave the
garage until the last vehicle returns to the garage at the end of
the day.
4. Each time a vehicle has an expired or null Public Service Commission
sticker.
5. Each time an accident is not reported to the Director within
twenty-four (24) hours.
6. Each time an operator is found guilty of commiting a moving
violation of the New York State Vehicle and Traffic Law while
transporting pupils under this Contract.
C. One half the appropriate daily rate per vehicle paid to the contractor shall
be deducted from the subsequent month's payment due the contractor for the
following:
1. Each vehicle transporting a greater number of pupils than the
vehicle's permissible pupil seating capacity.
2. Each vehicle furnished that has a pupil seating capacity less than
required by the Contract terms.
3. Each vehicle each day a child has been unilaterally excluded from
transportation by a contractor, operator or escort without the
consent of the Director.
4. Each vehicle failing to hold an emergency drill as required.
5. Each time the operator requires a school to dismiss pupils prior to
the normal close of the school session except where required by
special circumstances specified by the Director.
6. Each vehicle which does not comply with structural and safety
provisions for the vehicle, including but not limited to seat belts,
padded seats, high back seats, and operable wheel chair brackets.
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D. One third the appropriate daily rate per vehicle paid to the contractor shall
be deducted from the subsequent month's payment due the contractor because of
the following:
1. Each operator or escort who has not received the proper training,
instruction, and/or refresher courses as specified herein within the
time period agreed upon by the Director and contractor.
2. Each vehicle which arrives after the time a session is due to start.
3. Each vehicle that arrives at the school more than thirty minutes
prior to the start of the session.
4. Each vehicle operator who does not have on his or her person an
appropriate operator's license.
5. Each time the contractor fails to notify a parent that the vehicle
is more than one hour behind schedule, unless no telephone number
has been provided or the Bureau of Pupil Transportation is contacted
before the hourly limit has expired and agrees that the contractor
need not call every parent.
E. One sixth of the appropriate daily rate per vehicle paid to the contractor
shall be deducted from the subsequent month's payment due the contractor for the
following:
1. Each time the contractor, operator or escort does not notify the
parents of pupils on the vehicle of changes in schedules or pick-up
or drop-off locations.
2. Each vehicle that makes an unauthorized stop or an unauthorized
change in an established route or schedule.
3. Each vehicle failing to have a fire extinguisher.
4. Each vehicle failing to have a first aid kit.
5. Each time an operator fails to remove ignition keys, turns wheels to
curb, and set brakes when and as required while pupils are on the
vehicle.
6. Each vehicle for each scheduled stop not served.
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7. Each vehicle with an operator or escort not wearing uniform attire
or visibly displaying an identification badge with the required
information.
8. Each day the contractor fails to provide the information on forms
required as set forth herein.
9. Each vehicle that arrives at the school or departs from the school
after the time scheduled, unless required to do so by the Bureau of
Pupil Transportation.
10. Each vehicle the contractor changes on a run, where it is not a
change resulting from a breakdown or a scheduled maintenance.
11. Each operator who fails to assist in the conduct of an emergency
drill.
12. Each operator who fails to make available a vehicle providing
extended service to a scheduled class in transportation safety.
13. Each time a vehicle is not in compliance with the identification
requirement of Section IX, Vehicle Specifications.
14. Each time a vehicle over five (5) years old is not equipped with a
two-way radio.
15. Each failure to perform any other duties as set forth in the Bureau
of Pupil Transportation Handbook No. 1.
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GENERAL TERMS AND CONDITIONS
WITNESSETH
That pursuant to all applicable State and Local Laws and all By-Laws,
resolutions, rules and regulations of the Board of Education and the City of New
York and its various departments, and in consideration of the agreements
hereinafter undertaken by each of the parties hereto with the other, the parties
hereto do hereby convenant and agree for themselves and for their respective
successors and legal representatives as follows:
DEFINITIONS
Wherever the following words, names or titles appear in this Contract, they
shall have the following meanings:
(a) "THE BOARD" means the Board of Education (BOE) of the City of New
York and the party of the first part of this Contract.
(b) "THE CONTRACTOR" means the party of the second part to this
Contract.
(c) "THE DIRECTOR" means the Director of the Bureau of Pupil
Transportation delegated by the Board to supervise the work of this
Contract.
(d) "THE CITY" means the City of New York.
(e) "THE COMPTROLLER" and "THE TREASURER'" means the Comptroller and the
Treasurer of the City of New York respectively.
(f) "THE SECRETARY", "ASSISTANT SECRETARY" and "EXECUTIVE DIRECTOR" mean
the following officers and employees of the Board of Education
respectively: the Secretary, assistant Secretary of the Board of
Education and Executive Director of the Division of Business and
Administration.
(g) "APPROVED", "REQUIRED", "DIRECTED", "SPECIFIED", "DESIGNATED" or
"DEEMED NECESSARY", unless otherwise expressed, means approved,
required, directed, specified, designated, or deemed necessary, as
the case may be, by the Director.
(h) "WORK" or "SERVICES" means all services to be furnished or done by
or on the part of the contractor.
(i) "COMPLETION" means full and complete compliance with every
requirement of the Contract as attested by the Director.
(j) "SPECIFICATIONS" shall mean the combined proposal for bids and
specifications, and amendments thereto, and all of the directions
and requirements applying to the service as hereinbefore detailed
and designated under specifications.
(k) The term "ITEM" as used herein, shall be defined as each separate
unit or group of vehicles upon which a contractor may bid.
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1. SUBJECT MATTER
The contractor shall provide at its own cost and expense sufficient plant,
equipment and working capital to provide for the transportation of pupils in
accordance with the terms, conditions, and specifications set forth herein. The
contractor shall accept as full compensation for its faithful performance of
this Contract the sums certified by the Director in accordance with the
provisions of the Contract, and said sums shall be the amount at which the
Contract was awarded to the Contractor at the public bidding.
2. CONTRACT
The Proposal for Bids, Instructions to Bidders, Bid, Schedules and
Specifications are and shall be a part of this Contract. In case of variance
between the specifications, bid and Contract, if any, the specifications shall
be controlling.
3. INTERPRETATION
Any doubt as to the meaning of the terms of the Contract or any obscurity as to
the wording of the terms will be explained in writing, upon request, by the
Director and all directions and explanations required, alluded to, or necessary
to complete any of the provisions of the Contract and to give them due effect
will be given by the Director in writing upon request. The interpretation of the
Director shall be final and binding upon all parties.
To prevent all disputes and litigations, the Director shall, in all cases,
determine the quality of the services which are to be delivered and paid for
under this Contract, and shall determine all questions in relation to said
services, their quality, delivery and condition, and shall in all cases decide
every question which may arise relative to the execution of this Contract on the
part of the contractor, and the Director's estimate or decision shall be final
and conclusive upon the contractor.
4. MODIFICATIONS
The Board may, from time to time, request changes in the scope of the services
to be performed by the contractor hereunder. However, no term, provision or
condition of this Contract shall be deemed waived by the Board unless such
waiver shall be in writing with the approval of an authorized representative of
the Board subscribed thereon.
5. COMPLIANCE WITH LAWS
The contractor shall comply with all applicable laws, ordinances, and codes of
Federal, State and Local governments.
It is the intent and understanding of the parties hereto that each and every
provision of law required by law to be inserted in this Contract shall be deemed
to be inserted herein. It is further agreed that if, through mistake or
otherwise, any such provision is not inserted, or is not inserted in correct
form, that this Contract shall forthwith be amended upon notice to the
Contractor by such insertion so as to comply strictly with the law.
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6. NON-ASSIGNMENT OF CONTRACT
The contractor will give personal attention to the faithful performance of this
Contract. The contractor will not assign, transfer, convey, sublet or otherwise
dispose of this Contract or its right, title or interest in or to the same or
any part thereof without the previous consent of the Director or the Director's
designee endorsed thereon; and the contractor will not assign by power of
attorney or otherwise, any of the monies to become due and payable under this
Contract unless by and with the previous consent in writing of the Board or its
designee endorsed thereon. If the contractor shall, without such previous
written consent, assign, transfer, convey, sublet or otherwise dispose of this
Contract or of its right, title or interest therein, or any of the monies to
become due under this Contract, to any other person, firm or corporation, this
Contract may, at the option of the said Board, be canceled and terminated, and
the Board and the City shall thereupon be relieved and discharged from any and
all liabilities and obligations to the contractor arising from such Contract,
and to its assignee or transferee; provided that nothing herein contained shall
be construed to hinder, prevent or affect an assignment by the contractor for
the benefit of its creditors made pursuant to the statutes of the State of New
York, and no right under this Contract, or to any monies to become due
hereunder, shall be asserted against the Board or the City in a law or in
equity, by reason of any so-called assignment of this Contract, or any part
thereof, or of any monies to become due hereunder, unless authorized as
aforesaid.
7. CANCELLATION
A. If the contractor engages in repetitive or persistent violations of the
conditions or covenants of this Contract, the Director may seek to have the
contractor declared in default by the Board of Review pursuant to Article 8 of
the Board's By-laws. In the event the Board of Review shall determine the
contractor to be in default, the Director shall notify the contractor that its
Contract is terminated. Such action by the Director may be based upon any of the
following:
(1) Failure of the contractor to provide any portion of the services
specified herein;
(2) Action by the Contractor to subcontract, encumber, assign, or
transfer this Contract, either in whole or in part, otherwise than
as specified herein;
(3) Failure to notify the Director of increases in the total number of
vehicles as required by the "Insurance and Performance Bond"
provisions of the Proposal for Bids; or
(4) Violation by the Contractor of any of the conditions or covenants of
this Contract or execution of this Contract in bad faith.
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B. Upon the refusal of a person, when called before a grand jury, governmental
department, commission, agency, or any other body which is empowered to compel
the attendance of witnesses and examine them under oath, to testify in an
investigation or to answer any relevant questions concerning any transaction or
contract entered into with the State, or any political subdivision thereof, or a
public authority or with any public department, agency or official of the State
or a political subdivision thereof, when immunity has been granted to the
witness against subsequent use of such testimony, or any evidence derived
therefrom, in any subsequent criminal proceeding:
(1) such person, or any firm, partner, director, or corporation of which
he is a member, partner, director or officer shall be disqualified
for a period of five (5) years after such refusal from submitting
bids for or entering into or obtaining any contracts, leases,
permits or licenses with the City or submitting bids for or entering
into or obtaining any contracts, leases, permits, or licenses which
will be paid out of any monies under the control of or collected by
the City, and/or shall be subject to such other action appropriate
under the circumstances, and
(2) any and all such existing contracts, leases, permits or licenses
made with or obtained by any such person or firm, partnership, or
corporation of which he is a member, partner, director or officer
may be cancelled or terminated by the City of the Board or be
subject to such action appropriate under the circumstances, without
incurring any penalty or damages on account of such cancellation or
termination, but any monies owing for goods delivered, work done, or
rentals, permits or license fees due, prior to the cancellation or
termination shall be paid.
C. In the event of termination of this Contract by reason of default of the
contractor, the Director shall have the power in the manner prescribed by law to
obtain the undelivered services, or such part thereof as it may deem advisable,
and to charge the expense thereof to the contractor. The expense so charged and
the liquidated damages for delay herein provided for shall be deducted and paid
by the BOE out of such monies that may then be due or may thereafter become due
to the contractor under or by virtue of this Contract or any part thereof. In
case such expense and liquidated damages hereunder shall exceed the sum owing
for services rendered at the time of termination of this Contract, then the
contractor shall pay the amount of such excess to the BOE on notice from the BOE
of the amount of such excess and in case such expense and liquidated damages
shall be less than the sum which would have been payable under this Contract if
the same had been completed by the contractor, then the contractor shall forfeit
all claims to the difference to the BOE. In the event of the BOE undertaking to
secure the services or any part thereof under this section of the Contract, the
certificate of the director as to the amount of services secured, the cost, and
the excess cost, if any, of completing this Contract, and the amount of
liquidated damages hereunder, shall be binding and conclusive upon the
contractor, his assignee, and all other claimants.
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8. NOTICES
The residence or place of business given in the Contract is hereby designated as
the place where all notices, letters or other communications addressed to the
contractor shall be served, mailed or delivered. Any notice letter or other
communication addressed to the contractor and delivered at the above-named
place, or sealed in a post-paid wrapper and deposited in any post office box
regularly maintained by the post-office, shall be deemed sufficient service
thereof upon the contractor. The place named may be changed at any time by an
instrument in writing, executed and acknowledged by the contractor, and
delivered to the Director. Nothing herein contained shall be deemed to preclude
or render inoperative service of any notice, letter or other communication upon
the contractor personally. Whenever in the trial of any action growing out of
this Contract it shall be necessary or required to prove the service of a notice
as herein prescribed, an affidavit executed at the time of service showing the
service in the manner herein required to have been made by the person making the
affidavit shall be presumptive evidence of such service upon first proving that
the affiant is dead or insane, or that with due diligence, his attendance cannot
be compelled.
9. NO ESTOPPEL
Neither the BOE nor the City, nor any department or officer thereof, shall be
precluded or estopped by any return or certificate made or given by the
Director, or other officer, inspector, assignee or appointee of the BOE or the
City, under any provision of this Contract, from at any time (either before or
after the final completion and acceptance of the work or services and payment
therefore, pursuant to any such return or certificate) showing the true and
correct amount and character of the work done and supplies furnished by the
contractor, or any other person under this Contract, or from showing at any time
that any such return or certificate is untrue or incorrect, or improperly made
in any particular, or that the work or services or any part thereof do not in
fact conform to the specifications; and neither the BOE nor the City shall be
precluded or estopped notwithstanding any such return or certificate and payment
in accordance therewith, from demanding and recovering from the contractor such
damages or other loss as it may sustain by reason of its failure to comply with
the specifications.
10. CLAIMS - LIMITATION OF ACTION
No action shall be maintained by the contractor, his successors or assignees,
against the Board of any claim based upon or arising out of this Contract or out
of anything done in connection with this Contract unless such action shall be
commenced within six (6) months after the date of filing of the voucher for
final payment hereunder in the appropriate office of the Board, or within six
(6) months of the termination of this Contract, or within six (6) months of the
required completion date for the services performed hereunder, whichever is
sooner. None of the provisions of Article 2 of the Civil Practice Law and Rules
shall apply to any action against the Board arising out of this Contract.
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11. MAINTENANCE OF RECORDS
The contractor shall, until six (6) years after completion of its services
hereunder or six (6) years after date of termination of this Contract, maintain
and retain complete and correct books and records relating to all aspects of the
contractor's obligations hereunder, including, without limitation, accurate cost
and accounting records specifically identifying the costs incurred by the
contractor in performing such obligations (such as payroll expense, and all
other related records necessary to assure a proper accounting of funds,
including property, personnel records, cash receipts and disbursements, journals
and ledgers). Records must be maintained as a separate set of books so as to
identify clearly the expenses applicable to the specific Contract and be
distinguishable from all other costs not incurred under this Contract. The
contractor shall make available to the Office of the Auditor General of the BOE
or such agencies as the BOE may designate for review and audit, all books,
records or materials deemed necessary by the BOE to substantiate the validity of
claims made under the Contract at all reasonable times that the BOE shall from
time-to-time request. They shall be maintained in such a fashion as to permit
clear identification of costs incurred under this Contract or any amendment
thereto.
12. DISCRIMINATION
In connection with the performance of work under this Contract, the contractor
agrees as follows:
a) The contractor will not discriminate against any employee or
applicant for employment because of race, creed, color, age, sex,
national origin, handicap, marital status, religion or political
beliefs or affiliations. The contractor will take action to ensure
that applicants are employed, and that employees are treated during
employment, without regard to the foregoing categories. Such action
shall include but not be limited to the following: employment;
upgrading; demotions or transfer; recruitment or recruitment
advertising; layoff or termination; rates of pay or other forms of
compensation; and selection for training, including apprenticeship.
The contractor agrees to post in conspicuous places, available to
employees and applicants for employment, notices to be provided by
the Board setting forth the provisions of this nondiscrimination
clause.
b) The contractor shall not discriminate against any employee or
applicant for employment on the basis of sex pursuant to Title IX of
the Education Amendments of 1972 (20 United States Code Annotated,
Section 1681 et seq.).
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c) The contractor will, in all solicitations or advertisements for
employees placed by or on behalf of the contractor, state that all
qualified applicants will receive consideration for employment
without regard to race, creed, color, age, sex, or national origin.
d) The contractor will send to each labor union or representative of
workers with which it has a collective bargaining agreement or other
contract or understanding, a notice to be provided by the Board
advising the said labor union or workers' representatives of the
contractor's commitments under this section, and shall post copies
of the notice in conspicuous places available to employees and
applicants for employment.
e) The contractor will comply with all provisions of law prohibiting
discrimination because of race, creed, color, age, sex, or national
origin.
f) The contractor will comply with all provisions of Executive Order
No. 11246 of September 24, 1965, and of the rules, regulations, and
relevant orders of the Secretaries of Labor and Health, Education
and Welfare created thereby. The contractor will furnish all
information and reports required by Executive Order No. 11246 of
September 24, 1965, and by the rules, regulations, and orders of
said Secretaries issued pursuant thereto, and will permit access to
its books, records, and accounts by the Board and the Secretaries
for purposes of investigation to ascertain compliance with such
rules, regulations and orders. In the event of the contractor's
compliance with the nondiscrimination clause of this Contract, or
with any of the said rules, regulations or orders, this Contract may
be cancelled in whole or in part and the contractor may be declared
ineligible for further Government contracts in accordance with
procedures authorized in Executive Order No. 11246 of September 24,
1965, and such other sanctions may be imposed and remedies invoked
as provided in the said Executive Order or by rule, regulation or
order of the Secretaries of Labor and Health, Education, and
Welfare, or as otherwise provided by law.
-7-
<PAGE>
13. EQUAL EMPLOYMENT OPPORTUNITY REQUIREMENTS FOR
NON-CONSTRUCTION CONTRACTORS, VENDORS AND SUPPLIERS
The attention of all bidders is particularly directed to the various
orders rules, regulations and procedures set forth in the contract documents
with respect to identifying and eliminating both overt and covert discriminatory
employment practices.
I. Policy
It is the policy of the Board of Education, City of New York, in
accordance with the Labor Law of the State of New York and other
applicable laws, to provide equal opportunity for all qualified
persons, to prohibit discrimination in employment because of race,
creed, color, age, sex, national origin, handicap, marital status,
religion or political beliefs or affiliations and to promote the
full realization of equal opportunity through an affirmative,
continuing program of compliance by all contractors, suppliers and
vendors doing business with the Board of Education and their
subcontractors.
II. Implementation
The Director of the Office of Equal Opportunity shall be responsible
for the implementation and administration of this policy. He or she
shall be directly responsible to the Deputy Chancellor of the Board
of Education and shall be responsible for issuing all orders, rules,
regulations and procedures as may be deemed necessary or convenient
for carrying out and implementing the policy set forth in Section 1.
III. Definition of terms for the purpose of these Orders, Rules and
Procedures
A. Non-Construction Contract
Any Agreement, or commitment by the Board of Education, to
purchase or lease supplies, equipment or services. The term
"Non-Construction Contract" excludes contracts of the Board of
Education related to the erection, construction, reconstruction,
rehabilitation, alteration, conversion, extension, repair or
demolition of buildings or improvements to real property, with the
exception of supplies, equipment and materials therefore, and
work, labor or services relating to architectural, engineering or
consultant services.
B. Contractor
C. Employee of Non-Construction Contractor
Any Person or entity employing workers, who bids for, or who is
awarded a non-construction contract.
-8-
<PAGE>
D. Minority Group Members
Blacks, Hispanics (non-European), Asian-Americans and American
Indians.
E. Program of Affirmative Action
A detailed, result-oriented set of written procedures which when
implemented with conscientious effort results in compliance with
the equal opportunity policy herein, through full utilization and
equal treatment of minority group members and women at all levels
in all segments of contractor's workforce. An effective program of
affirmative action shall include, but not necessarily be limited
to, the following ingredients:
1. Development or reaffirmation of the contractor's equal
employment opportunity policy;
2. Dissemination of the policy;
3. Responsibility for implementation;
4. A survey and analysis of employment at all levels and in all
categories and aspects the contractor or subcontractor is
deficient in the utilization of minority group members and
women;
5. Establishment of goals and timetables toward the attainment of
which the contractor's or subcontractor's good faith effort
must be directed to remedy any identifiable underutilization of
minority group members and women;
6. An analysis of employment policies and practices, including but
not limited to seniority systems, recruitment training,
promotion, insurance, and job benefits, and their effects upon
minority group members and women;
7. Corrective actions taken, or to be taken, toward the
elimination of any employment policy or practice having a
discriminatory effect on minority group members and women.
F. Goals and Timetables
Projected levels of achievement resulting from an analysis by the
contractor or subcontractor of its deficiencies, and of what it
can reasonably do to remedy them within a specified time frame.
-9-
<PAGE>
[ILLEGIBLE] job classification than would reasonably be expected
by their availability in the appropriate labor force.
IV. Bidding and Awarding of Contracts
A. Pre-Award Conference
Prior to the award of contract to the apparent low bidder and
if requested in writing by the Director of the Office of Equal
Opportunity (hereinafter referred to as the "Director"), such
bidder shall attend a pre-award conference to be held in the
Office of Equal Opportunity of the Board of Education for the
purpose of acquainting him or her with the statutory and
contractual requirements and what specific measures shall
constitute an acceptable program of affirmative action.
B. Program of Affirmative Action
Prior to the award of contract to the lowest responsible
bidder and upon demand, the low bidder must submit to the
Director a detailed written Program of Affirmative Action
(hereinafter referred to as "P.A.A."). In the event the low
bidder fails to submit an acceptable P.A.A. within the
allotted time stipulated in the demand, the Director may
recommend that the low bid be rejected, the amount of the bid
deposit, if any, be forfeited, and that the low bidder be
disqualified from bidding on Board of Education work for a
period of one year. The P.A.A. shall:
1. Apply to all Board of Education non-construction
contracts except that, with regard to contracts,
sub-contracts or purchase orders under $25,000, the
Director is authorized to make such modifications as may
be appropriate in the individual case;
2. Encompass all phases of the employment process,
including evaluation of job classifications to ensure
job relatedness, recruitment, selection, validity of
examinations, retention, layoffs, seniority,
assignments, training, promotion, salary and benefits;
3. Be considered by the Board of Education in its
determination as to whether a numerical low bidder will
be judged the lowest responsible bidder entitled to
award thereof. The Director shall be the sole judge of
the program's acceptability;
-10-
<PAGE>
4. In addition to the above, fulfill the requirements of
subdivisions (a) through (g) of this section:
(a) The P.A.A. shall include measurable goals,
reasonable timetables and specific programs to be
implemented by the contractor to identify and
eliminate deficiencies in employment practices
with respect to the underutilization of minority
group members and women in the contractor's
workforce and a projection of the minority
utilization in the contractor's workforce for the
life of the contract and for at least a one year
period succeeding its completion. This statement
and projection shall include present and projected
(1) rates of hiring and promotion of minority
group members and women in specific job categories
at each wage rate within each level of employment
and according to major organizational unit, and
(2) percentages of minority group and women
utilization in specific job categories at each
wage rate within each level of employment and
according to major organizational units, within
the contractor's workforce.
(b) The P.A.A. shall include all of the contractor's
facilities within New York City as well as those
facilities located elsewhere within the
continental limits of the United States.
(c) The P.A.A. shall specify the union(s) or other
employee organizations to which the contractor's
employees belong and shall include commitments to
good faith efforts to effect equal employment
opportunity changes directly or indirectly, in
programs by such unions or organizations to
recruit, train, qualify or otherwise select
members if such changes are deemed necessary. The
P.A.A. shall also include a copy of any agreement
with an employee association which affects
employment policies and practices.
(d) The P.A.A., or portion thereof, shall be submitted
in such format as shall be specified by the
Director of the Office of Equal Opportunity.
(e) The P.A.A. shall include a commitment to submit to
the Director a separate P.A.A., of the form and
substance specified in subdivisions (a) through
(g) hereof, for each subcontractor prior to its
approval by the Board of Education. Every
subcontract made by a non-construction contractor
shall also contain these rules, regulations and
orders in their entirety or their incorporation by
reference.
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<PAGE>
(f) The P.A.A. shall include written evidence or other
proof which shows that minority entrepreneurs have
been solicited and given an equal opportunity to
submit proposals and that such proposals have been
given equal consideration for award.
(g) Unless exempted by the Board of Education, no
specified commitment, including goals for minority
group employment and adoption of equal employment
practices, contained in the P.A.A., if any, of the
contractor or subcontractor.
V. Compliance Inspection Report
A. Prior to the award of contract to the lowest responsible
bidder and upon demand, the low bidder must submit to the
Director of Equal Opportunity, a Compliance Inspection Report.
The completed Compliance Inspection Report must be returned to
the Office of Equal Opportunity within twelve (12) calendar
days from the effective date stated on the Requisition for
Information accompanying the Report form.
Failure to submit the Compliance Inspection Report within the
period of time specified above may result in a rejection of
the bid and the disqualification of the bidder from bidding on
the Board of Education work for a period of one year.
B. The Compliance Inspection Report shall be submitted in a form
provided by or approved by the Director, and shall indicate
and furnish explanations for any current or anticipated
departures, from the total labor force projections, or
minority group labor force projections in the contractor's or
subcontractor's P.A.A., or from planned corrective action
relating to employment policies as stated in the P.A.A.
VI. Contractor's Implementation
Good faith efforts must be made to implement these affirmative
action steps during the performance of the contract. The
effectiveness of the affirmative action program shall be
measured by the extent of progress made toward an equitable
participation which reflects the appropriate available
minority and female workforce and the lack of such progress
shall be a factor considered in determining whether there have
been good faith efforts to implement the program.
VII. Sanctions and Remedies
A. It is agreed that if the contractor does not comply with the
equal opportunity provisions herein stated, as solely
determined by the Board of Education, the said contract may be
cancelled,
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<PAGE>
terminated, or suspended in whole or in part and the
contractor may be declared ineligible for further Board of
Education contracts and/or subject to such other sanctions as
may be imposed and remedies involved by the Board of Education
in its discretion.
B. Prime contractors shall be responsible for the compliance of
their subcontractors. Failure of its subcontractor to comply
with the provisions hereof or with affirmative action
contractual provisions, shall be grounds for the imposition of
sanctions and remedies against a prime contractor. Such
sanctions and remedies include the authority of the Director
to halt scheduled payments to contractors who consistently
fail to comply with the provisions hereof.
C. No sanctions or remedies shall be imposed on a bidder,
contractor or subcontractor without affording such bidder,
contractor or subcontractor an opportunity for a compliance
review. The purpose of the compliance review is to enable the
Board of Education's Policy of Equal Employment Opportunity.
The bidder, contractor or subcontractor shall be allowed at
least twelve (12) calendar days to present such evidence. If
at the end of such period compliance is not reached, and the
Director maintains his or her position of non-compliance, the
bidder, contractor or subcontractor may appeal to the Board of
Review of the Board of Education. Conformity to technical
rules of evidence at the Board of Review hearing shall not be
required. The determination of such Board of Review appeal
shall be final and conclusive, subject only to judicial
review.
D. Each of the foregoing sections or subdivisions hereof shall be
construed to be independent of all other sections and
subdivisions unless the contrary is clearly indicated by the
text.
For further information concerning these rules, regulations or procedures
contractors may consult with the Office of Equal Opportunity of the Board of
Education.
-13-
<PAGE>
14. [ILLEGIBLE]
The contractor shall be responsible for any claims made against the Board of
Education for acts of negligence, carelessness or incompetence perpetrated by
the contractor, or anyone employed by the contractor, in connection with
providing or failing to provide the services described herein, and the
contractor shall protect, indemnify and hold harmless the Board from all suits,
actions, damages or costs of every kind and description to which it shall be
subjected by reason of injury to person, or property, or wrongful death because
of such negligence, carelessness, or incompetence.
15. WORKMEN'S COMPENSATION
If this Contract be of such a character that the employees engaged thereon are
required to be insured by the provisions of Chapter 615 of the Laws of 1922,
known as the Workmen's Compensation Law, as it has been or may be amended, the
person, firm or corporation making or performing the same shall secure
compensation for the benefit of, and keep insured during the life of this
Contract, such employees, in compliance with the provisions of said law. Prior
to starting service under this Contract, the contractor shall file with the
Director a certificate showing compliance with the provisions of said law. Such
insurance shall be kept during the life of said Contract.
16. PREVENTION OF DELAY, SUSPENSION OR STRIKES
Because of the public nature of the services involved, and because of the
essential public services performed, the contractor shall not act in any manner,
nor employ labor or means, nor do anything by way of omission or commission that
would in any way cause or result in a suspension, or delay of or strike
affecting the work or any services to be performed hereunder. Any violation by
the contractor of this requirement may, upon certification of the Director that
the contractor's act or failure to act demonstrated a lack of good faith, effort
to assure the performance of the conditions or covenants of this Contract, be
considered as proper and sufficient cause for finding the contractor to be in
default in the manner set forth in this Contract.
17. INSPECTORS
The Director may assign inspectors to inspect vehicles furnished under this
Contract, and such inspector or inspectors shall have the right at any and all
times to inspect the vehicles used or proposed to be used under this Contract;
to inspect the driver's license, vehicle registration, and proof of insurance;
and to require drivers and escorts to produce proper identification. Such
inspectors are authorized and empowered to reject and forbid the use of all
vehicles or any part thereof offered under or in fulfillment of this Contract
for the reason that the same do not comply with the specifications.
-14-
<PAGE>
18. REJECTION OF VEHICLES
Any vehicle furnished or offered to be furnished under this Contract for the
transportation of pupils which is rejected by an inspector as not conforming to
the specifications, the rules and regulations of the New York State Department
of Transportation or to the rules and regulations of the New York State
Education Department, shall be immediately removed, and vehicles for the
transportation of pupils which do conform shall be furnished in place thereof.
19. PAYMENTS
If the contractor shall well and faithfully perform and fulfill this Contract
and keep every covenant on its part herein contained, the Board shall then pay
or cause to be paid to the contractor, subject to the provisions of the
specifications, the amounts due the contractor as the services are provided. The
Board and the Comptroller may at all times reserve and retain out of said
payments, all sums as by the terms hereof, or of any law of the State of New
York, or of any local law of the City of New York, now in effect or hereafter
enacted, the Board or the City may be authorized to collect, reserve or retain.
The contractor shall not be entitled to demand or receive payment for the
services rendered, or any portion thereof, except in the manner set forth in
this Contract, upon certification by the Director of compliance by the
contractor with each and every one of the stipulations herein mentioned provided
that nothing herein contained be construed to affect the right hereby reserved
by the Board and the Comptroller to refuse to pay any part or all of the amount
certified should the said certificate be found or known to be inconsistent with
the terms of this Contract, or otherwise improbably given.
The contractor will not ask, demand, sue for or recover any sum whatsoever for
any services delivered under this Contract, either as extra compensation or
otherwise, beyond the amount payable for the services which shall be actually
supplied at the price herein agreed upon and fixed.
20. ACCEPTANCE OF FINAL PAYMENT
The acceptance by the contractor or by any person claiming under the Contract of
the final payment as audited by the Comptroller, whether such payment be made
pursuant to any judgment or order of any court or otherwise, shall operate and
shall be a release of the Board from all claims of and liability to the
contractor and to the contractor's representatives and assigns for anything
done, furnished for or relating to the work or vehicles furnished, or for any
neglect of the Board or of any person relating to or affecting the work done or
vehicles furnished hereunder.
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<PAGE>
21. COMPTROLLER'S CERTIFICATE
The Comptroller will endorse hereon during the Contract period his certificates
that there are appropriations or funds applicable thereto sufficient to pay the
estimated expense of executing this Contract during the respective fiscal
periods.
22. RESERVED RIGHTS
The rights, powers, privileges and remedies reserved to the Board and to the
City by this Contract are cumulative and shall be in addition to and not in
derogation of any other rights or remedies which the City and the Board may have
at law or in equity with respect to the subject matter of this Contract, and a
waiver thereof at any time or in any instance shall not affect any other time or
instance.
23. ANTI-TRUST
The contractor hereby assigns, sells and transfers to the Board and the City all
right, title and interest in and to any claims and causes of actions arising
under the anti-trust laws of New York State or of the United States relating to
the particular goods or services purchased or procured by the City or Board
under this Contract.
24. MERGER
This Contract contains all the terms and conditions agreed upon by the parties
hereto, and no other Contract oral or otherwise, regarding the subject matter of
this Contract shall be deemed to exist or to bind any of the parties hereto, or
to vary any of the terms contained herein.
25. VENUE
All actions or special proceedings involving disputes relating to this contract
shall be brought in New York County.
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<PAGE>
THIS CONTRACT shall bind and inure to the benefit of the parties hereto
and their successors, heirs, administrators, executors, or assigns.
IN WITNESS WHEREOF, The Board, by and through its Secretary or Assistant
Secretary, and the contractor have executed this Contract in quadruplicate, one
copy of which is to remain with the Board, one to be filed with the Comptroller,
the third to be delivered to the contractor, and the fourth to be filed with the
New York State Department of Education.
THE BOARD OF EDUCATION OF THE CITY OF NEW YORK
By, [ILLEGIBLE]
---------------------------------------
Assistant Secretary
Amboy Bus Inc.
---------------------------------------
(Name of individual, firm or corporation)
By, /s/ Michael Gatto Pres
---------------------------------------
(Member of firm or officer of corporation)
Address___________________________________
(Where Contractor is corporation, add:)
(Seal) Attest: /s/ Michael Gatto
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<PAGE>
AFFIDAVIT OF ACKNOWLEDGEMENT OF CONTRACT
(BY BOARD OF EDUCATION)
State of New York )
County of Kings ) SS:
On this 23 day of July, 1979 before me personally came Beatrice Steinberg
to me known, who being by me duly sworn, did depose and say:
I, the ________ Assistant Secretary of the Board of Education of the
City of New York, designated by said Board for the purpose of signing this
Contract pursuant to the By-Laws of the Board of Education, said Board of
Education being designated in and having authorized the execution of the above
Contract, and signed my name thereto in accordance with said By-Laws.
/s/ Julius Kaplan
-------------------------------------------
Commissioner of Deeds, The City of New York
Julius Kaplan
Commissioner of Deeds
City of New York 2-1760
Certificate Filed in Kings County
Commission Expires May 1, 1981
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<PAGE>
AFFIDAVIT OF ACKNOWLEDGEMENT OF CONTRACT
- - - -0- - - -
(BY AN INDIVIDUAL)
State of New York )
) SS:
County of Kings )
On this________________day of _____________, 1979 before me personally
came________________ to me known and known to me, to be the same person
described in and who executed the foregoing Contract, and acknoweledged to me
that he had executed same.
___________________________________________
Commissioner of Deeds, The City of New York
- - - -0- - - -
(BY A PARTNERSHIP)
State of New York )
) SS:
County of Kings )
On this________________day of _____________, 1979 before me personally
came________________ to me known and known to me to be a member of
_______________________, the firm described in and which executed the foregoing
Contract and he acknowledged to me that he subscribed the name of said firm
thereto on behalf of said firm for the purposes therein mentioned.
___________________________________________
Commissioner of Deeds, The City of New York
-19-
<PAGE>
(BY A CORPORATION)
State of New York )
) SS:
County of Kings )
On this day 19th day of July, 1979 before me personally came Michael Gatto
to me known, who, being by me duly sworn, did say, for himself, that he resides
in the City of Morganville, and is the President of Amboy Bus Inc., the
corporation described in and which executed the foregoing Contract, that he
knows the corporate seal of said Corporation, that the seal affixed to the
foregoing Contract is such corporate seal and was affixed thereto by order of
the Board of Directors of said Corporation, and that by like order he thereto
signed his name and official designation.
/s/ Michael Gatto
-----------------------------
/s/ Josephine Viti
- -----------------------------
Josephine Viti
Notary Public, State of New York
No. 24-4666814
Qualified in Kings County
Commission Expires March 30, 1980.
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<PAGE>
APPROPRIATION
CERTIFICATES OF UNEXPENDED BALANCE
In conformity with the provisions of the State Education Law, it is hereby
certified that the estimated expense of executing the within Contract until June
30, ________will approximate as follows:
__________________________________ $________________________________________
CODE
_______________________________________
BOARD OF EDUCATION
EXECUTIVE DIRECTOR
DIRECTOR OF BUSINESS AND ADMINISTRATION
- - - - 0- - - -
COMPTROLLER'S CERTIFICATE
THE CITY OF NEW YORK_____________________
Pursuant to the provisions of Section 93 C-3.0 of Chapter 5 of the
Administrative Code of the City of New York, I hereby certify that there remains
unapplied and unexpended a balance of the appropriation applicable to this
Contract sufficient to pay the estimated expense of executing the same until
June 30, vis:
__________________________________ $________________________________________
_______________________________________
Comptroller
- - - - 0- - - - -
SECRETARY'S CERTIFICATE
I hereby certify that this Contract is based upon specifications which
comply with the terms and conditions of the budget.
_______________________________________
Secretary
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<PAGE>
PERFORMANCE BOND
KNOW ALL MEN BY THESE PRESENTS, THAT we, _______________________________
________________________________________________________________________________
hereinafter referred to as the 'Principal', and ________________________________
________________________________________________________________________________
hereinafter referred to as the 'Surety' are held and firmly bound to the BOARD
OF EDUCATION OF THE CITY OF NEW YORK, hereinafter referred to as the 'Board', or
to its successors and assigns, in the penal sum of____________________Dollars,
lawful money of the United States, for the payment of which said sum of money
well and truly to be made, we, and each of us, bind ourselves, our heirs,
executors, administrators, successors and assigns, jointly and severally, firmly
by these presents.
WHEREAS, the Principal is about to enter, or has entered, into a Contract
in writing with the Board for transportation of pupils, a copy of which Contract
is annexed to and hereby made a part of this bond as though herein set forth in
full;
NOW, THEREFORE, the conditions of this obligation are such that if the
principal, his or its representatives or assigns, during the period beginning on
the first day of September 197___ and ending on the 30th day of June 197___
shall well and faithfully perform the conditions of said Contract and all
modifications, amendments, additions and alterations therein with respect to
performance by the Principal during said period and shall indemnify and save
harmless the Board from all cost and damages which it may suffer by reason of
failure so to do and shall fully reimburse and repay the Board for all outlay
and expense which the Board may incur in making good any such default with
respect to performance by Principal during the period of this bond, then this
obligation shall be void, otherwise the same to remain in full force and effect.
The Surety, for value received, hereby stipulates and agrees, if requested
to do so by the Board, fully to perform and complete the work to be performed
under the Contract pursuant to the terms, conditions and covenants thereof,
during the period of this bond if for any cause the Principal fails or neglects
to fully perform and complete such work. The Surety further agrees to commence
such work within five (5) days after written notice thereof from the Board.
The Surety, for value received, for itself and its successors and assigns,
hereby stipulates and agrees that the obligation of said Surety and its bond
shall in no way be impaired or affected by any modification, omission, addition
or change in or to the Contract or the work to be performed during the period of
this bond, or by any payment thereunder, before the time required therein, or by
any waiver or any provisions thereof, or by any assignment, subletting other
transfer thereof of any work to be performed or any moneys due to or to become
due thereunder, and said Surety does hereby waive notice of any and all such
extensions, modifications, omissions, additions, changes, payments waivers,
assignments, subcontracts and transfers, and hereby expressly stipulates and
agrees that any and all things done and omitted to be done by and in relation to
assignees, subcontractors, and other transferees shall have the same effect as
to said Surety as though done or omitted to be done by or in relation to said
Principal.
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<PAGE>
IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their
hand and seals, and such of them as are corporations have caused their corporate
seals to be hereunto affixed and these presents to be signed by their proper
officers.
this day of , 19
(Seal) ________________________________
Principal
(Seal) By ________________________________
________________________________
Surety
By ________________________________
(Seal) ________________________________
Surety
By ________________________________
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<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
INTRODUCTION
Area of Service
This section on the bid blank form describes geographic areas of service.
Type of Vehicle
This section on the bid blank form identifies vehicle type as defined in
Section IX
Bid Calculations
Some of the items on the attached bid sheets are grouped. For those items
which are grouped, submit only one set of quotations for extended and
regular service for any item within the specific group. The quotation
submitted for the specific group will apply to as many items as the number
entered in the column headed "Number of Items Being Bid.'
For all items, both those being grouped and those which are not grouped,
enter the daily rate per vehicle for both extended service and regular
service for each item bid upon.
In computing the weighted average daily rate per vehicle, multiply the
percent extended service by the daily rate for extended service, then add
the percent regular service multiplied by the daly rate for regular
service. Weighted average daily rate per vehicle is computed by bidder
based on information in columns, A, B, C, and D. The weighted average daily
rate per vehicle is to be computed by the contractor. The weighted average
daily rate per vehicle shall be the basis for the award and for subsequent
increases or decreases in the number of vehicles.
-1-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within Manhattan and homes of pupils living within
Manhattan
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WH-MW-1 through 14 14 5 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
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<PAGE>
SCHEDULE OF ITEM AND BID BLANK
AREA OF SERVICE:
Service between: schools within Manhattan and homes of pupils living within
Mahattan.
TYPE OF VEHICLE:
Standard School Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WM-SB-1 through 17 17 5 ______ 25% $_________ 75% $_________ $_________
WM-SB-18 1 7 ______ 25% $_________ 75% $_________ $_________
</TABLE>
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<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within Manhattan and homes of pupils living within
any of the other four boroughs and/or Manhattan when their scheduled trips
to Manhattan schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BM-MW-1 through 13 13 5 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-4-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within Manhattan and homes of pupils living
within any of the other four boroughs and/or Manhattan when their
scheduled trips to Manhattan schools begin in one of the other four
boroughs.
TYPE OF VEHICLE:
Standard School Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
M-SB-1 through 3 3 5 ______ 25% $_________ 75% $_________ $_________
M-SB-4 1 8 ______ 25% $_________ 75% $_________ $_________
</TABLE>
-5-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within Manhattan and homes of pupils living within
Manhattan
TYPE OF VEHICLE:
Hydraulic Lift Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WM-HL-1 through 2 2 5 ______ 10% $_________ 90% $_________ $_________
WM-HL-3 1 9 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-6-
<PAGE>
AREA OF SERVICE:
Service between: schools within Manhattan and homes of pupils living within
any of the other four boroughs and/or Manhattan when their scheduled trips
to Manhattan schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Hydraulic Lift Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BM-HL-1 1 1 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-7-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within Manhattan and homes of pupils living within
Manhattan
TYPE OF VEHICLE:
Mini-bus Station Wagon with Ramp
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WH-RM-1 1 8 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-8-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within the Bronx and homes of pupils living within
the Bronx.
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WBX-MW-1 through 14 14 5 ______ 10% $_________ 90% $_________ $_________
WBX-MW-15 1 9 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-9-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within Manhattan and homes of pupils living within
any of the other four boroughs and/or Manhattan when their scheduled trips
to Manhattan schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Mini-bus Station Wagon with Ramp
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BH-RM-1 1 4 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-10-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within the Bronx and homes of pupils living within
any of the other four boroughs and/or the Bronx when their scheduled trips
to Bronx schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BMX-MW-1 through 5 5 5 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-11-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within the Bronx and homes of pupils living within
the Bronx.
TYPE OF VEHICLE:
Standard School Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WBX-SB-1 through 31 31 5 ______ 25% $_________ 75% $_________ $_________
WBX-SB-32 1 9 ______ 25% $_________ 75% $_________ $_________
</TABLE>
-12-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within the Bronx and homes of pupils living within
any of the other four boroughs and/or the Bronx when their scheduled trips
to Bronx schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Standard School Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BHX-SB-1 1 1 ______ 25% $_________ 75% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-13-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within the Bronx and homes of pupils living within
the Bronx.
TYPE OF VEHICLE:
Hydraulic Lift Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WBX-HL-1 through 4 4 5 ______ 10% $_________ 90% $_________ $_________
WBX-HL-5 1 4 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-14-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: schools within the Bronx and homes of pupils living within
any of the other four boroughs and/or the Bronx when their scheduled trips
to Bronx schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Hydraulic Lift Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BBX-HL-1 1 2 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-15-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within the Bronx and homes of pupils living within
any of the other four boroughs and/or the Bronx when their scheduled trips
to Bronx schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Mini-bus Station Wagon with Ramp
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BBX-RW-1 1 1 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-16-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Westchester County and homes of pupils
living within the five boroughs.
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BWC-MW-1 1 1 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-17-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Queens and homes of pupils living within
Queens.
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BQ-MW-1 through 35 35 5 ______ 10% $_________ 90% $_________ $_________
BQ-MW-36 1 7 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-18-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Queens and homes of pupils living within
any of the other four boroughs and/or Queens when their scheduled trips to
Queens schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BQ-MW-1 through 17 17 5 ______ 10% $_________ 90% $_________ $_________
BQ-MW-18 1 6 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-19-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Queens and homes of pupils living within
Queens.
TYPE OF VEHICLE:
Standard School Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WQ-SB-1 through 35 35 5 5 25% $242.00 75% $229.00 $232.25
WQ-SB-36 1 7 ______ 25% $_________ 75% $_________ $_________
</TABLE>
-20-
<PAGE>
BID CALCULATIONS
Some of the items on the attached bid sheets are grouped. For those items
which are grouped, submit only one set of quotations for extended and
regular service for any item within the specific group. The quotation
submitted for the specific group will apply to as many items as the number
entered in the column headed "Number of Items Being Bid."
For all items, both those being grouped and those which are not grouped,
enter the daily rate per vehicle for both extended service and regular
service for each item bid upon.
In computing the weighted average daily rate per vehicle, multiply the
percent extended service by the daily rate for extended service, then add
the percent regular service multiplied by the daily rate for regular
service. Weighted average daily rate per vehicle is computed by bidder
based on information in columns, A, B, C, and D. The weighted average daily
rate per vehicle is to be computed by the contractor. The weighted average
daily rate per vehicle shall be the basis for the award and for subsequent
increases or decreases in the number of vehicles.
-21-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Nassau County and homes of pupils living
within Queens.
TYPE OF VEHICLE:
Mini-bus Station Wagon with Ramp
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WNC-RW-1 1 5 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-22-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Nassau County and homes of pupils living
within boroughs other than Queens and/or Queens when their scheduled trips
begin in one of the other four boroughs
TYPE OF VEHICLE:
Mini-bus Station Wagon with Ramp
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BNC-RW-1 1 1 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-23-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Nassau County and homes of pupils living
within Queens.
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WNC-MW-1 1 3 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-24-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Nassau County and homes of pupils living
within boroughs other than Queens and/or Queens when their scheduled trips
begin in one of the other four boroughs
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BNC-MW-1 1 2 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-25-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Staten Island and homes of pupils living
within Staten Island.
TYPE OF VEHICLE:
Mini-bus Station Wagon with Ramp
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WSI-RW-1 1 5 ______ 10% $_________ 90% $_________ $_________
WSI-RW-2 1 7 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-26-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Staten Island and homes of pupils living
within any of the other four boroughs and/or Staten Island when their
scheduled trips to Staten Island schools begin in one of the other four
boroughs.
TYPE OF VEHICLE:
Mini-bus Station Wagon with Ramp
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BSI-RW-1 1 2 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-27-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Staten Island and homes of pupils living
within Staten Island.
TYPE OF VEHICLE:
Standard School Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WSI-SB-1 through 8 8 5 ______ 25% $_________ 75% $_________ $_________
WSI-SB-9 1 6 ______ 25% $_________ 75% $_________ $_________
</TABLE>
-28-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Staten Island and homes of pupils living
within Staten Island.
TYPE OF VEHICLE:
Hydraulic Lift Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WSI-HL-1 1 2 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-29-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Staten Island and homes of pupils living
within Staten Island.
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WSI-MW-1 through 5 5 5 ______ 10% $_________ 90% $_________ $_________
WSI-MW-6 1 8 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-30-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Brooklyn and homes of pupils living within
any of the other four boroughs and/or Brooklyn when scheduled trips to
Brooklyn schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Mini-bus Station Wagon with Ramp
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BBK-RW-1 1 2 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-31-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Brooklyn and homes of pupils living within
any of the other four boroughs and/or Brooklyn when their scheduled trips
to Brooklyn schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Hydraulic Lift Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BBK-HL-1 1 1 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-32-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Brooklyn and homes of pupils living within
Brooklyn.
TYPE OF VEHICLE:
Hydraulic Lift Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WBK-HL-1 through 8 8 5 ______ 10% $_________ 90% $_________ $_________
WBK-HL-9 1 7 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-33-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Brooklyn and homes of pupils living within
any of the other four boroughs and/or Brooklyn when their scheduled trips
to Brooklyn schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BBK-MW-1 through 6 6 5 ______ 10% $_________ 90% $_________ $_________
BBK-MW-7 1 6 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-34-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Brooklyn and homes of pupils living with
Brooklyn.
TYPE OF VEHICLE:
Standard school bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WBK-SB-1 through 53 53 5 ______ 25% $_________ 75% $_________ $_________
WBK-SB-54 1 6 ______ 25% $_________ 75% $_________ $_________
</TABLE>
-35-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Queens and homes of pupils living within
any of the other four boroughs and/or Queens when their scheduled trips to
Queens schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Mini-bus Station Wagon with Ramp
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BQ-RW-1 1 2 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-36-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Brooklyn and homes of pupils living within
Brooklyn.
TYPE OF VEHICLE:
Mini-bus Station Wagon
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WBK-MW-1 through 19 19 5 ______ 10% $_________ 90% $_________ $_________
WBK-MW-20 1 6 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-37-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Queens and homes of pupils living within
any of the other four boroughs and/or Queens when their scheduled trips to
Queens schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Hydraulic Lift Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BQ-HL-1 1 2 ______ 10% $_________ 90% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-38-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Queens and homes of pupils living within
Queens.
TYPE OF VEHICLE:
Mini-bus Station Wagon with Ramp
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WQ-RW-1 through 5 5 5 ______ 10% $_________ 90% $_________ $_________
WQ-RW-6 1 9 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-39-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Queens and homes of pupils living within
any of the other four boroughs and/or Queens when their scheduled trips to
Queens schools begin in one of the other four boroughs.
TYPE OF VEHICLE:
Standard School Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BQ-SB-1 1 5 ______ 25% $_________ 75% $_________ $_________
______ $_________ $_________ $_________
</TABLE>
-40-
<PAGE>
SCHEDULE OF ITEMS AND BID BLANK
AREA OF SERVICE:
Service between: Schools within Queens and homes of pupils living within
Queens.
TYPE OF VEHICLE:
Hydraulic Lift Bus
BID CALCULATION:
<TABLE>
<CAPTION>
(A) X (B)
(A) (B) (C) (D) +(C) X (D)
DAILY RATE DAILY RATE
NO. OF NO. OF PER VEHICLE PER VEHICLE WEIGHTED
NO. OF VEHICLES ITEMS PERCENT FOR PERCENT FOR AVERAGE
ITEMS IN EACH BEING EXTENDED EXTENDED REGULAR REGULAR DAILY RATE
ITEM NUMBER(S) IN GROUP ITEM BID SERVICE SERVICE SERVICE SERVICE PER VEHICLE
- ------------- -------- -------- ------ -------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WQ-HL-1 through 5 5 5 ______ 10% $_________ 90% $_________ $_________
WQ-HL-6 1 6 ______ 10% $_________ 90% $_________ $_________
</TABLE>
-41-
<PAGE>
EX-10.13
Contract Proposal
Serial No. 8101
BOARD OF EDUCATION [SEAL] CITY OF NEW YORK
CONTRACT PROPOSAL
Sealed bids will be received by the Director of the Bureau of Supplies of the
Board of Education of the City of New York, at his office. Room 513, 44-36
Vernon Blvd., Long Island City, New York, 11101.
Until 10:00 A.M., on MONDAY, JULY 2, 1979
Bids will be publicly opened and read at 10:00 A.M. on the date and place stated
above.
FOR THE TRANSPORTATION OF HANDICAPPED PUPILS
FOR THE PERIOD FROM SEPTEMBER 1979 THROUGH JUNE 1982
- --------------------------------------------------------------------------------
1. Name of Bidder [ILLEGIBLE] Transportation, Inc.
---------------------------------------------------------
Address of Bidder Suite 810 1407 Broadway N.Y.C., N.Y. 10018
---------------------------------------------------------
2. Page Number(s) Containing Bid Prices:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
<PAGE>
IMPORTANT
NO-BID RESPONSE FORM
IT IS NOT NECESSARY FOR THE BIDDERS WHO ARE SUBMITTING BIDS ON THE PRODUCT(S)
AND/OR SERVICES SPECIFIED HEREIN TO RETURN THIS FORM.
FAILURE OF NON-BIDDERS TO COMPLETE AND RETURN THIS FORM WILL RESULT IN THEIR
AUTOMATICALLY BEING DROPPED FROM OUR BIDDERS' LIST FOR THE PRODUCT(S) AND/OR
SERVICES SPECIFIED HEREIN.
The New York City Board of Education is committed to programs and policies that
will result in the procurement of supplies, equipment and services that meet the
quality standards required by our educational institutions at the lowest
possible prices consistent with those standards.
An important aspect of achieving this goal is to promote competitive bidding
among as great a number of qualified bidders as possible.
However, the preparation and mailing of Bid Request Packages is time-consuming
and expensive. In instances where bidders fail to respond, or notify the Board
of Education of their future intentions, the preparation and mailing of the Bid
Request Package represents an unnecessary expense to the Board of Education.
All bidders who respond with a "No Bid" response, or choose not to bid, are
requested to provide the information requested below and return this form, in
the envelope provided, in time for the bid opening. FAILURE TO RETURN THIS
COMPLETED FORM WILL RESULT IN THEIR AUTOMATICALLY BEING DROPPED FROM OUR
BIDDER'S LIST FOR THE PRODUCT(S) AND/OR SERVICES SPECIFIED HEREIN. To be
reinstated on the bidder's list the bidder must forward a written request for
consideration which will be reviewed by the Board of Education.
- --------------------------------------------------------------------------------
REASONS FOR NOT BIDDING AT THIS TIME: _________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
DO YOU WISH TO RECEIVE BID REQUESTS FOR THIS PARTICULAR PRODUCT OR SERVICE IN
THE FUTURE? ( ) YES ( ) NO
*BIDDER NAME AND ADDRESS: _____________________________________________________
________________________________________________________________________________
SIGNED:___________________ TITLE:___________________ DATE:____________________
BID SERIAL NO. 8108 DATE OF BID OPENING_________________
*PLEASE CHECK HERE ( ) IF THIS ADDRESS IS A CORRECTION OF THE MAILING
ADDRESS TO WHICH THIS BID PROPOSAL WAS ORIGINALLY MAILED.
<PAGE>
ALL PROSPECTIVE BIDDERS PLEASE NOTE THE FOLLOWING:
BID DEPOSIT OR BID BOND
Your attention is directed to Section _____ on Page 1 on the General
Instructions to Bidders entitled "BID DEPOSIT OR BID BOND".
In the event the Bid Deposit to be submitted with bid is in the form of a check,
said check MUST BE CERTIFIED.
Bids that are not executed in strict accordance with this section shall be
rendered informal and not read at bid opening.
WRITTEN AGREEMENT & ANTI-TRUST CLAUSES
The written agreement contains all the terms and conditions agreed upon by the
parties hereto, and no other agreement, oral or otherwise, regarding the subject
matter of this agreement shall be deemed to exist or to bind any of the parties
hereto, or to vary any of the terms contained herein.
The vendor (contractor) hereby assigns, sells and transfers to the City of New
York, all right, title and interest in and to any claims and causes of action
arising under the antitrust laws of New York State or of the United States
relating to the particular goods or services purchased or procured by the City
under this contract.
PARTICIPATION IN AN INTERNATIONAL BOYCOTT
a. The contractor agrees that neither the contractor nor any
substantially-owned affiliated company is participating or shall
participate in an international boycott in violation of the provisions of
the Export Administration Act of 1969, as amended, or the regulations of
the Untied States Department of Commerce promulgated thereunder.
b. Upon the final determination by the Commerce Department or any other agency
of the United States as to, conviction of the contractor or
substantially-owned affiliated company thereof, participation in an
international boycott in violation of the provisions of the Export
Administration Act of 1969, as amended, or of the regulations promulgated
thereunder, the Comptroller may, at his option, render forfeit and void
this contract.
c. The contractor shall comply, in all respects, with the provisions of
Section 343 - 10.0 of the Administrative Code of the City of New York and
the rules and regulations issued by the Comptroller thereunder.
III B
<PAGE>
PRICE CERTIFICATION CLAUSE (REVISED 11/13/78)
The bidder certifies that the prices, warranties, conditions, benefits,
and terms quoted herein are at least equal or more favorable to the Board of
Education of the City School District of the City of New York than the prices,
warranties, conditions, benefits and terms currently quoted by the bidder to any
customers for the same or a substantially similar quantity and type of item(s)
or services as described herein. This certification shall not apply to prices,
warranties, conditions, benefits and terms under contracts in effect between the
bidder and other customers at the date of submission of the within bid, except
as provided herein.
The successful bidder (hereinafter called the "Contractor") further
certifies that during the period between the bid submission date and the
completion of the term of this contract, should he offer prices, warranties,
conditions, benefits, and terms more favorable than those quoted herein, or
provide changed prices, warranties, conditions, benefits and terms more
favorable than those quoted herein under a contract in effect at the bid
submission date with any customer, for the same or a substantially similar
quantity and type of item(s) or services, then the contractor shall immediately
thereafter notify the Board of Education, Bureau of Supplies. Regardless whether
such notice is sent by the contractor or received by the Board of Education,
this contract shall be deemed amended retroactively to the effective date of
more favorable treatment, to provide the more favorable prices, warranties,
conditions, benefits, and terms.
The Board of Education shall have the right and option to decline any such
amendment.
If the contractor is of the opinion that an apparently more favorable
price, warranty, benefit, condition and term quoted, offered or provided to a
customer is not more favorable treatment, the contractor shall immediately
notify the Director of the Bureau of Supplies of the Board of Education in
writing setting forth in detail the reasons why it believes the apparently more
favorable treatment is not in fact more favorable treatment. The Director of the
Bureau of Supplies after consideration of the written explanation may, in his
sole discretion, decline to accept the explanation and thereupon, the contract
shall be deemed amended retroactively to the effective date of the more
favorable treatment, to provide the more favorable prices, warranties,
conditions, benefits, and terms to the Board of Education.
The contractor further certifies that when the terms and conditions of the
within contract provide for the written submission by the contractor of a
request for revision of prices, warranties, conditions, benefits and terms,
such requested revised prices, warranties, conditions, benefits and terms will
be at least equal to or more favorable to the Board of Education of the City
School District of the City of New York than the prices, warranties, conditions,
benefits, and terms offered by the contractor to any customer for the same or
substantially similar quantity and type of item(s) and services as of the
effective date of the revision.
The contractor hereby authorizes the inspection, review and copying of
contracts and documents that pertain or relate to the performance of this clause
of the contract.
The contractor shall be obliged to keep the contracts and documents
referred to in the above paragraph during the effective period of this contract
and for a period of three years after the final payment of this contract.
III C
<PAGE>
Revised April 30, 1979
Form CE 8 - Standard Form of Contract Proposal, Page IX, Section 9A
Entitled "Grounds for Disqualification or Cancellation" is hereby deleted and
replaced by the following:
INVESTIGATIONS
Upon the refusal of a person, when called before a Grand Jury,
Governmental Department, a commission, agency or any other body which is
empowered to compel the attendance of witnesses and examine them under oath, to
testify concerning a transaction, contract, lease, permit or license entered
into with the City of New York (City), The State, or any political subdivision
thereof, or a public authority or with any public department, agency or official
of the State or a political subdivision thereof, upon being advised that neither
his or her statement nor any information or evidence derived from such statement
will be used against that person in any subsequent criminal proceeding;
(A) Such person, or any firm, partnership, corporation or other entity
related to the aforesaid testimony of which he or she was at the time of the
testimony a member, partner, director, officer, fiduciary, principal or employee
may be disqualified for a period not to exceed five years after such refusal
from submitting bids for or entering into or obtaining any contract, lease,
permit or license with or from the City or submitting bids for or entering into
or obtaining any contract, lease, permit or license which will be paid in whole
or in part out of monies under the control of or collected by the City, and
(B) Any and all such existing City contracts, leases, permits or licenses
that said refusal to testify concerned may be cancelled or terminated by the
City or the contracting agency and/or be subject to such other action
appropriate under the circumstances thereto, in the discretion of the City for
cause after a hearing, without the City incurring any penalty or damages on
account of such cancellation or termination, but any monies owing for goods
delivered, work done, rentals, permit or license fees due, prior to the
cancellation or termination, shall be paid by the City.
(C) The term license or permit as used herein shall be defined as a
license, permit, franchise or concession not granted as a matter or right.
(D) Any disqualification, cancellation or termination hereunder shall be
made by the City Commissioner or agency head who is or would be a party to the
contract, lease, permit or license that is the subject of the aforesaid
disqualification, cancellation and/or termination, after a hearing upon not less
than two (2) days written notice to the parties involved.
III D
<PAGE>
TABLE OF CONTENTS
CONTRACT
TRANSPORTATION OF HANDICAPPED PUPILS
FOR THE PERIOD FROM SEPTEMBER 1979 THROUGH JUNE 1982
Page
General Instructions for Bidders ..........................................
Form to be Used ........................................................... 1
Presentation of Bids ...................................................... 1
Bid Opening ............................................................... 1
Late Bids ................................................................. 1
Bid Deposit or Bid Bond ................................................... 1
Verification .............................................................. 2
Quotation ................................................................. 2
Additional Information .................................................... 2
Equal Employment Opportunities ............................................ 2
Withdrawal of Bids ........................................................ 3
Ability to Perform ........................................................ 4
Financial Statement ....................................................... 4
Equipment ................................................................. 4
Insurance and Performance Bond ............................................ 5
Award ..................................................................... 7
Notice of Award ........................................................... 7
Return of Bid Deposit ..................................................... 7
Bid Certification ......................................................... 8
Individual Verification ................................................... 11
Corporate Verification .................................................... 12
<PAGE>
Schedule of Items, Specifications and Bid Blank:
Page
I. Intent and Scope .......................................... 13
II. Period of Contract ........................................ 13
III. Number of Days of Service ................................. 13
IV. Period of Operation ....................................... 14
V. Payment ................................................... 14
VI. Items ..................................................... 15
VII. Transportation of Pupils .................................. 15
VIII. Schedule of Vehicles ...................................... 15
IX. Vehicle Specifications .................................... 16
X. Vehicle Safety Requirements ............................... 17
XI. Spare Vehicles and Vehicle Performance Monitoring ......... 18
XII. Use of Vehicles ........................................... 19
XIII. Increase of Decrease in the Number of Vehicles ............ 20
XIV. Facilities and Maintenance ................................ 23
XV. Gasoline .................................................. 23
XVI. Records to be Transmitted ................................. 23
XVII. Vehicle Operator Standards ................................ 23
XVIII. Operational Supervision ................................... 25
XIX. Escorts ................................................... 26
XX. Audit of Invoices and Financial Records ................... 29
XXI. Liquidated Damages ........................................ 29
XXII. Employee Protection Provisions ............................ 33
<PAGE>
General Terms and Conditions
Page
Definitions......................................................... 1
1. Subject Matter.................................................. 2
2. Contract........................................................ 2
3. Interpretation.................................................. 2
4. Modifications................................................... 2
5. Compliance With Laws............................................ 3
6. Non-Assignment of Contract...................................... 3
7. Cancellation.................................................... 3-4-5
8. Notices......................................................... 5
9. No Estoppel .................................................... 5
10. Claims - Limitations of Action.................................. 6
11. Maintenance of Records.......................................... 6
12. Discrimination.................................................. 6-7
13. Equal Employment Opportunity Requirement for
Non-Construction Contractors, Vendors and Suppliers............. 8 thru 13
14. Indemnification................................................. 14
15. Workmen's Compensation.......................................... 14
16. Prevention of Delay, Suspension of Strikes...................... 14
17. Inspectors...................................................... 14
18 Rejection of Vehicles........................................... 15
19. Payments........................................................ 15
20. Acceptance of Final Payment..................................... 15
21. Reserved Rights................................................. 16
<PAGE>
Page
22. Anti-Trust...................................................... 16
23. Merger.......................................................... 16
24. Venue........................................................... 16
Performance Bond.................................................... 17-18
<PAGE>
BOARD OF EDUCATION
CITY OF NEW YORK
NOTICE: The attention of the bidder is particularly called to the fact that,
unless the bid is made in strict conformity with the directions given in this
proposal as provided for herein, the bid may be rejected.
PROPOSAL FOR BIDS
FOR THE TRANSPORTATION OF HANDICAPPED PUPILS
FOR THE PERIOD FROM SEPTEMBER 1979 THROUGH JUNE 1982
(SERIAL NO. 8108)
GENERAL INSTRUCTIONS FOR BIDDERS
FORM TO BE USED
Bidder must submit his bid upon the blank form included herein, which set forth
the schedule of items quantities, specifications and form on Contract. The forms
provide for quotations for extended and regular service, and each bidder is
required to bid on both for each item bid upon. Partial item bids will not be
accepted.
PRESENTATION OF BIDS
The person, firm or corporation making a bid shall furnish such bid in a sealed
envelope of the Director of the Bureau of Supplies or his designated
representative at the place herein mentioned on or before the day and time
herein named, and the envelope shall be endorsed on the face thereof with the
name of the person, firm or corporation making such bid, the date of its
presentation and the title of the services for which such bid is made.
BID OPENING
At the time and place herein stated, the bids received will be publicly opened
and read by the Director of the Bureau of Supplies or his duly designated
representative. The Board of Education reserves the right to waive any
formalities in a bid if it is deemed to be in the best interests of the Board to
do so.
LATE BIDS
Bids which arrive after the time stated for the opening of bids cannot be
accepted. This includes bids sent by mail, which, if so sent, are sent at the
risk of the bidder, and will not be considered if they arrive after the time
stated for the bid opening.
BID DEPOSIT OR BID BOND
Every bid shall be accompanied by a bid bond or by a deposit in the amount of
two (2) times the daily rate for regular service per vehicle for each vehicle in
all items bid. Such deposit shall consist of a certified check upon a state or
national bank or trust company or a check of such bank or trust company signed
by a duly authorized officer thereof, drawn to the order of the Comptroller of
the City or New York.
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The bid deposit shall be enclosed in a sealed envelope within the envelope
containing the bid. Receipt for the bid deposit will not be given, as bids will
be publicly opened and read, and the amount of bid deposits publicly announced
at the time of opening of bids.
VERIFICATION
Each bid shall be verified by the oath in writing of the party or parties making
it, that the several matters stated therein are in all respects true. If the
bidder is a corporation, the verification shall be made by an officer of such
corporation with knowledge of the facts and having authority to make such a
sworn statement.
QUOTATION
The bidder shall insert the prices he proposes to furnish for each item in the
schedules herein contained or annexed, as well as all other information required
on the bid blank.
ADDITIONAL INFORMATION
Further information, interpretation or clarification relative to the terms or
conditions of the Contract should be requested in writing prior to the
submission of the bid from the Director or duly designated representative of the
Bureau of Pupil Transportation at 28-11 Queens Plaza North, Long Island City,
New York, 11101.
EQUAL EMPLOYMENT OPPORTUNITIES
The particular attention of bidders is called to the section entitled "Equal
Employment Opportunities and Practices" on Pages 8 through 13 of the General
Terms and Conditions. The provisions and terms therein will be strictly enforced
by the Board of Education. It is recommended that you contact the Director of
the Office of Equal Opportunity Room 641, 110 Livingston St., Brooklyn, N. Y.
11201 for forms and other information that his office would require in the event
of possible consideration of award to your company.
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WITHDRAWAL OF BIDS
A. After the opening of bids, a request by a bidder to the Board of Education
for consent to the withdrawal of his bid because of error made by said
bidder, will be considered only under the following terms and conditions:-
1. Request to withdraw bid must be in writing, addressed to the
Director of Bureau of Supplies and must give reasons for the
request.
2. Request must be sent by registered mail and must be post-marked not
later than 48 hours following the opening of bids.
3. All requests will be referred to the Board of Review.
4. Contractors requesting consent to the withdrawal of bids shall
appear and testify before the Board of Review and shall make
available to the Board of Review all work sheets, summary sheets
and other data requested by the Board of Review as pertinent to
its inquiry. Failure to appear or to make available data as
requested by the Board of Review will result in refusal to
consent to the withdrawal of bids.
5. After the Board of Review has considered a request by a bidder to
withdraw its bid after an award has been made by the Board of
Education, the Board of Education may grant such request in any case
which it deems just and proper, but such request shall be made and
such consent to withdraw shall be accepted by the bidder upon the
express conditions that said bidder shall be excluded from bidding
again on the readvertisement of bids for the same item or proposal.
Should any bidder request the withdrawal of more than one bid in any
twelve month period, he shall be disqualified from bidding on Board
of Education work for a period of one (1) year from the date of the
second request.
B. If the Contract award is not made within forty-five days after the date of
the bid opening, a bidder has the right to withdraw his bid, provided such
withdrawal is made prior to Contract award. Such withdrawal must be in
writing and shall be filed with the Secretary of the Board of Education
and the Director of the Bureau of Supplies.
A withdrawal of bid pursuant to this paragraph is not subject to the
provisions stated in paragraph "A" above.
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ABILITY TO PERFORM
Upon demand of the Director of the Bureau of Pupil Transportation, any bidder
for this Contract shall furnish testimonials or evidence in such form as the
Director may indicate, as to his financial ability, prior experience, past
performance, ability to perform (which includes permitting investigation and
evaluation by the Board of bidder's facilities, equipment, personnel), etc. No
award will be made to a bidder who shall fail to submit testimonials, setting
forth the facts required to be set forth, or to a bidder whose statements set
forth in such testimonials are found to be untrue. Any statement or declaration
made by the bidder which shall be found be untrue will be sufficient cause for
rejecting his bid and forfeiting his bid deposit to the Board. The Director will
determine whether the evidence of ability to perform is satisfactory and will
recommend awards only when such evidence is deemed satisfactory, and reserves
the right to reject bids where evidence is submitted, or investigation and
evaluation is determined by the Director, to indicate inability of the bidder to
perform.
FINANCIAL STATEMENT
The bidder must submit with its bid a balance sheet and profit and loss
statement of its operations for the past three annual tax periods or for the
number of tax years which the bidder has been in business, with a certification
by an independent Certified Public Accountant licensed by the State of New York.
The individual, firm, or corporation employed to prepare the financial statement
will have no interests in the bid and must so certify. Each bidder shall submit
a statement under oath disclosing and clearly identifying all its stockholders
owning 5% or more of the outstanding equity, its officers, partners, creditors,
and every person, firm or corporation who has any interest directly or
indirectly in the bid or the bidder at the time the bid is submitted; and shall
report to the Director any change in control or ownership during the period of
this Contract within 5 days. If the bidder has not been in business within the
past three (3) years, the bidder shall submit a satisfactory certified financial
statement outlining its qualifications to perform satisfactorily.
EQUIPMENT
The bidder must submit with his bid the following data if such information is
available at the time of bid, in the connection with each vehicle intended to be
used for transportation of pupils:
1. Make, year of manufacture and identification number of each vehicle.
2. Pupil seating capacity.
3. Name of owner of each vehicle.
The bidder shall supply satisfactory evidence that he will have the required
number of vehicles prior to the beginning or the Contract period or beginning of
service. Such evidence may be a signed statement from an acceptable vehicle
manufacturer, dealer, or rental corporation to the effect that he will furnish
the required number of vehicles. If the vehicles are leased or rented, the
vehicle operator (driver) cannot be owner.
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A successful bidder must furnish this date with reference to each vehicle being
furnished and used for the transportation of pupils under the Contract both at
the inception of the Contract and for any additional vehicle acquired
thereafter. The successful bidder must also inform the Board of Education of any
vehicle withdrawn from service or replaced during the life of the Contract.
INSURANCE AND PERFORMANCE BOND
The bidder must submit, with his bid, certifications from acceptable insurors to
the effect that said insurors will furnish to the bidder public liability
insurance, property damage coverage and a performance bond as follows:
1. Public Liability for bodily injury, including death shall be in the
amount of $500,000.00 for each person and $5,000,000.00 for each
accident. Property damage coverage shall be in the amount of
$50,000.00 to cover the claim of one person and $100,000.00 to cover
the claim of two or more people for each accident. These policies
shall be endorsed to include the Board of Education and City of New
York, as named insureds. A copy of said policies shall be supplied
to the Director of the Bureau of Pupil Transportation upon request.
This written proof must be issued by a company licensed by the
Superintendent of Insurance of the State of New York to do business
in New York.
2. Performance Bond to cover the faithful performance of the Contract
in the amount of the Contract where required. This written proof
must be issued by a company licensed by the Superintendent of
Insurance of the State of New York to do business in New York.
The amount of the initial performance bond to be provided, when
required, by the successful bidder for the first year of the
Contract shall be one hundred and eighty times the daily rate for
regular service per vehicle for all vehicles for which the Contract
is awarded. This performance bond shall guarantee the full and
faithful performance for the initial first year period of such
Contract as may be awarded to bidder. The initial performance bond
shall be filed with the Secretary of the Board of Education with the
acknowledgement of the notice of award. Thereafter, the contractor
shall provide an equal and identical bond guaranteeing performance
for each additional year beyond the operation of the first year of
said Contract by April 1, 1980, 1981, and 1982 respectively.
Inability or failure on the part of the contractor to obtain the
bond guaranteeing performance as required herein on or before April
1, as state above, shall be deemed sufficient cause for cancellation
of the balance of the Contract.
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3. Waiver of Performance Bond.
(a) Any bidder who initially receives an award of Contract for
fifteen (15) or fewer vehicles is not required to furnish a
performance bond, nor shall there be any retainage withheld by
the Board of Education.
(b) Any bidder who initially receives an award of Contract for
sixteen (16) to twenty-five (25) may elect between the
following alternatives:
1. File a performance bond as stated herein; or
2. Authorize the Board of Education to retain 10% of each
payment made to the contractor from the first five (5)
months payments of each year of the contract in an
interest bearing account to assure full and faithful
performance of this Contract. This retainer shall be
paid to the contractor with interest at the conclusion
of each one (1) year period of full and faithful
performance under this Contract.
4. During the period of the Contract, if there is a increase in the
total number of vehicles furnished by one contractor to more than
fifteen (15), but less than twenty-six (26), then the contractor
shall comply with the terms and conditions outlined in 3(b) above.
During the period of the Contract, if there is a increase in the
total number of vehicles furnished by one contractor to more than
twenty-five (25), then the contractor shall immediately notify the
Director and shall furnish a performance bond as required herein for
those vehicles in excess of twenty five (25) within twenty (20) days
and must furnish such performance bond for the remaining portion of
the Contract period for those vehicles in excess of twenty-five (25)
in accordance with the conditions stated herein.
5. For the purposes of 3 and 4 above, corporate bidders who are subject
to common control as determined by the Board based upon an analysis
of:
(a) ownership of the corporations' assets,
(b) coincidence of corporate officers and directors, and
(c) such other factors as the Board determines to be relevant, are
deemed to be one bidder.
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AWARD
The award of Contract, if made, will be made according to law, as soon after the
opening of bids as practicable, by item, to the lowest reponsible bidder
offering the lowest weighted average daily rate per vehicle for extended and
regular service as specified in each item.
The Board of Education reserves the right to reject any or all bids. No award of
Contract shall be binding until the Contract had been duly approved by the New
York State Department of Education and the Financial Control Board.
NOTICE OF AWARD
The mailing by the Board of Education of the City of New York to the undersigned
bidder at the address herein specified of the NOTICE OF AWARD OR ACCEPTANCE OF
BID for any of the items for which this bid is submitted shall constitute a
Contract between the Board of Education and the undersigned to furnish and
deliver the items set forth in said NOTICE OF AWARD OR ACCEPTANCE OF BID. The
successful bidder will acknowledge receipt by him of the notice of award or
acceptance of bid within five days after receipt on the form to be provided to
him, and shall submit with said acknowledgement an executed copy of the
participation agreement (as set forth in XXII 4.) and the performance bond
where required. Purchase orders will be issued when and as required.
RETURN OF BID DEPOSIT
After the award of Contract, the Comptroller shall reimburse the amount of bid
deposits received to the persons, firms, or corporation submitting the same,
except the bid deposit made by the bidder whose bid has been accepted. The
amount of the bid deposit of the successful bidder will be reimbursed to him
after acknowledgement from him of receipt of notice of award of Contract, and
submission of the participation agreement and performance bond where required.
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BID TO THE BOARD OF EDUCATION OF THE CITY OF NEW YORK
Made by
Name of Bidder _________________________________________________________________
(Individual, firm or corporation)
Place of Business of Bidder ____________________________________________________
Date of Bid _________________________________ Telephone No.____________________
If Bidder is an individual or partnership, state here:
Name of Individual or Partners Residence of Individual or Partners
1.______________________________________________________________________________
2.______________________________________________________________________________
3.______________________________________________________________________________
If Bidder is a corporation, fill in the following blanks:
Organized under the laws of the State of _______________________________________
Name and Residence of President ________________________________________________
________________________________________________________________________________
Name and Residence of Secretary_________________________________________________
________________________________________________________________________________
Name and Residence of Treasurer_________________________________________________
________________________________________________________________________________
The bidder above mentioned declares and certifies:
First: That the said bidder is of lawful age and the only one interested in this
bid, and that no one other than hereinabove named has any interested in this
bid, or in the contract proposed to be entered into.
Second: By submitting of this bid, each bidder and each person signing on behalf
of any bidder certifies, and in the case of a joint bid each party thereto
certifies as to its own organization, under penalty of perjury, that to the best
of its knowledge and belief -
(1) The prices in this bid have been arrived at independently without
collusion, consultation, communication, or agreement for the purpose
of restricting competition, as to any matter relating to such prices
with any other bidder or with any competitor;
(2) Unless otherwise required by law, the prices which have been quoted
in this bid have not been knowingly disclosed by the bidder and will
not knowingly be disclosed by the bidder prior to opening, directly
or indirectly, to any other bidder or to any competitor; and
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(3) No attempt has been made or will be made by the bidder to induce any
other person, partnership or corporation to submit or not to submit
a bid for the purpose of restricting competition.
Third: That no Councilman of the City of New York, member of the Board of
Education of the City of New York, or any officer or employee or person whose
salary is payable in whole or in part from the treasury of the City of New York
is directly or indirectly interested in this bid or in the supplies, materials,
equipment, work or labor to which it relates, or in any portion of the profits.
Fourth: That said bidder is not in arrears to the City of New York or the Board
of Education of the City of New York upon debt, contract, or taxes and is not a
defaulter as surety or otherwise, upon any obligations to the City of New York,
and has not been declared not responsible, or disqualified, by any agency of the
City of New York, or State of New York, nor is there any proceeding pending
relating to the responsibility or qualification of the bidder to receive public
contract, except
________________________________________________________________________________
________________________________________________________________________________
(if none, bidder will insert "none")
Fifth: That said bidder has carefully examined the standard form of contract
proposal, including the instructions to bidders, specifications, and the
schedule of bid items, and will, if successful, perform all its terms, covenants
and conditions, and will furnish and deliver at the prices bid, within the time
stated, all the materials, supplies, apparatus, goods, wares, merchandise,
services, or labor named and described therein for which bid is made.
Sixth: The bidder expressly undertakes and agrees, if successful, to comply
fully with any and all applicable laws, orders, or regulations, of any federal,
state or municipal authority or agency.
The undersigned, if an individual bidder, or if the bidder be a firm,
partnership or corporation, the undersigned executing this document as a member,
partner, director or officer and on behalf of such firm, partnership or
corporation, expressly warrants and represents that neither he, nor any member,
partner, director or officer of said firm, partnership or corporation has, prior
to the date of execution of this bid, been called before a grand jury, head of a
state department, temporary state commission or other state agency, head of a
city department, or other city agency, to testify in an investigation concerning
any transaction or contract had with the State of New York, any political
subdivision thereof, a public authority or with any public department, agency or
official of the State of New York or of any political subdivision thereof, or of
a public authority or any fire district, and refused to sign a waiver of
immunity against subsequent criminal prosecution or to answer any relevant
question concerning such transaction or contract. If there has been a refusal to
sign a wavier or to answer, the bidder must state the time and place of such
refusal on the bid form submitted.
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The amount of the bid deposit or bid bond furnished with this bid is the
sum of _______________________________Dollars ($________________________________
Signature_______________________________________________________________________
(Individual, firm or corporation)
By______________________________________________________________________________
(Where bidder is corporation add:)
Attest:
____________________________________
Secretary (Seal)
(Please note that affidavit of verification on following pages must be executed)
Notes: 1. Where bidder is a firm, the bid must be signed in the name of
the firm by a member thereof, who must sign his own name immediately thereunder,
as A. & B. Co., By C.A., Partner.
2. Where the bidder is a corporation, each bid must be signed in the
name of the corporation by some duly authorized officer or agent thereof having
knowledge of the matters stated in the bid, and such officer or agent shall also
subscribe his own name, as: A. B. Company, by C. D., President. The seal of the
corporation should also be affixed.
3. An individual doing business under a trade name must present the
bid in such individual's correct name. The style "Thomas Jonas, doing business
as (d/b/a) Celestial Bus Co." may be used.
4. Each bid must be verified by the bidder submitting same by
execution of one of the follower proper forms.
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INDIVIDUAL VERIFICATION
County of )
State of New York ) ss:
______________________, being duly sworn, deposes and says; he is the person who
executed the foregoing bid, that deponent has read the declarations contained in
said bid and knows the contents thereof; that the same are true to deponent's
own knowledge.
____________________________________
(Signature of person verifying bid)
Subscribed and sworn to before me this
day of
___________________________________________
-----0-----
BY A FIRM OR PARTNERSHIP
County )
State of New York ) ss:
______________________________, being duly sworn, says:
I am a member of ________________________________________________________,
the firm described in and which executed the foregoing bid. I subscribed the
name of the said firm thereto on behalf of the firm and several matters therein
stated are in all respects true.
____________________________________
(Signature of person verifying bid)
Subscribed and sworn to before me this
day of
________________________________________
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CORPORATE VERIFICATION
County of )
State of New York ) ss:
_________________________________, being duly sworn, says:
I am the ____________________ of _________________________________________
the corporation whose name is subscribed to and which executed the foregoing
bid.
I reside at ____________________________________________________________________
I have knowledge of the several matters therein stated and they are in all
respects true.
____________________________________
(Signature of person verifying bid)
Subscribed and sworn to before me this
day of
___________________________________________
-----0-----
The officer taking the acknowledgement shall enter his title, the date of
expiration of his commission, etc.
IMPORTANT NOTE:
Those found making intentionally false or misleading statements are liable for
prosecution for perjury.
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SCHEDULE OF ITEMS, SPECIFICATIONS AND BID BLANK
FOR THE TRANSPORTATION OF HANDICAPPED PUPILS
FOR THE PERIOD OF SEPTEMBER 1979 TO JUNE 1982
I. INTENT AND SCOPE
This Contract is intended to cover requirements for the transportation of
handicapped pupils whose transportation is provided by the Board of Education of
the City of New York, and for such other uses as provided for herein.
II. PERIOD OF CONTRACT
The time for the performance of the work herein scheduled is for the period of
three (3) years beginning with the first official scheduled public school day in
September, 1979 and ending with the last official scheduled public school day in
June, 1982. Thereafter, the Contract may be extended for one or more additional
years in conformance with the requirements of the State Education Law and the
regulations of the Commissioner of Education of the State of New York.
III. NUMBER OF DAYS OF SERVICE
The contractor must conform to the public school calendar and time schedules of
all the different schools involved in the item(s) bid upon, including daily time
schedules. The public school calendar shall be furnished prior to the opening of
each school year. It is the responsibility of the contractor to adhere to this
calendar at all times unless notified otherwise by the Director of the Bureau of
Pupil Transportation (hereinafter the "Director"). This shall include
responsibility for adhering to any special schedules or shortened schedules. The
Board reserves the right to change the school hours or days of attendance of any
or all grades, or of any or all schools any time prior to the letting of the
Contract and at any time thereafter. No change in compensation will be made for
such adjustments, unless they necessitate the use of additional vehicles by the
bidder.
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IV. PERIOD OF OPERATION
Extended and regular service shall be provided pursuant to the terms and
conditions of this Contract. Extended service shall be defined as being provided
by those vehicles that are available for the transportation of pupils beginning
with the initial pick-up time of 7:00 A.M. and concluding with the delivery of
the last pupil to his or her home on the return trip.
Regular service shall be defined as being provided by those vehicles that are
available for the transportation of pupils beginning with the initial pick-up
time of 7:00 A.M., and delivery to school for the morning session which will
commence no later than 9:00 A.M. In addition, a regular vehicle shall pick up
pupils for the homeward trip no earlier than 2:00 P.M. and no later than 3:30
P.M., and shall complete its service with the delivery of the last pupil to his
or her home. Vehicles providing regular service shall be assigned runs not
exceeding two (2) hours for intraborough operation, of two and one half (2 1/2)
hours for interborough operation and runs extending beyond New York City limits,
from the time of the initial pick-up for the homeward trip.
V. PAYMENT
Payment will be made based upon the daily rate per vehicle quoted by the
contractor for the number of vehicles and the number of days for the type of
service provided by the contractor for each vehicle. The Board reserves the
right to adjust the number extended and regular vehicles required to be provided
within any item upon five (5) days notice to the contractor. However, in no
event will the Board adjust the use of vehicles so as to reduce the extended use
of vehicles other than buses below ten percent (10%) of the total number of
such vehicles originally awarded to any contractor, or the extended use of buses
below twenty-five percent (25%) of the total number of buses orignally awarded
to any contractor. In no event will the contractor be paid for days on which the
vehicles are not operating pursuant to this Contract except for those days upon
which the contractor was scheduled to provide service and schools were ordered
closed by the Chancellor or Community Superintendents due to weather conditions
or other emergency situations. Invoices shall be submitted at the end of each
calendar month for the number of vehicles and the number of days on which
services were rendered during the preceding month. No adjustment in compensation
will be made other than for: (1) assessment of liquidated damages, (2)
assessment of expenses arising from default pursuant to paragraph7(c) of the
General Terms and Conditions of this Contract, (3) charges for additional use of
the vehicle, (4) charges for escort service when the contractor provides such,
and (5) increases or decreases in the number of vehicles or extended service.
Charges for additional use of the vehicle shall be defined as the requirement
that the contractor pick up its first pupil prior to 7:00 A.M. or any pupil
after 3:30 P.M. for the homeward trip. Such a requirement may result from the
scheduling by the Bureau of Pupil Transportation. Additional charges for use of
extended service vehicles shall be at an hourly rate equal to ten percent (10%)
of the daily rate for extended service vehicles. Charges for less than one hour
in additional service will be pro-rated.
The Board of Education reserves the right to deduct two per cent (2%) from the
prices quoted herein if payment is made within thirty days from the date the
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The discount herein provided for shall not be a consideration in determination
of award.
VI. ITEMS
The contractor shall complete the item(s) bid upon first. At the discretion of
the Director the vehicle may be assigned for a secondary use outside of the item
bid upon in accordance with the provisions of Section XII entitled, Use of
Vehicles, but within the hours contracted for the specific vehicle.
VII. TRANSPORTATION OF PUPILS
The pupils who will require transportation under this Contract are to be
provided with curb-to-curb service and/or additional service in accordance with
the provisions of Section XII. On the trip to school each child will be picked
up at the curb at a point as close to the front entrance to his home as
possible. In the unusual case where, because the child lives on a dead-end
street or because of traffic regulations, it is impossible for the vehicle to
pick up at the curb in front of the pupil's home, the pick-up and drop-off point
will be at the nearest intersecting street to the street on which the child
resides. On the homeward trip, the pupil will be discharged from the vehicle at
the same point from which the child was picked up unless instructed otherwise by
the Director. Vehicles will load and unload at the school at the point
designated by the Principal of the school.
Except in an emergency, no pupil will be required to transfer from one vehicle
to another vehicle either on the trip to school or on the homeward trip.
VIII. SCHEDULE OF VEHICLES
The Bureau of Pupil Transportation will prepare the vehicle schedules to be
operated by each vehicle to be used under this Contract. The schedule will show
the name, address, and the time of the initial pick up, name, address, sequence
of pick up for each additional pupil on the route, the school and its address,
and the scheduled arrival at each school. On the return trip the schedule will
indicate the departure time from the school and the sequence in which the
children will be delivered to their homes. These schedules will be subject to
frequent changes as the school schedule or session is altered, or as schools or
pupils' names and addresses are added to or deleted from the transportation
lists. The contractor will be required to comply with the changes in the
schedule within the time frame stipulated by the Bureau of Pupil Transportation.
The contractor shall not alter the schedule or the vehicle servicing such
schedule without prior approval of the Director.
A copy of such schedule shall be furnished to the Principal of each school.
Vehicles must not leave a pick-up point until the scheduled time and shall not
wait past the scheduled time unless the operator sees a pupil approaching to
board the vehicle for the trip to school. No vehicle shall leave the school at
dismissal time until all students are aboard. Contractors are not to permit
their employees to make stops at unauthorized locations.
If a toll is involved it will be the responsibility of the contractor to pay
such toll at his own expense.
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IX. VEHICLE SPECIFICATIONS
All vehicles to be used and all transportation operations must comply with the
regulations of the New York State Department of Education, the New York State
Department of Transportation, the New York State Department of Motor Vehicles,
as well as with all applicable laws and regulations of any agency of the federal
government, State of New York and the City of New York.
Four different type vehicles are required to perform the services under this
Contract. In addition to complying with all governmental laws and regulations
the vehicles must also comply with the following standards:
1. "Standard school buses" must have a minimum seating capacity for
thirty-six handicapped students with seat belts, excluding the
driver and escort. Any vehicle with the capacity of more than
sixteen pupils is deemed to be a bus.
2. "Hydraulic lift buses" shall be designed so that an escort can
assist the pupil in a wheelchair into and out of the vehicle by use
of the lift without discomfort or danger to the pupil and so that
the escort can securely anchor the wheelchair to the vehicle. The
contractor must be able safely to accommodate various types of
wheelchairs. The minimum capacity with seat belts must be eight
wheelchair passengers and eight ambulatory passengers. These seating
configurations are subject to adjustment by removal or addition of
seats as required by the Director of the Bureau of Pupil
Transportation.
3. "Mini-bus station wagons" must have a minimum seating capacity of
fourteen (14) for vehicles acquired prior to January 1, 1979 and a
seating capacity of fifteen (15) for vehicles acquired after January
1, 1979.
4. "Mini-bus or station wagons equipped with ramps to accommodate
wheelchairs" must have a minimum capacity for four wheelchair
passengers and minimum seating capacity for four ambulatory
passengers and must be so equipped so that the escort can securely
anchor the wheelchairs to the vehicles. The contractor must be
able to accommodate safely various types of wheelchairs. These
seating configurations are subject to adjustment by the removal or
addition of seats as required by the Director.
No standees will be permitted at any time on any vehicle used in the
performance of this Contract.
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All vehicles being used in performance of this Contract that were manufactured
more than five years prior to the date of execution of this Contract shall be
equipped with two-way radios.
Vehicles shall be given a number suitable for identification purposes. Such
numbers shall be not less than four inches high displayed on both sides, front
and rear of the vehicles. Also displayed on each vehicle shall be the name and
address of the contractor providing the service in letters not less than three
inches high. Numbers and letters shall be applied with black paint. The run
number, which will be supplied to the contractor by the Bureau of Pupil
Transportation, shall be placed inside the side front window of the vehicle and
shall be sufficiently large so that it can be clearly seen from a distance of
not less than fifteen feet. The run number shall not obscure the driver's
vision. The color of all vehicles used in the performance of this Contract shall
be National School Bus chrome yellow.
X. VEHICLE SAFETY REQUIREMENTS
The interior of each vehicle shall be cleaned and swept or vacuumed at least
once a day. The exterior shall be washed weekly and kept as clean as possible,
weather and conditions permitting.
All vehicles shall be equipped with individual safety belts for each passenger
carried. Such safety belts shall conform to the motor vehicle code of the State
of New York. All vehicles shall be equipped with an all purpose fire
extinguisher, dry chemical or CO 2 type, rated at least 10-B:c, equipped with a
calibrated or marked gauge. The fire extinguisher shall be mounted in automotive
bracket located in the driver's front compartment in full view and easily
accessible.
All vehicles shall be equipped with a first aid kit in a dust proof medical
container easily removable, located in the driver's front compartment which
shall contain the following items:
2 bandages (1" by 10 yards)
6 sterile gauze pads (3" by 3")
1 adhesive tape (1" by 25 yards)
12 plastic bandaid strips
1 pair scissors
2 triangular bandages with 2 safety pins
(approximately 40" by 30" by 54")
3 single units of sterile eye pads (one per unit)
When a vehicle operator is not in his seat and pupils are in the vehicle, the
motor must be shut off, ignition key removed, the brakes set and the front
wheels turned against the curb. If the vehicle is parked and the motor shut off
for any reason, the ignition key must be removed and the brakes set with the
wheels turned towards the curb.
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To protect against carbon monoxide concentration or buildup, no idling of the
motor is permitted while: (1) awaiting school dismissal : (2) loading or
unloading pupils at school; (3) parked or not moving for an excessive length of
time.
XI. SPARE VEHICLES AND VEHICLE PERFORMANCE MONITORING
The contractor will provide all of the vehicles necessary to do all of the work
as contracted for in the item(s) contained in his Contract. The contractor must
have available sufficient approved vehicles and qualified personnel to enable
him to dispatch and place spare vehicles into operation promptly if, when and
where necessary to ensure continuous uninterrupted service in the event one or
more of the vehicles in regular use cannot function.
The contractor shall provide one spare vehicle for every twenty (20) vehicles of
a specific type contracted for. If a contractor provides between sixteen (16)
and twenty (20) vehicles of a specific type, then it must provide one spare
vehicle for each type. In the event a contractor provides less than fifteen (15)
vehicles of any specific type, then the contractor shall document to the
satisfaction of the Director that it has access to one spare vehicle for each
type. For these purposes, corporate bidders who are subject to common control as
determined by the Board based on an analysis of:
(a) ownership of the corporations' assets,
(b) coincidence of corporate officers and directors, and
(c) such other factors as the Board determines to be relevant, are
deemed to be one contractor.
The maximum number of spare vehicles required to be available and
provided by one contractor shall not exceed ten vehicles for any
specific type of vehicle.
Vehicles must be staffed with personnel qualified to handle emergency service.
Spare vehicles must be located at strategic points during the hours that
pupils are being transported under this Contract.
The person on the spare vehicle shall also act as expeditor, whose
responsibilities, beside performing emergency service shall include, but not be
limited to the following:
1. Dispatching or expediting vehicles to ensure a smooth operating
fleet.
2. Prompt dispatching of spare vehicles in the event of breakdown of
vehicles.
3. Maintaining a log in a form approved by the Director, in which he
will enter reports of disruptions of service or delays. A transcript
of such log shall be furnished to the Director at the end of each
school week.
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The maintenance of spare vehicles of a contractor providing 20 or more vehicles
shall be equipped with two-way radios and shall have continually open contact
with contractor's garage. In addition, the contractor shall assign its other
vehicles equipped with two-way radios among its routes so that the contractor
can dispatch the vehicles expeditiously to replace vehicles with breakdowns,
after these vehicles have completed their regular run. All equipment and
personnel referred to herein shall be supplied by the contractor and maintained
by the contractor at his own expense. A list of equipment and personnel used for
this service shall be submitted to the Director.
The contractor shall ensure direct telephone access to the contractor's garage
during the hours of operation. Answering services shall not qualify as direct
telephone access. The Bureau of Pupil Transportation will supply the contractor
with parent telephone numbers of each pupil. As a vehicle varies from its
schedule at any time for more than one hour, the contractor shall telephone
parents of the pupils involved in the delay. The contractor shall have available
sufficient telephone accessibility to handle problems and inquiries properly.
The contractor is responsible for monitoring operator and escort performance in
the field and to resolve problems with parents.
Field supervision shall include but is not limited to the following:
1. Spot checking operator and escort performance at specific pick-up points
and at schools.
2. Riding a specific run where problems have occurred.
3. Providing on-the-job training to operators and escorts.
4. Resolving problems between the contractor's personnel and school officials
or parents.
5. Assisting expediting vehicles and continuing service where bus breakdowns
occur.
XII. USE OF VEHICLES
Passengers other than pupils assigned by the Bureau of Pupils Transportation
shall not be carried in the vehicles used under this Contract while they are
being used to transport pupils except as otherwise stated or as authorized in in
writing by the Director.
In the event that a school principal requests permission for parents or other
adults to ride on the vehicle to maintain order, such permission may be granted
by the Director only, and the contractor will be notified accordingly.
The vehicles contracted for extended service are subject to use for field trips,
special events, emergency situations, or any other use as prescribed by the
Director. The use of the vehicles for such purposes may only be for hours that
will not interfere with the schedules established for the pupils transported to
and from school under the Contract. Use of these vehicles shall not be
restricted to physically handicapped, mentally retarded, emotionally disturbed
or other classifications of pupils, nor shall use of the vehicles for such
purposes be limited to schools specified herein. The vehicles under Contract for
extended service
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shall provide transportation services to any other public agency or private
organization upon instruction of the Director.
In the case of field trips and other special trips where the routes are not
provided by the Director, these routes shall be established by the contractor in
advance, using the most efficient routing for the vehicle.
When vehicles are used for field trips, the pupil groups will be accompanied by
one or more adults. At least one of these adults will be a teacher. If the route
requested by a teacher in charge requires that a toll be paid, or if the teacher
should request the operator to park the vehicle in an area where a parking fee
is charged, it will be the responsibility of the teacher to pay such toll or
parking fee. Operators are not to be reimbursed by the teacher for any other
reason. Operator will not solicit tips or gratuities.
XIII. INCREASE OR DECREASE IN THE NUMBER OF VEHICLES
A. Decrease. At any time during the period of the Contract the number of
vehicles required may be reduced and the schedules may be adjusted due to change
in pupil population, or change in policy or directive adopted by the Board of
Education, the City of New York, the State Education Department, and/or the
Financial Control Board, or other factors; provided, however, that in no event
shall the total number of any type of vehicle originally awarded to a contractor
be reduced: (1) by more than ten percent (10%) of the total number of any type
of vehicle originally awarded in the first year of this Contract; (2) in the
second year of this Contract, by more than twenty percent (20%) of the total
number of any type of vehicle originally awarded; and (3) in the third year of
this Contract by more than thirty percent (30%) of the total amount of any type
of vehicle originally awarded. Compensation to the contractor shall be reduced
to the number of vehicles actually used in the performance of this Contract, and
the Board of Education shall not be liable for payments for any vehicles
eliminated to the extent provided above.
Upon determination by the Director that there is a decrease in the number of
vehicles required for a specific type of service (service area and type of
vehicle) during the period of this Contract, the Board of Education reserves the
right to reduce the number vehicles for a specific type of service as follows:
(1) If the total number of vehicles at the time of decrease does not
exceed the total number of vehicles originally contracted for, such
reduction shall apply to the contract who quoted the highest
weighted average daily rate per vehicle and shall apply subsequently
to the contractors who quoted the next highest weighted average
daily rates per vehicle until all necessary reductions are made.
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(2) If the total number vehicles at the time of decrease exceeds the
number of vehicles originally contracted for, such reduction shall
first be made from the additional vehicles contracted for during the
performance of this Contract and shall apply first to the highest
weighted average daily rate per vehicle, and subsequently to the
contractors who quoted the next highest weighted average daily rates
per vehicle until all necessary reductions are made. After the
reduction of these additional vehicles is exhausted, the Director
may reduce the number of vehicles originally contracted for in
accordance with XIII.A(1) above.
B. Increase. If at any time during the period of the Contract the number of
vehicles required for a specific type of service increase, the Board of
Education reserves the right to increase the number of vehicles for a specific
type of service as follows:
(1) If the total number of vehicles at the time of the increase is the
total number or in excess of the total number of vehicles originally
contracted for, the increase shall first be offered to that
contractor who quoted the lowest weighted average daily rate per
vehicle. Opportunity to furnish such vehicles as the initial offeree
cannot furnish may then be offered to the next contractor with the
next lowest weighted average daily per vehicle. If no contractors
providing a specific type of service are found willing to supply
additional service of the same type, then the Board may offer the
opportunity to provide the additional vehicles to a contractor in
any adjacent borough in the manner set forth. The initial offer will
be made to that contractor with the lowest weighted average daily
rate for that type of vehicle for which none of the successful
bidders for that type of service were willing to provide additional
vehicles as provided above.
(2) If the total number of vehicles at the time of the increase is less
than the total number of vehicles originally contracted for, and
there is a subsequent need for these vehicles, the contractors who
had their number of vehicles reduced shall be afforded the right of
right refusal for reinstatement of the use of these vehicles in
inverse order to that by which they were reduced pursuant to XIII.A
above.
All additional vehicles provided throughout the entire period of the
Contract must comply with all the terms, conditions, and
specifications of the Contract set forth herein. The contractor will
be compensated for such additional vehicles provided for herein.
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C. Notice and Liability. The contractor shall be notified at least five (5)
school days in advance of the date the above changes are effective. If the
contractor is willing to furnish the required additional vehicles, he shall
confirm such agreement in writing to the Director within five (5) business days
of receipt of the offer.
If the above changes, when effective, terminate the need for any part of the
services rendered by a particular contractor, the Board of Education and the
City of New York (or any political or governmental subdivision thereof) shall
not be liable for any damages or cost of the contractor as a consequence
thereof.
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XIV. FACILITIES AND MAINTENANCE
The bidder shall have sufficient storage and access to maintenance facilities
with sufficient equipment and trained personnel to satisfy New York State
Department of Transportation requirements. The facilities shall be subject to
periodic inspection and approval by the Board of Education during the period of
the Contract.
The contractor shall provide a program of preventive maintenance which meets the
approval of the Director and shall maintain records as evidence that the
vehicles are receiving acceptable periodic maintenance.
The Board of Education reserves the right to demand withdrawal from service of
any vehicle which in the opinion of the inspectors of the Bureau of Pupil
Transportation presents a hazard to the safe transportation of pupils.
XV. GASOLINE
All gasoline required will be provided by the contractor at his own expesense.
XVI. RECORDS TO BE TRANSMITTED
The contractor shall submit, on Tuesday of each week, a list of the names and
addresses of pupils to be transported on the contractor's vehicles, but who have
not appeared for transportation for the entire preceding week. A record of
vehicles incorporating a Daily Record of Crews (operators and escorts) used each
day for the transportation of pupils under this Contract shall be maintained in
duplicate on forms to be prescribed by the Director, and the contractor shall
furnish to the Director the duplicate copies by Wednesday of each week. The
contractor shall supply such other information or documentation as may be
requested by the Director.
XVII. VEHICLE OPERATOR STANDARDS
To protect the safety and welfare of pupils, the contractor shall only employ
persons of good moral character to serve as vehicle operators. The contractor
shall send all applications for employment to the Director, and follow
procedures established by the Director for submission of the fingerprint record
and medical certificate for each applicant. The contractor shall certify to the
Director that he has checked the references of the applicant and that to the
best of his knowledge and belief the applicant is a person of good moral
character. No operator shall be employed on Board of Education work until his
references and fingerprint record have been approved by the Director, and his
medical certificate has been approved by both the Director and Medical Director.
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Vehicle operators shall have valid appropriate operator's licenses for the
vehicles they operate, and must be competent, reliable and between the age of 21
and 65. Operators shall be physically fit and properly qualified by experience,
driving record and training to perform their duties. The contractor shall
certify to the Director that he reviewed New York State Department of Motor
Vehicles driver abstract records to determine the fitness and driving record of
its operators.
All vehicle operators shall be examined by a licensed physician. The results of
the physical examination shall be immediately reported to the Director and
Medical Director of the Board of Education on forms approved by the New York
State Department of Education and provided by the Director. These forms shall
constitute the medical certificate. The written report of the physician shall be
considered by the Medical Director in determining the fitness of the driver.
Each operator who is to be initially employed shall be examined within the four
weeks prior to the beginning of service.
Each operator shall receive an annual physical examination which shall include a
tubercular test. The results of this examination and the tubercular test shall
be recorded on forms approved by the New York State Department of Education and
provided by the Director.
These examinations shall be at no cost to the Board of Education.
Section 156.13(d)(2) of the Regulations of the New York State Commissioner of
Education shall be complied with in full and states: "Each school bus driver
initially employed by a Board of Education or transportation contractor
subsequent to July 1, 1973, shall have received at least two hours of
instruction on school bus safety practices. Each driver of a vehicle
transporting handicapped pupils exclusively who was initially employed
subsequent to January, 1, 1976, shall have received an additional hour of
instruction concerning the special needs of a handicapped pupil. During the
first year of employment, each driver shall complete a course of instruction in
school bus safety practices approved by the Commissioner, which shall include
two hours of instruction concerning the special needs of a handicapped pupil.
All school bus drivers shall receive a minimum of two hours of refresher
instruction in school bus safety at least two times a year, at sessions
conducted prior to the first day of school and prior to February 1st of each
year. Refresher courses for drivers of vehicles transporting handicapped pupils
exclusively shall also include instructions relating to the special needs of a
handicapped pupil."
Each contractor must utilize instructors approved by the New York State
Education Department for conducting the training sessions for drivers. All
training programs must be approved by the New York State Education Department
and the Bureau of Pupil Transportation before the program
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is offered. In addition, all new vehicle operators must have a total of twenty
hours of classroom instruction prior to driving on any Board of Education
business. All vehicle operators having two or more accidents while driving on
Board of Education business must also attend an accident repeater course
conducted by a defensive driving specialist. Certification will be required from
the contractor stating that each operator has received appropriate training as
specified in this Contract.
If the Director determines that an operator's competency falls below acceptable
standards, or that any operator has made an unauthorized stop or an unauthorized
change in established route for which the operator may or may not have accepted
additional remuneration from other than his employer, or that the driver has a
previous record of careless or unsafe driving, the contractor, upon receiving
written notice from the Director to that effect, shall not again employ this
operator on any part of the work to be performed hereunder, or on any part of
any work the contractor may perform for the Board of Education under any other
contract.
Vehicle operators must be dressed in uniform attire provided by the contractor
and wear a photo identification badge which clearly shows the operator's name,
company's name, and operator's identification number assigned by the contractor.
The identification badge should be visible from a distance of ten feet.
XVIII. OPERATIONAL SUPERVISION
The requirements entitled "Contract Carrier and Driver Responsibility" contained
in Bureau of Pupil Transportation Handbook No. 3, Policy and Procedures Manual
Common Carrier and School Bus Information for Pupils in Grades K through 6,"
dated August, 1978 and drafted by the Bureau of Pupil Transportation is
incorporated herein by reference and is made part of this Contract as if fully
set forth herein in its entirety.
In addition to the requirements set forth in Pupil Transportation Handbook No.
3, operators must drive the scheduled route assigned to them at least one time
prior to start of school. If at any time during the school year a new operator
is assigned to a scheduled route, that operator must drive the schedule before
being permitted to transport students on that schedule.
All operators employed in the transportation of pupils shall be given permanent
route assignments at the commencement of each school year, except that, there
shall be one job "pick" for all operators (drivers), mechanics, dispatchers (who
may be employed as drivers or dispatches) and escorts (matrons-attendants)
appearing on the industry-wide Master Seniority Lists, to be held in the month
of October each year.
All accidents involving vehicles operating under this Contract shall be reported
to the Director immediately.
The emergency drills required by the State Education Law shall include practice
and instruction in the location, use and operation of the emergency door, fire
extinguisher, first aid equipment, and use of the windows as a means of escape
in case of fire or accident. Drills shell include situations which might result
from both fire and accidents. Such instruction
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and the conduct of drills shall be given by a member or members of the teaching
staff as arranged between the contractor and the principal of each school. No
emergency drills shall be conducted when vehicles are on routes. The Director
shall be notified of arrangements for, and execution of, emergency drills. The
contractor and operator shall make arrangements for emergency drills so as to
minimize disruptions in service.
XIX. ESCORTS
The contractor shall provide escort service in addition to the operator to the
extent required by the Board.
A. The Board may determine to: (1) employ escorts directly, (2) contract
separately for the employment of escorts with the contractor herein or with
a separate contractor, or (3) require the contractor to provide escort
service in addition to the operator. Should the Board determine to employ
escorts directly, or contract separately with the contractor or with a
separate contractor to provide escort service, the Board and/or the
contractor providing the escort service, as the case may be, shall assume
sole responsibility for any claims made for acts of negligence,
carelessness or incompetence perpetrated by the escorts or by the employer
of the escorts in connection with performance or failure to perform of such
escorts or employers of escorts; and shall indemnify and hold harmless the
contractor herein, if a separate contractor, from the contractor providing
the escort service from all suits, actions, damages or costs of every kind
and description, as may arise under the terms of this contract or
otherwise, to which the contractor herein may be subjected because of such
negligence, carelessness or incompetence. In addition, should the Board
determine to employ escorts directly, or contract separately for the
provision of escort service with a contractor other than the contractor
herein, the provisions of B. through E. herein, references to escort
service in Paragraph XXI of the Specifications, and any other reference to
escort service in this contract other than as provided in Paragraph XIX
(A), shall be deemed to be of no force and effect with respect to the
contractor herein.
Should the Board determine to require the contractor to provide escort
service in addition to the operator, (1) the contractor shall be
compensated in the manner provided herein in the amount of forty dollars
($40) per day per escort providing service on a vehicle in regular service
and sixty dollars ($60) per day per escort providing service on a vehicle
in extended service, with the daily rate per escort increased by ten (10%)
percent in each of the second and third years of this Contract,
(establishing the rate as forty-four dollars and sixty-six dollars in the
second year, and forty-eight dollars and seventy-two dollars in the third
year), which amount shall be in addition to any and all other compensation
to which the contractor is entitled under the terms of this Contract, and
(2) all references to escort service in provisions B. through E. below,
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Paragraph XXI of the Specifications, and any other reference to escort
service in this contract other than the first two options described above,
shall be of full force and effect with respect to the contractor herein.
B. Standards. To provide for the safety and welfare of children, the
contractor shall only employ persons of good moral character to serve as
escorts. Escorts must be competent, reliable, over twenty-one years of age,
physically fit and properly qualified to perform their duties. The
contractor shall send all applications for employment to the Director and
follow procedures established by the Director for submission of the
fingerprint record and medical certificate for each applicant before the
date the escort services are to be provided; allowing sufficient time for
review and approval by the Director and Medical Director. The contractor
will certify that he has checked the references of the applicant and to the
best of his knowledge and belief the applicant is a person of good moral
character. No escort shall be employed on Board of Education work until the
references and fingerprint record have been approved by the Director, and
the medical certificate has been approved by the Medical Director and the
Director.
Each regular or substitute escort shall be examined by a licensed
physician. A report concerning the physical examination shall be submitted
immediately on the forms prescribed to the Director and the Medical
Director of the Board of Education. The physical examination shall include,
as a minimum, those requirements specified on the prescribed physical
examination report. The written report of the physician shall be considered
by the Medical Director to determine the fitness of the escort to perform
the duties set forth herein. Each escort who is to be initially employed
shall be examined within the four weeks prior to the beginning of service.
Each escort shall receive an annual physical examination. In no case shall
the interval between physical examinations exceed a twelve month period.
This examination will be at no additional cost to the Board of Education.
The result of this examination and of an annual tubercular test shall be
recorded on forms approved by the Director. These forms shall constitute
the medical certificate.
The Board of Education specifically reserves the right to reject any person
who fails to meet the minimum physical requirements as specified on the
medical certificate. If the Director determines that an escort's
performance is unsatisfactory, the contractor, upon receiving written
notice from the Director of such unsatisfactory performance shall not
employ this escort on any work performed for the Board of Education.
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C. Training and Instruction. All escorts shall attend five one and one-half
hour training sessions for a total of seven and one-half hours each year
concerning the transportation of handicapped pupils. The training sessions
shall be scheduled by the contractor with the approval of the Director, and
are to be held at an hour and location convenient to the contractor and the
escorts. The contractor shall furnish the premises required at his own cost
and expense, and shall not be entitled to any additional compensation from
the Board for these training sessions. All training programs must be
approved by the Director before being offered.
D. Identification. Escorts shall wear uniform attire supplied by the
contractor. Escort shall wear a photo identification badge on the outside
of his or her uniform which shows clearly the name, escort identification
number assigned by the contractor, and the name of the contractor which
employs the escort. The identification badge should be visible from a
distance of ten feet.
E. Responsibilities. The section entitled "Escort Responsibilities" contained
in Pupil Transportation Handbook No. 1, entitled "School Bus Information
for Drivers, Escorts, Schools and Parents of Handicapped Children," dated
April, 1977 is incorporated herein by reference as if it is set forth
herein in its entirety. Pupil Transportation Handbook No. 1 is available
upon request from the Director of Pupil Transportation.
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XX. AUDIT OF INVOICES & FINANCIAL RECORDS
Invoices will be audited for payment after each month in which the services are
rendered.
The contractor hereby consents to an audit of any and all financial records
relating to this Contract by the Department of Audit and Control. During the
period of the Contract and upon the request of the Department of Audit and
Control, the Office of Auditor General of the New York City Board of Education,
the Comptroller of the City of New York or the Department of Investigation of
the City of New York, the contractor shall furnish information and documents as
specified by any of these agencies, including but not limited to the
contractor's income tax forms filed with the City, State and Federal government
for the term of this Contract.
XXI. LIQUIDATED DAMAGES
In view of the difficulty of ascertaining the loss which the Board or City will
suffer by reason of these defaults on the part of the contractor, the following
sums are hereby agreed upon, fixed and determined by the parties hereto as the
liquidated damages the Board or City will suffer by reason of said delay and
default, and not by way of penalty, and such liquidated damages may be imposed
in the amounts provided below upon the following findings of the Director or his
or her designee:
A. One and one-half times the appropriate daily rate per vehicle paid to the
contractor shall be deducted from the subsequent month's payment due the
contractor for the following:
1. Each failure to provide the number of vehicles required each day
to convey to and from the school the number of pupils specified.
2. Each vehicle providing extended service which does not service a
field trip or provide the services required by Section XII (Use
of Vehicles), on the schedule established in advance either by
the Director or a school or the community school district office.
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B. The appropriate daily rate per vehicle shall be deducted from the subsequent
month's payment due the contractor for the following:
1. Each day that the contractor permits an employee to service a route
for whom the required medical certificate, fingerprint record and
applications for employment were not submitted to and approved by the
Bureau of Pupil Transportation.
2. Each time an escort is not provided on a vehicle, if required.
3. Each time it is found that the contractor did not provide telephone
access from the time the first vehicle is scheduled to leave the
garage until the last vehicle returns to the garage at the end of the
day.
4. Each time a vehicle has an expired or null Public Service Commission
sticker.
5. Each time an accident is not reported to the Director within
twenty-four (24) hours.
6. Each time an operator is found guilty of commiting a moving violation
of the New York State Vehicle and Traffic Law while transporting
pupils under this Contract.
C. One half the appropriate daily rate per vehicle paid to the contractor shall
be deducted from the subsequent month's payment due the contractor for the
following:
1. Each vehicle transporting a greater number of pupils than the
vehicle's permissible pupil seating capacity.
2. Each vehicle furnished that has a pupil seating capacity less than
required by the Contract terms.
3. Each vehicle each day a child has been unilaterally excluded from
transportation by a contractor, operator or escort without the consent
of the Director.
4. Each vehicle failing to hold an emergency drill as required.
5. Each time the operator requires a school to dismiss pupils prior to
the normal close of the school session except where required by
special circumstances specified by the Director.
6. Each vehicle which does not comply with structural and safety
provisions for the vehicle, including but not limited to seat belts,
padded seats, high back seats, and operable wheel chair brackets.
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D. One third the appropriate daily rate per vehicle paid to the contractor shall
be deducted from the subsequent month's payment due the contractor because of
the following:
1. Each operator or escort who has not received the proper training,
instruction, and/or refresher courses as specified herein within the
time period agreed upon by the Director and contractor.
2. Each vehicle which arrives after the time a session is due to start.
3. Each vehicle that arrives at the school more than thirty minutes prior
to the start of the session.
4. Each vehicle operator who does not have on his or her person an
appropriate operator's license.
5. Each time the contractor fails to notify a parent that the vehicle is
more than on hour behind schedule, unless no telephone number has been
provided or the Bureau of Pupil Transportation is contracted before
the hourly limit has expired and agrees that the contractor need not
call every parent.
E. One sixth of the appropriate daily rate per vehicle paid to the contractor
shall be deducted from the subsequent month's payment due the contractor for the
following:
1. Each time the contractor, operator or escort does not notify the
parents of pupils on the vehicle of changes in schedules or pick-up or
drop-off locations.
2. Each vehicle that makes an unauthorized stop or an unauthorized change
in an established route or schedule.
3. Each vehicle failing to have a fire extinguisher.
4. Each vehicle failing to have a first aid kit.
5. Each time an operator fails to remove ignition keys, turns wheels to
curb, and set brakes when and as required while pupils are on the
vehicle.
6. Each vehicle for each scheduled stop not served.
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7. Each vehicle with an operator or escort not wearing uniform attire or
visibly displaying an identification badge with the required
information.
8. Each day the contractor fails to provide the information on forms
required as set forth herein.
9. Each vehicle that arrives at the school or departs from the school
after the time scheduled, unless required to do so by the Bureau of
Pupil Transportation.
10. Each vehicle the contractor changes on a run, where it is not a change
resulting from a breakdown or a scheduled maintenance.
11. Each operator who fails to assist in the conduct of an emergency
drill.
12. Each operator who fails to make available a vehicle providing extended
service to a scheduled class in transportation safety.
13. Each time a vehicle is not in compliance with the identification
requirement of Section IX, Vehicle Specifications.
14. Each time a vehicle over five (5) years old is not equipped with a
two-way radio.
15. Each failure to perform any other duties as set forth in the Bureau of
Pupil Transportation Handbook No. 1.
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XXII. EMPLOYEE PROTECTION PROVISIONS
1. Priority in Hiring and Master Seniority Lists:
There shall be established two industry-wide Master Senority Lists. One
list shall be composed of all operators (drivers), mechanics and dispatchers and
the other list shall be composed of escorts (matrons-attendants) who were
employed as of February 9, 1979 under a contract between their employers and the
Board for the transportation of school children in the City of New York, who are
furloughed or become unemployed as a result of loss of contract or any part
thereof by their employers, or as the result of a reduction in service directed
by the Board during the term of the contract, in accordance with their date of
entry into the industry. All operators (drivers), mechanics, dispatchers and
escorts (matrons-attendants) on the Master Seniority Lists who participated in
the Division 1181 A.T.U.-New York Employees Pension Fund and Plan as of February
9, 1979 and who do not exercise their option to withdraw from the Fund and Plan
shall continue to participate in such Pension Plan.
Any existing contractor or individual who conducted business as a sole
proprietor, or as a member of a partnership or who held a controlling interest
in a corporation that performed service pursuant to contract expiring in June,
1979 (contractor) shall give priority in employment in September, 1979 or
thereafter on the basis of position on the Master Seniority List of any
additional or replacement operators, mechanics and dispatchers beyond those
performing service as of February 9, 1979 consistent with the number of
employees required by the specifications of the contract expiring June, 1979 for
the number of vehicles providing service to the Board as of February 9, 1979 to
individuals from the Master Seniority List until such list is exhausted.
Any new contractors, i.e. those who did not provide service pursuant to
contract expiring June, 1979 (new contractor), shall give priority in employment
in September, 1979 or thereafter on the basis of seniority to every operator
(driver), mechanic and dispatcher performing service pursuant to such contract
starting from the first employee from the Master Seniority List until such list
is exhausted.
Should the Board determine to require the contractor to provide escort
service in addition to the operator, and in the event that all escorts
(matrons-attendants) on the Master Seniority List, who were members of Local
1181-1061 as of February 9, 1979, are not employed as escorts by contractors for
the beginning of service in September of 1979, than said escorts shall be
employed in order of their position on the Master Seniority List, and escorts
who are not members of Local 1181-1061 and who were employed as of February 9,
1979 shall be replaced by members of Local 1181-1061 in inverse order of
seniority and shall be added to the Master Seniority List in order of seniority
following the members of Local 1181-1061, if any, who remain on the List.
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2. Compensation
All operators (drivers), mechanics, dispatchers and escorts
(matrons-attendants) on the industry-wide Master Seniority Lists shall be
employed and paid on a full-time basis based upon the wage scale received from
prior employer under pupil transportation contracts.
The contractor shall compensate operators (drivers), mechanics and
dispatchers and escorts (matrons-attendants) who appear on the Master Seniority
Lists and who are employed pursuant to contracts to be awarded as follows for
the term of the contract;
(a) operators (drivers) and dispatchers at a daily rate of pay,
including any COLA, for each day of service not less than that
paid by the NYCTA on July 5, 1979 to its surface drivers (bus)
operators.
(b) mechanics at a daily rate of pay, including any COLA, for each
day of service, not less than that paid by the NYCTA on July 5,
1979 to its bus maintenance personnel performing similar duties.
(c) escorts (matrons-attendants) at a daily rate of pay not less than
$37.085 for each day of service plus that percentage of the COLA
paid to operators effective July of 1979 that reflects the
proportion of the escorts' pay to that of operators, should the
Board require the contractor to provide escort service.
Such operators (drivers) and escorts (matrons-attendants) shall be
available for extended service, without additional compensation, which shall be
defined as performance within the particular job category (i.e. drivers as
drivers, and escorts (matrons-attendants) as escorts (matrons-attendants) within
the eight (8) hour work day within the spread provided for in the collective
bargaining agreement covering said employees, if any.
3. Welfare
Contributions by the contractor for providing welfare benefits to operators
(drivers), mechanics, dispatchers and escorts (matrons-attendants), in the event
the contractor employs escorts, who appear on the Master Seniority List shall be
no less than $82 per employee per month on a twelve month basis during each year
of the contract.
4. Pensions
The contractor shall sign an agreement with Division 1181-A.T.U.-New York
Employees Pension Fund and Plan to participate in such plan on behalf of all
operators (drivers), mechanics, dispatchers and escorts (matrons-attendants), in
the event the contractor employs escorts who appear on the Master Seniority
Lists and who participated in the Fund and Plan as of February 9, 1979. This
requirement shall not be interpreted to require a contractor to enter into a
collective
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bargaining agreement with the union nor shall it prohibit the contractor
from entering into a collective bargaining agreement with the union. The
contractor shall file a copy of the executed agreement with the Trustees
of the Fund and Plan to participate in said Fund and Plan and with the
Secretary of the Board with the acknowledgement of the Notice of Award.
The contractor shall contribute $27.15 per week per operator (driver),
mechanic and dispatcher on the Master Seniority List, and participating in
the Plan and Fund as of February 9, 1979, for forty weeks each year for the
term of the contract, or such greater amount as may be required, based on
contributions by contractors on behalf of the majority of employees
participating in the Fund and Plan pursuant to a collective bargaining
agreement with Local 1181-1061. The contractor shall withhold $10 a week
from each operator, mechanic and dispatcher for forty weeks each year for
the term of the contract, or such greater amount as may be required based
on contributions of a majority of the operators (drivers) mechanics or
dispatchers contributing to the Fund and Plan.
Should the Board require the contractor to provide escort service,
then the contractor shall contribute $23.15 per week per escort
(matrons-attendant) for forty weeks each year for the term of the contract,
or such greater amount as may be required based on contributions by
contractors on behalf of the majority of employees participating in the
Fund and Plan pursuant to a collective bargaining agreement with Local
1181-1061. The contractor shall withhold $8 a week from each escort,
(matron-attendant) for forty weeks each year for the term of the contract,
or such greater amount as may be required based on contributions of the
majority of the escorts contributing to the Fund and Plan.
The contractor shall pay all such amounts to the Fund and Plan within
seven days after the end of each payroll period.
5. In addition to any other remedies provided in the contract
between the Board and the contractor, such a default and/or
termination, if the contractor is found to be in violation of the
foregoing employee protection provisions, then the Director of
the Bureau of the Pupil Transportation, within thirty (30) days
of written notice, shall withhold the appropriate amounts from
the first payment thereafter due to the contractor and pay it
directly to the Division 1181 A.T.U.-New York Employees Pension
Fund for the benefit of the employees affected and to the
appropriate Welfare Fund for the benefit of the employees
affected.
In the event any contractor willfully fails to comply, the Board of
Education shall act to cancel such contractor's contract; provided,
however, that the Board shall not be required to act so as to cause a
disruption of service.
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6. Contractors providing a total of five vehicles or less pursuant
to all contracts with the Board for the transportation of pupils
shall not be subject to the foregoing provisions with respect to
operators (drivers), mechanics and dispatchers.
Escorts (matrons-attendants) shall not be included in the exclusion
provided in this paragraph six (6).
7. For the purpose of XXII. corporate bidders who are subject to
common control as determined by the Board upon an analysis of:
(a) ownership of the corporations' assets,
(b) coincidence of corporate officers and directors, and
(c) such other factors as the Board determines to be relevant,
are deemed to be one bidder.
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GENERAL TERMS AND CONDITIONS
WITNESSETH
That pursuant to all applicable State and Local Laws and all By-Laws,
resolutions, rules and regulations of the Board of Education and the City of New
York and its various departments, and in consideration of the agreements
hereinafter undertaken by each of the parties hereto with the other, the parties
hereto do hereby covenant and agree for themselves and for their respective
successors and legal representatives as follows:
DEFINITIONS
Wherever the following words, names or titles appear in this Contract, they
shall have the following meanings:
(a) "THE BOARD" means the Board of Education (BOE) of the City of New York
and the party of the first part of this Contract.
(b) "THE CONTRACTOR" means the party of the second part to this Contract.
(c) "THE DIRECTOR" means the Director of the Bureau of Pupil
Transportation delegated by the Board to supervise the work of this
Contract.
(d) "THE CITY" means the City of New York.
(e) "THE COMPTROLLER" and "THE TREASURER" means the Comptroller and the
Treasurer of the City of New York respectively.
(f) "THE SECRETARY", "ASSISTANT SECRETARY" and "EXECUTIVE DIRECTOR" mean
the following officers and employees of the Board of Education
respectively: the Secretary, Assistant Secretary of the Board of
Education and Executive Director of the Division of Business and
Administration.
(g) "APPROVED", "REQUIRED", "DIRECTED", "SPECIFIED", "DESIGNATED" or
"DEEMED NECESSARY", unless otherwise expressed, means approved,
required, directed, specified, designated, or deemed necessary, as the
case may be, by the Director.
(h) "WORK" or "SERVICES" means all services to be furnished or done by or
on the part of the contractor.
(i) "COMPLETION" means full and complete compliance with every requirement
of the Contract as attested by the Director.
(j) "SPECIFICATIONS" shall mean the combined proposal for bids and
specifications, and amendments thereto, and all of the directions and
requirements applying to the service as hereinbefore detailed and
designated under specifications.
(k) The term "ITEM", as used herein, shall be defined as each separate
unit or group of vehicles upon which a contractor may bid.
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1. SUBJECT MATTER
The contractor shall provide at its own cost and expense sufficient plant,
equipment and working capital to provide for the transportation of pupils in
accordance with the terms, conditions, and specifications set forth herein. The
contractor shall accept as full compensation for its faithful performance of
this Contract the sums certified by the Director in accordance with the
provisions of the Contract, and said sums shall be the amount at which the
Contract was awarded to the Contractor at the public bidding.
2. CONTRACT
The Proposal for Bids, Instructions to Bidders, Bid, Schedules and
Specifications are and shall be a part of this Contract. In case of variance
between the specifications, bid and Contract, if any, the specifications shall
be controlling.
3. INTERPRETATION
Any doubt as to the meaning of the terms of the Contract or any obscurity as to
the wording of the terms will be explained in writing, upon request, by the
Director and all directions and explanations required, alluded to, or necessary
to complete any of the provisions of the Contract and to give them due effect
will be given by the Director in writing upon request. The interpretation of the
Director shall be final and binding upon all parties.
To prevent all disputes and litigations, the Director shall, in all cases,
determine the quality of the services which are to be delivered and paid for
under this Contract, and shall determine all questions in relation to said
services, their quality, delivery and condition, and shall in all cases decide
every question which may arise relative to the execution of this Contract on the
part of the contractor, and the Director's estimate or decision shall be final
and conclusive upon the contractor.
4. MODIFICATIONS
The Board may, from time to time, request changes in the scope of the services
to be performed by the contractor hereunder. However, no term, provision or
condition of this Contract shall be deemed waived by the Board unless such
waiver shall be in writing with the approval of an authorized representative of
the Board subscribed thereon.
5. COMPLIANCE WITH LAWS
The contractor shall comply with all applicable laws, ordinances, and codes of
Federal, State and Local governments.
It is the intent and understanding of the parties hereto that each and every
provision of law required by law to be inserted in this Contract shall be deemed
to be inserted herein. It is further agreed that if, through mistake or
otherwise, any such provision is not inserted, or is not inserted in correct
form, that this Contract shall forthwith be amended upon notice to the
Contractor by such insertion so as to comply strictly with the law.
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6. NON-ASSIGNMENT OF CONTRACT
The contractor will give personal attention to the faithful performance of this
Contract. The contractor will not assign, transfer, convey, sublet or otherwise
dispose of this Contract or its right, title or interest in or to the same or
any part thereof without the previous consent of the Director or the Director's
designee endorsed thereon; and the contractor will not assign by power of
attorney or otherwise, any of the monies to become due and payable under this
Contract unless by and with the previous consent in writing of the Board or its
designee endorsed thereon. If the contractor shall, without such previous
written consent, assign, transfer, convey , sublet or otherwise dispose of this
Contract or of its right, title or interest therein, or any of the monies to
become due under this Contract, to any other person, firm or corporation, this
Contract may, at the option of the said Board, be cancelled and terminated, and
the Board and the City shall thereupon be relieved and discharged from any and
all liabilities and obligations to the contractor arising from such Contract,
and to its assignee or transferee; provided that nothing herein contained shall
be construed to hinder, prevent or affect an assignment by the contractor for
the benefit of its creditors made pursuant to the statutes of the State of New
York, and no right under this Contract, or to any monies to become due
hereunder, shall be asserted against the Board or the City in a law or in
equity, by reason of any so-called assignment of this Contract, or any part
thereof, or of any monies to become due hereunder, unless authorized as
aforesaid.
7. CANCELLATION
A. If the contractor engages in repetitive or persistent violations of the
conditions or covenants of this Contract, the Director may seek to have the
contractor declared in default by the Board of Review pursuant to Article 8 of
the Board's By-laws. In the event the Board of Review shall determine the
contractor to be in default, the Director shall notify the contractor that its
Contract is terminated. Such action by the Director may be based upon any of the
following:
(1) Failure of the contractor to provide any portion of the services
specified herein;
(2) Action by the Contractor to subcontract, encumber, assign, or transfer
this Contract, either in whole or in part, otherwise than as specified
herein;
(3) Failure to notify the Director of increases in the total number of
vehicles as required by the "Insurance and Performance Bond"
provisions of the Proposal for Bids; or
(4) Violation by the Contractor of any of the conditions or covenants of
this covenants of this Contract or execution of this Contract in bad
faith.
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B. Upon the refusal of a person, when called before a grand jury, governmental
department, commission, agency, or any other body which is empowered to compel
the attendance of witnesses and examine them under oath, to testify in an
investigation or to answer any relevant questions concerning any transaction or
contract entered into with the State, or any political subdivision thereof, or a
public authority or with any public department, agency or official of the State
or a political subdivision thereof, when immunity has been granted to the
witness against subsequent use of such testimony, or any evidence derived
therefrom, in any subsequent criminal proceeding:
(1) such person, or any firm, partner, director, or corporation of which
he is a member, partner, director or officer shall be disqualified for
a period of five (5) years after such refusal from submitting bids for
or entering into or obtaining any contracts, leases, permits or
licenses with the City or submitting bids for or entering into or
obtaining any contracts, leases, permits, or licenses which will be
paid out of any monies under the control of or collected by the City,
and/or shall be subject to such other action appropriate under the
circumstances, and
(2) any and all such existing contracts, leases, permits or licenses made
with or obtained by any such person or firm, partnership, or
corporation of which he is a member, partner, director or officer may
be cancelled or terminated by the City or the Board or be subject to
such action appropriate under the circumstances, without incurring any
penalty or damages on account of such cancellation or termination, but
any monies owing for goods delivered, work done, or rentals, permits
or license fees due, prior to the cancellation or termination shall be
paid.
C. In the event of termination of this Contract by reason of default of the
contractor, the Director shall have the power in the manner prescribed by law to
obtain the undelivered services, or such part thereof as it may deem advisable,
and to change the expense thereof to the contractor. The expense so charged and
the liquidated damages for delay herein provided for shall be deducted and paid
by the BOE out of such monies that may then be due or may thereafter become due
to the contractor under or by virtue of this Contract or any part thereof. In
case such expense and liquidated damages hereunder shall exceed the sum owing
for services rendered at the time of termination of this Contract, then the
contractor shall pay the amount of such excess to the BOE on notice from the BOE
of the amount of such excess and in case such expense and liquidated damages
shall be less than the sum which would have been payable under this Contract if
the same had been completed by the contractor, then the contractor shall forfeit
all claims to the difference to the BOE. In the event of the BOE undertaking to
secure the services or any part thereof under this section of the Contract, the
certificate of the Director as to the amount of services secured, the cost, and
the excess cost, if any, of completing this Contract, and the amount of
liquidated damages hereunder, shall be binding and conclusive upon the
contractor, his assignee, and all other claimants.
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8. NOTICES
The residence or place of business given in the Contract is hereby designated as
the place where all notices, letters or other communications addressed to the
contractor shall be served, mailed or delivered. Any notice letter or other
communication addressed to the contractor and delivered at the above-named
place, or sealed in a post-paid wrapper and deposited in any post office box
regularly maintained by the post-office, shall be deemed sufficient service
thereof upon the contractor. The place named may be changed at any time by an
instrument in writing, executed and acknowledged by the contractor, and
delivered to the Director. Nothing herein contained shall be deemed to preclude
or render inoperative service of any notice, letter or other communication upon
the contractor personally. Whenever in the trial of any action growing out of
this Contract it shall be necessary or required to prove the service of a notice
as herein prescribed, an affidavit executed at the time of service showing the
service in the manner herein required to have been made by the person making the
affidavit shall be presumptive evidence of such service upon first proving that
the affiant is dead or insane, or that with due diligence, his attendance cannot
be compelled.
9. NO ESTOPPEL
Neither the BOE nor the City, nor any department or officer thereof, shall be
precluded or estopped by any return or certificate made or given by the
Director, or other officer, inspector, assignee or appointee of the BOE or the
City, under any provision of this Contract, from at any time (either before or
after the final completion and acceptance of the work or services and payment
therefore, pursuant to any such return or certificate) showing the true and
correct amount and character of the work done and supplies furnished by the
contractor, or any other person under this Contract, or from showing at any time
that any such return or certificate is untrue or incorrect, or improperly made
in any particular, or that the work or services or any part thereof do not in
fact conform to the specifications; and neither the BOE nor the City shall be
precluded or estopped notwithstanding any such return or certificate and payment
in accordance therewith, from demanding and recovering from the contractor such
damages or other loss as it may sustain by reason of its failure to comply with
the specifications.
10. CLAIMS - LIMITATION OF ACTION
No action shall be maintained by the contractor, his successors or assignees,
against the Board on any claim based upon or arising out of this Contract or out
of anything done in connection with this Contract unless such action shall be
commenced within six (6) months after the date of filing of the voucher for
final payment hereunder in the appropriate office of the Board, or within six
(6) months of the termination of this Contract, or within six (6) months of the
required completion date for the services performed hereunder, whichever is
sooner. None of the provisions of Article 2 of the Civil Practice Law and Rules
shall apply to any action against the Board arising out of this Contract.
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11. MAINTENANCE OF RECORDS
The contractor shall, until six (6) years after completion of its services
hereunder or six (6) years after date of termination of this Contract, maintain
and retain complete and correct books and records relating to all aspects of the
contractor's obligations hereunder, including, without limitation, accurate cost
and accounting records specifically identifying the costs incurred by the
contractor in performing such obligations (such as payroll expense, and all
other related records necessary to assure a proper accounting of funds,
including property, personnel records, cash receipts and disbursements, journals
and ledgers). Records must be maintained as a separate set of books so as to
identify clearly the expenses applicable to the specific Contract and be
distinguishable from all other costs not incurred under this Contract. The
contractor shall make available to the Office of the Auditor General of the BOE
or such agencies as the BOE may designate for review and audit, all books,
records or materials deemed necessary by the BOE to substantiate the validity of
claims made under the Contract at all reasonable times that the BOE shall from
time-to-time request. They shall be maintained in such a fashion as to permit
clear identification of costs incurred under this Contract or any amendment
thereto.
12. DISCRIMINATION
In connection with the performance of work under this Contract, the contractor
agrees as follows:
a) The contractor will not discriminate against any employee or applicant
for employment because of race, creed, color, age, sex, national
origin, handicap, marital status, religion or political beliefs or
affiliations. The contractor will take action to ensure that
applicants are employed, and that employees are treated during
employment, without regard to the foregoing categories. Such action
shall include but not be limited to the following: employment;
upgrading; demotions or transfer; recruitment or recruitment
advertising; layoff or termination; rates of pay or other forms of
compensation; and selection for training, including apprenticeship.
The contractor agrees to post in conspicuous places, available to
employees and applicants for employment, notices to be provided by the
Board setting forth the provisions of this nondiscrimination clause.
b) The contractor shall not discriminate against any employee or
applicant for employment on the basis of sex pursuant to Title IX of
the Education Amendments of 1972 (20 United States Code Annotated,
Section 1681 et seq.).
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c) The contractor will, in all solicitations or advertisement for
employees placed by or on behalf of the contractor, state that all
qualified applicants will receive consideration for employment without
regard to race, creed, color, age, sex, or national origin.
d) The contractor will send to each labor union or representative of
workers with which it has a collective bargaining agreement or other
contract or understanding, a notice to be provided by the Board
advising the said labor union or workers' representatives of the
contractor's commitments under this section, and shall post copies of
the notice in conspicuous places available to employees and applicants
for employment.
e) The contractor will comply with all provisions of law prohibiting
discrimination because of race, creed, color, age, sex, or national
origin.
f) The contractor will comply with all provisions of Executive Order No.
11246 of September 24, 1965, and of the rules, regulations, and
relevant orders of the Secretaries of Labor and Health, Education and
Welfare created thereby. The contractor will furnish all information
and reports required by Executive Order No. 11246 of September 24,
1965, and by the rules, regulations, and orders of said Secretaries
issued pursuant thereto, and will permit access to its books, records,
and accounts by the Board and the Secretaries for purposes of
investigation to ascertain compliance with such rules, regulations and
orders. In the event of the contractor's compliance with the
nondiscrimination clause of this Contract, or with any of the said
rules, regulations or orders, this Contract may be cancelled in whole
or in part and the contractor may be declared ineligible for further
Government contracts in accordance with procedures authorized in
Executive Order No. 11246 of September 24, 1965, and such other
sanctions may be imposed and remedies invoked as provided in the said
Executive Order or by rule, regulation or order of the Secretaries of
Labor and Health, Education, and Welfare, or as otherwise provided by
law.
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13. EQUAL EMPLOYMENT OPPORTUNITY REQUIREMENTS FOR
NON-CONSTRUCTION CONTRACTORS, VENDORS AND SUPPLIERS
The attention of all bidders is particularly directed to the various
orders, rules, regulations and procedures set forth in the contract documents
with respect to identifying and eliminating both overt and convert
discriminatory employment practices.
I. Policy
It is the policy of the Board of Education, City of New York, in
accordance with the Labor Law of the State of New York and other
applicable laws, to provide equal opportunity for all qualified
persons, to prohibit discrimination in employment because of race,
creed, color, age, sex, national origin, handicap, marital status,
religion or political beliefs or affiliations and to promote the full
realization of equal opportunity through an affirmative, continuing
program of compliance by all contractors, suppliers and vendors doing
business with the Board of Education and their subcontractors.
II. Implementation
The Director of the Office of Equal Opportunity shall be responsible
for the implementation and administration of this policy. He or she
shall be directly responsible to the Deputy Chancellor of the Board of
Education and shall be responsible for issuing all orders, rules,
regulations and procedures as may be deemed necessary or convenient
for carrying out and implementing the policy set forth in Section 1.
III. Definition of terms for the purpose of these Orders, Rules and
Procedures
A. Non-Construction Contract
Any Agreement, or commitment by the Board of Education, to
purchase or lease supplies, equipment or services. The term
"Non-Construction Contract" excludes contracts of the Board of
Education related to the erection, contruction, reconstruction,
rehabilitation, alteration, conversion, extension, repair or
demolition of buildings or improvements to real property, with
the exception of supplies, equipment and materials therefore, and
work, labor or services relating to architectural, engineering or
consultant services.
B. Contractor
C. Employee of Non-Construction Contractor
Any Person or entity employing workers, who bids for, or who is
awarded a non-construction contract.
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D. Minority Group Members
Blacks, Hispanics (non-European), Asian-Americans and American
Indians.
E. Program of Affirmative Action
A detailed, result-oriented set of written procedures which when
implemented with conscientious effort results in compliance with
the equal opportunity policy herein, through full utilization and
equal treatment of minority group members and women at all levels
in all segments of contractor's workforce. An effective program
of affirmative action shall include, but not necessarily be
limited to, the following ingredients:
1. Development or reaffirmation of the contractor's equal employment
opportunity policy;
2. Dissemination of the policy;
3. Responsibility for implementation;
4. A survey and analysis of employment at all levels and in all
categories and aspects the contractor or subcontractor is
deficient in the utilization of minority group members and women;
5. Establishment of goals and timetables toward the attainment of
which the contractor's or subcontractor's good faith effort must
be directed to remedy any identifiable underutilization of
minority group members and women;
6. An analysis of employment policies and practices, including but
not limited to seniority systems, recruitment training,
promotion, insurance, and job benefits, and their effects upon
minority group members and women;
7. Corrective actions taken, or to be taken, toward the elimination
of any employment policy or practice having a discriminatory
effect on minority group members and women.
F. Goals and Timetables
Projected levels of achievement resulting from an analysis by the
contractor or subcontractor of its deficiencies, and of what it can
reasonably do to remedy them within a specified time frame.
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G. Having fewer minority group members and women in a particular job
classification than would reasonably be expected by their availability
in the appropriate labor force.
IV. Bidding and Awarding of Contracts
A. Pre-Award Conference
Prior to the award of contract to the apparent low bidder and if
requested in writing by the Director of the Office of Equal
Opportunity (hereinafter referred to as the "Director"), such bidder
shall attend a pre-award conference to be held in the Office of Equal
Opportunity of the Board of Education for the purpose of acquainting
him or her with the statutory and contractual requirements and what
specific measures shall constitute an acceptable program of
affirmative action.
B. Program of Affirmative Action
Prior to the award of contract to the lowest responsible bidder and
upon demand, the low bidder must submit to the Director a detailed
written Program of Affirmative Action (hereinafter referred to as
"P.A.A."). In the event the low bidder fails to submit an acceptable
P.A.A. within the allotted time stipulated in the demand, the Director
may recommend that the low bid be rejected, the amount of the bid
deposit, if any, be forfeited, and that the low bidder be disqualified
from bidding on Board of Education work for a period of one year. The
P.A.A. shall:
1. Apply to all Board of Education non-construction contracts except
that, with regard to contracts, sub-contracts or purchase orders
under $25,000, the Director is authorized to make such
modifications as may be appropriate in the individual case;
2. Encompass all phases of the employment process, including
evaluation of job classifications to ensure job relatedness,
recruitment, selection, validity of examinations, retention,
layoffs, seniority, assignments, training, promotion, salary and
benefits;
3. Be considered by the Board of Education in its determination as
to whether a numerical low bidder will be judged the lowest
responsible bidder entitled to award thereof. The Director shall
be the sole judge of the program's acceptability;
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4. In addition to the above, fulfill the requirements of
subdivisions (a) through (g) of this section:
(a) The P.A.A. shall include measurable goals, reasonable timetables
and specific programs to be implemented by the contractor to
identity and eliminate deficiencies in employment practices with
respect to the underutilization of minority group members and
women in the contractor's workforce and a projection of the
minority utilization in the contractor's workforce for the life
of the contract and for at least a one-year period succeeding its
completion. This statement and projection shall include present
and projected (1) rates of hiring and promotion of minority group
members and women in specific job categories at each wage rate
within each level of employment and according to major
organizational unit, and (2) percentages of minority group and
women utilization in specific job categories at each wage rate
within each level of employment and according to major
organizational units, within the contractor's workforce.
(b) The P.A.A. shall include all of the contractor's facilities
within New York City as well as those facilities located
elsewhere within the continental limits of the United States.
(c) The P.A.A. shall specify the union(s) or other employee
organizations to which the contractor's employees belong and
shall include commitments to good faith efforts to effect equal
employment opportunity changes directly or indirectly, in
programs by such unions or organizations to recruit, train,
qualify or otherwise select members if such changes are deemed
necessary. The P.A.A. shall also include a copy of any agreement
with an employee association which affects employment policies
and practices.
(d) The P.A.A., or portion thereof, shall be submitted in such format
as shall be specified by the Director of the Office of Equal
Opportunity.
(e) The P.A.A. shall include a commitment to submit to the Director a
separate P.A.A., of the form and substance specified in
subdivisions (a) through (g) hereof, for each subcontractor prior
to its approval by the Board of Education. Every subcontract made
by a non-construction contractor shall also contain these rules,
regulations and orders in their entirety or their incorporation
by reference.
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<PAGE>
(f) The P.A.A. shall include written evidence or other proof which
shows that minority entrepreneurs have been solicited and given
an equal opportunity to submit proposals and that such proposals
have been given equal consideration for award.
(g) Unless exempted by the Board of Education, no specific
commitment, including goals for minority group employment and
adoption of equal employment practices, contained in the P.A.A.,
if any, of the contractor or subcontractor.
V. Compliance Inspection Report
A. Prior to the award of contract to the lowest responsible bidder and
upon demand, the low bidder must submit to the Director of Equal
Opportunity, a Compliance Inspection Report. The completed Compliance
Inspection Report must be returned to the Office of Equal Opportunity
within twelve (12) calendar days from the effective date stated on the
Requisition for Information accompanying the Report form.
Failure to submit the Compliance Inspection Report within the period
of time specified above may result in a rejection of the bid and the
disqualification of the bidder from bidding on Board of Education work
for a period of one year.
B. The Compliance Inspection Report shall be submitted in a form provided
by or approved by the Director, and shall indicate and furnish
explanations for any current or anticipated departures from the total
labor force projections, or minority group labor force projections in
the contractor's or subcontractor's P.A.A., or from planned corrective
action relating to employment policies as stated in the P.A.A.
VI. Contractor's Implementation
Good faith efforts must be made to implement these affirmative action
steps during the performance of the contract. The effectiveness of the
affirmative action program shall be measured by the extent of progress
made toward an equitable participation which reflects the appropriate
available minority and female workforce and the lack of such progress
shall be a factor considered in determining whether there have been
good faith efforts to implement the program.
VII. Sanctions and Remedies
A. It is agreed that if the contractor does not comply with the equal
opportunity provisions herein stated, as solely determined by the
Board of Education, the said contract may be cancelled,
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<PAGE>
terminated, or suspended in whole or in part and the contractor may be
declared ineligible for further Board of Education contracts and/or
subject to such other sanctions as may be imposed and remedies
involved by the Board of Education in its discretion.
B. Prime contractors shall be responsible for the compliance of their
subcontractors. Failure of its subcontractor to comply with the
provisions hereof or with affirmative action contractual provisions,
shall be grounds for the imposition of sanctions and remedies against
a prime contractor. Such sanctions and remedies include the authority
of the Director to halt scheduled payments to contractors who
consistently fail to comply with the provisions hereof.
C. No sanctions or remedies shall be imposed on a bidder, contractor or
subcontractor without affording such bidder, contractor or
subcontractor an opportunity for a compliance review. The purpose of
the compliance review is to enable the Board of Education's Policy of
Equal Employment Opportunity. The bidder, contractor or subcontractor
shall be allowed at least twelve (12) calendar days to present such
evidence. If at the end of such period compliance is not reached, and
the Director maintains his or her position of non-compliance, the
bidder, contractor or subcontractor may appeal to the Board of Review
of the Board of Education. Conformity to technical rules of evidence
at the Board of Review hearing shall not be required. The
determination of such Board of Review appeal shall be final and
conclusive, subject only to judicial review.
D. Each of the foregoing sections or subdivisions hereof shall be
construed to be independent of all other sections and subdivisions
unless the contrary is clearly indicated by the text.
For further information concerning these rules, regulations or procedures
contractors may consult with the Office of Equal Opportunity of the Board of
Education.
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<PAGE>
14. INDEMNIFICATION
The contractor shall be responsible for any claims made against the Board of
Education for acts of negligence, carelessness or incompetence perpetrated by
the contractor, or anyone employed by the contractor, in connection with
providing or failing to provide the services described herein, and the
contractor shall protect, indemnify and hold harmless the Board from all suits,
actions, damages or costs of every kind and description to which it shall be
subjected by reason of injury to person, or property, or wrongful death because
of such negligence, carelessness, or incompetence.
15. WORKMEN'S COMPENSATION
If this Contract be of such a character that the employees engaged thereon are
required to be insured by the provisions of Chapter 615 of the Laws of 1922,
known as the Workmen's Compensation Law, as it has been or may be amended, the
person, firm or corporation making or performing the same shall secure
compensation for the benefit of, and keep insured during the life of this
Contract, such employees, in compliance with the provisions of said law. Prior
to starting service under this Contract, the contractor shall file with the
Director a certificate showing compliance with the provisions of said law. Such
insurance shall be kept during the life of said Contract.
16. PREVENTION OF DELAY, SUSPENSION OR STRIKES
Because of the public nature of the services involved, and because of the
essential public services performed, the contractor shall not act in any manner,
nor employ labor or means, nor do anything by way of omission or commission that
would in any way cause or result in a suspension, or delay of or strike
affecting the work or any services to be performed hereunder. Any violation by
the contractor of this requirement may, upon certification of the Director that
the contractor's act or failure to act demonstrated a lack of good faith, effort
to assure the performance of the conditions or covenants of this Contract, be
considered as proper and sufficient cause for finding the contractor to be in
default in the manner set forth in this Contract.
17. INSPECTORS
The Director may assign inspectors to inspect vehicles furnished under this
Contract, and such inspector or inspectors shall have the right at any and all
times to inspect the vehicles used or proposed to be used under this Contract;
to inspect the driver's license, vehicle registration, and proof of insurance;
and to require drivers and escorts to produce proper identification. Such
inspectors are authorized and empowered to reject and forbid the use of all
vehicles or any part thereof offered under or in fulfillment of this Contract
for the reason that the same do not comply with the specifications.
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<PAGE>
18. REJECTION OF VEHICLES
Any vehicle furnished or offered to be furnished under this Contract for the
transportation of pupils which is rejected by an inspector as not conforming to
the specifications, the rules and regulations of the New York State Department
of Transportation or to the rules and regulations of the New York State
Education Department, shall be immediately removed, and vehicles for the
transportation of pupils which do conform shall be furnished in place thereof.
19. PAYMENTS
If the contractor shall well and faithfully perform and fulfill this Contract
and keep every covenant on its part herein contained, the Board shall then pay
or cause to be paid to the contractor, subject to the provisions of the
specifications, the amounts due the contractor as the services are provided. The
Board and the Comptroller may at all times reserve and retain out of said
payments, all sums as by the terms hereof, or of any law of the State of New
York, or of any local law of the City of New York, now in effect or hereafter
enacted, the Board or the City may be authorized to collect, reserve or retain.
The contractor shall not be entitled to demand or receive payment for the
services rendered, or any portion thereof, except in the manner set forth in
this Contract, upon certification by the Director of compliance by the
contractor with each and every one of the stipulations herein mentioned provided
that nothing herein contained be construed to affect the right hereby reserved
by the Board and the Comptroller to refuse to pay any part or all of the amount
certified should the said certificate be found or known to be inconsistent with
the terms of this Contract, or otherwise improperly given.
The contractor will not ask, demand, sue for or recover any sum whatsoever for
any services delivered under this Contract, either as extra compensation or
otherwise, beyond the amount payable for the services which shall be actually
supplied at the price herein agreed upon and fixed.
20. ACCEPTANCE OF FINAL PAYMENT
The acceptance by the contractor or by any person claiming under the Contract of
the final payment as audited by the Comptroller, whether such payment be made
pursuant to any judgment or order of any court or otherwise, shall operate and
shall be a release of the Board from all claims of and liability to the
contractor and to the contractor's representatives and assigns for anything
done, furnished for or relating to the work or vehicles furnished, or for any
neglect of the Board or of any person relating to or affecting the work done or
vehicles furnished hereunder.
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<PAGE>
21. RESERVED RIGHTS
The rights, powers, privileges and remedies reserved to the Board and to the
City by this Contract are cumulative and shall be in addition to and not in
derogation of any other rights or remedies which the City and the Board may have
at law or in equity with respect to the subject matter of this Contract, and a
waiver thereof at any time or in any instance shall not affect any other time or
instance.
22. ANTI-TRUST
The contractor hereby assigns, sells and transfers to the board and the City all
right, title and interest in and to any claims and causes of actions arising
under the anti-trust laws of New York State or of the United States relating to
the particular goods or services purchased or procured by the City or Board
under this contract.
23. MERGER
This Contract contains all the terms and conditions agreed upon by the parties
hereto, and no other Contract, oral or otherwise, regarding the subject matter
of this Contract shall be deemed to exist or to bind any of the parties hereto,
or to vary any of the terms contained herein.
24. VENUE
All actions or special proceedings involving disputes relating to this contract
shall be brought in New York County.
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<PAGE>
PERFORMANCE BOND
KNOW ALL MEN BY THESE PRESENTS, THAT we,___________________________________
________________________________________________________________________________
hereinafter referred to as the 'Principal', and ________________________________
________________________________________________________________________________
hereinafter referred to as the 'Surety' are held and firmly bound to the BOARD
OF EDUCATION OF THE CITY OF NEW YORK, hereinafter referred to as the 'Board', or
to its successors and assigns, in the penal sum of __________ Dollars, lawful
money of the United States, for the payment of which said sum of money well and
truly to be made, we, and each of us, bind ourselves, our heirs, executors,
administrators, successors and assigns, jointly and severally, firmly by these
presents.
WHEREAS, the Principal is about to enter, or has entered, into a Contract
in writing with the Board for transportation of pupils, a copy of which Contract
is annexed to and hereby made a part of this bond as though herein set forth in
full;
NOW, THEREFORE, the conditions of this obligation are such that if the
principal, his or its representatives or assigns, during the period beginning on
the first day of September 197_ and ending on the 30th day of June 197_ shall
well and faithfully perform the conditions of said Contract and all
modifications, amendments, additions and alterations therein with respect to
performance by the Principal during said period and shall indemnify and save
harmless the Board from all cost and damages which it may suffer by reason of
failure so to do and shall fully reimburse and repay the Board for all outlay
and expense which the Board may incur in making good any such default with
respect to performance by Principal during the period of this bond, then this
obligation shall be void; otherwise the same to remain in full force and effect.
The Surety, for value received, hereby stipulates and agrees, if requested
to do so by the Board, to fully perform and complete the work to be performed
under the Contract pursuant to the terms, conditions and covenants thereof,
during the period of this bond if for any cause the Principal fails or neglects
to fully perform and complete such work, except for a work stoppage by its
employees or a strike of its employees authorized by the collective bargaining
unit representing such employees. The Surety further agrees to commence such
work within twenty (20) days after written notice thereof from the Board.
The Surety, for value received, for itself and its Successors and assigns,
hereby stipulates and agrees that the obligation of said Surety and its bond
shall in no way be impaired or affected by any modification, omission, addition
or change in or to the Contract or the work to be performed during the period of
this bond, or by any payment thereunder, before the time required therein, or by
any waiver or any provisions thereof, or by any assignment, subletting other
transfer thereof of any work to be performed or any moneys due to or to become
due thereunder, and said Surety does hereby waive notice of any and all such
extensions, modifications, omissions, additions, changes, payments, waivers,
assignments, subcontracts and transfers, and hereby expressly stipulates and
agrees that any and all things done and omitted to be done by and in relation to
assignees, subcontractors, and other transferees shall have the same affect as
to said Surety as though done or omitted to be done by or in relation to said
Principal.
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<PAGE>
IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their
hand and seals, and such of them as are corporations have caused their corporate
seals to be hereunto affixed and these presents to be signed by their proper
officers.
this day of , 19
(Seal) ___________________________________
Principal
(Seal) By ___________________________________
___________________________________
Surety
(Seal) By ___________________________________
___________________________________
Surety
By ___________________________________
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<PAGE>
EX-10.14
Extension and Eighth Amendment of Contract
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
Extension and Eighth Amendment Agreement made and entered into on the date
expressed at the end of this document by and between the BOARD OF EDUCATION OF
THE CITY OF NEW YORK ("BOE"), 110 Livingston Street, Brooklyn, New York 11201,
and the Contractor whose signature appears at the end of this document (the
Contractor")
W I T N E S S E T H:
In consideration of the following stipulations, terms and conditions, the
parties to this Extension and Eighth Amendment Agreement agree as follows:
W H E R E A S in 1979 the BOE publicly solicited competitive bids for the
transportation of special education pupils under Contract Serial No. 0070 and
Contract Serial No. 8108; and,
W H E R E A S at divers times thereafter from 1982 through 1964, the BOE
publicly solicited competitive bids for similar services under Contract Serial
Nos. G8805, G8891, G8893, G9301 and G9325, which contracts have incorporated, as
of their dates, provisions which are counterparts of the provisions of contracts
under Serial Nos. 0070 and 8108 as they then read; and,
W H E R E A S the Contractor submitted a bid(s) under one or more of the
aforementioned contract serial numbers and was duly awarded a contract(s)
including certain Employee Protection Provisions for the transportation of
special education pupils; and,
W H E R E A S during the period of September 10, 1979 through December 21,
1979, the Contractor did not provide escort services for special education
pupils; but, under an emergency contract entered into by and with the BOE, such
escort services have been supplied since that time; and,
W H E R E A S the New York State Legislature enacted Chapter 737 of the
Laws of 1979 ("Chapter 737") and the parties have desired to amend the Contract
to implement Chapter 737 and be subject to its terms; and,
W H E R E A S the BOE elected fairly and reasonably on the basis of the
best interests of the school district not to extend the terms of all contracts
under Serial Nos. G8893 and G9301; and,
W H E R E A S the original terms of all contracts under Serial Nos. 0070,
8108, G8805, G8891 and G9301 would have expired on June 30, 1982 unless
extended, and G9325 would have expired on June 30, 1984 unless extended and
Section 305, Paragraph 14 (a) of the State Education Law authorizes extensions
and provides a method for appropriate payment increases; and,
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<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
W H E R E A S in 1982 the BOE and the Contractors agreed to amend and
extend all Serial Nos. 0070, 8108, G8805, G8891, G9301 and G9325 contracts
through June 30, 1984; and,
W H E R E A S in 1984 the BOE and the Contractors agreed to amend and
extend further all Serial Nos. 0070, 8108, G8805, G8891, G9301 and G9325
contracts through June 30, 1987; and,
W H E R E A S in 1987 the BOE and the Contractors agreed to amend and
extend further all Serial Nos. 0070, 8108, G8805, G8891, G9301 and G9325
contracts through June 30, 1990; and,
W H E R E A S in 1990 the BOE and the Contractors agreed to amend and
extend further all Serial Nos. 0070, 8108, G8805, G8891, G9301 and G9325
contracts through June 30, 1993; and,
W H E R E A S in 1993 the BOE and the Contractors agreed to amend and
extend further all Serial Nos. 0070, 8108, G8805, G8891, G9301 and G9325
contracts through June 30, 1996; and,
W H E R E A S in 1994 the BOE publicly solicited competitive bids for the
transportation of special education pupils under Contract Serial Nos. 7165, 7200
and 7291 whose original terms shall expire on June 30, 1997, unless extended;
and,
W H E R E A S in 1995 the City of New York, the BOE, the Contractors, and
delegates of the Amalgamated Transit Union, Local Division 1181-1061, the
Transit Workers Union, Local 100, and various other labor organizations that
represent school bus workers entered into negotiations to deal with the
increasing costs of school bus service in the face of markedly diminished City
and school district financial resources; and, the City of New York, the BOE, the
Contractors, and the labor organizations reached an accord that averted the
possibility of school bus service interruptions and that produced significant
prospective cost savings for the City and the BOE; and,
W H E R E A S the said accord reached among the City of New York, the BOE,
the Contractors, and delegates of the Amalgamated Transit Union, Local Division
1181-1061, the Transit Workers Union, Local 100, and various other labor
organizations calls for modification to the terms, conditions and specifications
of existing extension and amendment agreements under Serial Nos. 0070, 8108,
G8805, G8891, G9301 and G9325 and all contracts under Serial Nos. 7165, 7200 and
7291 to take effect during the current term periods of such extension and
amendment agreements and contracts starting as of July 1, 1995 or September 1,
1995,
2
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
depending upon the particular contract or agreement serial number; and,
W H E R E A S the BOE now determines that all contracts under Serial Nos.
0070, 8108, G8805, G8891 and G9325 should be still further amended and extended
through June 30, 2000, and that all contracts under 7165, 7200, and 7291 should
be initially amended and extended through June 30, 2000, and the Contract does
hereby so agree, acknowledge and stipulate; and,
W H E R E A S in 1991, the BOE Office of Auditor General ("OAG") commenced
a currently continuing review and audit of annual rate increases paid to
contractors during the school years 1986-87 through 1994-95 pursuant to
provisions in previous and existing Extension and Amendment Agreements as
allowed by State Education Law ss.305, Sub-division 14(a); and this audit has
resulted in the release of preliminary findings which proposed various
adjustments to the daily rates per vehicle of many Contractors as well as the
recovery of alleged overpayments from some of the Contracts; and,
W H E R E A S some of the contractors have instigated litigation in the
Supreme Court of the State of New York in New York County under the Index No.
20841/92 (IAS Part 17, Justice Goodman) to prevent the BOE from acting upon the
OAG's findings to adjust daily vehicles rates prospectively and to recover
alleged overpayments, which litigation is still pending either judicial
resolution or settlement, and which the Contractor does hereby agree, confess,
acknowledge and stipulate that he/she/it has been apprised fully of such
litigation; and,
W H E R E A S the parties mutually desire to make this extension agreement
and amendment to the aforesaid contracts as heretofore amended and extended
("the Contract");
N 0 W T H E R E F 0 R E, the parties whose names and signatures appear at
the end of this document do hereby further agree and covenant as follows:
(A) (1) TERM OF EXTENSION AGREEMENT. All references to the termination of the
Contract, by whatever terminology, shall be deemed hereafter to read "June 30,
2000, unless further extended;" provided however, that if, prior to 5:00 P.M. on
December 19, 1995, the Contractor shall have exercised an option to terminate
the Contract as of June 30, 1996, the Contract shall so terminate; and, provided
further, that if the Contractor has not, in December 1995, exercised the option
to terminate, then if prior to 5:00 PM on December 19, 1996, the Contractor
shall have exercised an option to
3
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
terminate the Contract as of June 30, 1997, the Contract shall so terminate; and
provided further that if the Contractor shall not have exercised an option to
terminate, then if prior to 5:00 PM on December 19, 1997, the Contractor shall
have exercised an option to terminate the Contract as of June 30, 1998, the
Contractor shall so terminate; and provided further that if the Contractor shall
not have exercised an option to terminate, then if prior to 5:00 PM on December
19, 1998, the Contractor shall have exercised an option to terminate the
Contract as of June 30, 1999, the Contractor shall so terminate; and, provided
still further, that the Contractor's aforementioned December option to terminate
effective June 30th next succeeding may be exercised by a Contractor only if the
Contractor demonstrates that its insurance premiums including any Automobile
Insurance Plan (AIP) surcharges and excess pass-along costs for the minimum
liability coverage required by the Contract will have increased as of January 1,
1995 more than six-percent (6%) over the January 1, 1994 premiums, and as of
January 1, 1996 more than seven percent (7%) over the January 1, 1995 premiums
and as of January 1, 1997, more than (7%) over the January 1, 1996, premiums and
as of January 1, 1998, more than (7%) over the January 1, 1997 premiums.
(2) To be effective the Contractor's Notice of Exercise of the Option to
Terminate must be received at the Office of the Director of the Office of Pupil
Transportation, in writing signed by the Contractor, by the date and time
specified.
(3) If the Contractor fails to comply strictly with the above requirements
the Contract shall continue without interruption.
(B) ARTICLE V - A entitled, "PAYMENT DURING PERIOD OF EXTENSION," is hereby
amended to read as follows for the period of this Extension and Amendment
Agreement:
V - A. PAYMENT DURING PERIOD OF EXTENSION
(1) Notwithstanding the provisions of Article V, during this Extension
Period the daily rate per vehicle will be deemed to be augmented each year
according to the following formulae subject to the Director's approval of
all or any portion(s) of the Contractor's claims in the below described
annual Cost Justification Financial Statements:
(a) (1) For Contracts under Serial Nos. 0070, 8108, G8805, G8891 and
G9325, during the Fourteenth Extension Year of July 1, 1995
through June 30, 1996, each Contractor's daily rates per vehicle
4
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
shall be equal to ninety-eight-and-one-half per cent (98.5%) of
the daily rates per vehicle provided in extension and amendment
agreements of the Contracts which are in effect for the Extension
Year of July 1, 1994 through June 30, 1995.
(2) For Contracts under Serial Nos. 7165, 7200, and 7291, during
the Second Contract Year of July 1, 1995 through June 30, 1996,
each Contractor's daily rates per vehicle and per escort shall be
equal to ninety-eight and one-half percent (98.5%) of the daily
rates per vehicle and per escort as originally quoted by the
Contractor in 1994.
(b) (1) For Contracts under Serial Nos. 0070, 8108, G8805, G8891 and
G9325, during the Fifteenth Extension Year of July 1, 1996
through June 30, 1997, each Contractor's daily rates per vehicle
shall be deemed to be augmented by an amount not to exceed
whichever of the following represents the least amount of actual
increase: (i) the same percentage by which the Consumer Price
Index as of May 1996 shall have increased over the Consumer Price
Index as of May 1995; (ii) two-and-two-tenths per cent (2.2%)
over the base daily rates per vehicle paid during the Extension
Year of July 1, 1995 through June 30, 1996; or, (iii) the amount
in dollars expressed as a percentage by which each Contractor's
actual costs during the Extension Year of July 1, 1995 through
June 30, 1996 shall have increased over each Contractor's actual
costs during the Extension Years of July 1, 1993 through June 30,
1994.
(2) For Contracts under Serial Nos. 7165, 7200, and 7291, during
the Third Contract Year of July 1, 1996 through June 30, 1997,
each Contractor's daily rates per vehicle and per escort shall
resume equality to one hundred percent (100%) of the daily rates
per vehicle and per escort as originally quoted by each such
Contractor in 1994.
(c) (1) For Contracts under Serial Nos. 0070, 8108, G8805, G8891 and
G9325, during the Sixteenth Extension Year of July 1, 1997
through June 30, 1998, each Contractor's daily rates per vehicle
shall be deemed to be augmented by an amount not to exceed
whichever of the following represents the least amount of actual
increase: (i) the same percentage
5
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
by which the Consumer Price Index as of May 1997 shall have
increased over the Consumer Price Index as of May 1996; (ii)
two-and-six-tenths percent (2.6%) over the base daily rates per
vehicle paid during the Extension Year of July 1, 1996 through
June 30, 1997; or (iii) the amount in dollars expressed as a
percentage by which each Contractor's actual costs during the
Extension Year of July 1, 1996 through June 30, 1997 shall have
increased over each Contractor's actual costs during the
Extension Year of July 1, 1995 through June 30, 1996, plus the
percentage of each Contractor's actual cost increases from the
Extension Year of July 1, 1995 through June 30, 1996 over the
Extension Year of July 1, 1993 through June 30, 1994 to the
extent that such percentage exceeded two-and-two-tenths percent
(2.2%) and was consequently disallowed for the Extension Year of
July 1, 1996 through June 30, 1997. (1)
(2) For Contracts under Serial Nos. 7165, 7200, and 7291, during
the First Extension Year of July 1, 1997 through June 30, 1998,
each Contractor's daily rates per vehicle and per escort shall be
deemed to be augmented by an amount not to exceed whichever of
the following represents the least amount of actual increase: (i)
the same percentage by which the Consumer Price Index as of May
1997 shall have increased over the Consumer Price Index as of May
1996; (ii) two-and-six-tenths percent (2.6%) over the base daily
rates per vehicle paid during the Contract Year of July 1, 1996
through June 30, 1997; or (iii) the amount in dollars expressed
as a percentage by which each Contractor's actual costs during
the Contract Year of July 1, 1996 through June 30, 1997 shall
have increased over each Contractor's actual costs during the
Contract Year of July 1, 1995 through June 30, 1996.
(d) (1) For Contracts under Serial Nos. 0070, 8108, G8805, G8891 and
G9325, during the Seventeenth Extension Year of July 1, 1998
through June 30,
- ----------
(1) This "cost carry-forward" is allowed only for that percentage of the
Contractor's cost increases from the Fourteenth over the Twelfth Extension Years
that exceeded two-and-two-tenths percent (2.2%) and it is allowed due to such a
low fixed rate hike cap.
6
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
1999, each Contractor's daily rates per vehicle shall be deemed
to be augmented by an amount not to exceed whichever of the
following represents the lesser amount of actual increase: (i)
the same percentage by which the Consumer Price Index as of May
1998 shall have increased over the Consumer Price Index as of May
1997; or, (ii) the amount in dollars expressed as a percentage by
which each Contractor's actual costs during the Extension Year of
July 1, 1997 through June 30, 1998 shall have increased over each
Contractor's actual costs during the Extension Year of July 1,
1996 through June 30, 1997, plus each of the percentages of each
Contractor's actual cost increases from (a) the Fifteenth
Extension Year (July 1, 1996 through June 30, 1997) over the
Fourteenth Extension Year (July 1, 1995 through June 30, 1996) to
the extent that such exceeds two-and-six tenths percent (2.6%)(2)
and (b) the Fourteenth Extension Year (July 1, 1995 through June
30, 1996) over the Twelfth Extension Year (July 1, 1993 through
June 30, 1994) to the extent that such exceeds two-and-two-tenths
percent (2.2%)(3).
(2) For Contracts under Serial Nos. 7165, 7200 and 7291, during
the Second Extension Year from July 1, 1998 through June 30,
1999, each Contractor's daily rates per vehicle and per escort
shall be deemed to be augmented by an amount not to exceed
whichever of the following represents the lesser amount of actual
increase: (i) the same percentage by which the Consumer Price
Index as of May 1998 shall have increased over the Consumer Price
Index as of May 1997; or, (ii) the amount in dollars expressed as
a percentage by which each
- ----------
(2) This "cost carry-forward" is allowed only for that percentage of the
Contractor's cost increases from the Fifteenth over the Fourteenth Extension
Years that exceed two-and-six-tenths percent (2.6%), and it is allowed due to
such a low fixed rate hike cap.
(3) As in Note 1, the second "cost carry-forward" is allowed due to such a
low fixed rate hike cap but only to the extent that the Contractor's cost
increases beyond two-and-two tenths percent (2.2%) shall not as yet have been
absorbed by the rate augmentation for the Sixteenth Extension Year.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
Contractor's actual costs during the Extension Year from July 1,
1997 through June 30, 1998 shall have increased over each
Contractor's actual costs during the Contract Year from July 1,
1996 through June 30, 1997.
(e) (1) For Contracts under Serial Nos. 0070, 8108, G8805, G8891 and
G9325, during the Eighteenth Extension Year of July 1, 1999
through June 30, 2000, each Contractor's daily rates per vehicle
shall be deemed to be augmented by an amount not to exceed
whichever of the following represents the lesser amount of actual
increase: (i) the same percentage by which the Consumer Price
Index as of May 1999 shall have increased over the Consumer Price
Index as of May 1998; or, (ii) the amount in dollars expressed as
a percentage by which each Contractor's actual costs during the
Extension Year from July 1, 1998 through June 30, 1999 shall have
increased over each Contractor's actual costs during the
Extension Year of July 1, 1997 through June 30, 1998.
(2) For Contracts under Serial Nos. 7165, 7200, and 7291, during
the Third Extension Year from July 1, 1999 through June 30, 2000,
each Contractor's daily rates per vehicle and per escort shall be
deemed to be augmented by an amount not to exceed whichever of
the following represents the lesser amount of actual increase:
(i) the same percentage by which the Consumer Price Index as of
May 1999 shall have increased over the Consumer Price Index as of
May 1998; or, (ii) the amount in dollars expressed as a
percentage by which each Contractor's actual costs during the
Extension Year from July 1, 1998 through June 30, 1999 shall have
increased over each Contractor's actual costs during the
Extension Year from July 1, 1997 through June 30, 1998.
(2) Notwithstanding the foregoing payment increase provisions, where there
is a decrease in the regional consumer price index for the New York, New
York-Northeastern, New Jersey area as based upon the index for all urban
consumers (CPI-U) during the preceding twelve month period, the amount to
be paid to the Contractor in the succeeding extension year
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
will reflect that decrease in a manner satisfactory to the New York State
Commissioner of Education.
(3) Definitions. The definitions below control the meanings of the
described terms wherever they appear in this Contract. These definitions
add to and supplement any definitions or instructions expressed in the
original Contract and, as such, do not supersede, revoke, replace, revise
or limit any similar or analogous provisions in the original Contract.
(a) For Contracts under Serial Nos. 0070, 8108, G8805, G8891 and
G9325, the following Extension Year definitions shall apply:
(i) "Fourteenth Extension Year" means July 1, 1995 through June
30, 1996.
(ii) "Fifteenth Extension Year" means July 1, 1996 through June
30, 1997.
(iii) "Sixteenth Extension Year" means July 1, 1997 through June
30, 1998.
(iv) "Seventeenth Extension Year" means July 1, 1998 through June
30, 1999.
(v) "Eighteenth Extension Year" means July 1, 1999 through June
30, 2000.
(b) For Contracts under Serial Nos. 7165, 7200, and 7291, the
following Contract Year and Extension Year definitions shall apply:
(i) The term "Contract Year" means each annual period during the
original term of the Contract from July lst of a given year
through June 30th of the next year, i.e., "Second Contract Year"
means July 1, 1995 through June 30, 1996 and "Third Contract
Year" means July 1, 1996 through June 30, 1997.
(ii) "First Extension Year" means July 1, 1997 through June 30,
1998.
(iii) "Second Extension Year" means July 1, 1998 through June 30,
1999.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
(iv) "Third Extension Year" means July 1, 1999 through June 30,
2000.
(c) The term "Consumer Price Index," as of a given date, is defined as
that statistic of the United States Department of Labor or its
successor agency which the New York State Education Department deems
as the "regional consumer price index for the New York, New
York-Northeastern, New Jersey area, based upon the index for all urban
consumers (CPI-U)," according to Section 305, Paragraph 14(a) of the
State Education Law or as the same may be updated, revised or
otherwise changed during the life of this Extension and Eighth
Amendment Agreement.
(d) The term "contractor's average cost per vehicle per day" for a
given extension year is defined as a Contractor's "total net allowable
costs" for that extension year divided by the total number of "vehicle
days". The term "total net allowable costs" is limited to those
expenses determined by the BOE to be related directly to
transportation services provided to the BOE pursuant to this Contract.
The term "vehicle days" is defined as the total number of "authorized
vehicles" the Contractor actually operates multiplied by the number of
school days, which number is hereby fixed at 183 school days per
extension year (220 school days per extension year for 12 month
contracts) for the term of this Extension and Amendment Agreement.(4)
The term "authorized vehicles" is defined as the total number of
contract and additional vehicles, but
- ----------
(4) The numbers 183 (ten month contracts) and 220 (twelve month contracts)
represent average numbers of school days per extension year for the three
extension years preceding the instant Extension and Amendment Agreement, i.e.,
1992-93, 1993-94 and 1994-95 Extension Years. These averages shall be reviewed
every three (3) years during this Extension and Amendment Agreement and such
further extension and amendment agreements thereafter, if any. Whereupon a
triennial review finds that one or both average numbers of school days per
extension year have changed as based upon the fluctuation of actual school days
per annum, the affected fixed number(s) of school days shall be revised up or
down accordingly for the next extension year(s), but only if the change in the
affected average number(s) at least equals two (2) school days. In each
subsequent triennial review, if any, the effects of changes in the numbers of
school days from the preceding triennial review(s) shall be viewed cumulatively.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
excluding spare vehicles, that the Contractor has been granted
expressly by the Director. If the Director grants the Contractor
additional vehicles after December 15 of a given extension year, such
additional vehicles shall not be counted among the "authorized
vehicles" until the start of the succeeding extension year, if indeed
the Contractor continues to furnish such additional vehicles during
the succeeding extension year.(5)
(e) The term "Cost Justification Financial Statement" is defined as a
written accountant's review report prepared by a Certified Public
Accountant (CPA) or Public Accountant (PA) licensed by the State of
New York, except as otherwise noted herein. This review report shall
state that a review was performed in accordance with AICPA standards
and that the information in the financial statements is the
representation of management, and it describes the nature of the
review as distinct from an audit. The report shall give the limited
assurance that, based on the review, the CPA/PA is not aware of any
material modifications that should be made to the financial statement
in order for it to be in conformity with generally accepted accounting
principles. In addition, the Certified Public Accountant or Public
Accountant preparing a report or review must state that he or she has
studied the cost justification manual supplied by
- ----------
(5) This exclusion of additional vehicles granted after each December 15th
shall not apply to any vehicles that the Contractor obtains by way of assignment
or other transfer of contract, if such is approved by the BOE. Except for the
one-and-one half percent (1.5%) daily rate reduction for the 1995-96 Extension
Year, the annual rate augmentation, if any, for each additional vehicle granted
after December 15th of a given extension year shall not become effective until
the succeeding extension year, whereupon any such rate augmentation shall
commence (without retroactivity) cumulatively with the following extension
year's rate increase, if any. For cost justification purposes, the Contractor
shall not add or combine any costs associated with additional vehicles granted
after each December 15th into the Contractor's other operating costs for that
extension year but shall begin to add or combine such costs (without
retroactivity) into other operating costs only at the outset of the succeeding
extension year, i.e., each such additional vehicle shall be treated for cost
justification purposes as if it had been initially granted to the Contractor
effective July 1st of the given following extension year.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
the Board and has applied the standards contained in the Board's
manual to the development of the Cost Justification Financial
Statement. Contractors who have not had a CPA audited report done for
any purpose within two (2) years prior to the commencement date of
this Extension Agreement, shall be required to submit a certified
audited statement by a CPA for its first cost justification financial
statement under this Extension Agreement. In addition, the accountant
must have no interest in this Contract or the Contractor and must so
certify in writing. The financial statement will utilize a form
prescribed by the Director as approved by the State Education
Department.
(4) Cost Justification Financial Statements. Section 305 of the State
Education Law requires the Contractor to substantiate any cost increases
which he/she claims to justify annual payment increases during the term of
this Extension and Eighth Amendment Agreement. In consultation with the BOE
Office of Auditor General, the Director of the Office of Pupil
Transportation (OPT) shall determine whether to approve all or any
portion(s) of the claims in each of the Contractors' annual Cost
Justification Financial Statements as described immediately below:
(a) To substantiate any payment increases received under this Article
V - A during the Extension Year of July 1, 1996 through June 30, 1997,
the Contractor must submit by September 30,. 1996 a cost justification
financial statement by an independent Certified Public Accountant or
Public Accountant which details total costs incurred by the Contractor
for all of its operations and, separately, for its operations under
this Contract for the Extension Years 1995-96 and for 1993-1994.
(b) To substantiate any payment increases received under this Article
V - A during the Extension Year of July 1, 1997 through June 30, 1998,
the Contractor must submit by September 30, 1997 (i) a cost
justification financial statement by an independent Certified Public
Accountant or Public Accountant which details the total costs incurred
by the Contractor for all of its operations and, separately, for its
operations under this Contract for the Extension Years 1996-1997 and
1995-1996, and (ii) an additional cost justification financial
statement by an independent Certified Public Accountant or Public
Accountant which details the total costs incurred by the
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
Contractor for all of its operations and, separately, for its
operations under this Contract for Extension Years 1995-96 and
1993-1994 (to account for a cost carry-forward, if any)
(c) To substantiate any payment increases received under this Article
V - A during the Extension Year of July 1, 1998 through June 30, 1999,
the Contractor must submit by September 30, 1998, (i) a cost
justification financial statement by an independent Certified Public
Accountant or Public Accountant which details the total costs incurred
by the Contractor for all of its operations and, separately, for its
operations under this Contract, for the Extension Years 1997-1998 and
1996-1997, and (ii) an additional cost justification financial
statement by an independent Certified Public Accountant or Public
Accountant which details the total costs incurred by the Contractor
for all of its operations and, separately, for its operations under
this Contract for Extension Years 1996-97, 1995-1996 and 1993-1994,
(to account for a cost carry-forward, if any).
(d) To substantiate any payment increases received under this Article
V - A during the Extension Year of July 1, 1999 through June 30, 2000,
the Contractor must submit by September 30, 1999, a cost justification
financial statement by an independent Certified Public Accountant or
Public Accountant which details the total costs incurred by the
Contractor for all of its operations and, separately, for its
operations under this Contract for the Extension Years 1998-1999 and
1997-1998.
(e) In each annual cost justification financial statement, the
Contractor will treat costs for escorts separately from all other
costs. As a minimum, the Contractor will supply in each annual cost
justification financial statement all data required by the New York
State Education Department related to this Contract, and the submittal
shall include, but is not necessarily limited to, New York State
Education Department approved cost justification forms. The Contractor
must supply promptly any and all additional cost data as required by
the BOE or the State Education Department.
(f) Until six (6) years after completion of its services hereunder, or
six (6) years after the date of termination of this Extension and
Amendment Agreement, whichever
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
shall occur later, the Contractor shall retain and maintain complete
and correct books and records related to all aspects of the
Contractor's obligations hereunder. Records must be maintained
separately, so as to identify clearly the expenses applicable to the
Contract, all previous extension and amendment agreements and this
Extension and Amendment Agreement and be distinguishable from all
other costs not incurred under the Contract, all previous extension
and amendment agreements and this Extension and Amendment Agreement.
Except as provided in this subparagraph, all other provisions of the
Contract as amended that relate to the retainage and maintenance of
records shall remain in full force and effect.
(g) To be eligible to "carry forward" unabsorbed cost increases
arising from cost growth, if any, greater than the two-and-two-tenths
percent (2.2%) fixed cap during the 1996-97 Extension Year and the
two-and-sixth-tenths percent (2.6%) fixed cap during the 1997-98
Extension Year of Contract Serial Nos. 0070, 8108, G8805, G8891, and
G9325, the Contractor must meet eligibility conditions and must adhere
to rules, procedures and definitions expressed in Appendix A. The said
eligibility conditions, rules, procedures and definitions for the
allowance of a "cost carry-forward" of such unabsorbed cost increases
under Contract Serial Nos. 0070, 8108, G8805, G8891, and G9325 are
hereby incorporated by this reference into this Extension and
Amendment Agreement as hereby incorporated by this reference into this
Extension and Amendment Agreement as if set forth herein in their
entirety, and a copy of the said eligibility conditions, rules,
procedures and definitions is hereto annexed as "Appendix A".
(5) Required Analysis of Costs. To determine the allowable increase in
costs for the extension year, as specified in Section V-A 1 of this
agreement, the following analysis of the Cost Justification Financial
Statement must be undertaken:
Step 1: Divide the total applicable annual operating costs by the
number of vehicle days for both the base year and the year
previous to the base year to determine the average daily cost
per vehicle for each of those years. The base year is the year
immediately preceding the extension year.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
Step 2: Subtract the average daily cost per vehicle for the year
previous to the base year from the average daily cost per
vehicle for the base year to determine the increase in the
average daily cost per vehicle.
Step 3: Divide the increase in the average daily cost per vehicle by
the average daily cost per vehicle for the year previous to
the base year to determine the percent increase in the average
daily cost per vehicle.
Step 4: Compare the percent increase in the average daily cost per
vehicle to the percentage by which the Consumer Price Index as
of May of the base year shall have increased over the Consumer
Price Index as of May of the year previous to the base year
and to the appropriate annual caps in the increase as
stipulated in Section V-A 1 of this agreement. Whichever is
the least of the three percentages will be the allowable
increase applied to the daily rate for the extension year.
Step 5: Only for Contract Serial Nos. 0070, 8108, G8805, G8891 and
G9325 for the rate augmentations in the Sixteenth and
Seventeenth Extension Years, repeat steps 1 to 4 for any
allowable cost increases accrued during the period of Twelfth
to Fourteenth Extension Years and, when appropriate, any
allowable cost increases accrued during the Fifteenth to
Sixteenth Extension Years. Determine the percent increase in
the average daily cost per vehicle from the Twelfth to
Fourteenth Extension Years and, when appropriate, from the
Fifteenth to Sixteenth Extension Years. If the percent
increase in the average daily cost resulting in step 3 is
insufficient to justify fully the Consumer Price Index
increment in Step 4 or any applicable fixed cap, add the
percent increase of the Twelfth to Fourteenth Extension Years,
if any, to the percent increase in Step 3. If there is any
percent increase in the average daily cost per vehicle still
unabsorbed, such increase may be carried forward to the
Seventeenth Extension Year.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
For the Seventeenth Extension Year only, also add the
unabsorbed increase of the Fifteenth to Sixteenth Extension
Years, if any, to the percent increase in Step 3.
(6) Allowable Cost Increases. Only increases in "net allowable costs" will
justify augmentation of the daily vehicle rate from one extension year to
the next. "Allowable costs" are limited by the following: costs not
attributable to the Contractor's operations pursuant to this Contract,
costs which are not ordinary and/or reasonable, costs which are not
documented, and costs disallowed by the New York State Education Department
and/or BOE auditors are not permitted to justify increases of the daily
rate per vehicle. The Director and Office of Auditor General shall have the
right, power and authority to prescribe standardized miscellaneous cost
categories for all contractors.
(7) Access to Subcontractors. If with the approval of the Director, the
Contractor subcontracts any portion of the services under this Contract,
the Contractor must include in any such subcontract agreement a provision
which allows full and unimpeded access by the BOE, the New York State
Education Department or the New York City Office of the Comptroller to the
books and records of a subcontractor for inspection, audit and copying
purposes. The Contractor agrees and covenants to render all necessary
assistance to obtain any requested documents from subcontractors. The
Contractor's inability to obtain requested documentation from any such
entities will not excuse a failure to provide the documentation as a means
to justify payment increases.
(8) Absence of Cost Justification Financial Statement. The Contractor's
failure to submit an annual Cost Justification Financial Statement by the
deadline date as above expressed will result in the forfeiture of any
increase later justified for the period from the service start date to the
day the statement is received at the Office of Pupil Transportation, unless
the Director determines that reasonable circumstances exist to excuse the
Contractor's late submittal.
(9) Cost Increase Surety Bond. If the Contractor desires to receive the
annual daily vehicle rate(s) augmentation in advance of the "final" results
of the BOE audit of each year's Cost Justification Financial Statement (5),
the Contractor must post by September 30th of each Extension Year a surety
payment bond to insure the refund of any overpayments or debts the BOE
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
deems to be due and owing from the Contractor. Each bond must insure
expressly against the Contractor's inability to justify claims in each
annual Cost Justification Financial Statement to the extent of all payment
increases the BOE will make to the Contractor during each prospective
Extension Year. Each bond must be issued by a company licensed to do
business in New York State by the Superintendent of Insurance. The coverage
period of each bond must extend from September 1st of each Extension Year
until such date as the Contractor receives from the BOE "final written
notice of the results of the audit of each year's Cost Justification
Financial Statement. Each bond must extend to the BOE a claim submittal
period of at least ninety (90) days beyond the date of the Contractor's
receipt of the "final" audit result notice for the purpose of recouping any
overpayments based on the Contractor's inability to justify all or any
portion of each annual increase. Each bond must name both the BOE and the
City of New York as the insured parties. To calculate the amount of a bond,
use the following formula: the daily rate per vehicle for each contract
item (i.e., for a given Extension Year) multiplied by the total number of
vehicles for each contract item (i.e., for a given Extension Year excluding
spare and maintenance vehicles) multiplied by 180 days and multiplied again
by the percentage of payment increase as reflected either by the Consumer
Price Index for the month of May of each succeeding Extension Year or the
maximum cap for a given Extension Year, whichever is less; then, add to
this figure an amount equal to the Base Escort Daily Compensation Rate
(i.e., for a given Extension Year) multiplied by the total number of
vehicles for each contract item (i.e., for a given Extension Year excluding
spare and maintenance vehicles) multiplied by 180 days and multiplied again
by the percentage of payment increase as reflected either by the Consumer
Price Index for the month of May of each succeeding Extension Year or the
maximum cap for a given Extension Year, whichever is less.
(a) Exemption from Cost Increase Surety Bond. If the Contractor
provides a performance bond, letter of credit or a cash performance
deposit for a given prospective Extension Year, the Contractor may
forego the requirements in this Paragraph (B) (9), provided that the
Contractor submits by September 30th of each Extension Year a written
consent that the BOE may deduct such amounts of money as the BOE deems
to be properly due and owing from the Contractor from any money to be
earned by the Contractor under any Contract at any time. The verified
consent will be on a form approved and supplied
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
by the Director. A Contractor who is not required to provide a
Performance Bond or Letter of Credit because it provides 15 or fewer
vehicles pursuant to this agreement, may choose to either present the
BOE with the aforedescribed cost increase Surety Bond or consent to
have the increase in payments coming due to it withheld until the
approval of its cost justification statement.
(b) Retroactive Payments. (i) Contractors will be entitled to receive
retroactive payment increases without any interest only after the
date of approval and to the extent of such approval of the cost
justification statement, and the Contractor will not be entitled
to receive retroactive payment in one lump sum but only in
monthly installments to be determined at the Director's sole
discretion.
(ii) Should any retroactive payments promised by the foregoing
language of Paragraph 9 be deemed or found to be illegal or
otherwise improper due to being in violation of any Federal,
State, New York City or BOE law, rule, regulation, by-law or
official written policy (e.g., the BOE "Standard Operating
Procedures for Financial Management Centers"), then the BOE, its
employees or agents cease to have any and all obligations to pay
same and contractor's obligations hereunder remain unchanged.
(iii) The Contractor hereby agrees and covenants to refrain from
any litigation and to release, hold harmless and indemnify the
BOE and the City of New York (including reasonable attorney fees)
concerning any claims, actions or special proceedings by the
Contractor or any other party arising from denial(s) or
postponement(s) of any payment increase(s) or any portion(s)
thereof due to the Contractor's failure to meet the express
terms, conditions and deadlines of this paragraph 9.
(10) Adjustments to Later Payments. Based on the BOE's audit of the
Contractor's annual statements and financial records, the BOE may make any
necessary adjustments in any later payments which become due and owing to
the Contractor during a given Extension Year to compensate for any excesses
of payments over cost increases.
(11) Refund of Overpayment. The Contractor further agrees and covenants to
refund any and all additional monies due to the
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
BOE within thirty (30) days of the final audit report, if the amount of
each year's payment excess over allowable cost increase is greater than any
payments due and owing for the balance of a given Extension Year, except
where a refund is obtained from the bond herein described
(12) In the event of any apparent inconsistencies between any other
provisions of the Contract and this Article V - A, the provisions of this
Article V - A will prevail.
(C) For Contracts under Serial Nos. 7165, 7200, and 7291, there is no separate
daily rate for escort service. Therefore, during the First, Second and Third
Extension Years of Contracts under Serial Nos. 7165, 7200 and 7291, there shall
be no special or separate increases in any payment or allowance for escorts
other than that expressed herein above at Paragraph (B). Regarding only
Contracts under Serial Nos. 0070, 8108, G8805, G8891 and G9325, Article XIX
entitled, "Escorts," as amended previously, is hereby amended further so that
subparagraph A, subdivision (2), as numbered by the First Amendment Agreement,
shall read as follows for the balance of the Contract term:
"(2) However, the parties agree that, for only so long as and only to the
extent that the New York City Administrative Code requires the BOE to
utilize escorts on special education runs, the Contractor will continue to
provide such escorts and substitute escorts in addition to vehicle
operator, as hereinafter allowed, through June 30, 2000, and that:
"(a) Escort Compensation. Except for overtime, the BOE will compensate
the Contractor for each full day for each escort who provides actual
service under this Contract in an amount to be calculated in the
following manner subject to the Director's approval of all or any
portion of the Contractor's claims in each of the below described
annual Escort Cost Justification Financial Statements:
"(i) During the Fourteenth Extension Year, the "Base Escort Daily
Compensation Rate" shall be equal to ninety-eight-and-one-half
percent (98.5%) of the Base Escort Daily Compensation Rate
provided as of June 30, 1995, or such lesser amount that
represents the audited and approved decrease from the Base Escort
Daily Compensation Rate paid to the contractor during the
Thirteenth Extension Year. Also, the BOE will pay "Wage Accrual
Compensation" in the exact amount the Contractor actually paid
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
either to or for escorts during the Fourteenth Extension Year, if
any, and only when known after a BOE audit and which was required
to be paid. No contractor may receive as Wage Accrual
Compensation an amount in the aggregate which is more than ten
percent (10%) above the total reimbursed costs for wage accruals
as of June 30, 1995.
"(ii) During the Fifteenth Extension Year, the BOE will increase
the "Base Escort Daily Compensation Rate" in an amount to be
derived by application of subparagraph (b) hereinafter, or such
lesser amount that represents the audited and approved increase
over the Base Escort Daily Compensation Rate paid to the
contractor during the Fourteenth Extension Year. Also, the BOE
will pay "Wage Accrual Compensation" in the exact amount the
Contractor actually paid either to or for escorts during the
Fifteenth Extension Year, if any, and only when known after a BOE
audit and which was required to be paid. No contractor may
receive as Wage Accrual Compensation an amount in the aggregate
which is more than ten percent (10%) above the total reimbursed
costs for wage accruals as of June 30, 1996.
"(iii) During the Sixteenth Extension Year, the BOE will increase
the "Base Escort Daily Compensation Rate" in an amount to be
derived by application of subparagraph (b) hereinafter, or such
lesser amount that represents the audited and approved increase
over the Base Escort Daily Compensation Rate paid to the
contractor during the Fifteenth Extension Year. Also, the BOE
will pay "Wage Accrual Compensation" in the exact amount the
Contractor actually paid either to or for escorts during the
Sixteenth Extension Year, if any, and only when known after a BOE
audit and which was required to be paid. No contractor may
receive as Wage Accrual Compensation an amount in the aggregate
which is more than ten percent (10%) above the total reimbursed
costs for wage accruals as of June 30, 1997.
"(iv) During the Seventeenth Extension Year, the BOE will
increase the "Base Escort Daily Compensation Rate" in an amount
to be derived by application of subparagraph (b) hereinafter, or
such
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
lesser amount that represents the audited and approved increase
over the Base Escort Daily Compensation Rate paid to the
contractor during the Sixteenth Extension Year. Also, the BOE
will pay "Wage Accrual Compensation" in the exact amount the
Contractor actually paid either to or for escorts during the
Seventeenth Extension Year, if any, and only when known after a
BOE audit and which was required to be paid. No contractor may
receive as Wage Accrual Compensation an amount in the aggregate
which is more than ten percent (10%) above the total reimbursed
costs for wage accruals as of June 30, 1998.
"(v) During the Eighteenth Extension Year, the BOE will increase
the "Base Escort Daily Compensation Rate" in an amount to be
derived by application of subparagraph (b) hereinafter, or such
lesser amount that represents the audited and approved increase
over the Base Escort Daily Compensation Rate paid to the
contractor during the Seventeenth Extension Year. Also, the BOE
will pay "Wage Accrual Compensation" in the exact amount the
Contractor actually paid either to or for escorts during the
Eighteenth Extension Year, if any, and only when known after a
BOE audit and which was required to be paid. No contractor may
receive as Wage Accrual Compensation an amount in the aggregate
which is more than ten percent (10%) above the total reimbursed
costs for wage accruals as of June 30, 1999.
"(b) Annual Increase of the Base Escort Daily Compensation Rate.
Except during the Fourteenth Extension Year in which the BOE will
reduce the Base Escort Daily Compensation Rate to equal
ninety-eight-and-one-half percent (98.5%) of such rate paid as June
30, 1995 each succeeding Extension Year the BOE will augment the
amount of the Base Escort Daily Compensation Rate according to the
payment increase limits expressed in Article V - A, Paragraph (1)
(i.e., Paragraph (B)(l) above), provided the Contractor justifies such
increases, if any, through the submittal of a separate annual Escort
Cost Justification Financial Statement according to the same terms,
conditions and deadlines expressed in Article V - A, Paragraphs (3)
through (12) (i.e., Paragraphs (B) (3) through (B) (12) above). This
provision does not affect
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
payment for overtime escort services, which is governed separately at
Article XIX, Paragraph (2) (c) (i.e., Paragraph (C) (2) (c) below).
"(c) Payment for Overtime. Where the Contractor actually provides
scheduled overtime escort services due to BOE authorization, the BOE
will reimburse the Contractor for such services in the exact amount of
the costs for overtime wages and statutory fringe benefits. No
reimbursement will be permitted for occasional or episodic overtime.
"Overtime" is defined as service which exceeds eight (8) hours within
any ten (10) hour daily period. The hourly rate for overtime escort
services will not exceed one-and-one-half times the regular hourly
wage rate.
"(d) Monthly Advance Payment for Escort Services. On or about the
first school day of each calendar month, the BOB will pay an eligible
contractor in advance an amount equal to the anticipated usage of
escort service for that month, excluding overtime. For each month's
overtime claims, the BOE will pay the Contractor only after receipt
and approval of a voucher on a BOB form, which will contain such
detail as the BOE may require to confirm the Vendor's claims and which
will be subject to BOB audit.
" (i) Surety Payment Bond. To receive advance monthly payments,
the Contractor must file with the BOE by June 1st of each
Extension Year a bond in the amount of the anticipated
utilization of escort service for one (1) month. The coverage
period for each bond must be from September 1st through August
31st of each prospective year. To calculate the bond amount for
one year, use this formula: twenty (20) days multiplied by the
total number vehicles (excluding spares) multiplied again by the
Base Escort Daily Compensation Rate for a given Extension Year.
Each bond must name the BOE and the City of New York as the named
insureds. Each bond must insure against any and all acts of
commission or omission by the Contractor, any subcontractors,
subsidiaries, parent or affiliate entities or any officers,
owners, directors, employees, servants, agents, independent
contractors or any other parties which cause the failure of
proper disbursement to the intended escort beneficiaries, whether
any such party acts within or outside the scope of
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
employment or contractual performance. Bonds must be issued by a
company licensed by the Superintendent of Insurance to do
business in New York State.
"(ii) Where the BOE makes payments to the Contractor in excess of
what is properly due and owing under subparagraph (a), the BOE
may recoup such amounts from future payments to the Contractor,
request the Contractor to refund such amounts, or take whatever
other actions are necessary to retrieve excessive payments. Where
the BOE requests the Contractor to make a refund, the Contractor
will remit payment within thirty (30) days of the Contractor's
receipt of the final audit report.
"(iii) Where the Contractor elects to delegate escort services to
a subcontractor, the Contractor may direct the BOE to make
payments in the full amounts owed under subdivisions (a), (b) and
(c) or any portions thereof directly to the subcontractor. The
Contractor must make such payment directions in writing on a form
approved by the BOE.
"(e) Limitation on Wage Accruals. The BOE will compensate the
Contractor for wage accruals only if payment of such wage accruals to
escorts is mandated by an express provision to that effect in
existence prior to the execution of this Extension and Eighth
Amendment Agreement as part of a written collective bargaining
agreement between the Contractor and a union that represents the
Contractor's employees. The BOE will not recognize the establishment
of any new wage accrual packages or collective bargaining agreements
which provide for such payments if executed after this Extension and
Eighth Amendment Agreement. Moreover, the BOE will not make payments
based upon any revision of entitlement schedules even if established
before execution of this Extension and Eighth Amendment Agreement
which would increase any benefits to escorts. No enhancements of wage
accrual benefits will be at the BOE's expense either directly or
indirectly.
"(f) The Contractor must provide all of the escorts necessary to
perform all of the work covered by the Contract, including additional
and spare vehicles. The Contractor must have sufficient, qualified and
approved personnel to enable the Contractor to dispatch substitute
escorts promptly if, when and where necessary to ensure
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
continuous, uninterrupted and punctual service in each and every
instance. The Contractor must operate every vehicle for the
transportation of handicapped children in strict adherence to the
provisions of Section 19-603, Paragraphs (a) and (b) of the New York
City Administrative Code. If the law is amended during the term of
this Extension and Eighth Amendment Agreement to eliminate the further
requirement of escorts, the Contractor must cease to provide escorts
upon five (5) days notice from the BOB to that effect. After the
effective date of the notice, the BOB and the City of New York will
not be obligated to the Contractor or any other party for the
provision of escort services.
"(g) Basic, Refresher and Additional Training for Special Education
Escorts. The BOE will continue to provide basic and refresher training
for all special education escorts, including all instructional staff
and educational materials, at no cost to the Contractor. Whereupon the
BOE revises basic and/or refresher training courses to include
additional subject material and/or fields, the Contractor must
cooperate to have all escorts and substitute escorts trained in the
additional skills and responsibility, according to BOE training
schedules.
"(h) Escort Subcontractor. The Contractor may delegate performance of
escort services to an acceptable subcontractor; however, the
Contractor will remain responsible for all pertinent contractual
obligations. The Director will have sole and final discretion to
approve or disapprove at any time the Contractor's particular choice
of an initial or replacement escort subcontractor. Whereupon the BOE
requests new, updated or revised information regarding any
subcontractor, the Contractor must supply the data immediately and/or
secure the cooperation of the affected subcontractor to make full and
prompt disclosure of the requested information.
"(i) Annual List of Escorts. By August 31st of each Extension Year or
any other time as required by the Director, the Contractor must
provide a list of all escorts and substitute escorts to be utilized
for special education school bus service during the prospective school
year. The list must be on a form to be supplied by OPT and will
include, but not be limited to, the following information: the name,
social security number and date of original hire of each escort.
Whenever a
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
change occurs in the escort list, the Contractor will provide updated
information on the OPT form(s) not later than the end of the month in
which any change occurs."
(D) NO DUPLICATION OR MISALLOCATION OF COSTS. To prevent unjust enrichment
through misrepresentation or falsification of cost increase claims, the
Contractor hereby agrees, consents and covenants to abide in all respects by the
following rules for the treatment of fixed, variable or other costs utilized to
establish increased expenses from one given Extension Year to the next:
(1) Duplication of Costs. Concerning only Contracts under Serial Nos. 0070,
8108, G8805, G8891 and G9325, in the establishment of allowable cost
increases under Article V - A (see Paragraph (B), supra) and Article XIX
(see Paragraph (C), supra), the Contractor must not commingle, combine,
merge or duplicate costs in any manner or to any extent between the two
Articles, i.e., costs used to justify increased payments for vehicles and
drivers under Article V - A may not be used again to justify increases in
the Base Escort Daily Compensation Rate, and vice versa.
(2) Allocation of Costs. If the Contractor misallocates any cost item(s),
the allocation will be disallowed. Improper allocation or "misallocation"
is defined as a transgression of one or more of the following precepts:
(a) Only those of the Contractor's fixed, variable or other costs
which are directly attributable to the performance and/or
administration of BOE pupil transportation contract work will be
considered allowable expense items. Costs attributable to a
contractor's other operations, whether in the public or private
sector, will not be allowed to justify payment increases.
(b) Costs must be attributable solely to the specific group of
Contracts covered by this Extension Agreement, i.e., Contract Serial
Nos. 0070, 7165, 7200, 7291, 8108, G8805, G8891 and G9325. Expenses
allocable to BOE pupil transportation contracts other than these eight
serial numbers must not appear in any materials presented to justify
payment increases under this Extension Agreement.
(c) Costs must be attributable solely to the corporate, partnership,
sole proprietorship or other entity which constitutes the Contractor.
Expenses allocable to a parent or other affiliated entity must not
appear on the
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
Contractor's cost justification financial statement. Where employees,
offices, storage and maintenance facilities or other cost items are
shared by several affiliated or unaffiliated entities, all or some of
which hold separate BOE transportation contracts, assertions of
expense increases must reflect only those percentages of utilization
directly allocable to the claimant Contractor.
(d) Allocation of costs must be based on the number of vehicle days
and not merely the number of vehicles under contract.
(e) Such other forms of misallocation of costs as may be determined by
the BOE, the New York City Office of the Comptroller or the New York
State Education Department, in accordance with the terms and
conditions of this Contract.
E. AMENDMENTS TO PERFORMANCE SECURITY PROVISIONS.
(1) The Extension and Seventh Amendment of Contract for Special Education Pupil
Transportation Services is hereby amended at Article (E), Paragraph (2) so that
Paragraph 2 (b) of the provisions of the original Contracts, as currently
amended and now entitled, "INSURANCE AND PERFORMANCE SECURITY," shall read as
follows:
"(b) Any contractor who receives an award of contract for 16 to
25 vehicles has the following options available to assure full and
faithful performance of the Contract:
"(1) Authorize the Board of Education to retain ten percent (10%)
of each payment made to the Contractor from the first five (5)
months' payments of each year of the Contract in an interest
bearing account maintained by the New York City Office of the
Comptroller to assure full and faithful performance of the
Contract. This retainage shall be paid to the Contractor with
interest at the conclusion of each one (1) year period of full
and faithful performance of this Contract.
"(2) Provide a confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution equal in value to ten percent
(10%) of the contract value which may be reduced each month by
ten per-
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
cent (10%) of the monthly payment authorized by the Contractor to
be retained by the BOE during the Extension Year from July 1,
1995 through June 30, 1996. Whereupon at any time during this
Extension Agreement there shall be any increase(s) or decrease(s)
in the Contractor's number of contract and/or additional vehicles
beyond five percent (5%) of the Contractor's total fleet
(excluding spare and maintenance vehicles), the BOE and the
Contractor shall adjust the performance security accordingly to
maintain the level at a constant ten percent (10%) of the
contract value; and, for each instance of any increases, the
Contractor shall furnish additional performance security via
confirmed irrevocable Letter(s) of Credit from an acceptable
financial institution or written authorization of retainage
within thirty (30) days of the award of each increase in the
number of vehicles. The amounts retained shall be deposited in an
interest bearing account maintained by the New York City Office
of the Comptroller with annual reports of the amounts retained
and interest earned provided to the Contractor. This retainage
will be returned to the Contractor with interest after the
conclusion of the full and faithful performance of this Extension
Agreement, or whereupon the Contractor replaces the retainage
with a confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution in an amount equal to ten
percent (10%) of the contract value at the time of the
conversion.
"3 Provide a confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution equal in value to ten percent
(10%) of the contract value which may be reduced each month by
five percent (5%) of the monthly payment authorized by the
Contractor to be retained by the BOE during the Extension Years
of July 1, 1995 through June 30, 1996 and July 1, 1996 through
June 30, 1997. Whereupon at any time during this Extension
Agreement there shall be any increase(s) or decrease(s) in the
Contractor's number of contract and/or additional vehicles beyond
five percent (5%) of the Contractor's total fleet (excluding
spare and maintenance vehicles), the BOE and the Contractor shall
adjust the performance security accordingly
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
to maintain the level at a constant ten percent (10%) of the
contract value; and, for each instance of increase, the
Contractor shall furnish additional performance security via
confirmed irrevocable Letter(s) of Credit from an acceptable
financial institution or written authorization of retainage
within thirty (30) days of the award of each increase in the
number of vehicles. The amounts retained shall be deposited in an
interest bearing account maintained by the New York City Office
of Comptroller with annual reports of the amounts retained and
interest earned provided to the Contractor. This retainage will
be returned to the Contractor with interest after the conclusion
of the full and faithful performance of this Extension Agreement,
or whereupon the Contractor replaces such retainage with a
confirmed irrevocable Letter(s) of Credit from an acceptable
financial institution in an amount equal to ten percent (10%) of
the contract value at the time of the conversion.
"(4) Provide a confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution equal in value to ten-percent
(10%) of the contract value renewable each year at an amount
equal to ten percent (10%) of the then current value of the
Contract.
"(5) Provide any combination of cash security deposit and
confirmed irrevocable Letter(s) of Credit from an acceptable
financial institution equal to ten percent (10%) of the contract
value. Whereupon at any time during this Extension Agreement
there shall be any increase(s) or decrease(s) in the Contractor's
number of contract and/or additional vehicles beyond five percent
(5%) of the Contractor's total fleet (excluding spare and
maintenance vehicles), the BOE and the Contractor shall adjust
the performance security accordingly to maintain the level at a
constant ten percent (10%) of the contract value; and, for each
instance of increase, the Contractor shall furnish additional
performance security via confirmed irrevocable Letter(s) of
Credit from an acceptable financial institution or written
authorization for retainage within thirty (30) days of the award
of each in-
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
crease in the number of vehicles. Any cash security deposit(s)
and/or retainage shall be deposited in an interest bearing
account maintained by the New York City Office of Comptroller
with annual reports of the amounts held and interest earned
provided to the Contractor. Any cash security deposit(s) and/or
retainage will be returned to the Contractor with interest after
the full and faithful performance of this Extension Agreement or
whereupon the Contractor replaces any retainage with a confirmed
irrevocable Letter(s) of Credit from an acceptable financial
institution that brings the performance security into an amount
equal to ten percent (10%) of the contract value at the time of
conversion."
(2) The Extension and Seventh Amendment of contract for Special Education Pupil
Transportation Services is hereby amended at Article (E), Paragraph (2) so that
Paragraph 2 (c) of the provisions of the original Contracts, as currently
amended and now entitled, "INSURANCE AND PERFORMANCE SECURITY," shall read as
follows:
"(c) Any contractor who receives an award of contract for 26 or
more vehicles has the following options available to assure full and
faithful performance of the Contract:
"(1) Provide a confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution equal in value to ten percent
(10%) of the contract value which may be reduced each month by
ten percent (10%) of the monthly payment authorized by the
Contractor to be retained by the BOE during the Extension Year
from July 1, 1995 through June 30, 1996. Whereupon at any time
during this Extension Agreement there shall be any increase(s) or
decrease(s) in the Contractor's number of contract and/or
additional vehicles beyond five percent (5%) of the Contractor's
total fleet (excluding spare and maintenance vehicles), the BOE
and the Contractor shall adjust the performance security
accordingly to maintain the level at a constant ten percent (10%)
of the contract value; and, for each instance of any increases,
the Contractor shall furnish additional performance security via
confirmed irrevocable Letter(s) of Credit from an acceptable
financial institution or written autho-
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
rization of retainage within thirty (30) days of the award of
each increase in the number of vehicles. The amounts retained
shall be deposited in an interest bearing account maintained by
the New York City Office of the Comptroller with annual reports
of the amounts retained and interest earned provided to the
Contractor. This retainage will be returned to the Contractor
with interest after the conclusion of the full and faithful
performance of this Extension Agreement, or whereupon the
Contractor replaces the retainage with a confirmed irrevocable
Letter(s) of Credit from an acceptable financial institution in
an amount equal to ten percent (10%) of the contract value at the
time of the conversion.
"2 Provide a confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution equal in value to ten percent
(10%) of the contract value which may be reduced each month by
five percent (5%) of the monthly payment authorized by the
Contractor to be retained by the BOE during the Extension Years
of July 1, 1995 through June 30, 1996 and July 1, 1996 through
June 30, 1997. Whereupon at any time during this Extension
Agreement there shall be any increase(s) or decrease(s) in the
Contractor's number of contract and/or additional vehicles beyond
five percent (5%) of the Contractor's total fleet (excluding
spare and maintenance vehicles), the BOE and the Contractor shall
adjust the performance security accordingly to maintain the level
at a constant ten percent (10%) of the contract value; and, for
each instance of increase, the Contractor shall furnish
additional performance security via confirmed irrevocable
Letter(s) of Credit from an acceptable financial institution or
written authorization of retainage within thirty (30) days of the
award of each increase in the number of vehicles. The amounts
retained shall be deposited in an interest bearing account
maintained by the New York City Office of Comptroller with annual
reports of the amounts retained and interest earned provided to
the Contractor. This retainage will be returned to the Contractor
with interest after the conclusion of the full and faithful
performance of this Extension Agreement, or whereupon the
Contractor replaces
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
such retainage with a confirmed irrevocable Letter(s) of Credit
from an acceptable financial institution in an amount equal to
ten percent (10%) of the contract value at the time of the
conversion.
"(3) Provide a confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution equal in value to ten percent
(10%) of the contract value renewable each year at an amount
equal to ten percent (10%) of the then current value of the
Contract.
"(4) Provide any combination of cash security deposit and
confirmed irrevocable Letter(s) of Credit from an acceptable
financial institution equal to ten percent (10%) of the contract
value. Whereupon at any time during this Extension Agreement
there shall be any increase(s) or decrease(s) in the Contractor's
number of contract and/or additional vehicles beyond five percent
(5%) of the Contractor's total fleet (excluding spare and
maintenance vehicles), the BOE and the Contractor shall adjust
the performance security accordingly to maintain the level at a
constant ten percent (10%) of the contract value; and, for each
instance of increase, the Contractor shall furnish additional
performance security via confirmed irrevocable Letter(s) of
Credit from an acceptable financial institution or written
authorization for retainage within thirty (30) days of the award
of each increase in the number of vehicles. Any cash security
deposit(s) and/or retainage shall be deposited in an interest
bearing account maintained by the New York City Office of
Comptroller with annual reports of the amounts held and interest
earned provided to the Contractor. Any cash security deposit(s)
and/or retainage will be returned to the Contractor with interest
after the full and faithful performance of this Extension
Agreement or whereupon the Contractor replaces any retainage with
a confirmed irrevocable Letter(s) of Credit from an acceptable
financial institution that brings the performance security into
an amount equal to ten percent (10%) of the contract value at the
time of conversion."
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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(3) The Extension and Seventh Amendment of Contract for Special Education Pupil
Transportation Services is hereby amended at Article (e), Paragraph (5) so that
Paragraph 5 of the provisions of the original Contracts, as currently amended
and now entitled, INSURANCE AND PERFORMANCE SECURITY," shall read as follows:
"5. If the Director awards any additional vehicles to the
Contractor during this extension periods, making it necessary to
provide performance security for the first time or additional
performance security, then the Contractor must provide sufficient
performance security to cover all additional vehicles (excluding
spare and maintenance vehicles) within thirty (30) days of
receipt of each award. This condition shall apply to individual
or cumulative increases of a contractor's total fleet (excluding
spare and maintenance vehicles) equaling at least five (5)
vehicles or five percent (5%), whichever is greater."
(4) The Extension and Seventh Amendment of Contract for Special Education Pupil
Transportation Services is hereby amended at Article (E), Paragraph (7) so that
Paragraph 7 of the provisions of the original Contracts, as currently amended
and now entitled, "INSURANCE AND PERFORMANCE SECURITY," shall read as follows:
"7. For all performance security purposes, contractor entities
that are subject to common control as determined by the BOE based
upon an analysis of (a) ownership of the corporate, partnership,
sole proprietorship or other entity's assets, (b) coincidence of
corporate, partnership, sole proprietorship or other entity's
owners, partners, managers, officers and/or directors, and (c)
such other factors as the BOE shall determine to be relevant,
shall be deemed to be one contractor. If the BOE determines
contractor entities to be subject to common control, contractors
shall be required to provide the appropriate performance security
for the number of vehicles operated by all of the corporate
entities that are determined to be subject to common control. For
the purpose of determining common control and performance
security requirements, all BOE pupil transportation contracts
shall be considered."
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
(F) Section E of the Extension & Seventh Amendment Agreement of Contract Serial
Nos. 0070, 8107, 8108, G8805, G8891 and G9325 and is hereby amended to read
as follows:
"1. Priority in Hiring and Master Seniority Lists:
"There shall be established two industry-wide Master Seniority Lists. One
list shall be composed of all operators (drivers), mechanics, and
dispatchers and the other list shall be composed of escorts
(matrons-attendants) who were employed as of June 30, 1995, under a
contract between their employers and the Board for the transportation of
school children in the City of New York, who are furloughed or become
unemployed as a result of loss of contract or any part thereof by their
employers, or as the result of a reduction in service directed by the Board
during the term of the contract, in accordance with their date of entry
into the industry. All operators (drivers), mechanics, dispatchers and
escorts (matrons-attendants) on the Master Seniority Lists who participated
in the Division 1181 A.T.U. - New York Employees Pension Fund and Plan as
of June 30, 1995, and who do not exercise their option to withdraw from the
Fund and Plan shall continue to participate in such Pension Plan.
"Any existing contractor or individual who conducted business as a sole
proprietor, or as a member of a partnership or who held a controlling
interest in a corporation that performed service pursuant to contract
expiring in June, 1995 (contractor) shall give priority in employment on
September, 1995 or thereafter on the basis of position on the Master
Seniority List of any additional or replacement operators, mechanics and
dispatchers beyond those performing service as of June 30, 1995 consistent
with the number of employees required by the specifications of the contract
expiring June, 1995 for the number of vehicles providing service to the
Board as of June 30, 1995 to individuals from the Master Seniority List
until such list is exhausted.
"Any new contractors, i.e. those who did not provide service pursuant to
contract expiring June, 1995 (new contractor), shall give priority in
employment in September, 1995 or thereafter on the basis of seniority to
every operator (driver), mechanic and dispatcher performing service
pursuant to such contract starting from the first employee from the Master
Seniority List until such list is exhausted.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
"Should the Board determine to require the contractor to provide escort service
in addition to the operator, and in the event that all escorts
(matrons-attendants) on the Master Seniority List, who were employed as of June
30, 1995, are not employed as escorts by contractors for the beginning of
service in September of 1995, then said escorts shall be employed in order of
their position on the Master Seniority List.
"2. Compensation
"All operators (drivers), mechanics, dispatchers and escorts
(matrons-attendants) on the industry-wide Master Seniority Lists shall be
employed and paid on a full-time basis based upon the wage scale received from
prior employer under pupil transportation contracts.
"The contractor shall compensate operators (drivers), mechanics and dispatchers
and escorts (matrons-attendants) who appear on the Master Seniority Lists and
who are employed pursuant to contracts to be awarded as follows for the term of
the contract:
"(a) operators (drivers) and dispatchers at a daily rate of pay, including any
COLA, for each day of service, not less than that paid pursuant to any
applicable labor collective bargaining agreement.
"(b) mechanics at a daily rate of pay, including any COLA, for each day of
service, not less than that paid pursuant to any applicable labor
collective bargaining agreement.
"(c) escorts (matrons-attendants) at a daily rate of pay, including any COLA,
for each day of service, not less than that paid pursuant to any applicable
labor collective bargaining agreement.
"Such operators (drivers) and escorts (matrons-attendants) shall be available
for extended service, without additional compensation, which shall be defined as
performance within the particular job category (i.e. drivers as drivers, and
escorts (matrons-attendants) as escorts (matrons-attendants) ) within the eight
(8) hour work day within the spread (8 within 10
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
hours) provided for in the collective bargaining agreement covering said
employees, if any.
"3. Welfare
"Contributions by the contractor for providing welfare benefits to operators
(drivers), mechanics, dispatchers and escorts (matrons-attendants), in the event
the contractor employs escorts, who appear on the Master Seniority List shall be
no less than $410 per employee per month on a twelve month basis during each
year of the contract.
"4. Pensions
"The contractor shall sign an agreement with Division 1181 A.T.U. - New York
Employees Pension Fund and Plan to participate in such plan on behalf of all
operators (drivers), mechanics, dispatchers and escorts (matrons-attendants), in
the event the contractor employs escorts who appear on the Master Seniority
Lists and who participated in the Fund and Plan as of June 30, 1995. This
requirement shall not be interpreted to require a contractor to enter into a
collective bargaining agreement with the union nor shall it prohibit the
contractor from entering into a collective bargaining agreement with the union.
The contractor shall file a copy of the executed agreement with the Trustees of
the Fund and Plan to participate in said Fund and Plan and with the Secretary of
the Board with the acknowledgment of the Notice of Award.
"The contractor shall contribute $48.15 per week per operator (driver), mechanic
and dispatcher on the Master Seniority List, and participating in the Plan and
Fund as of June 30, 1995, for forty weeks each year for the term of the
contract, or such greater amount as may be required, based on contributions by
contractors on behalf of the majority of employees participating in the Fund and
Plan pursuant to a collective bargaining agreement with Local 1181 - 1061. The
contractor shall withhold $23.00 a week from each operator, mechanic and
dispatcher participating in said Fund and Plan for forty weeks each year for the
term of the contract, or such greater amount as may be required based on
contributions of a majority of the operators (drivers), mechanics or dispatchers
contributing to the Fund and Plan.
"Such contractors who provide escort service, shall contribute $44.15 per week
per escort (matron-attendant) for forty weeks each year for the term of the
contract, or such greater amount
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
as may be required based on contributions by contractors on behalf of the
majority of employees participating in the Fund and Plan pursuant to a
collective bargaining agreement with Local 1181 - 1061. The contractor shall
withhold $18.00 per week from each escort, (matron-attendant) participating in
said Fund and Plan and Fund for forty weeks each year for the term of the
contract, or such greater amount as may be required based on contributions of
the majority of the escorts contributing to the Fund and Plan.
"In connection with employees who are on the Master Seniority List and who do
not participate in the Local 1181 - 1061 Fund and Plan, they shall not be
required to participate in the Plan but shall participate in the collective
bargaining agreement, if any, of their employer.
"The contractor shall pay all such amounts to the Fund and Plan within seven
days after the end of each payroll period.
"5. Enforcement
"In addition to any other remedies provided in the contract between the Board
and the contractor, such as default and/or termination, if the contractor is
found to be in violation of the foregoing employee protection provisions
regarding the payment of wages, welfare benefit contributions, pension
contributions, or other aspects of compensation or benefits, then the Director
of the Office of Pupil Transportation, within thirty (30) days of written
notice, shall withhold the appropriate amounts from any payments due to the
contractor and pay them directly to the applicable union for the benefit of the
employees affected, to the Division 1181 A.T.U. - New York Employees Pension
Fund or other applicable union pension fund for the benefit of the employees
affected or to the appropriate Welfare Fund for the benefit of the employees
affected. If the affected employees are not affiliated with any union, then the
Board shall investigate on their behalf allegations of employee protection
provision violations regarding the payment of wages, welfare benefit or health
insurance contributions, pension or similar savings plan contributions, or other
aspects of compensation or benefits. Upon a finding of any such violation(s),
the Director of the Office of Pupil Transportation shall withhold the
appropriate amounts from any payments due to the Contractor and pay them
directly to the employees or to such health insurance companies or other
institutions as appropriate.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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"In the event any contractor willfully fails to comply, the Board of Education
shall act to cancel such contractor's contract; provided, however, that the
Board shall not be required to act so as to cause a disruption of service.
"6. Contractors providing a total of five vehicles or less pursuant to all
contracts with the Board for the transportation of pupils shall not be subject
to the foregoing provisions with respect to operators (drivers), mechanics and
dispatchers.
"Escorts (matron-attendants) shall not be included in the exclusion provided in
this paragraph six (6).
"7. For the purposes of this section, corporate bidders who are subject to
common control as determined by the Board based upon analysis of:
"(a) ownership of the corporations' assets,
"(b) coincidence of corporate officers and directors, and
"(c) such other factors as the Board determines to be relevant, are deemed to be
one bidder.
"8. The Board may in its sole and unfettered discretion change any date which
determines employee protected status, employer status or any other status, which
is contained in any employee protection provisions of the Contract. The Master
Seniority Lists will be updated to June 30, 1995 as permitted in accordance with
pre-existing collective bargaining agreements executed prior to the date of
execution of this Contract. Furthermore, the rates quoted herein may not be
reflective of current labor rates in effect. The contractor should pay special
attention to the fact that many employees on the Master Seniority Lists have
been in the industry for many years and therefore may be entitled to substantial
wages, pension and welfare benefits and wage accruals.
"The date for inclusion on the Master Seniority List is hereby updated to the
last school day in June, 1995 as permitted in accordance with pre-existing
collective bargaining agreement executed prior to the dare of this Extension
Agreement and Amendment Agreement."
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(G) MISCELLANEOUS VEHICLE SPECIFICATIONS AND OPERATIONAL AMENDMENTS. Any terms,
conditions and specifications to the contrary notwithstanding, the Contract is
hereby amended as follows:
(1) Federal Safety Standards. All vehicles used to perform this Contract
must meet all of the 1977 Federal Safety Standards, as reflected in Title
49 of the Code of Federal Regulations, Part 571, and particularly, Standard
Nos. 105, 111, 220, 221, 222, and 301 (the "1977 Standards") . Violation of
this provision to any extent will be grounds for a determination of
contractual default.
(2) Age and Condition of Vehicles. The vehicles affected by this provision
include all originally contracted vehicles, (i.e., "contract vehicles") and
all additional and spare vehicles. Except for the age of vehicles, nothing
contained in this Paragraph (2) and/or any of its subparagraphs shall be
deemed or construed in any manner or to any extent whatsoever to act and/or
operate in abrogation or derogation of any other individual or cumulative
provisions of the Contract, as heretofore amended and extended.
(a) The Contractor shall furnish service, maintenance and repairs of
all vehicles used in the performance of this contract in compliance
with (i) all manufacturer's guidelines for maintenance, service and
repairs, (ii) all Federal and State of New York statutes, regulations,
rules, guidelines and policies applicable to service, maintenance and
repair of school bus vehicles, (iii) all New York State Department of
Transportation and New York State Department of Motor Vehicles
policies, rules and regulations; and (iii) Federal and State
regulations applicable to maintenance and repair of school bus
vehicles, and (iv) all New York State Education Department, policies,
rules and regulations applicable to service, maintenance and repair of
school bus vehicles. The Contractor shall maintain and, upon demand,
shall present to the Director contemporaneously kept, accurate,
complete, orderly and written records of the school bus vehicle,
maintenance and repair activities performed in accordance with the
foregoing.
(b) The Director shall have the right to disapprove any vehicles under
this Contract and to require the Contractor to furnish an acceptable
replacement vehicles in the event that the Director determines in
his/her reasonable judgement any such vehicle(s) to be unfit for
service.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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(c) The Contractor may continue to use the vehicles that are in
service as of the date of the execution of this Extension and
Amendment Agreement throughout the term of said Extension and
Amendment Agreement, provided each such vehicle is in compliance with
subparagraph (a) and (b) hereof. However, any new vehicles that shall
be placed into service during the term of this Extension and Amendment
Agreement shall be not more than five years old at the time such
vehicle is placed into service. Vehicles transferred among contractors
that are subject to common control shall not be considered as new
vehicles under the preceding sentence. In his/her reasonable
discretion, the Director may allow the continued use of any given
contractor's vehicles that are in service as of the date of the
execution of this Extension and Amendment Agreement upon an assignment
of the Contract, if and to the extent any such assignment shall be
approved in accordance with the terms and conditions of the Contract,
as heretofore amended and extended.
(3) List of Vehicles. Before September of each Extension Year or at any
other time stated by the Director, the Contractor must provide a list of
all vehicles, including spare and maintenance vehicles, to be operated
during each Extension Year. Each list must show for every vehicle the year,
make, type, seating capacity, registration number, bus number, license
plate number, owner, lessee (if applicable), and the expiration date of the
New York State Department of Transportation approval sticker. The
information must be provided on forms approved and supplied by the BOE, and
the Contractor must supply a copy of the title or certificate of
registration for each listed vehicle. Whenever any changes occur in the
list of vehicles, the Contractor must update the list within ten (10)
business days. In addition, the Contractor must provide at the same time
written assurance that all vehicles are equipped with two-way radios.
(4) Fax Machines. All Contractors must provide to the Director an available
number where documents pertaining to pupil transportation may be faxed.
(5) Railroad Crossings. Each vehicle used to perform this Extension
Agreement must come to a full stop before crossing the track(s) of any
railroad and, before crossing any state highway.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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(6) New Laws. Rules. Regulations. By-Laws or School Bus Safety Features.
whereupon any Federal, State, Local or Board of Education laws, rules,
regulations or by-laws are enacted, updated, revised, amended or otherwise
changed in any manner which require the Contractor to undertake any new or
revised procedures affecting school bus personnel or operations (i.e.,
school bus personnel drug or alcohol testing, driver licensing or training
procedures, etc.) or the introduction onto vehicles of new safety features
or any other equipment (i.e., increased seat-back padding, back-up beepers,
stop arms, safety sensors, etc.), the Contractor must comply promptly. The
Contractor must assume the full cost of compliance with any new or revised
driver, escort and/or operational procedures or for the purchase and
installation of new safety features or other equipment in compliance with
any such changes and will not be entitled to any additional remuneration
from the BOE except as expressly permitted by law.
(7) Use of Vehicles. Article XII entitled "Use of Vehicles" in Contract
Serial Nos. 0070, 8108, G8805, G8891 and G9325 and Article 35 entitled "Use
of Vehicles" in Contract Serial Nos. 7165, 7200 and 7291, are hereby
amended by the addition of sixth and seventh unnumbered paragraphs at the
end of each such Article to read as follows:
"In addition to all other uses of vehicles prescribed in pupil
transportation contracts, the Director shall have the right, power and
authority to require the Contractor to provide vehicles during the hours
between the transportation of pupils to school for the morning sessions and
the pick-up of pupils for homeward bound trips for service to other mayoral
and/or non-mayoral City of New York agencies and to any other public
agencies and/or private organizations; as determined by the Director. While
not previously invoked to any great extent during the period of the
Contract, the provisions of the third unnumbered paragraph contained in
this Article XII are still in full force and effect as stated herein. The
Contractor shall be entitled to payment for such services as stipulated in
this contract. At no time shall such service interfere with the timely
transportation of pupils to and from school."
(H) MISCELLANEOUS FINANCIAL AMENDMENTS. Any express terms, conditions and
specifications to the contrary notwithstanding, the Contract is hereby amended
as follows:
(1) Further Amendments. The Contractor hereby agrees and covenants to
execute any further amendment to the Contract
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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that the New York State Education Department requires to secure the
Department's approval of this Extension and Eighth Amendment Agreement and
to maintain the continuity of funding.
(2) Insurance Cost Increase Provision. Whereupon the Legislature amends the
State Education Law to allow the Board of Education to obtain State funding
to reimburse the Contractor for any amount of demonstrated and approved
increases in the cost of insurance, this Contract will be deemed
automatically amended to allow such reimbursement according to the exact
terms of any such statutory provision.
(a) Interim Insurance Provision. For only so long as the State
Education Law does not provide expressly for reimbursement of vehicle
insurance and/or escort health and welfare insurance cost increases,
the Board of Education agrees and consents for a limited time to a
partial or complete suspension of the application of the two percent
(2%) prompt payment discount, but only to the for Contract Serial Nos.
0070, 8108, G8805, G8891 and G9325, and only to the extent of the
Contractor's annual proof of eligibility.
(b) To be eligible for a partial or complete suspension of the two
percent (2%) prompt payment discount for each Extension Year regarding
vehicle insurance rate increases, the Contractor must meet eligibility
conditions and adhere to rules, procedures and definitions for the
annual submittal of an "Insurance Rate Increase Claim Statement," as
such are expressed in Appendix B. The said eligibility conditions,
rules, procedures and definitions for partial or complete suspension
of the two percent (2%) prompt payment discount for each Extension
Year are hereby incorporated by this reference into this Extension and
Amendment Agreement as if set out herein in their entirety, and a copy
of the said eligibility conditions, rules, procedures and definitions
is hereto annexed as Appendix B.
(c) Documentation of Escort Health & Welfare Insurance Rate Increases.
To be eligible for a partial or complete suspension of the two percent
(2%) prompt payment discount for each Extension Year regarding escort
health and welfare insurance rate increases, the Contractor must
document to the satisfaction of the Director the amount of escort
health and welfare insurance cost and increases actually experienced.
The base year for the escort
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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health and welfare insurance calculation is January 1, 1990 through
December 31, 1990.
(i) During the Fourteenth Extension Year, the Contractor must
show the difference between all premiums paid for required
coverage for the period from January 1, 1995 through December 31,
1995 and the amount paid for such coverage for the period from
January 1, 1990 through December 31, 1990. For a complete
suspension of the discount, the difference between the two (2)
years must be equal to or greater than the value of the two
percent (2%) discount for each year as adjusted by the annual
percentage of increase provided above in Paragraph (B) of this
Extension Agreement and as calculated on a monthly basis at the
coverage levels prescribed by the BOE during the balance of the
contract period. To the extent that the difference is between
zero percent (0%) to two percent (2%), there will be a
proportionate reduction in the suspension of the discount.
(ii) During the Fifteenth Extension Year, the Contractor must
show the difference between all premiums paid for required
coverage for the period from January 1, 1996 through December 31,
1996 and the amount paid for such coverage for the period from
January 1, 1990 through December 31, 1990. For a complete
suspension of the discount, the difference between the two (2)
years must be equal to or greater than the value of the two
percent (2%) discount for each year as adjusted by the annual
percentage of increase provided above in Paragraph (B) of this
Extension Agreement and as calculated on a monthly basis at the
coverage levels prescribed by the BOE during the balance of the
contract period. To the extent that the difference is between
zero percent (0%) to two percent (2%), there will be a
proportionate reduction in the suspension of the discount.
(iii) During the Sixteenth Extension Year, the Contractor must
show the difference between all premiums paid for required
coverage for the period from January 1, 1997 through December 31,
1997 and the amount paid for such coverage for the period from
January 1, 1990 through December 31, 1990.
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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For a complete suspension of the discount, the difference between
the two (2) years must be equal to or greater than the value of
the two percent (2%) discount for each year as adjusted by the
annual percentage of increase provided above in Paragraph (B) of
this Extension Agreement and as calculated on a monthly basis at
the coverage levels prescribed by the BOE during the balance of
the contract period. To the extent that the difference is between
zero percent (0%) to two percent (2%), there will be a
proportionate reduction in the suspension of the discount.
(iv) During the Seventeenth Extension Year, the Contractor must
show the difference between all premiums paid for required
coverage for the period from January 1, 1998 through December 31,
1998 and the amount paid for such coverage for the period from
January 1, 1990 through December 31, 1990. For a complete
suspension of the discount, the difference between the two (2)
years must be equal to or greater than the value of the two
percent (2%) discount for each year as adjusted by the annual
percentage of increase provided above in Paragraph (B) of this
Extension Agreement and as calculated on a monthly basis at the
coverage levels prescribed by the BOE during the balance of the
contract period. To the extent that the difference is between
zero percent (0%) to two percent (2%), there will be a
proportionate reduction in the suspension of the discount.
(v) During the Eighteenth Extension Year, the Contractor must
show the difference between all premiums paid for required
coverage for the period from January 1, 1999 through December 31,
1999 and the amount paid for such coverage for the period from
January 1, 1990 through December 31, 1990. For a complete
suspension of the discount, the difference between the two (2)
years must be equal to or greater than the value of the two
percent (2%) discount for each year as adjusted by the annual
percentage of increase provided above in Paragraph (B) of this
Extension Agreement and as calculated on a monthly basis at the
coverage levels prescribed by the BOE during the balance of the
contract period. To the extent that the difference is
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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between zero percent (0%) to two percent (2%), there will be a
proportionate reduction in the suspension of the discount.
(d) Payment Deadline for Application of Prompt Payment Discount. The
Contractor consents, agrees and stipulates that the two percent (2%)
prompt payment discount will apply to payments for all services
rendered pursuant to this Contract which the BOE makes within six (6)
business days after thirty (30) days have elapsed from the date of the
BOE's receipt of the Contractor's monthly invoice.
(e) Audit and Recovery of Overpayment. Each Insurance Cost
Justification Financial Statement will be subject to audit and
approval by the BOE. As above provided, the BOE will have the right,
power and authority to recover any amounts paid to the Contractor
which the BOE determines to be unjustified either by deductions from
any later payments which become due and owing to the Contractor.
(g) Limitation on Discount Suspension. The Contractor consents, agrees
and stipulates that the suspension of the prompt payment discount will
survive only so long as the insurance crisis continues or until the
effective date of any amendment of the State Education Law as
mentioned above at Paragraph (H) (3) (a). The BOE will have the right,
power and authority to cease the suspension of this discount when the
insurance crisis abates, as determined at the Director's sole
discretion.
(h) Contractor's Use of Revenue. The Contractor hereby agrees,
covenants and warrants that any funds which the Contractor derives
because of the suspension of the two percent (2%) prompt payment
discount will be applied only to the payment of insurance premiums and
will be used for no other purpose. Whereupon the BOE discovers that
the Contractor will have used such funds for other purposes, the
Contractor will be disqualified permanently from any future suspension
of the prompt payment discount.
(i) Limitation on Actions. If, after the BOE will have determined the
Contractor not to be entitled to further suspension of the prompt
payment discount, there arises litigation at any future time whereby
the Contractor attempts to secure the prompt payment discount
suspension in perpetuity, the Contractor consents, agrees, stipu-
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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lates and covenants not to use or attempt to use this document in any
manner to establish that the BOE or the City of New York must suspend
the prompt payment discount or pay any amounts thereunder to the
Contractor.
(3) Fingerprint Processing and Identification Badges. The Contractor hereby
agrees, consents and covenants that at the discretion of the Director, all
employees of the Contractor including but not limited to principals,
shareholders, stockholders, managers, dispatchers, office personnel, and
mechanics, will be subject to a fingerprint check. The Contractor also,
hereby agrees, consents and covenants that the costs to process
fingerprints, criminal background research, other documents and
identification badges for any of the above mentioned will not be borne by
the Board of Education. Whereupon OPT assumes the responsibility to process
fingerprints, criminal background research, other documents and
identification badges, the Contractor agrees and covenants to be bound by
rules and procedures prescribed by the Director whereby the BOE will defray
the associated administrative costs.
(4) Vacillation in the Number of Contract and/or Additional Vehicles during
Extension Periods. Article XIII entitled, "Increase or Decrease in the
Number of Vehicles," is henceforth amended as follows:
(a) The current Paragraph C is henceforth redesignated as Paragraph D.
A new Paragraph C is added immediately below the current Paragraph B.
The new paragraph shall reads as follows:
C. Increases and/or Decreases in the Number of Vehicles during
Extension Periods. The Board of Education and the Contractor
hereby acknowledge and stipulate that the number of vehicles
required to serve pupil transportation needs may change often
during each school year due to changes in pupil population,
default or voluntary surrender of a Contract or changes in policy
or directives adopted by the BOE, the City of New York, the State
Department and/or Financial Control Board, over the term of an
Extension Agreement.
"If the Director eliminates any vehicle(s) from the number
originally awarded to the Contractor and later offers again a
vehicle(s) of the same type(s)
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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and geographical service area(s) due to any resumed need, the
Contractor shall be entitled to restoration up to and including
the number of vehicles of the same type(s) and geographical
service area(s) originally awarded pursuant to the procedures
specified above in Paragraph B.
"The Director shall offer any 'additional' vehicle(s) first to
the contractor with the lowest 'current' weighted average daily
rate per vehicle and the daily rate per escort in the relevant
contractual item, pursuant to the procedures specified above in
Paragraph B. Additional vehicles will be offered first to the
Contractor will the lowest current daily weighted average plus
the daily rate per escort. The ranking will include both those
Contractors who are under an extension agreement and those
Contractors who are under the terms of Contracts for similar
work.
"The term "lowest weighted average daily rate per vehicle," plus
the daily rate per escort, which is used to determine the order
in which contractors are affected by both the decrease provisions
of Paragraph A and the increase provisions of Paragraph B
concerning both original vehicles and all additional vehicles,
shall reflect the current rates paid by the Board of Education at
the time of an offer.
(5) Pending Litigation. (a) Pertaining only to contracts under Serial Nos.
0070, 8108, G8805, G8891, and G9325, the contractor does hereby acknowledge
that he/she is fully aware and apprised of pending litigation cases
concerning cost justification which have been consolidated under the
caption of A.C. Transportation. Inc., et. al., v. Board of Education of
City of New York. et al., Index No. 30841/92 (5. Ct. New York County) (the
"litigation"). Subject to the final judicial disposition or settlement of
the litigation, the Contractor does hereby consent, agree and covenant that
the daily rate(s) per vehicle to be paid by the BOE to the Contractor
during the period of the 1995-2000 Extension and Amendment Agreement shall
be the daily rate(s) per vehicle approved by the BOE Office of Auditor
General and as first decreased and thereafter augmented each Extension Year
pursuant to provisions contained herein (the "OAG Rate"), unless the
Contractor shall make a written request to the Director to
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
be paid the daily rate(s) per vehicle based on such rate(s) paid during the
Eleventh Extension Year, as augmented during the Twelfth and Thirteenth
Extension Years, decreased during the Fourteenth Extension Year, and
thereafter augmented during the Fifteenth, Sixteenth, Seventeenth and
Eighteenth Extension Years pursuant to provisions contained herein (the
"Contractor's Rate").
(b) To be effective, the Contractor's written request to be paid at a
higher daily rate(s) per vehicle must state that the Contractor does
consent, agree and covenant to be bound by the terms and conditions of
any settlement(s) or final judicial disposition(s) in these pending
litigation cases. To be effective, the Contractor's written request
must also state that the Contractor shall provide collateral annually
in a form and amount acceptable to the BOE Office of Auditor General
sufficient to secure the difference(s) each Extension Year between the
OAG Rate and the Contractor's Rate (the "Annual Rate Difference"),
i.e., the difference(s) between the daily rate(s) per vehicle in fact
paid during the Eleventh Extension Year, as augmented during the
Twelfth and Thirteenth Extension Years, decreased during the
Fourteenth, and augmented during the Fifteenth, Sixteenth, Seventeenth
and Eighteenth Extension Years pursuant to provisions contained
herein, and such daily rate(s) per vehicle for which has been or shall
have been determined to be appropriate by the BOE Office of Auditor
General for the Twelfth and Thirteenth Extension Years, decreased
during the Fourteenth Extension Years, and augmented during the
Fifteenth, Sixteenth, Seventeenth and Eighteenth Extension Years
pursuant to provisions contained herein.
(c) The BOE shall be required to surrender or release such collateral
to the Contractor only on the following conditions: (i) upon the
settlement(s) or final judicial disposition(s) of the said litigation
cases and upon the Contractor's payment to the BOE of any amounts
agreed or determined to be due and owing from the Contractor to the
BOE; and, (ii) if and to the extent that a higher daily rate(s) per
vehicle than that approved by the BOE Office of Auditor General is
sustained upon a final judicial disposition(s) of the litigation.
(d) The following forms of collateral are deemed to be acceptable: (i)
if the BOE withheld retainage as perfor-
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mance security from the Contractor during the Thirteenth Extension
Year and the estimated cumulative performance security retainage
amounts for the Fourteenth, Fifteenth, Sixteenth, Seventeenth and
Eighteenth Extension Years are equal to or greater than the minimum
collateral amounts estimated by the BOE Office of Auditor General for
the Fourteenth, Fifteenth, Sixteenth and Seventhteenth and Eighteenth
Extension Years, the Contractor may use such retainage for the
Fourteenth, Fifteenth, Sixteenth, Seventeenth and Eighteenth Extension
Years as collateral, provided the Contractor furnishes a written
agreement each year to the Director that such retainage shall be
pledged as collateral against any rate reduction(s) and overpayment
recovery by the BOE; (ii) if the Contractor's monthly service payments
plus performance security retainage for the Fourteenth, Fifteenth,
Sixteenth, Seventeenth and Eighteenth Extension Years are equal to or
greater than the minimum collateral amounts estimated by the BOE
Office of Auditor General for Fourteenth, Fifteenth, Sixteenth,
Seventeenth and Eighteenth Extension Years, the Contractor shall
provide to the Director a written agreement to receive monthly service
payments on or about the twenty-fifth (25th) day following each month
of service with no surrender by the BOE of the Two Percent (2%) Prompt
Payment Discount if payment shall be delayed by more than thirty (30)
days after the BOE's receipt of each monthly invoice, as provided in
Article V of the Contract; (iii) the Contractor shall provide a
confirmed irrevocable Letter of Credit from an acceptable financial
institution for the benefit of the BOE, renewed annually, in an amount
minimally equal to the collateral deemed necessary by the BOE Office
of the Auditor General; (iv) a surety payment bond on which the BOE
shall appear as the insured, issued by an insurer licensed to do
business in the State of New York, renewed annually, in an amount
minimally equal to the collateral deemed necessary by the BOE Office
of Auditor General; (v) the Contractor shall furnish title vested in
the BOE to a frozen bank account to be held by the BOE in escrow in an
amount minimally equal to the collateral deemed necessary by the BOE
Office of Auditor General; or, (vi) in the event that the Contractor
does not elect one of the foregoing forms of collateral provided for
in this subparagraph (d), the Contractor's daily rate(s) per vehicle
shall be reduced to a level(s) approved by the BOE Office of the
Auditor General, the disputed difference(s) shall be held by the BOE
in escrow for the
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Contractor in an interest bearing account maintained by the
Comptroller of the City of New York pending the outcome of the
litigation, and such amount shall be payable to the Contractor in
accordance with subparagraph (c) hereof.
(e) If the Contractor elects under Article (G), Paragraph (5) (d) (vi)
above to receive the reduced daily rate(s) per vehicle during the
1995-96 Extension Year, then the amount to be escrowed shall be the
difference(s) between 98.5% of the higher daily rate(s) and 98.5% of
the reduced daily rate(s) per vehicle to be paid to the Contractor
during the 1995-96 Extension Year shall be 98.5% of the reduced daily
rate(s).
(f) If litigation is unresolved prior to June of the Fourteenth,
Fifteenth, Sixteenth, Seventeenth and Eighteenth Extension Years, the
BOE shall retain from the Contractor's monthly service payment(s) for
June of each Extension Year any underpayment collateral for the year
then ended, as determined by the BOE Office of Auditor General. The
BOE shall hold such retainage in escrow for the Contractor in an
interest bearing account maintained by the Comptroller of the City of
New York pending the outcome of the litigation.
(I) GENERAL MISCELLANEOUS AMENDMENTS. Any express terms, conditions and
specifications to the contrary notwithstanding, the Contract is hereby amended
as follows:
(1) Cancellation. (a) General Terms and Conditions Section 7 entitled,
"Cancellation," is amended so that the Director may seek to have the
Contractor declared by the Chancellor's Board of Review to be in default of
the Contract either as a whole or merely in one or more "items" of the
Contract, i.e., the Contract is divisible into its several "items." Upon a
finding of default, the Chancellor's Board of Review will have the right,
power and authority to terminate the whole Contract or merely one or more
contractual "items."
(b) General Terms and Conditions Section 7 entitled, "Cancellation," is
amended by the addition of a new paragraph "D" to read as follows: "In the
event of significant or repeated safety violations due to acts of
commission or omission by the Contractor or by its employees, which result
from the Contractor's failure to conduct its operations in accordance with
good practices in the pupil transportation business, the BOE
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EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
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shall have the right to terminate the contract upon thirty days advance
written notice to the Contractor, unless the Contractor can establish to
the Director's reasonable satisfaction that the Contractor's record of
safety will thereafter be satisfactory in accordance with good industry
practices. For purposes of this provision, "safety violations" shall mean
significant or repeated violation of safety laws and/or regulations of the
United States Department of Transportation, the New York State Department
of Transportation, The New York City Department of Transportation, and the
BOE Office of Pupil Transportation, provided that prior to terminating this
agreement for repeated safety violations the BOE Office of Pupil
Transportation shall provide the contractor with notice and an opportunity
to cure."
(c) General Terms and Conditions Section 7 entitled, "Cancellation," is
amended by the addition of a new paragraph "E" to read as follows: "In the
event of an indictment of the Contractor, any of its principals, officers,
or management employees on the basis of acts of commission or omission
involving or affecting the provision of pupil transportation services under
any BOE pupil transportation contract(s) including, but not limited to,
acts of commission or omission which excessively increase BOE costs of
doing business, the BOE will have the right, at the Director's discretion,
either to terminate the Contract upon thirty days advance written notice to
the Contractor or to require the Contractor to obtain the employment
termination and ownership divestiture of the indicted party. Before a final
decision on either alternative disposition, the Director will afford the
Contractor a personal meeting to allow for a full, open discussion of
relevant issues."
(d) General Terms and Conditions Section 7 entitled, "Cancellation," is
amended by the addition of a new paragraph "F" to read as follows: "Nothing
herein shall otherwise limit the rights and remedies of the Director as set
forth in this contract."
(2) Standards of Professional Conduct and Performance. If the Director
promulgates new standards of professional conduct and/or minimum levels of
competency or performance for drivers and escorts, the Contractor must
ensure that all affected employees are made fully aware of, and act in full
compliance with, such new standards. In addition, the Contractor must
certify in the manner prescribed by the Director that each and
50
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
every driver, escort and other affected employee has received written
notification of such new standards.
(3) Advertising on Vehicles. (a) The Contractor hereby agrees and warrants
to cooperate fully and completely with the Board of Education regarding the
placement of advertisements on the two (2) exterior sides of all vehicles,
including all spare vehicles. The Contractor shall not be responsible for
any costs, labor or other work associated with the installation, repair,
maintenance, replacement and/or removal of advertisements or the repair
and/or maintenance of school bus vehicles in relation thereto. In addition,
the Contractor must not cause, incur or allow any costs, expenses or other
liabilities on its own part concerning anything whatsoever directly or
indirectly related to the placement, repair, maintenance and/or removal of
advertisements on school bus vehicles or the repair or maintenance of
school bus vehicles in connection with such advertisements, and the
Contractor shall not demand, nor be entitled to, any compensation from the
Board of Education for any such costs, expenses or other liabilities.
(b) The Contractor shall allow the Board or the Board's agents, employees,
contractors, subcontractors or other representatives to affix any and all
such advertisements to the Contractor's vehicles by any means the Board
selects including, but not limited to, metal and/or plastic frames and/or
direct application, adhesive decals, provided, that the BOE or its agent,
contractor and/or subcontractor shall be responsible for the cost to
restore the vehicle bodies with respect to any damage upon removal. The
Contractor shall cooperate fully to provide access to all of its vehicles
under the Contract, including spare vehicles, at such times when they are
not in use for Board transportation service including the early morning,
midday and evening hours, as the Board or the Board's agents, employees,
contractors, subcontractors or other representatives shall schedule with at
least three business days advance notice. Whereupon any advertisement or
any component part thereof becomes damaged to any extent or destroyed, for
any reason whatsoever, and/or whereupon any vehicle sustains damage or
requires repairs or maintenance due to any advertisements or any component
part thereof, the Contractor shall notify the Board or the Board's
designated agents, employees, contractors, subcontractors or other
representatives within twenty-four (24) hours by calling an "(800)"
telephone number which the Board shall supply to the Contractor. It the
Contractor is dissatisfied for any reason
51
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
with any vehicle repairs or maintenance supplied by the Board or the
Board's designated agents, employees, contractors, subcontractors or other
representatives, the Contractor shall submit any such claim or dispute in
writing to the Director of the Office of Pupil Transportation for
resolution whose decision shall be final and binding upon the Contractor,
except for administrative appeal to the Chancellor's Board of Review
pursuant to Section 8.3 of the Board of Education's Bylaws.
(c) The Contractor hereby consents, acknowledges and agrees that any and
all revenues or other consideration derived from the placement of
advertisements on the Contractor's vehicles shall be and remain forever the
sole and exclusive property of the Board of Education and not the
Contractor. The Contractor further agrees to follow in every respect any
and all rules, regulations, requirements, specifications or procedures
concerning school bus advertisements that the Board may, in its sole
discretion, promulgate in the Board's "SCHOOL BUS CONTRACTOR'S MANUAL OF
PROCEDURES AND REQUIREMENTS," as currently or hereafter updated, revised or
otherwise changed.
(4) Incorporation of More Favorable Terms. As an inducement to the
Contractor to execute this Extension and Eighth Amendment Agreement prior
to April 15, 1994, the BOE agrees that, if there are any subsequent
extension agreements with other contractors for any handicapped student
transportation originally awarded under Serial Nos. 0070, 8108, G8805,
G8891 and G9325 which contains terms more favorable to the contractors, the
BOE will agree to amend the Contract further to incorporate those same more
favorable terms.
(5) Unlawful or Unenforceable Provisions Void. Whereupon this Extension and
Eighth Amendment Agreement is found to contain any unlawful or
unenforceable provision(s) which is not essential to continued performance
or which is not material to the intent and inducement of the parties, such
provision(s) will be deemed of no effect and will, upon application of
either party, be stricken from this document without thereafter affecting
the binding force of the remainder of this Extension and Eighth Amendment
Agreement.
(6) Approval and Execution. This Extension and Eighth Amendment Agreement
will not become binding or effective upon the Board of Education until the
following series of events will have transpired: (a) approval as to form by
the BOE Office of Legal Services; (b) authorization by a resolution duly
adopted
52
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
by a vote of the Board of Education which will be deemed to be incorporated
herein; (c) execution on behalf of the Board of Education by the Chancellor
or his/her designee; (d) approval by the New York State Commissioner of
Education; (e) initial registration with Comptroller and re-registration
with the Comptroller each year thereafter; and, (f) initial approval and
subsequent annual re-approval by the New York State Financial Control Board
pursuant to the New York State Emergency Act for the City of New York, the
rules and regulations of said Board so require.
(7) Implementation of the State Education Law. This Extension and Eighth
Amendment Agreement is intended to implement the provisions of the New York
State Education Law, Section 305, Subdivision 14 and the attendant
regulations of the New York State Commissioner of Education. Whereupon
there exist any inconsistency between the Board of Education and the State
Education Department concerning this statutory provision, the attendant
regulations of the Commissioner of Education and/or any formula(e) for
reimbursement of funds, this Extension and Eighth Amendment Agreement will
be deemed amended automatically to conform to the interpretation of the
State Education Department but only for the protection of the Board of
Education's interests and only at the Board of Education's option.
(8) The Comptroller will endorse hereon during the term of this Contract
his/her certificates that there are appropriations or funds applicable
thereto sufficient to pay the estimated expense to execute and operate this
Contract during the respective fiscal periods.
(9) As used herein, the singular will include the plural and vice versa.
(10) All other provisions of the Contract as amended by the 1984 Extension
Agreement and Fourth Amendment Agreement, by the 1987 Extension Agreement
and Fifth Amendment Agreement, and the 1990 Extension and Sixth Amendment
Agreement, except those provisions herein noted and revised, will remain in
full force and effect.
(11) The Contractor does hereby consent and agree to cooperate with the BOE
concerning the elimination of the Contractor's payment of Federal, State
and local sales, excise and use taxes on purchases, leases and other
transfers which the Contractor makes, effects, causes or allows in the
performance of the Contract. The particular rules and
53
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
procedures concerning the elimination of such taxes shall be promulgated in
the Board's "SCHOOL BUS CONTRACTOR'S MANUAL OF PROCEDURES AND
REQUIREMENTS," a draft copy of which shall be circulated to the contractors
for comment before final promulgation. Such rules and procedures may
include, but are not necessarily limited to, the following: (A) the
Contractor's use of the Board's tax exempt status when making, effecting,
causing or allowing purchases, leases and other transfers in the
performance of the Contract (the Board shall furnish the Contractor with
appropriate forms and procedures), provided that the Contractor shall
remain the purchases or lessee of its vehicles, goods, commodities,
supplies, equipment and so forth; and, (B) the Contractor's cooperation
through the production of documentary evidence, as specified by the Board,
with any and all attempts by the Board to seek and obtain refunds of any
and all Federal, State and local excise, sales and use taxes which the
Contractor has paid during the applicable statutory period of limitation
for goods, fuel, commodities, services, leases, etc. in the performance of
the Contract. Whereupon the Board requires the Contractor to produce
documentary evidence in the course of any attempt by the Board to seek and
obtain such refunds of taxes, the Board shall pay the Contractor, as
consideration for such cooperation, twenty percent (20%) of any refund
amount attributable to the Contractor's purchases, leases and other
transfers, but only when and after such refund amounts are actually
received by the Board.
54
<PAGE>
IN WITNESS WHEREOF the parties have executed this Extension Agreement and Eighth
Amendment Agreement in septuplicate the year and day below written.
For the Board For the Contractor
/s/ [ILLEGIBLE] for Amboy Bus Company, Inc.
- ----------------------------- -----------------------------------------
CHANCELLOR (Print full name above)
46-81 Metropolitan Avenue
-----------------------------------------
Ridgewood, NY 11385
-----------------------------------------
(Print address above)
BY: /s/ Michael P. Coneys BY: /s/ Michael Gatto
------------------------- ---------------------------------
Approved as to Form Sec. Tres
(Sign in ink above - Print
name and title below)
Michael Gatto
-------------------------------------
Sec Tres
Michael P. Coneys
- -----------------------------
OFFICE OF LEGAL SERVICES
DATED: 6/19/96
Subscribed and sworn to me this 26
day of June, 1996
/s/ Marilyn C. Wise
-----------------------------------------
Notary Public
MARILYN C. WISE
Notary Public, State of New York
No. 41-6834893
Qualified in Queens County
Commission Expires 10/31/97
55
<PAGE>
IN WITNESS WHEREOF the parties have executed this Extension Agreement and Eighth
Amendment Agreement in septuplicate the year and day below written.
For the Board For the Contractor
/s/ [ILLEGIBLE] for Staten Island Bus Co.
- ----------------------------- -----------------------------------------
CHANCELLOR (Print full name above)
7 North Street
-----------------------------------------
Staten Island, New York 10302
-----------------------------------------
(Print address above)
BY: /s/ Michael P. Coneys BY: /s/ Michael Gatto
------------------------- ---------------------------------
Approved as to Form (Sign in ink above - Print
name and title below)
Michael Gatto
-------------------------------------
Sec Tres
Michael P. Coneys
- -----------------------------
OFFICE OF LEGAL SERVICES
DATED June 19, 1996
Subscribed and sworn to me this 26
day of June, 1996
/s/ Marilyn C. Wise
-----------------------------------------
Notary Public
MARILYN C. WISE
Notary Public, State of New York
No. 41-4836893
Qualified in Queens County
Commission Expires 10/31/97
55
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
APPENDIX A
Only for Contracts under Serial Nos. 0070, 8108, G8805, G8891 and G9325, where a
contractor meets conditions of eligibility may allowable cost increases accrued
during the period of the Twelfth to Fourteenth Extension Years be carried
forward "below-the-line" to supplement those cost increases which are used to
justify an augmentation of the daily rate per vehicle for the Sixteenth and
Seventeenth Extension Years. In addition, only for Contracts under Serial Nos.
0070, 8108, G8805, G8891 and G9325 where a contractor meets conditions of
eligibility may allowable cost increases accrued the during the period of
Fifteenth to Sixteenth Extension Years be carried forward "below-the-line" to
supplement those cost increases which are used to justify an augmentation of the
daily rate per vehicle for the Seventeenth Extension Year. To be eligible to
carry forward such cost increases, a contractor must provide annually a cost
increase comparison between the Twelfth and Fourteenth Extension Years and the
Fifteenth and Sixteenth Extension Years (when appropriate that identifies all
items of cost increase and, separately, the percentage of cost increase if any,
to be carried forward and applied to a given subsequent base year. The base year
is the year immediately preceding the given subsequent extension year to which
the cost increases from the Twelfth to Fourteenth Extension Years and/or the
Fifteenth to Sixteenth Extension Years are to be applied. The Board's Auditor
General may prescribe additional eligibility conditions as deemed appropriate in
his/her sole discretion. The term "below-the-line" is defined to mean that cost
increases from the periods of the Twelfth to Fourteenth and Fifteenth to
Sixteenth Extension Years, which are carried forward, are deemed as allocated to
the period of accrual, i.e., the Twelfth to Fourteenth and Fifteenth to
Sixteenth Extension Years, respectively, and not to the subsequent extension
year(s) to which they are carried forward and applied both supplementally and
"below-the-line" as prior cost increases that have not as yet been absorbed by
the lesser of an annual Consumer Price Index increment or a fixed annual rate
augmentation cap. Once a cost increase item accrued during the Twelfth to
Fourteenth or Fifteenth to Sixteenth Extension Years has been carried forward
and applied "below-the-line" to a given base year, it may not be used again in
any later base year.
i
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
Appendix B
(1) Eligibility for Discount Suspension. For contracts under Serial Nos. 0070,
8108, G8805, G8891 and G9325 to be eligible for a suspension of the two percent
(2%) prompt payment discount, to which the BOE is otherwise entitled under the
provisions of the Contract, the Contractor must demonstrate in an annual
"Vehicle Insurance Rate Increase Claim Statement" that increases of insurance
premium rates have created unreasonable financial burdens. Each annual "Vehicle
Insurance Rate Increase Claim Statement" will be subject to approval at the sole
discretion of the Director in consultation with the BOE Office of Auditor
General. Eligibility for vehicle insurance also rests on the Contractor's
showing that the insurance premiums which reflect annual increases are
sufficient to provide minimum levels of coverage required pursuant to the BOE
Resolution of September 6, 1985, as amended, and the Contract, as amended. The
extent of the discount suspension, if any, is governed by the provisions
immediately below at Paragraphs (L) (2) and (3).
(2) The term "Vehicle Insurance Rate Increase Claim Statement" is defined as a
written accountant's review report prepared by an independent Certified Public
Accountant ("CPA") or Public Accountant ("PA") licensed by the State of New
York. Each such review report must state (a) that a review was performed in
accordance with the standards of the American Institute of Certified Public
Accountants ("AICPA"), (b) that the information and data contained in the
"Vehicle Insurance Rate Increase Claim Statement" are the representations of the
Contractors management, and (c) that it describes the nature of the review as
distinct from an audit. Each such review report must furnish at least the
limited assurance that, based upon the review, the CPA/PA is not aware of any
material modifications that should be made to the "Vehicle Insurance Rate
Increase Claim Statement" in order for it to conform to the AICPA's generally
accepted accounting principles. Contractor's who have not had a CPA audited
report performed for tax, securities or other operation-wide purpose within two
(2) years of the commencement date of this Extension and Amendment Agreement
must submit a certified and audited "Vehicle Insurance Rate Increase Claim
Statement" prepared by an independent CPA for the 1995-96 Extension Year.
Furthermore, the CPA or PA who prepares each "Vehicle Insurance Rate Increase
Claim Statement" and each review report must state that he/she has studied the
cost justification manual supplied by the BOE and has applied the standards
contained therein for
i
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
the development of the "Vehicle Insurance Rate Increase Claim Statement." Still
further, the CPA or PA must have no interest in this Contract, the Contractor or
any of the Contractor's parent, subsidiary or other affiliated entities and must
so certify in writing. The "Vehicle Insurance Rate Increase Claim Statement"
shall utilize form prescribed by the Director as approved by the State Education
Department.
(3) Documentation of Vehicle Insurance Rate Increases. The Contractor must
submit a copy of the full insurance policy and a copy of all invoices from the
insurance carrier(s) noting the full amount of premiums which are the subject of
any claims. During the 1995-96 and 1996-97 Extension Years, the base year for
the vehicle insurance calculation is January 1, 1991, through December 31, 1991.
During the 1997-98, 1998-99 and 1999-2000 Extension Years, the base year for the
vehicle insurance calculation is January 1, 1994, through December 31, 1994.
(a) During the Fourteenth Extension Year, the Contractor must show the
difference between all premiums paid for required coverage for the
period from January 1, 1995 through December 31, 1995 and the amount
paid for such coverage for the period from January 1, 1994 through
December 31, 1994. For a complete suspension of the discount, the
difference between the two (2) years must be equal to or greater than
the value of the two percent (2%) discount for each year as adjusted
by the annual percentage of increase provided above in Paragraph (B)
of this Extension Agreement and as calculated on a monthly basis at
the coverage levels prescribed by the BOE during the balance of the
contract period. To the extent that the difference is between zero
percent (0%) to two percent (2%), there will be a proportionate
reduction in the suspension of the discount.
(b) During the Fifteenth Extension Year, the Contractor must show the
difference between all premiums paid for required coverage for the
period from January 1, 1996 through December 31, 1996 and the amount
paid for such coverage for the period from January 1, 1994 through
December 31, 1994. For a complete suspension of the discount, the
difference between the two (2) years must be equal to or greater than
the value of the two percent (2%)
ii
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
discount for each year as adjusted by the annual percentage of
increase provided above in Paragraph (B) of this Extension Agreement
and as calculated on a monthly basis at the coverage levels prescribed
by the BOE during the balance of the contract period. To the extent
that the difference is between zero percent (0%) to two percent (2%),
there will be a proportionate reduction in the suspension of the
discount.
(c) During the Sixteenth Extension Year, the Contractor must show the
difference between all premiums paid for required coverage for the
period from January 1, 1997 through December 31, 1997 and the amount
paid for such coverage for the period from January 1, 1994 through
December 31, 1994. For a complete suspension of the discount, the
difference between the two (2) years must be equal to or greater than
the value of the two percent (2%) discount for each year as adjusted
by the annual percentage of increase provided above in Paragraph (B)
of this Extension Agreement and as calculated on a monthly basis at
the coverage levels prescribed by the BOE during the balance of the
contract period. To the extent that the difference is between zero
percent (0%) to two percent (2%), there will be a proportionate
reduction in the suspension of the discount.
(d) During the Seventeenth Extension Year, the Contractor must show
the difference between all premiums paid for required coverage for the
period from January 1, 1998 through December 31, 1998 and the amount
paid for such coverage for the period from January 1, 1994 through
December 31, 1994. For a complete suspension of the discount, the
difference between the two (2) years must be equal to or greater than
the value of the two percent (2%) discount for each year as adjusted
by the annual percentage of increase provided above in Paragraph (B)
of this Extension Agreement and as calculated on a monthly basis at
the coverage levels prescribed by the BOE during the balance of the
contract period. To the extent that the difference is between zero
percent (0%) to two percent (2%), there will be a proportionate
reduction in the suspension of the discount.
iii
<PAGE>
EXTENSION AND EIGHTH AMENDMENT OF CONTRACT
FOR SPECIAL EDUCATION PUPIL TRANSPORTATION SERVICES
(e) During the Eighteenth Extension Year, the Contractor must show the
difference between all premiums paid for required coverage for the
period from January 1, 1999 through December 31, 1999 and the amount
paid for such coverage for the period from January 1, 1994 through
December 31, 1994. For a complete suspension of the discount, the
difference between the two (2) years must be equal to or greater than
the value of the two percent (2%) discount for each year as adjusted
by the annual percentage of increase provided above in Paragraph (B)
of this Extension Agreement and as calculated on a monthly basis at
the coverage levels prescribed by the BOE during the balance of the
contract period. To the extent that the difference is between zero
percent (0%) to two percent (2%), there will be a proportionate
reduction in the suspension of the discount.
iv
<PAGE>
Exhibit 10.15
SERIAL NO. 9888
BOARD OF EDUCATION [LOGO] CITY OF NEW YORK
CONTRACT PROPOSAL
Sealed bids will be received by the Directors of the Bureau of Supplies of the
Board of Education of the City of New York, at her office, room 513, 44-36
Vernon Blvd., Long Island City, New York 11101
Until 10:00 AM, on Thursday, February 13, 1986.
Bids will be publicly opened and read at 11:00 AM on February 13, 1986 in the
Auditorium of Willim C. Bryant High School, 48-10 31st Avenue, Long Island City,
New York 11103
FOR THE TRANSPORTATION OF OPEN ENROLLMENT PUPILS AND PUPILS ATTENDING REGULAR
CLASSES IN PUBLIC AND NON-PUBLIC SCHOOL IN THE CITY OF NEW YORK THE PERIOD FROM
SEPTEMBER 1986 THROUGH JUNE 1991 INCLUSIVE.
________________________________________________________________________________
1. Name of Bidder ___________________________________________________________
Address of Bidder ________________________________________________________
2. Page Number(s) Containing Bid Prices _____________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
IMPORTANT
NO-BID RESPONSE FORM
IT IS NECESSARY FOR THE BIDDERS WHO ARE SUBMITTING BIDS ON THE PRODUCT(S) AND/OR
SERVICES SPECIFIED HEREIN TO RETURN THIS FORM.
FAILURE OF NON-BIDDERS TO COMPLETE AND RETURN THIS FORM WILL RESULT IN THEIR
AUTOMATICALLY BEING DROPPED FROM OUR BIDDERS' LIST FOR THE PRODUCT(S) AND/OR
SERVICES SPECIFIED HEREIN.
The New York City Board of Education is committed to programs and policies that
will result in the procurement of supplies, equipment and services that meet the
quality standards required by our educational institutions at the lowest
possible prices consistent with those standards.
An important aspect of achieving this goal is to promote competitive bidding
among as great a number of qualified bidders as possible.
However, the preparation and mailing of Bid Request Packages is time-consuming
and expensive. In instances where bidders fail to respond, or notify the Board
of Education of their future intentions, the preparation and mailing of the Bid
Request Package represents an unnecessary expense to the Board of Education.
All bidders who respond with a "No Bid" response, or choose not to bid, are
requested to provide the information requested below and return this form, in
the envelope provided, in time for the bid opening. FAILURE TO RETURN THIS
COMPLETED FORM WILL RESULT IN THEIR AUTOMATICALLY BEING DROPPED FROM OUR
BIDDER'S LIST FOR THE PRODUCT(S) AND/OR SERVICES SPECIFIED HEREIN. To be
reinstated on the bidder's list the bidder must forward a written request for
consideration which will be reviewed by the Board of Education.
________________________________________________________________________________
REASONS FOR NOT BIDDING AT THIS TIME: _________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
DO YOU WISH TO RECEIVE BID REQUESTS FOR THIS PARTICULAR PRODUCT OR SERVICE IN
THE FUTURE? ( ) YES ( ) No
*BIDDER'S NAME AND ADDRESS: ____________________________________________________
________________________________________________________________________________
SIGNED: _______________________ TITLE: _________________ DATE: _________________
BID SERIAL NO.: 9888
----
*PLEASE CHECK HERE ( ) IF THIS ADDRESS IS A CORRECTION OF THE MAILING ADDRESS TO
WHICH THIS BID PROPOSAL WAS ORIGINALLY MAILED.
(ii)
<PAGE>
Serial No. 9888
TABLE OF CONTENTS
CONTRACT FOR THE TRANSPORTATION OF OPEN ENROLLMENT PUPILS AND PUPILS ATTENDING
REGULAR CLASSES IN PUBLIC AND NON-PUBLIC SCHOOLS IN THE CITY OF NEW YORK FOR THE
PERIOD FROM SEPTEMBER 1986 THROUGH JUNE 1991.
PAGE
General Instructions for Bidders and Bid .............................. 1
1. Form to be Used ................................................... 1
2. Presentation of Bid ............................................... 1
3. Bid Opening ....................................................... 1
4. Bid Deposit or Bid Bond ........................................... 1
5. Late Bids ......................................................... 2
6. Identical Bids .................................................... 2
7. Responsive Bids ................................................... 2
8. Rejection of Bids ................................................. 2
9. Withdrawal of Bid ................................................. 2
10. Verification ...................................................... 3
11. Quotation ......................................................... 3
12. Additional Information ............................................ 3
13. Equal Employment Opportunities .................................... 4
14. Ability to Perform ................................................ 4
15. Financial Statement ............................................... 5
16. Equipment ......................................................... 5
17. Insurance ......................................................... 6
18. Performance Bonds ................................................. 7
19. Cost Factor Form .................................................. 10
20. Award ............................................................. 10
21. Notice of Award ................................................... 10
22. Return of Bid Deposit ............................................. 11
23. Routes ............................................................ 11
24. Time of Sessions .................................................. 11
Bid Certification ..................................................... 12
Individual Verification and Firm or Partnership Verification .......... 15a
Corporate Verification ................................................ 15b
Cost Factor Form ...................................................... 16
(iii)
<PAGE>
Serial No. 9888
SCHEDUlE OF ITEMS, SPECIFICATIONS AND BID BLANK FOR THE TRANSPORTATION OF PUPILS
FOR THE PERIOD FROM SEPTEMBER 1986 THROUGH JUNE 1991.
PAGE
25. Intent and Scope ................................................. 19
26. Period of Contract ............................................... 19
27. Number of Days of Service ........................................ 19
28.A Period of Operation .............................................. 20
28.B Period of Operation - Field Trips ................................ 20
29. Payment .......................................................... 21
30. Items ............................................................ 22
31. Transportation of Pupils ......................................... 22
32. Schedule of Vehicles ............................................. 26
33. Vehicle Specifications ........................................... 26
34. Vehicle Safety Requirements ...................................... 28
35. Spare Vehicles and Vehicle Performance Monitoring ................ 29
36. Use of Vehicles .................................................. 31
37. Increase or Decrease in the Number of Vehicles ................... 32
38. Facilities and Maintenance ....................................... 34
39. Gasoline ......................................................... 34
40. Records to be Transmitted ........................................ 34
41. Vehicle Operator Standards ....................................... 35
42. Operational Supervision .......................................... 37
43. Audit of Invoices and Financial Records .......................... 37
44. Liquidated Damages ............................................... 37
45. Employee Protection Provisions ................................... 43
46. Price Certification .............................................. 46
47. Schedule of Items and Bid Blanks ................................. 47
List of Combination Items and Bid Blanks ......................... 48A-48U
Terms and Conditions .................................................. 49
1. Definitions .................................................. 49
2. Subject Matter ............................................... 51
3. Captions ..................................................... 51
4. Interpretation ............................................... 51
5. Modifications ................................................ 52
6. Compliance with Laws ......................................... 52
7. Worker's Compensation ........................................ 52
8. Unlawful Provisions Void ..................................... 52
9. Necessary Approvals .......................................... 52
10. Religious Activity Prohibited ................................ 54
11. Political Activity Prohibited ................................ 54
12. No Personal Liability ........................................ 55
13. Prevention of Delay, Suspension or Strikes ................... 55
14. Inspectors and/or Administrative Personnel ................... 55
(iv)
<PAGE>
Serial No. 9888
15. Rejection of Vehicles ........................................ 56
16. No Extra Compensation ........................................ 56
17. Invoices and Payments ........................................ 56
18. Cancellation of Funding ...................................... 56
19. No Estoppel .................................................. 57
20. Prior Contractors ............................................ 57
21. Acceptance of Final Payment .................................. 57
22. Claims - Limitation of ....................................... 58
23. Notices ...................................................... 58
24. Waivers ...................................................... 58
25. Cancellation ................................................. 58
26. Investigations ............................................... 59
27. Reports, Inspections and Maintenance of Records .............. 62
28. Non-Assignment of Contract ................................... 63
29. Transfer of Corporate Stock .................................. 63
30. Contractor's Staff ........................................... 64
31. Confidentiality of Records ................................... 64
32. Testimony .................................................... 64
33. Indemnification .............................................. 65
34. Conflict of Interest Prohibited .............................. 65
35. Antitrust Clauses ............................................ 65
36. Merger ....................................................... 66
37. Participation in an International Boycott .................... 66
38. Discrimination ............................................... 66
39. Equal Employment Opportunity Requirements for Non-Construction
Contractors, Vendors and Suppliers ........................... 68
40. Supervision .................................................. 74
41. Reserved Rights .............................................. 74
42. Choice of Law, Consent to Jurisdiction and Venue ............. 74
43. Bidders Anti-Apartheid and Export Administration Act and
Arms Export Control Act Provision ............................ 75
Acknowledgment by an Individual .............................. 77
Acknowledgment by a Corporation .............................. 78
Acknowledgment by a Partnership .............................. 78
Performance Bond ................................................. 80
(v)
<PAGE>
Serial No. 9888
BOARD OF EDUCATION
CITY OF NEW YORK
PROPOSAL FOR BIDS
FOR THE TRANSPORTATION OF OPEN ENROLLMENT PUPILS AND PUPILS ATTENDING REGULAR
CLASSES IN PUBLIC AND NON-PUBLIC SCHOOLS IN THE CITY OF NEW YORK
FOR THE PERIOD FROM SEPTEMBER 1986 THROUGH JUNE 1991
(SERIAL No. 9888)
GENERAL INSTRUCTIONS FOR BIDDERS AND BID
NOTICE: The attention of the bidder is particularly called to the fact that
unless the bid is made in strict conformity with the directions given in this
proposal as provided for herein, the bid may be rejected.
1. FORM TO BE USED
Bidder Must submit its bid on the blank forms included herein, which set forth
the schedule of items, quantities, specifications and form of Contract.
2. PRESENTATION OF BID
The person, firm or corporation making a bid shall furnish such bid in a sealed
envelope to the Director of the Bureau of Supplies or her designated
representative at the place herein mentioned on or before the day and time
herein named, and the envelope shall be endorsed on the face thereof with the
name of the person, firm or corporation making such bid, the date of its
presentation and the title of the services for which such bid is made. All bids
once submitted become the property of the Board of Education and may not be
returned, except for late bids as noted in Section 5.
3. BID OPENING
At the time and place herein stated, the bids received will be publicly opened
and read by the Director of the Bureau of Supplies or her duly designated
representative. The Board of Education reserves the right to waive any
informalities in a bid if it is desired to be in the best interests of the Board
to do so.
4. BID DEPOSIT OR BID BOND
Every bid shall be accompanied by a bid bond in the full amount of the bid or by
a deposit in the amount of $300.00 per vehicle for each vehicle in all items
bid. The deposit shall consist of a certified check upon a state or national
bank or trust company signed by a duly authorized officer thereof, drawn to the
order of the Comptroller of the City of New York.
The bid deposit shall be enclosed in a sealed envelope within the envelope
containing the bid. Receipt for the bid deposit will not be given, as bids will
be publicly opened and read, and the amount of bid deposits publicly announced
at the time of the opening of bids.
<PAGE>
Serial No. 9888
5. LATE BIDS
Bids which arrive after the time stated for the opening of bids cannot be
accepted. Bids sent by mail are sent at the risk of the bidder, and will not be
considered if they arrive after the time stated for the bid opening.
6. IDENTICAL BIDS
In cases where two or more responsible bidders have submitted identical bids as
to price, the Board will award the Contract pursuant to Board policy, by public
drawing. The Board may, in its discretion reject all bids and readvertise for
new bids.
7. RESPONSIVE BIDS
Bidders are advised that a qualified, conditional or unbalanced bid, (i.e. some
prices grossly inflated and others incredibly low), or one at variance with any
provision of the Contract documents or one which fails to meet any requirement
thereof may be rejected.
8. REJECTION OF BIDS
The Board of Education reserves the right to reject any or all bids that do not
conform to the bid requirements for ability to perform, financial statements,
bidder responsibility, vehicle information, insurance, and performance bonds.
9. WITHDRAWAL OF BID
A. 1. After the opening of bids, a request by a bidder to the Board of
Education for consent to the withdrawal of its bid because of error
made by said bidder, will be considered only under the following
terms and conditions:
a. Request to withdraw bid must be in writing, addressed to the
Director of the Bureau of Supplies and must give reasons for
the request.
b. Request must be sent by certified mail and must be post-marked
not later than 48 hours following the opening of bids.
c. All requests will be referred to the Board of Review.
d. Contractors requesting consent to the withdrawal of bids shall
appear and testify before the Board of Review and shall make
available to the Board of Review all work sheets, summary
sheets, and other data requested by the Board of Review as
pertinent to its inquiry. Failure to appear or to make
available data as requested by the Board of Review will result
in refusal of consent to the withdrawal of bids.
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<PAGE>
Serial No. 9888
e. After the Board of Review has considered a request by a bidder
to withdraw its bid after an award has been made by the Board
of Education, the Board of Education may grant such request in
any case which it deems just and proper, but such request
shall be made and such consent to withdraw shall be made and
such consent to withdraw shall be accepted by the bidder upon
the express conditions that said bidder shall be excluded from
bidding again on the readvertisement of bids for the same item
or proposal. Should any bidder request the withdrawal of more
than one bid in any twelve month period, the bidder shall be
disqualified from bidding on Board of Education work for a
period of one (1) year from the date of the second request.
B. 1. If the Contract award is not made within forty-five days after
the date of bid opening, a bidder may withdraw its bid, provided
such withdrawal is made prior to a Contract award. Such withdrawal
must be in writing and copies shall be submitted to both the
Secretary of the Board of Education and the Director of the Bureau
of Supplies.
2. A withdrawal of bid pursuant to this paragraph is not subject to
paragraph "A" above.
10. VERIFICATION
Each bid shall be verified by the oath signed in writing by the party or parties
making it, that the several matters stated therein are in all respects true. If
the bidder is a corporation, the verification shall be made by an officer of
such corporation with knowledge of the facts and having authority to make such a
sworn statement.
11. QUOTATION
The bidder shall insert the prices at which it proposes to furnish vehicles for
each item in the schedules herein contained as well as all other information
required on the bid blank.
12. ADDITIONAL INFORMATION
Further information, interpretation or clarification relative to the terms or
conditions of the Contract shall be requested in writing, prior to the
submission of the bid, from the Director or his or her designee. Such request
must be received a minimum of 10 working days prior to the date of bid opening.
Any response by the Director will be issued in writing prior to bid opening and
mailed to all bidders appearing on the bidder's list maintained by the Bureau of
Supplies and all other interested parties who have requested a copy of the bid
document.
3
<PAGE>
Serial No. 9888
In addition, the Office of Pupil Transportation (OPT) maintains, in the regular
course of business, a bulletin board located in the OPT Bureau of Contractual
and Regulatory Affairs, 28-11 Queens Plaza North, L.I.C., N.Y. 11101, 3rd floor,
room 303, which is open for public inspection to all persons during regular
Board business hours, (9 AM to 5 PM - Monday through Friday) where, in addition
to all mailings of answers to written inquiries, said responses of the Director
will be posted and available for inspection. Posting of the response at the OPT
will constitute notice regardless of individual receipt of a copy of the
Director's response.
13. EQUAL EMPLOYMENT OPPORTUNITIES
The particular attention of bidders is called to the section entitled "Equal
Employment Opportunities and Practices" on Pages 68 through 74 of the Terms and
Conditions. The provisions and terms therein will be strictly enforced by the
Board of Education. It is recommended that you contact the Director of the
Office of Equal Opportunity, Room 641, 110 Livingston Street, Brooklyn, N.Y.
11201 for forms and other information that said office would require in the
event of possible consideration of award to your company.
14. ABILITY TO PERFORM
Each bidder shall furnish evidence as to its financial ability, prior
experience, past performance, current and past business and contractual
associations, ability to perform, facilities, equipment, majority stockholders,
officers and owners. The foregoing evidence shall include but not be limited to
the following:
(a) Three (3) letters of reference, from three former or present
individuals, agencies or organizations to which you have
provided service, on letterhead, related to the level and
quality of service provided to those individuals, agencies, or
organizations. Letters from family members and those parties
having a financial interest in the contract are unacceptable.
(b) List and description of all local, state and federal contracts
related to the provision of transportation services currently
in force and to which the bidder was a party within the last
five years, including the name of the agency involved, annual
amount of contract and nature of contract.
(c) Description of any investigation, and/or litigation involving
a city, state, or federal agency as well as a private
individual, partnership or corporation, within the past three
years.
No award will be made to a bidder who shall fail to submit evidence, setting
forth the facts required to be set forth, or to a bidder whose statements set
4
<PAGE>
Serial No. 9888
forth in such evidence are found to be untrue. Any statement or declaration made
by the bidder which shall be found to be untrue will be sufficient cause for
rejecting its bid and forfeiting its bid deposit to the Board. The Director will
determine whether the evidence of ability to perform is satisfactory and will
recommend awards only when such evidence is deemed satisfactory, and reserves
the right to reject any bid where after investigation and evaluation the
Director determines that the evidence of the bidder's ability to perform is not
satisfactory.
15. FINANCIAL STATEMENT
The bidder must submit with its bid a balance sheet and profit and loss
statement of its operations for the past three annual tax periods or the number
of tax years (must be indicated) for which the bidder has been in business. The
balance sheet and profit loss statement must be certified by an independent
Certified Public Accountant licensed by the State of New York, and the
individual, firm, or corporation employed to prepare the financial statements
must have no interests in the bid, and must so certify. Each bidder shall submit
a statement under oath disclosing and clearly identifying all its stockholders
owning 5% or more of the outstanding equity, its officers, partners, creditors,
and every person, firm or corporation who has any interest directly or
indirectly in the bid or the bidder at the time the bid is submitted; and shall
report to the Director any change in control or ownership during the period of
this Contract within 5 days. If the bidder has not been in business within the
past three (3) years, the bidder shall submit a satisfactory financial statement
certified by an independent Certified Public Accountant as described above and
affidavits outlining its qualifications to perform satisfactorily.
Bidders who have an existing transportation contract with the Board of Education
and have a financial statement on file must also resubmit a financial statement.
16. EQUIPMENT
A. Each bidder, including those which currently have contracts with the
Board, must submit with its bid the following data if such information is
available at the time of bid, in connection with each vehicle intended to
be used for transportation of pupils:
1. Make, year of manufacture and registration number of each vehicle.
2. Vehicle number and plate number of each vehicle.
3. Pupil seating capacity & vehicle type.
5
<PAGE>
Serial No. 9888
4. Name of owner of each vehicle.
5. Expiration date of the State Department of Transportation
Certificate.
B. The bidder shall supply satisfactory evidence that it will have the
required type and number of vehicles prior to the beginning of the
Contract period or beginning of service. Such evidence may be a signed
statement on letterhead, from an acceptable vehicle manufacturer, dealer,
or rental corporation to the effect that it will furnish the required type
and number of vehicles. If the vehicles are leased or rented, the vehicle
operator (driver) cannot be the owner.
C. A successful bidder must provide this data with reference to each vehicle
being furnished and used for the transportation of pupils under the
Contract both at the inception of the Contract and for any additional
vehicle acquired thereafter. The successful bidder must also inform the
Board of Education of any vehicle withdrawn from service or replaced
during the life of the Contract.
17. INSURANCE
The bidder must submit with its bid, certifications from insurers acceptable to
the Board that said insurers will furnish public liability and property damage
insurance to the bidder. The policies shall be filed with the Director with a
copy of the Acknowledgement of the Notice of Award at the same time said
acknowledgement is submitted to the Secretary of the Board of Education, and
shall name the Board of Education and City of New York as additional insureds.
The foregoing certifications and policies must be issued by a company licensed
by the Superintendent of Insurance of the State of New York to do business in
New York. The insurance shall remain in force at all times during the life of
this Contract. Renewals shall be filed with the Director at least 30 days prior
to the expiration of the current policy. The required minimum limits of coverage
are as follows:
1. Public Liability for bodily injury, including death shall be in the
amount of $500,000.00 for each person and $5,000,000.00 for each
occurrence.
2. Property damage coverage shall be in the amount of $50,000.00 to
cover the claim of one person and $100,000.00 to cover the claim of
two or more people for each accident.
The Contractor shall also maintain during the life of this Contract such
additional insurance policies necessary to comply with applicable laws,
ordinances or regulations governing the performance of the work, and/or cover
any additional vehicles which may be required during the life of this Contract.
6
<PAGE>
Serial No. 9888
The Board retains the right to modify the minimum limits of public liability and
property damage coverage required under this Contract by a duly approved
Resolution of the Board. Should the limits of public liability be increased
there shall be no additional compensation. Should the limits of public liability
be reduced the Board will be entitled to a credit for any savings to the
contractor in premiums, if any.
If the vehicles to be used in the performance of this contract are not owned by
the bidder, the insurance certificate must be endorsed to include the bidder as
well as the Board of Education and the City of New York, as named insureds.
Insurance certificates and policies reflecting coverage for only the vehicle
owner, who is not the bidder, are not acceptable.
18. PERFORMANCE BOND
1. The bidder shall also, where required, submit with its bid, certifications
from acceptable insurers that said insurers will furnish a performance
bond. Said certifications and each bond must be issued by a company
licensed by the Superintendent of Insurance of the State of New York to do
business in New York. Failure of the bidder to obtain certification as
required, will cause the bid to be rejected. Performance Bonds for each
year of the Contract must be submitted in the manner prescribed herein.
The bidder's attention is drawn to the provision requiring the surety's
performance to begin within 20 days following a default of the Contract.
The amount of the performance bond, when required, for the first year of
the Contract shall be one hundred and eighty times the daily rate per
vehicle for all vehicles for which the Contract is awarded. This
performance bond shall guarantee the full and faithful performance for the
first year of the Contract as may be awarded to bidder.
By way of example:
25 Vehicles x $220.00 x 180 = $990,000.00
The initial performance bond shall be filed with the Director with a copy
of the acknowledgement of the Notice of Award at the same time said
acknowledgement is submitted to the Secretary of the Board of Education.
Thereafter the contractor shall provide an equal and identical bond
guaranteeing performance for each additional year beyond the operation of
the first year of said Contract to be filed with the Director by April 1,
1987, April 1, 1988, April 1, 1989, April 1, 1990, for the succeeding
year.
Failure of the contractor to obtain the bond guaranteeing performance as
required herein on or before April 1, as stated above, shall be deemed
sufficient cause for the cancellation of the balance of the Contract.
7
<PAGE>
Serial No. 9888
In the event that this Contract is extended after its initial term, as
provided for in Section 305.14 of the State Education Law, the amount of
the performance bond shall be adjusted to reflect any increases in the
daily rate paid to a Contractor during the term of the extension.
Any late filing of a Performance Bond renewal will be cause for the
assessment of Liquidated Damages for each day after April 1, that the bond
is not submitted.
2. Performance Bonds and Assurance of Faithful Performance
(a) Any bidder awarded a Contract authorizes the Board to deduct from
any receivables due the Contractor under this or any other contract
any losses and liquidated damages sustained by the Board for the
contractor's failure to perform; and authorizes the Board to retain
the June payments in 1987, 1988, 1989 and 1990 to guarantee
contractor performance for each succeeding year of the Contract.
(b) In addition, bidders have the following options available to them to
assure faithful performance of this Contract:
1. Any bidder who initially receives an award of Contract for
fifteen (15) or fewer vehicles must;
A. File a performance bond for all vehicles as stated
herein; or
B. Authorize the Board of Education to retain ten percent
(10%) of each payment made to the contractor from the
first five (5) months payment of each year of this
Contract. The retainage shall be returned to the
contractor with interest after the conclusion of each
one year period of full and faithful performance under
this contract.
2. Any bidder who initially receives an award of Contract for
sixteen (16) to twenty-five (25) vehicles must;
A. File a performance bond for all vehicles as stated
herein; or
B. Post a one time cash payment equal to ten percent (10%)
of the Contract value; or
C Provide a confirmed, irrevocable letter of credit from
an acceptable financial institution equal to ten percent
(10%) of the Contract value.
8
<PAGE>
Serial No. 9888
3. Any bidder who initially receives an award of Contract for
twenty-six (26) or more vehicles must;
A. File a Performance Bond for all vehicles as stated
herein; or
B. Post a one time cash payment equal to ten percent (10%)
of the Contract value and, in addition the Contractor
authorizes the Board of Education to retain five percent
(5%) of each payment made to the Contractor from the
first five (5) months payments of each year of the
Contract, to be maintained in an interest bearing
account, to assure full and faithful performance of the
Contract. This retainage shall be returned to the
Contractor with interest after the conclusion of each
one (1) year of full and faithful performance under this
Contract; or
C. Provide a confirmed, irrevocable letter of credit from
an acceptable financial institution equal to ten percent
(10%) of the contract value, and in addition the
Contractor authorizes the Board of Education to retain
five percent (5%) of each payment made to the Contractor
from the first five (5) months payments of each year of
this Contract. This retainage shall be returned to the
Contractor with interest after the conclusion of each
one (1) year period of full and faithful performance
under this Contract.
(c) Performance bonds provided shall be in strict accordance with
the sample bond attached. For Contractors posting a cash
payment, or letter of credit, the "contract value" shall be
arrived at by multiplying the Daily Rate per vehicle by the
number of vehicles awarded times 184. Cash payment shall be
certified check or bank money order payable to Board of
Education, City of New York and the payment or letter of
credit shall be delivered to the Director of the Office of
Pupil Transportation as provided for in Section 21 herein.
Cash payments posted under sub-paragraphs (b) 1. and (b) 2.
hereof shall be non-interest-bearing and shall be refunded to
the Contractor after September 15, 1987, and before October
15, 1987, if the Contractor is well and faithfully performing
the contract.
3. During the period of the Contract, if there is an increase in the total
number of vehicles furnished by one Contractor to more than fifteen(15),
but less than twenty-six (26), then the Contractor shall comply with the
terms and conditions outlined in 2(b) 2 above.
9
<PAGE>
Serial No. 9888
4. During the period of the Contract, if there is an increase in the total
number of vehicles furnished by one Contractor to more than twenty five
(25), then the contractor shall immediately notify the Director and shall
comply with the terms and conditions outlined in 2(b) 3 above.
5 For the purpose of 1, 2, 3, and 4 above, corporate bidders who are subject
to common control as determined by the Board based upon an analysis of:
(a) ownership of the corporation's assets; (b) coincidence of corporate
officers and directors; and (c) such other factors as the Board determines
to be relevant, are deemed to be one bidder.
19. COST FACTOR FORM
Pursuant to New York State Education Law Section 156.1, all successful bidders
shall submit, by October 15, 1986, the Cost Factor Form as provided herein. The
statement must be completed by an independent Certified Public Accountant
detailing reasonable contractual transportation costs used in computing the bid
amount(s).
20. AWARD
The award of Contract, if made, will be made according to law, as soon after the
opening of bids as practicable by item, to the lowest responsible bidder
offering the lowest daily rate per vehicle in each item. In addition, the Board
reserves the right to reject any and all bids if the Board elects to further
extend existing agreements covering the work being bid.
The Board of Education or the New York State Commissioner of Education may
reject any or all bids. No award of contract shall be binding upon the Board of
Education until the contract has been duly approved by the Board of Education,
NYS Education Department, the NYC Department of Investigation and the Financial
Control Board, if required by the regulations of said Board. The approval of the
New York State Education Department shall be a condition subsequent as described
in the Terms and Conditions of this Contract.
21, NOTICE OF AWARD
The mailing by the Board of Education of the City of New York to the undersigned
bidder at the address herein specified of the NOTICE OF AWARD OR ACCEPTANCE OF
BID for any of the items for which this bid is submitted shall constitute a
contract between the Board of Education and the undersigned to furnish and
deliver the items set forth in said NOTICE OF AWARD OR ACCEPTANCE OF BID. The
successful bidder will acknowledge receipt of the Notice of Award or Acceptance
of Bid within five days after receipt of the form provided and at the same time
shall submit to the Director with a copy of said acknowledgement the performance
bond and/or cash payment or letter of credit where required. Purchase orders
will be issued when and as required.
10
<PAGE>
Serial No. 9888
22. RETURN OF BID DEPOSIT
After the award of Contract, the Comptroller shall reimburse the bid deposits
received to the persons, firms, or corporations submitting the same, except for
the bid deposits of the bidders whose bids have been accepted. The bid deposits
of the successful bidders will be reimbursed after acknowledgment from him/her
of receipt of notice of award of Contract, and submission of the performance
bond and/or cash payment or letter of credit where required, or retained pending
the initiation of service.
23. ROUTES
The routes which were being served at the time this Contract Proposal was
prepared are compiled in a separate volume entitled, "List of Routes". The "List
of Routes" may be examined by prospective bidders at the Office of Pupil
Transportation, 28-11 Queens Plaza North, Long Island City, New York, third
floor, Monday through Friday, 9:00 A.M. to 4:00 P.M. The bidders attention is
drawn to the fact that the "List of Routes" is subject to change and the actual
routes and numbers of students and sites to be serviced at the opening of school
may vary considerably from those served at the time this proposal was prepared.
The contractor is responsible for the preparation of the actual runs to be
serviced from the list of routes provided by the Director, and there shall be no
reliance by the Contractor on the "List of Routes" as the actual routes to be
serviced. A copy of the appropriate list will be forwarded to the successful
bidder(s) at the time of award of Contract.
24. TIME OF SESSIONS
Time schedules in existence for all schools presently serviced are set forth in
the List of Routes. Public schools generally adhere to the following sessions:
All Grades - 8:40 A.M. to 3:00 P.M.
The Board reserves the right to adjust the time schedules and to establish
part-time, split, or multiple sessions for any school(s). The contractor shall
be required to transport pupils so as to service all sessions established by the
Board for each public school and each principal for each non-public school. All
requests by a principal of a public school or non-public school to modify the
time of sessions must be approved by the Board and/or Director of the Office of
Pupil Transportation.
11
<PAGE>
BID CERTIFICATION
BID TO THE BOARD OF EDUCATION OF THE CITY OF NEW YORK
Made by
Name of Bidder _________________________________________________________________
(Individual, Firm or Corporation)
Place of Business of Bidder ____________________________________________________
Date of Bid _______________________ Telephone __________________________________
If Bidder is an individual or partnership, state here:
Name of Individual or Partners Residence of Individual or Partners
1. _____________________________________________________________________________
2. _____________________________________________________________________________
3. _____________________________________________________________________________
If Bidder is a corporation, complete the following:
Organized under the laws of the State of _______________________________________
Name and Residence of President ________________________________________________
________________________________________________________________________________
Name and Residence of Secretary ________________________________________________
________________________________________________________________________________
Name and Residence of Treasurer ________________________________________________
________________________________________________________________________________
The bidder, above mentioned, declares and certifies:
First: That the said bidder is of lawful age and the only one interested in the
bid, and that no one other than herein above named has any interest in this bid,
or in the contract proposed to be entered into.
Second: By submission of this bid, each bidder and each person signing on behalf
of any bidder certifies, and in the case of a joint bid each party thereto
certifies as to its own organization, under penalty of perjury, that to the best
of its knowledge and belief-
(1) The prices in this bid have been arrived at independently without
collusion, consultation, communication, or agreement for the purpose
12
<PAGE>
Serial No. 9888
of restricting competition, as to any matter relating to such prices
with any other bidder or with any competitor;
(2) Unless otherwise required by law, the prices which have been quoted
in this bid have not been knowingly disclosed by the bidder and will
not knowingly be disclosed by the bidder prior to opening, directly
or indirectly, to any other bidder or to any competitor; and
(3) No attempt has been made or will be made by the bidder to induce any
other person, partnership or corporation to submit or not to submit
a bid for the purpose of restricting competition.
Third: That no Councilman of the City of New York, member of the Board of
Education of the City of New York, or any officer or employee or person whose
salary is payable in whole or in part from the treasury of the City of New York
is directly or indirectly interested in this bid or in the supplies, materials,
equipment, services, work or labor to which it relates, or in any portion of the
profits.
Fourth: That said bidder is not in arrears to the City of New York or the Board
of Education of the City of New York upon debt, contract, or taxes and is not a
defaulter as surety or otherwise, upon any obligations to the City of New York,
and has not been declared not responsible, or disqualified, by any agency of the
City of New York, or State of New York, nor is there any proceeding pending
relating to the responsibility or qualification of the bidder to receive public
contract, except
________________________________________________________________________________
________________________________________________________________________________
(if none, bidder must insert "None")
Fifth: That said bidder has carefully examined the standard form of Contract
proposal, including the instructions to bidders, specifications, and the
schedule of bid items, and will, if successful, perform all its terms, covenants
and conditions, and will furnish and deliver at the prices bid, within the time
stated, all the materials, supplies, apparatus, goods, wares, merchandise,
services and/or labor named and described therein for which the bid is made.
Sixth: The bidder expressly undertakes and agrees, if successful, to comply
fully with any and all applicable Federal, State and/or municipal laws, and the
orders, or regulations, of any federal, state and/or municipal authority or
agency.
Seventh: The undersigned, if an individual bidder, or if the bidder be a firm,
partnership or corporation, the undersigned executing this document as a member,
partner, director or officer and on behalf of such firm, partnership or
corporation, expressly warrants and represents that neither he/she, nor any
member, partner, director or officer of said firm, partnership or corporation
has, prior to the date of execution of this bid, been called before a grand
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<PAGE>
Serial No. 9888
jury, head of a state department, temporary state commission or other state
agency, head of a city department, or other city agency, to testify in an
investigation concerning any transaction or contract had with the State of New
York, any political subdivision thereof, a public authority or with any public
department, agency or official of the State of New York or of any political
subdivision thereof, or of a public authority or any fire district, and refused
to sign a waiver of immunity against subsequent criminal prosecution or to
answer any relevant question concerning such transaction or contract. If there
has been a refusal to sign a waiver or to answer, the bidder must state the time
and place of such refusal below.
NAME(S) DATE PLACE
- ------- ---- -----
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Eighth: There are listed below any present or previous connection of the bidder
or any owner, officer, partner, director, stockholder, or employee of the bidder
with the Board of Education as an employee, vendor or Contractor, or an employee
of a vendor or Contractor. Drivers who are employed by the contractor in no
position or function other than driver need not be listed.
NAME(S) CONNECTION/CAPACITY DATE(S)
- ------- ------------------- -------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
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<PAGE>
Serial No. 9888
Ninth: The bidder offers to provide the services at the prices entered on the
written bid blanks and, if the bidder's offer is accepted, will well and
faithfully perform all the requirements of the Contract at those prices.
The amount of the bid deposit or bid bond furnished with this bid is the
sum of __________________________________________Dollars ($______).
It is a (cross out one) bid deposit/bid bond.
Serial No.: ____________________
Signature______________________________________________________________________.
(Individual, Firm or Corporation)
Where bidder is corporation add:
By ____________________________________________________________________________.
Attest:
_______________________________
Secretary (Seal)
(Please note that the applicable affidavit of verification on the following
pages must be executed.)
NOTE: 1. Where bidder is a firm, the bid must be signed in the name of the
firm by a member thereof, who must sign his/her own name immediately thereunder,
as A. & B. Co., by C. A., Partner.
2. Where the bidder is a corporation, each bid must be signed in the
name of the corporation by a duly authorized officer or agent thereof having
knowledge of the matters stated in the bid, and such officer or agent shall also
subscribe his/her own name, as: A.B. Company, by C.D., President. The seal of
the corporation must also be affixed.
3. An individual doing business under a trade name must present the
bid in such individual's correct name. The style "Thomas Jones, doing business
as (d/b/a) Celestial Bus Co." may be used.
4. Each bid must be verified by the bidder submitting same by
execution of one of the following proper forms.
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Serial No. 9888
INDIVIDUAL VERIFICATION
County of )
State of ) ss:
________________________, being duly sworn, deposes and says; he/she is the
person who executed the foregoing bid, that deponent has read the declarations
contained in said bid and knows the contents thereof; that the same are true to
deponent's own knowledge.
___________________________________
(Signature of person verifying bid)
Subscribed and sworn to before me this
day of
______________________________________
- - - - - - - 0 - - - - - - -
FIRM OR PARTNERSHIP VERIFICATION
County of )
State of ) ss:
____________________________, being duly sworn, says:
I am a member of _______________________, the firm described in and which
executed the foregoing bid. I subscribed the name of said firm thereto on behalf
of the firm and the several matters therein stated are in all respects true.
___________________________________
(Signature of person verifying bid)
Subscribed and sworn to before me this
day of
______________________________________
If notarized outside the State of New York, County Clerk's certificate must be
attached.
15A
<PAGE>
Serial No. 9888
CORPORATE VERIFICATION
County of )
State of ) ss:
_______________________, being duly sworn, says:
I am the _________________________ of ______________________, the
corporation whose name is subscribed to and which executed the foregoing bid.
I reside at_____________________________________________________________________
I have knowledge of the several matters therein stated and they are in all
respects true.
___________________________________
(Signature of person verifying bid)
Subscribed and sworn to before me this
day of
______________________________________
If notarized outside the State of New York, County Clerk's certificate must be
attached.
- - - - - - - 0 - - - - - - -
The officer taking the acknowledgment shall enter his/her title, the date of
expiration of his/her commission, etc.
IMPORTANT NOTE:
Those found making intentionally false or misleading statements are liable for
prosecution.
15B
<PAGE>
Serial No. 9888
Contract Year ________
The University of the State of New York
THE STATE EDUCATION DEPARTMENT
BUREAU OF EDUCATIONAL MANAGEMENT SERVICES
ALBANY, NEW YORK 12230 PHONE: 518-474-3384
COST FACTOR FORM
FOR DETERMINATION OF REASONABLE CONTRACTUAL TRANSPORTATION COST
VEHICLE PUPIL SEATING CAPACITY (check one only) [ ] 5 - 20 Note: Use separate
worksheet for each
State Education Department [ ] 21 - Up group included in
Bureau of Educational Management Services contract.
School District New York City Contractor_____________________________
Amount of Contract $______________________ No. of Buses_________________________
(for vehicle group
checked above only)
Total No. of Students Transported ____ Total Daily Mileage ______ No. of Days of
Service _____
(for vehicle group checked above only)
PART I Summary of Contract Costs
TOTAL COST FOR
ITEM ITEM DESCRIPTION SCHOOL YEAR
---- ---------------- --------------
1. Fuel Contractor supplied fuel for $_____________
vehicles
2. Vehicle Maintenance Tires, tubes, chains, parts,
lubricants, garage supplies, bus
cleaners, and mechanics wages
excluding fringe benefits _____________
3. Insurance Bodily injury and property damage
Insurance coverage on building and
contents _____________
4. Building Costs Building rental, real property
taxes, repairs, mortgage principal
and interest payments _____________
5. Utilities Heat, light, power, water and
telephone _____________
6. Licenses Vehicle registration fees _____________
7. Drivers' Wages Wages excluding fringe benefits _____________
8. Driver Training Training, recruitment, employment
advertising, investigations and
physical examinations _____________
9. Fringe Benefits Pension, health insurance, FICA,
Workers' compensation, unemployment
insurance, union welfare _____________
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Serial No. 9888
TOTAL COST FOR
ITEM ITEM DESCRIPTION SCHOOL YEAR
---- ---------------- --------------
10. Interest Interest Cost on borrowings for
acquisition of vehicles and
equipment $_____________
11. Depreciation Depreciation cost for vehicles and
other equipment _____________
12. Management Salaries and other expenses for
management and supervision including
corporate overhead and terminal
management _____________
13. Other (Specify) Items not included in cost
categories 1-12 above
______________________ _____________________________________
______________________ _____________________________________
______________________ _____________________________________ _____________
Total
$ _____________
_____________
PART II Method of Computing Costs
For each of the cost categories used in Part I of the form, please
indicate below the method of computation and basis used in arriving at the
cost figure. If the cost represents a prorated amount among various
contracts or a prorated amount between school contract and charter service
operations, the basis for that proration should be noted for each cost
item involved.
1. Fuel
2. Vehicle Maintenance
3. Insurance
4. Building Costs
5. Utilities
6. Licenses
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Serial No. 9888
7. Drivers' Wages
8. Driver Training
9. Fringe Benefits
10. Interest
11. Depreciation
12. Management
13. Other (Specify)
If additional space is required separate sheets detailing computations may be
attached.
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Serial No. 9888
SCHEDULE OF ITEMS, SPECIFICATIONS AND BID BLANK
FOR THE TRANSPORTATION OF OPEN ENROLLMENT PUPILS AND PUPILS ATTENDING
REGULAR CLASSES IN PUBLIC AND NON-PUBLIC SCHOOLS TN THE CITY OF NEW YORK
FOR THE PERIOD FROM SEPTEMBER 1986 THROUGH JUNE 1991
25. INTENT AND SCOPE
This Contract is intended to cover requirements for the transportation of open
enrollment pupils and pupils attending regular classes in public and non-public
schools who are eligible for transportation provided by the Board of Education
pursuant to the eligibility standards established by the Board, and whose
transportation is provided by the Board of Education of the City of New York,
and for such other uses as provided for herein.
26. PERIOD OF CONTRACT
The term of this Contract shall commence when the Secretary of the Board mails
the NOTICE OF AWARD OR ACCEPTANCE OF BID and certain services are required as of
that date. The time for the performance of the transportation herein scheduled
is for the period beginning with the first officially scheduled public school
day in September 1986, or the first day of service requested by the Board to
accommodate non-public school service provided pursuant to Chapter 902 of the
Laws of 1985, and ending with the last officially scheduled public school day in
June 1991 in accordance with the public school calendar. Thereafter, the
Contract may be extended for one or more additional years in conformance with
the requirements of the State Education Law and the regulations of the
Commissioner of Education of the State of New York.
27. NUMBER OF DAYS OF SERVICE
A. The Contractor must conform to the public school calendar and daily tine
schedules of all the different schools involved in the item(s) bid upon.
The public school calendar shall be furnished prior to the beginning of
service. It is the responsibility of the contractor to adhere to this
calendar at all times, unless notified otherwise by the Director of the
Office of Pupil Transportation (hereinafter the "Director"). This shall
include responsibility for adhering to any special schedules or shortened
schedules. The public school calendar varies from year to year and
generally includes 180 to 185 school days; however, the Board reserves the
right to change the school hours or days of attendance, including the
addition or deletion of days of any or all grades, or of any or all
schools any time prior to the letting of the Contract and at any time
thereafter. No change in compensation will be made for such adjustments,
unless they necessitate the use of additional vehicles by the bidder.
B. Contractors shall provide service to non-public schools which are in
session on any five of eleven days or holidays during the term of this
19
<PAGE>
Serial No. 9888
Contract when public schools are closed. The eleven days per year from
which non-public schools may select five days to receive service are: the
Wednesday, Thursday and Friday after Labor Day, Rosh Hashannah, Yom Kippur
and the week between Christmas day and New Year's day. Contractors shall
be notified by the Director a minimum of five (5) days before such service
to a non-public school is required.
28A. PERIOD OF OPERATION
Regular service, extended service and additional service shall be provided
pursuant to the terms and conditions of this Contract. Regular service shall be
defined as being provided by those vehicles that are available for the
transportation of pupils beginning with the initial pick-up time of 7:00 AM, and
delivery to school for the morning session which will commence no later than
9:30 AM. Regular service will conclude with the pick-up of pupils for the
homeward trip no earlier than 2:00 PM and no later than 4:30 PM in conformity
with the school's dismissal schedule, and shall complete its service with the
delivery of the last pupil to his or her home.
Extended service shall be defined as mid-day dismissal service between the hours
of 9:30 AM and 2:00 PM which is necessary due to clerical half days,
Parent/Teacher conferences, special testing, release time for religious
instruction or any other reason as designated by the Chancellor or his designee
or, an early dismissal for non-public schools which has been approved by the
Director. However, if an early dismissal affects all schools serviced by a
particular vehicle so that there is no afternoon service provided, the mid-day
run shall be the PM run and will not be considered Extended Service.
Additional use of the vehicle shall be defined as the requirement that the
contractor pick-up its first pupil prior to 7:00 AM or any pupil after 4:30 PM
for the homeward trip upon authorization of the Director.
28B. PERIOD OF OPERATION - FIELD TRIPS
Field Trip service shall be defined as either a round trip or shuttle service
between two (2) points scheduled during the hours of 9:30 AM to 1:30 PM and/or
after 4:30 PM for the purpose of educational activities.
The Contractor shall provide transportation for field trips and other purposes
("Field Trips") between 9:30 AM and 1:30 PM, and after 4:30 PM, in addition to
transportation between pick-up points and schools, to the extent required by the
Board.
A. The Board may determine to: (1) provide field trips directly, (2) Contract
separately for the provision of field trips with the Contractor herein or
with a separate Contractor, or (3) require the Contractor to provide field
trip service in addition to transportation between pick-up points and
schools. Should the Board determine to require the Contractor to provide
field trips in addition to transportation between pick-up points and
schools, the Contractor shall be compensated in the manner provided
20
<PAGE>
Serial No. 9888
herein at the rate of two percent (2%) of its daily rate per vehicle
additional for each day of Field Trip Service, in addition to any and all
other compensation to which the Contractor is entitled under the terms of
this Contract.
B. If the Contractor provides Field Trip Service under either option (2) or
option (3), above, it shall bill separately for field trips, as directed
by the Director, so as to enable the Board to ascertain its costs for
field trips as opposed to transportation between pick-up points and
schools.
29. PAYMENT
A. Payment will be made based upon the daily rate per vehicle quoted by the
Contractor for the number of vehicles and the number of days of service
provided by the Contractor. The Board reserves the right to increase or
decrease the number of vehicles required to be provided upon two (2) days
notice to the Contractor. In no event will the Contractor be paid for days
on which the vehicles are not operating pursuant to this Contract except
for those days upon which the Contractor was scheduled to provide service
and schools were ordered closed by the Chancellor or his designee.
Invoices shall be submitted at the end of each calendar month for the
number of vehicles and the number of days on which services were rendered
during the preceding month. Adjustments in compensation will be made for
(1) assessment of liquidated damages, (2) charges for increases or
decreases in the number of vehicles, (3) assessment of expenses arising
from default, and (4) as otherwise provided in the Contract or by law.
On days when the public schools are closed and service is required for
non-public schools, Contractors are required to reroute vehicles in order
to maximize vehicle utilization and will be paid only for vehicles
authorized to operate on those dates.
B. The Board of Education may deduct two percent (2%) from the prices quoted
herein if payment is made within thirty days from the date the Board shall
have received the invoice accompanied by acceptable proof of service. The
Board shall not be deemed to have received an invoice earlier than the
first day of the month the Board is regularly open for business in the
month succeeding the month in which the service is rendered. The date of
payment shall be the date on the payment check issued by the New York City
Office of the Comptroller, on behalf of the Board. The discount herein
provided for shall not be a consideration in determination of award.
C. Payment for extended service shall be at the regular daily rate plus an
additional one percent (1%) of that rate for each vehicle for each day
that extended service, as defined herein, is required.
21
<PAGE>
Serial No. 9888
Charges for additional use of the vehicle, shall be at an hourly rate
equal to ten percent (10%) of the regular service daily rate. Charges for
less than one hour in additional service will be prorated. Where field
trip service is required, pursuant to option 3 of Section 28B herein,
after 4:30 PM the additional service rate shall be in addition to the
field trip rate.
Payment for field trip service, provided pursuant to option 3 of Section
25B herein, shall be at the regular daily service rate for the vehicle
plus two percent (2%). Field trip service, provided pursuant to option 2
of Section 28B herein, shall be paid at the per trip bid for service.
30. ITEMS
The Contractor shall complete the item(s) bid upon first. At the discretion of
the Director the vehicle may be assigned for a secondary use outside of the item
bid upon in accordance with the provisions of Section 36 entitled Use of
Vehicles.
31. TRANSPORTATION OF PUPILS
A. Buses shall pick up the pupils to be transported at the authorized stops
specified in the "List of Routes". The "List of Routes" can be examined at
the Office of Pupil Transportation, 28-l1 Queens Plaza North, Long Island
City, New York, third floor, Monday through Friday, 9:00 AM to 4:00 PM.
Buses shall deliver the pupils to the same locations on return from
school; except where traffic regulations prevent same. The authorized
stops shall be established by the Director and may be changed by the
Director upon five (5) business days notice to the Contractor. The
Contractor shall arrange and submit to the Director a schedule of the time
of each stop, for each run for each school serviced two (2) business days
before any schedule or change in schedule is to be put into effect. After
approval of a schedule by the Director, the Contractor shall supply a copy
of the approved schedules to the Principal.
The Contractor shall report any deviation from the approved schedule to
the Director. If the pick-up or delivery time, or the sequence of the
stops is altered, the Contractor must notify the Principal and Director
five (5) business days in advance of said changes so that the pupils to be
transported may be informed. All pupils to be transported pursuant to this
Contract will be required to assemble at the designated stops, and stops
will be spaced a minimum of a quarter (1/4) of a mile apart.
The Contractor will not be required to service any route which is more
than five (5) miles in length, measured from the initial stop to the
schools services via the shortest driving distance covering the
intermediate stops, except for the transportation of open enrollment
pupils. No student attending regular classes in public or non-public
22
<PAGE>
Serial No. 9888
schools shall be required to travel for more than one (1) hour on either
the trip to school or the homeward trip, except for open enrollment pupils
and/or when the Director has approved same.
A route consists of a number of stops authorized by the Director, from
which pupils are to be transported to a designated school for specific
school sessions and to which they are to be returned on the homeward trip.
The school the pupil attends shall be determinative of what route the
pupil is placed upon, and not the pupil's home address or school district
in which the pupil resides; however, exceptions may be made at the
discretion of the Director.
One (1) or more routes may be designated to service an individual school.
Buses will utilize the most expeditious route in traveling between the
authorized stops and the schools to be serviced.
The Contractor shall prepare the run to be traveled by each bus, by
merging routes prepared by the Office of Pupil Transportation, however,
the Board reserves the right to assume responsibility for the preparation
of runs for vehicles upon five (5) business days notice to the
contractor. The authorized stops are subject to change as the school
session is altered, or as schools or pupils are added to or deleted from
the transportation lists. The Contractor will be required to comply with
the changes in the stops within the time frame stipulated. The contractor
shall not alter the schedule of the vehicle servicing such stops without
prior approval from the Director.
Vehicles must not leave an authorized stop until the scheduled time and
shall not wait past the scheduled time unless the operator sees a pupil
approaching to board the vehicle for the trip to school. No vehicle shall
leave the school at dismissal time until all students are aboard.
Contractors are not to permit its employees to make stops at unauthorized
locations.
If a toll is involved, it will be the responsibility of the contractor to
pay such toll at its own expense.
B. All accidents involving pupils on a vehicle, or in boarding or leaving a
vehicle, and all other accidents shall be handled as follows:
1. When the severity of the accident warrants, the driver will call 911
and request police and ambulance service.
2. The Contractor shall immediately notify by telephone, school
administrators and the Office of Pupil Transportation of the
location, extent of the accident, names of pupils involved with a
description of their injuries, run number, bus number and schools
affected.
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Serial No. 9888
3. The Contractor shall assist the school administrators in contacting
parents and providing them with information on their children, when
requested by the school.
4. The Contractor shall prepare accident reports for the State
Department of Motor Vehicles, State Department of Education, Office
of Pupil Transportation and their insurance company, within 24
hours, using appropriate forms.
C. 1. In the case of a vehicle breakdown on the way to school, the
driver shall notify the Contractor which, in turn, shall notify the
school administrators and the Office of Pupil Transportation
immediately. If the breakdown occurs after school closing time, the
Contractor is to notify the Office of Pupil Transportation by
telephone of the delay.
2. The Contractor may not unilaterally exclude a pupil from
transportation.
3. Except in an emergency, or when scheduled by the Director or his
designee, no pupil will be required to transfer from one vehicle to
another either on the trip to school or on the homeward trip.
4. All drivers employed in the transportation of pupils shall be given
permanent run assignments at the commencement of service, subject to
union agreement.
5. Drivers must drive the scheduled run permanently assigned to them at
least one time prior to the start of service. If at any time during
the school year a driver is given a new permanent run assignment,
that driver must drive the run before being permitted to transport
students on that run.
6. Contractors must make vehicles available to schools for emergency
drills as required by the State Education law to be held three times
per school year: once within the first five days of school, once
between November 1, and December 31, and once between March 1 and
April 30. The emergency drills shall include practice and
instruction in the location, use and operation of the emergency
door, fire extinguisher, first aid equipment, and use of the windows
as a means of escape in case of fire or accident. Drills shall
include situations which might result from both fire and accidents.
Such instruction and the conduct of drills shall be given by a
member or members of the teaching staff, with the assistance of the
bus driver, as arranged between the Contractor and the principal of
each school. No emergency drills shall be conducted when vehicles
are on runs.
The Director will be notified of arrangements for, and execution of,
emergency drills by the schools. The contractor and driver shall
make arrangements so as to avoid any disruption in service.
24
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Serial No. 9888
D. Driver Duties
Driver responsibilities, in addition to carrying out the service
requirements listed in A., B. and C. above are as follows:
1. Drivers must be courteous at all times and avoid the use of brusque,
impatient, defamatory, abusive, impolite, vulgar or obscene language
with pupils, school personnel, parents, or the general public.
2. Drivers shall not allow pupils to enter or leave the vehicle while
it is in motion.
3. Drivers shall not allow pupils to thrust any part of their bodies
out of open windows, or to throw objects out of windows.
4. In the event of a temporary hindrance (e.g. snow, excavation, etc.),
alternative arrangement shall be made for the bus to stop at a place
convenient for the students.
5. In the event of an emergency on the vehicle, the driver, after
securing the vehicle, shall arrange for emergency and/or medical
assistance where necessary.
6. a. If a pupil's behavior on the bus is seriously disruptive or
potentially dangerous to self or to others, the driver must
ask that such behavior cease. If the pupil continues
misbehaving, the driver shall discuss the problem with the
principal or teacher in charge. If after intervention by the
teacher, the pupil's disruptive behavior continues, a written
report must be submitted by the driver to the contractor and
the principal and the report forwarded by the company to the
Director.
b. Incidents involving physical harm while the bus is on route
shall be reported immediately to the principal and the
Director. All corporal punishment is forbidden. The driver has
no authority to exclude a pupil from transportation.
7. Drivers shall be familiar with the vehicle and traffic laws,
regulations of the Commissioner of Motor Vehicles and regulations of
the State Commissioner of Education pertaining to pupil
transportation.
8. Drivers shall make a full stop at all railroad crossings and at
state highways before crossing except that no stop need be made at
any railroad crossing where a police officer or traffic control
signal directs traffic to proceed.
9. The driver is otherwise in charge of the vehicle at all times.
25
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Serial No. 9888
E. Identification
Drivers shall wear uniform attire supplied by the Contractor, and shall
wear photo identification badges on the outside of their uniforms, which
show clearly the driver's name, driver identification number assigned by
the Contractor, and the name of the Contractor which employs the driver.
The identification badge lettering shall be visible from a distance of ten
feet.
32. SCHEDULE OF VEHICLES
The Contractor shall prepare the run to be travelled by each bus and the time
schedule based upon the authorized stops provided to the Contractor by the
Director. The Contractor shall schedule buses so as to provide maximum
utilization of each vehicle. Contractors must consider the fact that Junior High
School and High School pupils are larger than elementary school students,
thereby, affecting actual vehicle capacity and routing. This may require
scheduling buses for multiple trips to one or more schools for arrivals and
dismissals; however pupils shall not be delivered to school more than thirty
(30) minutes nor less than five (5) minutes before the start of the session, and
shall be transported from school not less than five (5) minutes nor more than
thirty (30) minutes after the end of its session. The Board reserves the right
to extend the arrival/departure time from thirty (30) to forty (40) minutes upon
five (5) days notice to the Contractor.
In the event that a vehicle can only be used for one run, pupils must be
delivered to and picked up from school as close to the school session time as
practicable, and in no instance will the thirty (30) minute grace period be
utilized by the Contractor to perform non-Board of Education work.
The Contractor will report to the Office of Pupil Transportation any route or
run on which 10 or fewer children are transported for five consecutive days.
33. VEHICLE SPECIFICATIONS
All vehicles to be used and all transportation operations must comply with the
regulations of the New York State Department of Education, the New York State
Department of Transportation, the New York State Department of Motor Vehicles,
as well as comply with and satisfy all laws, rules and regulations of any agency
of the federal government, State of New York and the City of New York that are
deemed to be applicable to this Contract by the Board, and shall meet all the
1977 Federal Safety Standards as reflected in Title 49 Code of Federal
Regulations 571, and specifically standards No. 105, 111, 220, 221, 222 and 301.
Spare vehicles must also comply with the above.
Seating Capacity:
In addition to complying with applicable governmental laws and regulations as
determined by the Board, each school bus trust have a registered minimum
26
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Serial No. 9888
seating capacity of sixty-five (65) passengers excluding the driver, and have a
capacity for transporting an additional thirteen (13) standee passengers in
conformance with Department of Transportation regulations. The Director reserves
the right to limit the number of pupils being transported on any bus.
Vehicles equipped for handicapped service may be used in the performance of this
Contract if the vehicle meets the seating capacity required for a particular
route, and it has been demonstrated that it is in the best interests of the
Board of Education to allow the use of such vehicles(s), and the Director of the
Office of Pupil Transportation has provided prior written consent.
The Director, in his sole discretion, may dictate the size of the vehicle (based
on passenger capacity) to be used on any given route in the performance of this
Contract, within the specified requirements of the Contract.
Two-Way Radios:
All vehicles being used in performance of this Contract shall be equipped with
two-way radios approved and licensed by the Federal Communications Commission
operated on assigned frequencies and having ranges such that the base station
can contact any vehicle anywhere within the limits of the City of New York.
Citizen's Band ("CB") radios may be used if the communication network is
adequate to allow contact between the base station and any vehicle anywhere
within the limits of the City of New York, and has been approved by the
Director.
Identification Features:
Vehicles shall be given a number suitable for identification purposes. Such
numbers shall be not less than for inches high displayed on both sides, front
and rear of vehicles. Also displayed on each vehicle shall be the name and
address of the Contractor providing the service in letters not less than three
inches high. Numbers and letters shall be applied with black paint. The name
displayed must be the name of the bidder on the first line of the Bid
Certification of this Contract, unless use of a different name is authorized in
writing by the Director. If, in an emergency, vehicles must be rented or
borrowed on a short term basis, a temporary sign giving the name of the operator
in letters no less than three inches high as specified herein shall cover any
other name painted on the vehicle. The run number, assigned by the company,
shall be placed on both sides of the vehicle inside the first side front windows
and shall be sufficiently large so that it can be clearly seen from a distance
of not less than fifteen feet. The run number shall not obscure the driver's
vision. The color of all vehicles used in the performance of this Contract shall
be National School Bus chrome yellow.
One month prior to the start of school each year the Contractor shall submit to
the Director the list of vehicles that shall be used by the Contractor in the
performance of this Contract stating for each vehicle the year, make,
27
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Serial No. 9888
type, seating capacity, registration number, bus number, plate number, owner and
the expiration date of the State Department of Transportation certificate and
indicating if the vehicle is equipped with a two-way radio. This information
shall be provided for all Contract, additional and spare vehicles, on forms
supplied by the Board and shall have attached a copy of the title or certificate
of registration for each vehicle. If at any time during the life of this
Contract any change in the above referenced items occurs, this change shall be
reported to the Director within 10 days.
Safety Features
If seat belts or other features or improvements become necessary due to changes
in federal, state or local laws, rules or regulations during the term of the
Contract, the Contractor, shall promptly comply, and the Contractor, and not the
Board, will assure the full cost in connection with said compliance.
Posters/Announcements
The Contractor agrees to insert, reinsert and maintain posters and announcements
in the interiors of the vehicles. The foregoing posters and announcements shall
be initially supplied by the Board at no expense to the Contractor, however if
said posters and announcements are removed, destroyed or found to be no longer
legible, replacements shall be provided by the Board at the Contractor's
expense.
Exterior Stencils
The Contractor agrees to apply and maintain on the exterior of the vehicle,
information specified by the Board, other than the vehicle identification
information required by federal, state or local laws or regulations or other
sections of the Contract. Said information shall be applied directly to the
vehicle in black paint, by stencil to be supplied by the Board, in a location
specified by the Director.
34. VEHICLE SAFETY REQUIREMENTS
All vehicles are to be kept in good operating and physical condition.
The interior of each vehicle shall be cleaned and swept or vacuumed at least
once a day. The exterior shall be washed weekly and kept as clean as possible,
weather and other conditions permitting. Vehicles are not required to be air
conditioned, but if they are, the temperature will be maintained at a
comfortable level.
All vehicles shall be equipped with an all purpose fire extinguisher, dry
chemical or CO 2 type, rated at least 10.0-B:c, equipped with a calibrated or
marked gauge. The fire extinguisher shall be mounted in an automotive bracket
located in the driver's front compartment in full view and easily accessible.
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Serial No. 9888
All vehicles shall be equipped with a first aid kit in a dust proof medical
container easily removable, located in the driver's front compartment which
shall contain the following items:
2 bandages (1" by 10 yards)
6 sterile gauze pads (3" by 3")
1 adhesive tape (1" by 25 yards)
12 plastic bandaid strips
1 pair scissors
2 triangular bandages with 2 safety pins
(approximately 40" by 30" by 54")
3 single units of sterile eye pads (one per unit)
When a vehicle operator is not in his/her seat and pupils are in the vehicle,
the motor must be shut off, ignition key removed the brakes set and the front
wheels turned against the curb. If the vehicle is parked and the motor shut off
for any reason, the ignition key must be removed and the brakes set with wheels
turned towards the curb.
To protect against carbon monoxide concentration or buildup, no idling of the
motor is permitted while; (1) awaiting school dismissal; (2) loading or
unloading pupils at school; (3) parked or not moving for an excessive length of
time.
35. SPARE VEHICLES AND VEHICLE PERFORMANCE MONITORING
All spare vehicles to be used in the performance of the Contract shall meet the
vehicle specifications and requirements set forth in Section 33 of this
Contract.
The Contractor will provide all of the vehicles necessary to do all of the work
as contracted for in this Contract. The Contractor must have available
sufficient approved vehicles and qualified personnel to enable the Contractor to
dispatch and place spare vehicles into operation promptly if, when and where
necessary to ensure continuous uninterrupted service in the event one or more of
the vehicles in regular use cannot function. The fact that a Contractor has
insufficient spare vehicles shall not be an excuse for failure to transport
pupils assigned or to perform other duties specified herein.
The Contractor shall provide one spare vehicle for every ten (10) vehicles being
operated under the Contract. In the event a Contractor provides less than ten
(10) vehicles then the Contractor shall document to the satisfaction of the
Director that it has access to one spare vehicle. For these purposes, corporate
bidders who are subject to common control as determined by the Board based on an
analysis of:
(a) ownership of the corporation's assets,
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(b) coincidence of corporate officers and directors, and
(c) such other factors as the Board determines to be relevant,
shall be deemed in the Board's sole discretion to be one Contractor. The maximum
number of spare vehicles required to be available and provided by one Contractor
shall not exceed fifteen (15) vehicles.
Spare vehicles must be staffed with personnel qualified to handle emergency
service. Such personnel must be conversant in the English language. Spare
vehicles must be located at strategic points during the hours that pupils are
being transported under this Contract.
The person on the spare vehicle shall also act as an expeditor, whose
responsibilities, besides performing emergency service shall include, but not be
limited to the following:
1. Dispatching or expediting vehicles to ensure a smooth operating
fleet.
2. Prompt dispatching of spare vehicles in the event of breakdown of
vehicles.
3. Maintaining a log in a form approved by the Director, in which will
be entered reports of disruptions of service or delays. A transcript
of such log shall be furnished to the Director at the end of each
school week.
All maintenance or spare vehicles of a Contractor shall be equiped with two-way
radios or "CB" radios as specified herein, and shall have continually open
contact with the Contractor's garage, so that the Contractor can dispatch
vehicles expeditiously to replace vehicles with breakdowns, after these vehicles
have completed their regular run. All equipment and personnel referred to herein
shall be supplied by the Contractor and maintained by the Contractor at its own
expense. A list of equipment and personnel used for this service shall be
submitted to the Director.
The Contractor shall ensure direct telephone access to the Contractor's garage
during the hours of operation (from 10 minutes before the time the first vehicle
leaves the garage in the morning until the last vehicle returns to the garage in
the afternoon). Answering services or machines shall not qualify as direct
telephone access. The Contractor shall have available sufficient telephone
accessibility to handle problems and inquiries properly and in English, and at
all times during the hours of operation. The Contractor is responsible for
monitoring operator performance in the field and to resolve problems with
parents.
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The contractor shall provide to the Director the name and phone number of a
responsible person available after 5 PM or regular operating hours who may be
contacted in the event of an emergency.
If a vehicle varies from its schedule, the Contractor shall have available
sufficient telephone accessibility to handle problems and inquiries properly.
All employees of the Contractor who must deal with pupils, their parents,
teachers, school officials or the Office of Pupil Transportaton either in person
or by telephone must be able to communicate in English.
Field supervision shall include but is not limited to the following:
1. Spot checking operator performance at specific stops and at schools.
2. Riding a specific run where problems have occurred to define and correct
problems.
3. Providing on-the-job training to operators.
4. Resolving problems between the Contractor's personnel and school officials
or parents.
5. Assisting expediting vehicles and continuing service where bus breakdowns
occur.
Supervisory activities must be recorded, and records of same must be made
available for review upon the request of the Director.
36. USE OF VEHICLES
Passengers other than pupils assigned by the Office of Pupil Transportation
shall not be carried in the vehicles used under this Contract while they are
being used to transport pupils except as otherwise stated or as authorized in
writing by the Director.
In the event that a school principal requests permission for parents or other
adults to ride on the vehicle for a specific reason, such permission may be
granted by the Director only, and the Contractor will be notified accordingly.
Vehicles may be utilized for field trips, pursuant to Section 28B herein,
special events, emergency situations, or any other use as prescribed by the
Director, which may only be for hours that will not interfere with the schedules
established for the pupils transported to and from school under the Contract.
Use of these vehicles shall not be restricted to a classification of pupils, nor
shall use of the vehicles for such purposes be limited to schools specified
herein. vehicle use shall not be limited to the Board of Education, and the
vehicles used in the performance of this Contract at the instruction of the
Director shall provide transportation services to any other public agency or
private organization.
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In the case of field trips and other special trips where the routes are not
provided by the Director, or the school or Community School District office
requesting the trip, these routes shall be established by the Contractor in
advance, using the most efficient routing for the vehicle.
When vehicles are used for field trips, the pupil groups will be accompanied by
one or more adults. At least one of these adults will be a teacher. If the route
requested by a teacher in charge requires that a toll be paid, or if the teacher
should request the operator to park the vehicle in an area where a parking fee
is charged, it will be the responsibility of the teacher to pay such toll or
parking fee. Operators are not to be reimbursed by the teacher for any other
reason. Operators will not solicit or accept tips or gratuities.
37. INCREASE OR DECREASE IN THE NUMBER OF VEHICLES
A. It is foreseen that the need for vehicles may increase or decrease during
the Contract period for any number of reasons, including but not limited
to a change in pupil population; change in policy or directive adopted by
the Board of Education, the City of New York, the State Education
Department and/or the State Financial Control Board; default or withdrawal
of Contractors providing such service or contracted to provide service;
the need for service in an area or item for which there is no original
Contractor. However, nothing contained herein shall obligate the Board to
offer to the Contractor additional vehicles in unique or peculiar
circumstances, unrelated to the usual transportation services contemplated
under this Contract, and it shall be at the discretion of the Director
whether such work is offered to the Contractor.
The recital of occasions for the decreasing and increasing of vehicles
does not prevent the Board from considering its costs, its best economic
interest and other factors in determining decreases and increases.
B. Upon determination by the Director that there is a decrease in the number
of vehicles required for a specific type of service during the period of
this Contract, the Director reserves the right to reduce the number of
vehicles for service provided, that, however, in no event shall the total
number of vehicles originally awarded to a Contractor be reduced: (1) In
the first year of this Contract by more than twenty percent (20%) of the
total number of vehicles originally-awarded; (2) in the second year of
this Contract by more than thirty percent (30%) of the total number of
vehicles originally awarded; and (3) in the third, fourth, and fifth years
of this Contract by more than forty percent (40%) of the total number of
vehicles originally awarded. Compensation to the Contractor shall be
adjusted to the number of vehicles actually used in the performance of
this Contract, and the Board of Education shall not be liable for payments
for any vehicles eliminated to the extent provided above.
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The above percentages shall not apply on days when the public schools are
not in session but the Contractor is required to provide service pursuant
to Chapter 902 of the Laws of 1985. On those days the Contractor is
required to reroute vehicles in order to maximize utilization and will be
paid only for vehicles operating on those days.
If the above changes, when effective, terminate the need for any part of
the services rendered by a particular contractor, the Board of Education
and the City of New York (or any political or governmental subdivision
thereof) shall not be liable for any damages or cost of the contractor as
a consequence thereof.
C. If at any time during the period of the Contract the number of vehicles
required increases, the Contractor shall provide any and all additional
vehicles that are deemed necessary by the Director, but in no event shall
the Contractor be required to provide more than twenty percent (20%) above
the number of vehicles originally awarded.
If the Contractor is willing, at the request of the Director, to furnish
vehicles in excess of twenty percent (20%) above the number originally
contracted for, the Contractor shall confirm such agreement in writing to
the Director within five (5) business days of receipt of the offer.
Should the number of vehicles in any item exceed the number of vehicles
originally contracted for, and the Director determine that a reduction in
the total number of vehicles is necessary, such reduction shall first be
made from the additional vehicles contracted for during the performance of
this Contract. After the reduction in these vehicles is exhausted, then
the Director may reduce the number of vehicles originally contracted for
in any item(s).
If the number of vehicles in any item is reduced below the number of
vehicles originally contracted for, and there is a subsequent need for
these vehicles, the Contractor who had its number of vehicles reduced
shall be afforded the right of first refusal for any reinstatement of the
use of these vehicles.
All additional vehicles provided throughout the entire period of the
Contract must comply with all the terms, conditions and specifications of
the Contract set forth herein. The contractor will be compensated for such
additional vehicles as provided for herein.
D. When a Contractor defaults, an emergency situation is created given the
unknown cost and revenue loss to the Board due to increased absenteeism
and requires that alternative transportation be identified on an expedited
basis. Therefore, if a Contractor is found in default the Director may
offer all the work of the defaulting Contractor to any Contractor having a
Contract with the Board for the provision of transportation services to
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open enrollment pupils and pupils attending regular classes in public and
non-public schools. All such vehicles will be treated as additional
vehicles and not as Contract vehicles, and the Contractor should pay
particular attention to the decrease provision of Section 38C herein, as
it relates to additional vehicles.
If the Contractor to which these additional vehicles have been offered is
willing to furnish same, the Contractor shall confirm such agreement in
writing to the Director within five (5) business days of the receipt of
the offer.
38. FACILITIES AND MAINTENANCE
The bidder shall have sufficient storage and access to maintenance facilities
with sufficient equipment and trained personnel to satisfy the New York State
Department of Transportation requirements. The facilities shall be subject to
periodic inspection and approval by the Board of Education during the period of
the Contract.
The Contractor shall operate a program of preventive maintenance for every
vehicle in accordance with the Department of Transportation requirements and
which meets the approval of the Director, and shall maintain records as evidence
that the vehicles are receiving acceptable periodic maintenance.
The Contractor will withdraw from service any vehicle which in the opinion of
the inspectors of the Office of Pupil Transportation presents a hazard to the
safe transportation of pupils, and replace it with a vehicle which in the
opinion of the inspectors meets the safety standards of this Contract for the
safe transportation of pupils.
39. GASOLINE
All gasoline required will be provided by the Contractor at its own expense.
40. RECORDS TO BE TRANSMITTED
The Contractor shall submit on October 1, December 1, and March 1, of each
school year, and upon five (5) days written notice at any other time the
Director requests, copies of all current trip cards and run sheets presently in
use. The trip cards and run sheets shall contain the bus number, route number,
number of pupils transported to each school served, time, location and actual
sequence of stops, time of arrival and departure at each school, and the total
mileage covered by each bus. A record of vehicles incorporating a Daily Record
of Crews used each day for the transportation of pupils under this Contract
shall be recorded in duplicate on forms prescribed by the Director, and the
Contractor shall maintain the original and provide the duplicate copy to the
Director by Wednesday of each week, for the preceding week of service.
The Contractor shall also supply by Wednesday of each week a record of field
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trips served in the previous week; identifying the school served, the
destination of the trip, the time of arrival and departure from the site of the
trip and the number of the buses used.
The Contractor shall supply upon five (5) days written notice, such other
information or documentation as may be requested by the Director.
41. VEHICLE OPERATOR STANDARDS
To protect the safety and welfare of pupils and for other reasons, the
Contractor shall only employ persons of good moral character to serve as vehicle
operators. The Contractor shall send all applications for employment to the
Director, and follow procedures established by the Director for submission of
the fingerprint record and medical certificate for each applicant before the
date on which the operator will begin work, allowing sufficient time for review
and approval/rejection by the Director and Medical Director. The Contractor
shall certify to the Director that he/she has checked into the driving record
and references of the applicant for the past three years and that to the best
of his/her knowledge and belief the applicant is a person of good moral
character. No operator shall be employed on Board of Education work until
his/her references and fingerprint record have been approved by the Director,
and his/her medical certificate has been approved by the Director and Medical
Director.
Vehicle operators shall have valid appropriate operator's licenses for the
vehicles they operate. Conditional or restricted use licenses are not acceptable
except that an operator whose license has been restricted soley on the basis of
a lapse of insurance on his/her personal vehicle shall be permitted to operate a
vehicle in the performance of this Contract. Vehicle operators must be
competent, reliable and at least 21 years of age. Operators shall be physically
fit and properly qualified by experience, driving record and training to perform
their duties. The Contractor shall certify to the Director that he/she has
reviewed New York State Department of Motor Vehicles driver abstract records to
determine the fitness and driving record of its operators.
All vehicle operators shall submit to an annual examination by a licensed
physician who is not the personal physician of the operator. The results of the
physical examination shall be immediately reported to the Director and Medical
Director of the Board of Education on forms approved by the New York State
Department of Education provided by the Director. These forms shall constitute
the medical certificate. The written report of the physician shall be considered
by the Director in determining the fitness of the driver. Each operator shall
meet the physical fitness requirements of Section 156.3 (c) of the Regulations
of the NYS Commissioner of Education and Sections 6.11 and 6.12 of the
Regulations of the New York State Commissioner of Motor Vehicles. Each operator
who is to be initially employed shall be examined within four (4) weeks prior to
the beginning of service.
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Each operator's annual physical examination shall include a tubercular test and
test for vision, and the results of these examinations and the tubercular test
shall be recorded on the above noted forms. These examinations shall be at no
cost to the Board of Education.
Section 156.3(d) (2) of the Regulations of the New York State Commissioner of
Education shall be complied with in full. It currently states that, each school
bus driver initially employed by a Board of Education or transportation
contractor subsequent to July 1, 1973, shall have received at least two hours of
instruction on school bus safety practices. During the first year of employment,
each driver shall complete a course of instruction in school bus safety
practices approved by the Commissioner, which shall include two hours of
instruction concerning the special needs of a handicapped pupil. All school bus
drivers shall receive a minimum of two hours of refresher instruction in school
bus safety at least two times a year, at sessions conducted prior to the first
day of school and prior to February 1st of each year.
Each Contractor must utilize instructors approved by the New York State
Education Department for conducting the training sessions for drivers. All
training programs must be approved by the New York State Education Department
and the Office of Pupil Transportation before the program is offered. In
addition, all new vehicle operators must have a total of twenty hours of
classroom instruction prior to driving on any Board of Education business. All
vehicle operators having two or more accidents while driving on Board of
Education business must also attend an accident repeater course conducted by a
defensive driving specialist. Certification will be required from the Contractor
stating that each operator has received appropriate training as specified in
this Contract.
Within two weeks of each driver's completion of each training requirement, the
Office of Pupil Transportation must receive certification stating that the
requirement has been completed, signed by a school bus driver instructor
approved by the New York State Education Department.
If the Director determines that an operator's competency falls below acceptable
standards, or that any operator has made an unauthorized stop or an unauthorized
change in an established route for which the operator may or may not have
accepted additional remuneration from other than his/her employer, or that the
driver has a previous record of careless or unsafe driving, or other grounds
endangering pupils or affecting an operator's ability to perform, the
contractor, upon receiving written notice from the Director to that effect,
shall not again employ this operator on any part of the work to be performed
hereunder, or on any part of any work the Contractor may perform for the Board
of Education under any other contract.
The Contractor shall be responsible for assuring that all drivers employed are
able to speak and understand English well enough to communicate with pupils,
their parents and school officials; and to summon help, to speak and to
understand directions from police and other authorities in case of an emergency.
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The Contractor understands and agrees that the costs for processing fingerprints
of drivers for any reports required by the Board will not be borne by the Board
of Education.
42. OPERATIONAL SUPERVISION
The requirements entitled "Drivers and Escort Responsibilities" contained in the
"Office of Pupil Transportation School Bus Contractor's Manual" dated June, 1982
and drafted by the Office of Pupil Transportation is incorporated herein by
reference and is made part of this Contract as if fully set forth herein in its
entirety. Subsequent manuals relating to driver qualifications, standards of
conduct and levels of proficiency, drafted by the Board shall be incorporated
herein by reference as if fully set forth in their entirety.
43. AUDIT OF INVOICES AND FINANCIAL RECORDS
Invoices will be audited for payment after each month in which the services are
rendered.
The Contractor hereby consents to an audit of any and all financial records
related to this Contract by the Board, or its agents, the City Comptroller, and
the New York State Department of Audit and Control. During the period of the
Contract and upon the request of the Department of Audit and Control, the Office
of the Auditor General of the New York City Board of Education, the Comptroller
of the City of New York or the Department of Investigation of the City of New
York, the Contractor shall furnish information and documents as specified by any
of these agencies, including but not limited to the Contractor's income tax
forms filed with the City, State and Federal government for the term of this
Contract.
44. LIQUIDATED DAMAGES
A. In view of the difficulty of ascertaining the loss which the Board or City
would suffer by reason of these defaults on the part of the contractor, the
following sums are hereby agreed upon, fixed and determined by the parties
hereto as the liquidated damages the Board or City will suffer by reason of
said violation of Contract and not by way of penalty, and such liquidated
damages may be imposed upon the finding of the Director or his or her
designee that a Contract provision has been violated.
B. Liquidated damages may be assessed for every vehicle, for every day, and
for every instance of the violation in the amounts noted below.
C. One and one-half times the appropriate daily rate per vehicle paid to the
Contractor shall be deducted from subsequent payments due the Contractor
for each day each of the following violations of the Contract occurs:
- Failure to provide service on a day on which schools are required to
be open by the Board's official calendar.
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- Failure to conform to the arrival and dismissal schedules of the
schools serviced, as notified by the Office of Pupil Transportation.
- Failure to adhere to any special schedules or shortened and lengthened
schedules of the schools serviced.
- Failure to provide all of the vehicles necessary to do all of the work
contracted for.
- Failure to comply with the regulations of the New York State
Departments of Education, Transportation and Motor Vehicles as well as
with any and all laws and regulations of any agency of the Federal
Government, State of New York or City of New York.
- Failure to service a field trip or provide the services required by
Section 36 USE OF VEHICLES on the schedule established in advance
either by the Director, a school, or the Community School District
Office.
- Failure to comply with the minimum vehicle standards as set forth in
this contract.
- Failure of any vehicle to be properly painted and identified as set
forth in this contract.
- Failure of any vehicle to have a current and effective Department of
Transportation certificate.
- Assignment to Board of Education work of any driver disqualified by
the Director.
- Each time an operator is found guilty of committing a moving violation
of the New York State Vehicle and Traffic Law while transporting
pupils under this Contract.
- Each time a driver allows a pupil to enter or leave the vehicle while
it is in motion.
- Each time a driver fails to make a full stop before crossing a
railroad crossing or a state highway except when a police officer or a
traffic control signal or sign directs traffic to proceed.
- Exclusion of any pupil from a run by the Contractor or the driver.
- Each time a driver is found to use corporal punishment on a pupil.
- Each time that pupils are left unattended on a vehicle, except in an
emergency.
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- Failure to follow procedures for reporting of accidents as set forth
in the Contract.
- Failure to report immediately to the principal and the Office of Pupil
Transportation any incident involving physical harm.
D. The appropriate daily rate per vehicle paid to the Contractor shall be
deducted from subsequent payments due the Contractor for each day each of the
following violations of the contract occur:
- Failure of the Contractor to have the ability to dispatch spare
vehicles promptly.
- Failure of the contractor to ensure direct telephone access to the
Contractor's garage from ten (10) minutes before the time the first
vehicle leaves the garage in the morning until the last vehicle
returns to the garage in the afternoon, and to have available a
responsible person who can give information in English on the status
of each vehicle and the pupils assigned to each run.
- Failure of the Contractor to provide enough telephone lines to allow
telephone access to the garage or to an authority in a position to
take necessary action on behalf of the company.
- Failure of the Contractor to provide, to the Director, the name and
phone number of a responsible person available after 5 PM (or normal
business hours) who may be contacted in the event of an emergency.
- Failure of the designated person, or appropriate substitute, to be
available in case of an emergency after normal business hours.
- Failure of the Contractor to have sufficient storage and access to
maintenance facilities with sufficient equipment and trained personnel
to satisfy the Board and State of New York Department of
Transportation requirements.
- Failure of the Contractor to operate a program of preventive
maintenance for every vehicle in accordance with the Department of
Transportation requirements and which meets the approval of the
Director.
- Failure of the Contractor to maintain acceptable records as evidence
that the vehicles are receiving periodic maintenance in accordance
with Department of Transportation and Board requirements.
- Failure of any driver to meet any of the vehicle driver requirements
set forth in the Contract.
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- Each driver providing service pursuant to this Contract for whom the
required medical certificate, fingerprint record, driving record
(abstract), reference letters, and applications for employment were
not submitted to and approved by the Office of Pupil Transportation.
- Each driver who has not received the proper training, instruction,
and/or refresher courses as specified herein within the time period
agreed upon by the Director and Contractor.
E. One half the appropriate daily rate per vehicle paid to the Contractor shall
be deducted from subsequent payments due the Contractor for each day each of the
following violations of the Contract occur:
- Each vehicle transporting a greater number of pupils than the
vehicle's permissible pupil capacity.
- Failure of the driver to wait at the pick up point until the scheduled
pick up time if he/she has arrived early.
- Each unauthorized transfer of a pupil from one vehicle to another
vehicle either on the trip to school or on the homeward trip.
- Each time a driver allows pupils to thrust any part of their bodies
out of open windows of the vehicle.
- Failure of a driver to be familiar with the vehicle and traffic laws,
regulations of the Commissioner of Motor Vehicles and regulations of
the State Commissioner of Education pertaining to Pupil
Transportation.
- Failure of a driver to have on his or her person an appropriate
operator's license.
- Failure to have available the minimum number of spare vehicles as
required by the Contract.
- Failure to have available sufficient qualified personnel to staff
spare vehicles during the hours that pupils are being transported
under this Contract.
- Failure to keep records of the Contractor's supervisory activities as
specified in the Contract.
F. One-third of the appropriate daily rate per vehicle paid to the Contractor
shall be deducted from subsequent payments due the Contractor for each day
each of the following violations of the Contract occurs:
- Arrival of a vehicle at school more than thirty minutes or less than
five minutes before the start of the school session.
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- Departure from a school less than five minutes after or more than
thirty minutes after the end of the school session.
- Each vehicle which arrives after the time a session is due to start.
- Each time the operator requires a school to dismiss pupils prior to
the normal close of the school session except where authorized by
special circumstances by the Director.
- Failure to comply with changes in the run including additions or
deletions of stops.
- Altering the run schedule or pickup sequence of the run without
notifying the Director or his designee and school principal.
- Failure to service each designated stop on each run.
- Each time an employee of the Contractor is found to have been unable
to communicate effectively in English with pupils, their parents,
teacher, schools officials or with the Office of Pupil Transportation.
- Failure of the Contractor to require the driver to drive a new run
permanently assigned to him or her before being permitted to transport
students on that run.
- Failure to permanently assign runs to drivers.
- Failure to equip all vehicles, as well as all spare or maintenance
vehicles, used in the performance of this Contract with a two-way
radio capable of communicating with a base station at the Contractor's
garage or home.
G. One fourth of the daily rate per vehicle paid to the Contractor shall be
deducted from subsequent payment due the Contractor for each day each of
the following violations of the Contract occurs:
- Failure of the Contractor to monitor driver performance in the field.
H. One-sixth of the appropriate daily rate per vehicle paid to the Contractor
shall be deducted from subsequent payments due the Contractor for each day
each of the following violations of the Contract occurs:
- Loading or unloading vehicles at the school at any point other than
the point designated by the site supervisor or principal of the
school.
- Picking up pupils prior to 7 AM unless authorized by the Director.
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- Failure to inform the principal or his/her designee that children's
pickup times and drop off times will be changed because of an addition
or deletion of stops, or other revisions to a run.
- Failure to notify the school and the Office of Pupil Transportation
immediately of a breakdown on the way to school.
- Failure to notify the Office of Pupil Transportation of a delay due to
a breakdown on the way home from school.
- Making a stop at an unauthorized location.
- Leaving a school at dismissal time before all students have boarded
the vehicle.
- Failure to maintain a log in a form provided by the Director in which
the Contractor will enter reports of disruptions in service or delays
and to provide a transcript of this log to the Director at the end of
each school week.
- Failure to display their number inside the side front windows of the
vehicle so that it can clearly be seen from a distance of not less 15
feet.
- Failure to keep the interior of a vehicle clean.
- Failure to wash the exterior of each vehicle weekly or to keep it
clean.
- Each time a vehicle is operated in the performance of this Contract
without being equipped with an appropriate fire extinguisher.
- Each time a vehicle is operated in the performance of this Contract
without being equipped with an appropriate first aid kit.
- Failure to shut off the motor, to remove the ignition key, set the
brakes and turn the wheels to the curb when the driver leaves a parked
vehicle.
- Anytime passengers other then pupils assigned by the Office of Pupil
Transportation are carried in vehicles used in this Contract except as
authorized by the Director.
- Failure to submit daily crew records by Wednesday of each week as
specified in the Contract.
- Failure to supply any other information or documentation as may be
required by the Director.
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- Each vehicle with an operator not wearing uniform attire or visibly
displaying an identification badge with the required information.
- Each operator who fails to assist in the conduct of an emergency
drill.
- Each operator who fails to make a vehicle available to a scheduled
class in transportation safety.
- Each failure to perform any other duties as set forth in the Office of
Pupil Transportation School Bus Contractor's Manual incorporated
herein by reference.
- Any other violation of the Contract whatsoever for which no specified
liquidated damages are listed.
I. Nothing herein shall limit the right of the Board to declare the contractor
in default of contract in advance or, in lieu of, or in addition to the
assessment of liquidated damages.
45. EMPLOYEE PROTECTION PROVISIONS
1. Priority in Hiring and Master Seniority Lists:
There shall be established an industry-wide Master Seniority List. The list
shall be composed of all operators (drivers), mechanics and dispatchers who were
employed as of June 1, 1986 under a Contract between their employers and the
Board for the transportation of school children in the City of New York, who
are furloughed or become unemployed as a result of loss of Contract or any part
thereof by their employers, or as the result of a reduction in service directed
by the Board during the term of the Contract in accordance with their date of
entry into the industry. All operators (drivers), mechanics, and dispatchers on
the Master Seniority List who participated in the Division 1181 A.T.U. -New
York Employees Pension Fund and Plan as of June 1, 1986 and who do not exercise
their option to withdraw from the Fund and Plan shall continue to participate in
such Pension Plan.
Any existing Contractor or individual who conducted business as a sole
proprietor, or as a member of a partnership or held a controlling interest in a
corporation that performed service pursuant to the Contract expiring in June,
1986 (contractor) shall give priority in employment in September, 1986 or
thereafter on the basis of position on the Master Seniority List of any
additional or replacement operators, mechanics and dispatchers beyond those
performing service as of June 1, 1966 consistent with the number of employees
required by the specifications of the contract expiring June, 1986 for the
number of vehicles providing service to the Board as of June 1, 1986 to
individuals from the Master Seniority List until such list is exhausted.
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Serial No. 9888
Any new Contractors, i.e. those who did not provide service pursuant to the
Contract expiring June, 1986 (new Contractor), shall give priority in employment
in September, 1986 or thereafter on the basis of seniority to every operator
(driver), mechanic and dispatcher performing service pursuant to such Contract
starting from the first employee from the Master Seniority List until such list
is exhausted.
2. Compensation
All operators (drivers), mechanics and dispatchers on the industry-wide Master
Seniority List shall be employed and paid on a full-time basis based upon the
wage scale received from prior employer under pupil transportation contracts.
The Contractor shall compensate operators (drivers), mechanics and dispatchers
and escorts (matrons-attendants) who appear on the Master Seniority Lists and
who are employed pursuant to Contracts to be awarded as follows for the term of
the contract;
(a) operators (drivers) and dispatchers at a daily rate of pay, including
any COLA, for each day of service not less than that paid by the NYCTA
on July 5, 1979 to its surface drivers (bus) operators;
(b) mechanics at a daily rate of pay, including any COLA, for each day of
service, not less than that paid by the NYCTA on July 5, 1979 to its
bus maintenance personnel performing similar duties.
Your attention is called to paragraph number 8 as it affects compensation. Such
operators (drivers) shall be available for extended service, without additional
compensation, which shall be defined as performance within the particular job
category (i.e. drivers as drivers) within the eight (8) hour work day within the
spread for the collective bargaining agreement covering said employees, if any.
3. Welfare
Contributions by the Contractor for providing welfare benefits to operators
(drivers), mechanics, and dispatchers who appear on the Master Seniority List
shall be no less than $170.00 per employee per month on a twelve month basis
during each year of the Contract.
4. Pensions
The Contractor shall sign an agreement with Division 1181 A.T.U. - New York
Employees Pension Fund and Plan to participate in such plan on behalf of all
operators (drivers), mechanics, and dispatchers who appear on the Master
Seniority List and who participated in the Fund and Plan as of June 1, 1986.
This requirement shall not be interpreted to require a Contractor to enter into
a collective bargaining agreement with the union nor shall it prohibit
44
<PAGE>
Serial No. 9888
the Contractor from entering into a collective bargaining agreement with the
union. The Contractor shall file a copy of the executed agreement with the
Trustees of the Fund and Plan to participate in said Fund and Plan and with the
Secretary of the Board with the acknowledgement of the Notice of Award.
The Contractor shall contribute $30.15 per week per operator (driver), mechanic
and dispatcher on the Master Seniority List, and participating in the Plan and
Fund as of June 1, 1986, for forty weeks each year for the term of the Contract,
or such greater amount as may be required, based on contributions by Contractors
on behalf of the majority of employees participating in the Fund and Plan
pursuant to a collective bargaining agreement with Local 1181-1061. The
Contractor shall withhold $13 a week from each operator, mechanic and dispatcher
for forty weeks each year for the term of the contract, or such greater amount
as may be required based upon contributions of a majority of the operators
(drivers) mechanics or dispatchers contributing to the Fund and Plan.
The Contractor shall pay all such amounts to the Fund and Plan within seven days
after the end of each payroll period.
5. In addition to any other remedies provided in the Contract between the
Office and the Contractor, such as default and/or termination, if the
Contractor is found to be in violation of the foregoing employee
protection provisions, then the Director of the Office of Pupil
Transportation, within thirty (30) days of the written notice, shall
withhold the appropriate amounts from the first payment thereafter due
to the Contractor and pay it directly to the Division 1181 A.T.U. -
New York employees Pension Fund for the benefit of the employees
affected, and to the appropriate welfare Fund for the benefit of the
employees affected.
In the event any Contractor willfully fails to comply, the Board of Education
shall act to cancel such Contractor's Contract; provided, however, that the
Board shall not be required to act so as to cause a disruption of service.
6. Contractors providing a total of five vehicles or less pursuant to all
contracts with the Board for the transportation of pupils shall not be
subject to the foregoing provisions with respect to operators
(drivers), mechanics and dispatchers.
In addition, field trip service shall not be subject to the foregoing
provisions, with respect to operators (drivers), mechanics and
dispatchers.
7. For the purposes of 38. corporate bidders who are subject to common
control as determined by the Board based upon an
45
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Serial No. 9888
analysis of:
(a) ownership of the corporation's assets,
(b) coincidence of corporate officers and directors, and
(c) such other factors as the Board determines to be relevant, are
deemed to be one bidder.
8. The Board may in its sole and unfettered discretion change any date
which determines employee protected status, employer status or any
other status, which is contained in any Employee Protection
provisions of the Contract. The Master Seniority List will be
updated to June 1, 1986 as permitted in accordance with pre-existing
collective bargaining agreements executed prior to the date of the
execution of this Contract. Furthermore, the rates quoted herein may
not be reflective of the current labor rates in effect. Special
attention should be paid by the Contractor to the fact that many
employees on the Master Seniority List have been in the industry for
many years and therefore may be entitled to substantial wage
accruals.
46. PRICE CERTIFICATION
1. The bidder certifies that the prices, warranties, conditions, benefits
and terms quoted herein are at least equal or more favorable to the Board
of Education of the City School District of the City of New York than the
prices, warranties, conditions, benefits and terms currently quoted by the
bidder to any customers for the "same or substantially similar quantity
and type of item(s) or services as described herein". This certification
shall not apply to prices, warranties, conditions, benefits and terms
under contracts already in effect at the date of submission of the bid,
except as provided herein.
2. The successful bidder (hereinafter called "Contractor") further
certifies that during the period between the bid submission date and the
completion of the term of this Contract, should he/she offer prices,
warranties, conditions, benefits, and terms more favorable than those
quoted herein, or provide changed prices, warranties, conditions, benefits
and terms more favorable than those quoted herein under a contract in
effect at the bid submission date with any customer, be offered for the
same or a substantially similar quantity and type of services, then the
Contractor shall immediately thereafter notify the Board of Education,
Bureau of Supplies. Regardless whether such notice is sent by the
Contractor or received by the Board of Education, this Contract shall be
deemed amended retroactively to the effective date of more favorable
46
<PAGE>
Serial No. 9888
treatment, to provide the more favorable prices, warranties, conditions,
benefits, and terms.
3. The Board of Education shall have the right and option to decline any
such amendment.
4. If the Contractor is of the opinion that an apparently more favorable
price, warranty, benefit, condition, and term quoted, offered or provided
to a customer is not more favorable treatment, the Contractor shall
immediately notify the Director of the Bureau of Supplies and the Director
of the Office of Pupil Transportation of the Board of Education in writing
setting forth in detail the reasons why it believes the apparently more
favorable treatment is not in fact more favorable treatment. The Director
of the Bureau of Supplies after consideration of the written explanation
may, in his/her sole discretion, decline to accept the explanation and
thereupon, the Contract shall be deemed amended retroactively to the
effective date of the more favorable treatment, to provide the more
favorable prices, warranties, conditions, benefits, and terms to the Board
of Education.
5. The Contractor further certifies that the terms and conditions of the
within Contract provide for the written submission by the Contractor of a
request for revision of prices, warranties, conditions, benefits and
terms, such requested revised prices, warranties, conditions, benefits and
terms will be at least equal to or more favorable to the Board of
Education of the City School District of the City of New York than the
prices, warranties, conditions, benefits and terms offered by the
Contractor to any customer for the same or substantially similar quantity
and type of item(s) and services as of the effective date of the revision.
6. The Contractor hereby authorizes the inspection, review and copying of
contracts and documents that pertain or relate to the performance of this
clause of the Contract.
7. The Contractor shall be obliged to keep the contracts and documents
referred to in the above paragraph during the effective period of this
Contract and for a period of three years after the final payment of this
Contract.
47. SCHEDULE OF ITEMS AND BID BLANKS
1) Regular Service
For all items being bid, enter the daily rate per vehicle. In computing
the total daily cost per Item, multiply the daily rate by the total number
of vehicles shown on the bid blank. Award of contract shall be made on the
basis of the daily rate per vehicle.
The number of pupils set forth in the items are estimated numbers for the
purpose of bidding and are not warranted to be actual numbers of pupils.
47
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Serial No. 9888
2) Combination Items
Combination items are listed on a schedule entitled "List of Combination
Items". A Bid on a combination item will be for all items included in the
combination item. Award will be made to either the combination item or the
items included in the combination item based on the lowest daily cost.
No bids for a combination item other than those called for herein will be
considered. If a bidder submits a bid on a combination item, bids must
also be included on each of the items included in the combination item.
The Board of Education reserves the right to reject all bids on items
included in combination items and to award the Contract for an area of
service to the lowest responsible bidder on the combination item, or, to
reject all bids on combination items and award the contract for an area of
service to the lowest responsible bidder in each item included in the
combination items, if in its opinion either action would be in its
interest.
3) Qualified Bids
The bidder may submit bids for one or more Items, however, qualified bids
will not be accepted. If successful, bidders must be prepared to accept an
award of contract for any and all Items bid upon.
48
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Serial No. 9888
LIST OF COMBINATION ITEMS
COMBINATION ITEM NO. ITEMS INCLUDED IN COMBINATION ITEMS
- -------------------- -----------------------------------
M1C M1, M2, M3, M4, M5, M6
Q25C Q25A, Q25B
The Board of Education reserves the right to reject all bids on items included
in combination items and to award the contract for an area of service to the
lowest responsible bidder on the combination item, or, to reject all bids on
combination items and award the Contract for an area of service to the lowest
responsible bidder in each item included in the combination items, if in its
opinion either action would be in its interest.
48-A
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: M-1C
AREA OF SERVICE: Manhattan
For the transportation to and from school of approximately 7,770 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 1, 2, 3, 4, 5 & 6.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
90 174 1022 59
</TABLE>
48-B
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: BK-21
AREA OF SERVICE: Brooklyn
For the transportation to and from school of approximately 8,300 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 21.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
51 165 1,765 73
</TABLE>
48-L
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: BK-15
AREA OF SERVICE: Brooklyn
For the transportation to and from school of approximately 1,600 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 15.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
14 37 331 13
</TABLE>
48-J
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: BK-16-32
AREA OF SERVICE: Brooklyn
For the transportation to and from school of approximately 600 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 16 & 32.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
3 8 96 3
</TABLE>
48-K
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: BK-21
AREA OF SERVICE: Brooklyn
For the transportation to and from school of approximately 8,300 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 21.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
51 165 1,765 73
</TABLE>
48-L
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: BK-22
AREA OF SERVICE: Brooklyn
For the transportation to and from school of approximately 7,300 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 22.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
44 160 1,388 68
</TABLE>
48-M
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: Q-24
AREA OF SERVICE: Queens
For the transportation to and from school of approximately 5,500 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 24.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
33 59 438 34
</TABLE>
48-N
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: Q-25C
AREA OF SERVICE: Queens
For the transportation to and from school of approximately 6,700 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 25.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
38 103 787 60
</TABLE>
48-O
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: Q-25A
AREA OF SERVICE: Queens
For the transportation to and from school of approximately 3,350 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 25.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
18 49 408 24
</TABLE>
* This Item includes only schools North of Northern Blvd. in District 25.
48-P
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: Q-25B
AREA OF SERVICE: Queens
For the transportation to and from school of approximately 3,200 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 25.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
18 54 384 36
</TABLE>
* This Item includes only schools South of Northern Blvd. in District 25.
48-Q
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: Q-26
AREA OF SERVICE: Queens
For the transportation to and from school of approximately 4,500 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 26.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
34 102 1,040 47
</TABLE>
48-R
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: Q-27A
AREA OF SERVICE: Queens
For the transportation to and from school of approximately 3,900 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 27 Mainland.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
28 60 373 29
</TABLE>
* Service in this Item includes only schools North of Jamaica Bay and does not
include schools in the Rockaway peninsula.
48-S
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: Q-29
AREA OF SERVICE: Queens
For the transportation to and from school of approximately 5,500 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 29.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
39 100 692 38
</TABLE>
48-T
<PAGE>
Serial No. 9888
SCHEDULE OF ITEMS AND BID BLANK
ITEM NO.: Q-30A
AREA OF SERVICE: Queens
For the transportation to and from school of approximately 298 open enrollment
pupils and pupils attending regular classes in public and non-public schools in
Community School District 30.
<TABLE>
<CAPTION>
DAILY RATE DAILY RATE
NUMBER OF SCHOOLS NUMBER OF ROUTES NUMBER OF STOPS NUMBER OF VEHICLES PER VEHICLE PER ITEM
- ----------------- ---------------- --------------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C>
1 6 101 6
</TABLE>
* Vehicles in this Item are designated for service to IS 227Q only and the Board
reserves the right to design the routes to be serviced.
48-U
<PAGE>
Serial No. 9888
TERMS AND CONDITIONS
WITNESSETH
That pursuant to all applicable State and Local Laws and all By-Laws,
resolutions, rules and regulations of the Board of Education and the City of New
York and its various departments, and in consideration of the agreements
hereinafter undertaken by each of the parties hereto with the other, the parties
hereto do hereby covenant and agree for themselves and for their respective
successors and legal representatives as follows:
1. Definitions
A. Words used in this Contract shall have their ordinary meanings in
the English language, except that scientific, technical, specialized
or foreign words shall be given their appropriate scientific,
technical, specialized or foreign meanings, and definitions
specifically provided elsewhere in the Contract shall apply.
B. Wherever the following words, names or titles appear in this
Contract, they shall have the following meanings:
(1) "THE BOARD" means the Board of Education (BOE) of the City
School District of the City of New York and the party of the
first part of this Contract.
(2) "THE CONTRACTOR" means the party of the second part to this
Contract.
(3) The "CHANCELLOR" means the Chancellor of the Board of
Education.
(4) "BOARD OF REVIEW", means the Board of Review established by
the Board's By-Laws.
(5) "THE DIRECTOR" means the Director of the Office of Pupil
Transportation delegated by the Board to supervise the work of
this Contract.
(6) "THE SECRETARY", "ASSISTANT SECRETARY" and "EXECUTIVE
DIRECTOR" mean the following officers and employees of the
Board of Education respectively: the Secretary, and Assistant
Secretary of the Board of Education and the Executive Director
of the Division of Business and Administration.
(7) "THE CITY" means the City of New York.
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Serial No. 9888
(8) The "COMPTROLLER" and the "COMMISSIONER OF FINANCE" mean the
Comptroller and the Commissioner of Finance of the of the City
of New York, respectively.
(9) "APPROVED", "REQUIRED", "DIRECTED", "SPECIFIED", "DESIGNATED"
or "DEEMED NECESSARY", unless otherwise expressed, mean
approved, required, directed, specified, designated, or deemed
necessary, as the case may be, by the Chancellor or his
designee.
(10) "WORK" or "SERVICES" means all services to be furnished or
done by or on the part of the Contractor.
(11) "COMPLETION" means full and complete compliance with every
requirement of the Contract by the Contractor as certified by
the Chancellor or his designee.
(12) "SPECIFICATIONS" shall mean the combined proposal for bids
and specifications, and amendments thereto, and all of the
directions and requirements applying to the service as
hereinbefore detailed and designated under specifications.
(13) The term "ITEM", as used herein, shall be defined as each
separate unit or group of vehicles upon which a contractor may
bid.
(14) The terms "DRIVER" and "OPERATOR" shall be defined as
synonymous for the purpose of this Contract, and shall mean
any person employed by a Contractor and approved by the
Chancellor or his designee, to drive or operate a school bus
in the performance of this Contract.
(15) "FINAL PAYMENT" means (i) the payment or refund by the Board
or City of any monies which exhausts the amount of money made
available under the Agreement or (ii) any payment marked
"Final Payment".
(16) The term "ROUTE", as used herein, shall mean a series of bus
stops designated by the Office of Pupil Transportation for an
individual school, which, shall not exceed a total one way
route length of five miles when measured through all stop
points.
(17) The terms "RUN" and "SCHEDULE" shall be defined as synonymous
for the purpose of the Contract and shall mean the actual
course followed by a bus in transporting students to and from
school. Runs are constructed by the Contractor, from the stops
and routes designated by OPT, and may combine stops and/or
routes for several schools in close proximity and may exceed
five miles in length.
50
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Serial No. 9888
(18) "BIDDER" means an offerer of a price for which a contract will
be awarded.
(19) The term "CONTRACTOR" means a successful Bidder whose offer
has been accepted, and as stated in number (2) above, the
party of the second part to this Contract.
(20) "CONTRACT" shall mean the advertisement for furnishing and
delivering transportation services, proposal for bids,
instructions to bidders, bid specifications, schedules,
agreements and the resolution of awards approved by the Board
of Education which are and shall be a part of this Contract.
In case of variance between the specifications, bid and
contract, if any, the specifications shall be controlling.
2. Subject Matter
The Contractor shall provide at its own cost and expense sufficient plant,
equipment and working capital to provide for the transportation of pupils
in accordance with the terms, conditions, and specifications set forth
herein. The Contractor shall accept as full compensation for its faithful
performance of this Contract the sums certified by the Director in
accordance with the provisions of the Contract, and said sums shall be in
the amount at which the Contract was awarded to the Contractor at the
public bidding.
3. Captions
The headings of this Contract, the chapters, paragraphs, and subparagraphs
of the Contract, and of any attachments, are included solely for
convenience and reference, and they shall not be used in any way to
interpret this Contract.
4. Interpretation
Any doubt as to the meaning of the terms of the Contract or any obscurity
as to the wording of the terms will be explained in writing, upon written
request, by the Director and all directions and explanations required,
alluded to, or necessary to complete any of the provisions of the Contract
and to give them due effect will be given by the Director in writing upon
written request. The interpretation of the Director shall be final and
binding upon all parties.
The Chancellor or his designee shall in all cases determine the
acceptability of the labor, materials, or services which are delivered
pursuant to this contract, including but not limited to their quality,
delivery, and condition, and shall in all cases decide every question
which may arise relative to the performance of this Contract. The
51
<PAGE>
Serial No. 9888
Contractor may not rely upon, and the Board shall not be bound by, any
explanations, determinations or other statements by or from the Board
which are not in writing and signed by the Chancellor or his designee.
5. Modifications
The Board may, from time to time, request changes in the scope of the
services to be performed by the Contractor hereunder. However, no term,
provision or condition of this Contract shall be deemed waived by the
Board unless such waiver shall be in writing and signed by the Chancellor
or his designee.
6. Compliance With Laws
The Contractor shall comply with all applicable laws, ordinances, and
codes of Federal, State and Local governments.
It is the intent and understanding of the parties hereto that each and
every provision of law required by law to be inserted in this Contract
shall be deemed to be inserted herein. It is further agreed that if,
through mistake or otherwise, any such provision is not inserted, or is
not inserted in correct form, that this Contract shall forthwith be
amended upon notice to the Contractor by such insertion so as to comply
strictly with the law.
7. Worker's Compensation
If this Contract be of such a character that the employees engaged thereon
are required to be insured by the provisions of Chapter 615 of the Laws of
1922, known as the Worker's Compensation Law, as it has been or may be
amended, the person, firm or corporation making or performing the same
shall secure compensation for the benefit of, and keep insured during the
life of this Contract, such employees, in compliance with the provisions
of said law. Prior to starting service under this Contract, the Contractor
shall file with the Director a certificate showing compliance with the
provisions of said law. Such insurance shall be kept during the life of
said Contract.
8. Unlawful Provisions Void
If this Contract contains any unlawful provisions or portions thereof,
they shall be deemed deleted from the Contract and the remainder of the
Contract shall remain in full force and effect. If the deletion of such
provision frustrates the purpose of this Contract, either party may make
application to the Board of Review for relief.
9. Necessary Approvals
A. This Contract shall not become effective or binding upon the Board
until: (1) it shall have been approved as to form by the Office of
the
52
<PAGE>
Serial No. 9888
Corporation Counsel of the City of New York; (2) it has been
authorized by a resolution duly adopted by a vote of the Board; (3)
there is subsequent approval of the Contract by the New York State
Education Department and the rejection of the Contract at any time
by the Department shall extinguish all obligations of the Board
herein; (4) it is registered with the Comptroller, and reregistered
with the Comptroller from year to year if required; and (5) it is
approved and reapproved from year to year by the New York State
Financial Control Board if required by the Regulations of said
Financial Control Board.
B. This agreement is subject to the approval of the Financial Control
Board (FCB) if it falls into one of the following categories:
(1) Any Program Contract which requires or may reasonably be
anticipated to require payment by the City of an amount in
excess of $1,000,000.
(2) Any Capital Construction Contract which requires or may
reasonably be anticipated to require payment by the City or a
covered organization of an amount in excess of $5,000,000.
(3) Any other contract, including Capital Non-Construction
Contracts, other than Long-term Leases and Collective
Bargaining Agreements, which require or may reasonably be
anticipated to require payment by the City of $5,000,000 or
more or in the case of a covered organization, an amount of
$1,000,000 or more.
(4) Any Long-term Lease.
(5) Any Collective Bargaining Agreement or modification thereof as
defined and governed by the Collective Bargaining Agreements
Review and Approval Procedures adopted by the Control Board on
April 23, 1981, and as amended from time to time.
(6) (a.) Any amendment to a contract required to be submitted to
the Control Board pursuant hereto, other than a
Long-term Lease or Collective Bargaining Agreement,
which modifies the time or times of payment, or
increases the amount required to be paid by the City or
a covered organization, and which amendment when
considered in the aggregate with all prior unapproved
amendments to such contract approved since the last
amendment, increases or may reasonably be anticipated to
increase the base contract amount by increments of
$500,000 in the case of the City, and in the case of a
covered organization $500,000 for Capital Construction
Contracts and $250,000 for all other contracts.
(b.) Any amendment to a contract not initially required to be
submitted to the Control Board pursuant hereto, other
that a Long-term Lease or Collective Bargaining
Agreement,
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Bargaining Agreement, which amendment, when considered
in the aggregate with the base contract increases or may
reasonably be anticipated to increase the base contract
amount up to and beyond $5,000,000 in the case of the
City and, in the case of covered organizations
$5,000,000 for Capital Construction Contracts, and
$1,000,000 for all other contracts.
(c.) All subsequent amendments to a contract not initially
required to be submitted to the Control Board pursuant
hereto but which has been amended and such amendment was
required to be submitted to the Control Board pursuant
to Section 2(e) (ii) of the Regulation which subsequent
amendments, when considered in the aggregate with all
prior unapproved amendments to such contract, increase
or may reasonably be anticipated to increase the base
contract as approved by increments of $500,000 in the
case of the City or, in the case of a covered
organization $5,000,000 for Capital Construction
Contracts, and $250,000 for all other contracts.
(7) (a.) Any amendment to a Long-term Lease as defined in Section
1 (e) (1) or (2) of the Regulations which (a) modifies
the term of the lease or renewal period, (b) increases
the amount required to be paid by the City or a covered
organization as rent or otherwise, (c) decreases the
amount to be paid to the City or a covered organization
pursuant to such Lease, or (d) modifies the time or
amounts of any payments under the lease.
Any amendment to a Long-term Lease as defined in Section
1 (e) (3) of the Regulations.
10. Religious Activity Prohibited
There shall be no religious worship, instruction, proselytizing, or other
religious activity engaged in by the Contractor or its employees in
connection with the performance of this Contract.
11. Political Activity Prohibited
There shall be no political activity engaged in by the Contractor or its
employees while in the performance of this Contract to further the
election or defeat of any candidate for public office.
In addition, neither the Contractor nor its employees shall engage in the
distribution, to any students or their parents, of any handouts,
advertisements, pamphlets or any other document or material not required
by this Contract or otherwise authorized by the Director
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while engaged in or in connection with the performance of this Contract.
12. No Personal Liability
Neither the members of the Board nor the Chancellor nor any officer,
employee, agent or other representative of the Board or of the City shall
be personally liable, based upon any theory of law or equity, to the
Contractor, or to any party claiming on behalf of or through the
Contractor, under this Contract, or by reason of any individual's actions
or failure to act in any way connected with this Contract, whether or not
the action shall have been within or without an individual's scope of
authority. The scope of this provision includes injury to any personal
interest (commercial or otherwise), physical injury (including death),
property damages, and any pecuniary damages where such injuries or damages
result from or arise out of negligence. The Contractor further waives any
and all rights to make a claim or commence an action or special
proceeding, in law or equity, against any of the aforementioned
individuals, and the Contractor hereby assigns its complete right, title,
and interest in any such claim, action, or special proceeding to the
Board.
13. Prevention of Delay, Suspension or Strikes
Because of the public nature of the services involved, and because of the
essential public services performed, the contractor shall not act in any
manner, nor employ labor or means, nor do anything by way of omission or
commission that would in any way cause or result in a suspension, or delay
of or strike affecting the work or any services to be performed hereunder.
Any violation by the Contractor of this requirement may, upon
certification of the Director that the Contractor's act or failure to act
demonstrated a lack of good faith effort to assure the performance of the
conditions or covenants of this Contract, be considered as proper and
sufficient cause for finding the Contractor to be in default in the manner
set forth in this Contract.
14. Inspectors and/or Administrative Personnel
The Director may assign inspectors or other administrative personnel to
inspect vehicles furnished under this Contract, and such inspector or
inspectors shall have the right at any and all times to inspect the
vehicles used or proposed to be used under this Contract; to inspect the
driver's license, vehicle registration, and proof of insurance; and to
require drivers to produce proper identification. Such inspectors are
authorized and empowered to reject and forbid the use of any and all
vehicles or any part thereof offered under or in fulfillment of this
Contract for the reason that the same do not comply with the
specifications. Inspectors and/or administrative personnel will be allowed
access to all of the Contractor's premises and vehicles for
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the purpose of carrying out vehicle inspections and related functions, and
the review and audit of Contractor records for compliance with the terms
of this Contract.
15. Rejection of Vehicles
Any vehicle furnished or offered to be furnished under this Contract for
the transportation of pupils which is rejected by an inspector as not
conforming to the specifications, the rules and regulations of the New
York State Department of Transportation or Education Department, or those
of the Board, shall be immediately removed, and vehicles for the
transportation of pupils which do conform shall be furnished in place
thereof.
16. No Extra Compensation
The Contractor shall not seek, ask for, demand, sue for or recover as
extra compensation or otherwise, any sum for labor, materials or services
other than the compensation agreed upon and fixed.
17. Invoices and Payments
The Contractor shall furnish proof of performance with each invoice and
shall comply with all Board requirements concerning the manner in which
invoices are to be submitted. If the Contractor shall well and faithfully
perform and fulfill this Contract and keep every covenant on its part
herein contained, the Board shall then pay or cause to be paid to the
Contractor, subject to the provisions of the specifications, the amounts
due the contractor as the services are provided. The Board and the
Comptroller may at all times reserve and retain out of said payments, all
sums as by the terms hereof, or of any law of the State of New York, or of
any local law of the City of New York, now in effect or hereafter enacted,
the Board or the City may be authorized to collect, reserve or retain.
The Contractor shall not be entitled to demand or receive payment for the
services rendered, or any portion thereof, except in the manner set forth
in this Contract, upon certification by the Director of compliance by the
Contractor with each and every one of the stipulations herein mentioned,
provided that nothing herein contained be construed to affect the right
hereby reserved by the Board and the Comptroller to refuse to pay any part
or all of the amount certified should the said certificate be found or
known to be inconsistent with the terms of this Contract, or otherwise
improperly given.
18. Cancellation of Funding
The Services to be provided hereunder are to be paid for, in large part,
by means of funding received by the Board from Federal, State or City
Sources. The obligation to pay the Contractor shall be subject
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to the continuing availability of said funding. The Board shall notify the
Contractor within five (5) business days from the date the Board receives
written notice of the cancellation of such funding, in whole or in part,
whereupon the Contractor may cease further performance of this Contract to
the extent said performance would not be supported by the funding.
However, the Board may, at its option, require completion of performance
of this Contract by the Contractor upon giving written assurance, signed
by the Chancellor or his designee, within fifteen (15) business days of
the date the Board receives written notice of such cancellation, that the
completed performance of this Contract shall be supported by other
available funds.
19. No Estoppel
The Board, City, and their respective departments, divisions and offices,
shall not be precluded or estopped by a statement or document issued by or
on behalf of the Board or the City, from indicating the true value of
services performed and supplies furnished by the Contractor or by any
other person pursuant to or as a result of this Contract, or from
indicating that any such return or certificate is untrue or incorrect in
any, particular or that the services performed and supplies furnished or
any part thereof do not in fact conform to the provisions of the Contract.
Notwithstanding any such statements or document, or payment in accordance
therewith, the Board and the City shall not be precluded or estopped from
demanding and recovering from the Contractor such damages as may be
sustained by reason of the Contractor's failure to comply with the
provisions of this Contract.
20. Prior Contractors
The Contractor agrees to be responsible to the Board for any debts owed to
the Board by any other transportation Contractor, where the Contractor and
the other transportation contractor have, or had at anytime since the date
of execution of the previous Contract, substantially the same ownership,
and provided that those debts arose under a Contract for the
transportation of pupils previously entered into between the Board and the
other transportation contractor. Incorporated contractors having
substantially the same ownership, inc1udes, but is not necessarily limited
to, corporations having 20% of their shares held by the same persons.
21. Acceptance of Final Payment
Receipt and negotiation by the Contractor, or by any person claiming under
this Contract, of the Final Payment hereunder, notwithstanding whether
such payment be made pursuant to any judgement or order of any court,
shall constitute a general release of the Board from any and all claims
and liability for anything done, furnished, or relating to
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the labor, materials, or services provided, or for any act of omission or
commission of the Board or its agents and employees. Said release shall be
effective against the Contractor and the Contractor's representatives,
heirs, executors, administrators, successors, and assigns.
22. Claims - Limitation of Action
No action at law or equity shall be maintained by the Contractor, its
successors or assigns, against the Board on any claim based upon or
arising out of this Contract, or out of anything done in connection with
this contract, unless such action shall be commenced within six (6) months
after the date of filing of the voucher for final payment hereunder or
within six (6) months of the required completion date for the services
performed hereunder, whichever is sooner. None of the provisions of
Article 2 of the Civil Service Practice Law and Rules shall apply to any
action against the Board arising out of this contract.
23. Notices
The Contractor's address stated on Page 12 of this Contract is hereby
designated as the place where all notices, letters or other communications
directed to the Contractor shall be served, mailed or delivered. Any
notice, letter or other communication directed to the Contractor and
delivered to such address, or sealed in a post-paid wrapper and deposited
in any post office box regularly maintained by the United States Postal
Service, shall be deemed sufficient service thereof upon the Contractor.
Said address may be changed at any time by an instrument in writing,
executed and acknowledged by the Contractor and delivered to the
Chancellor's designee. Nothing herein contained shall be deemed to
preclude or render inoperative personal delivery of any notice, letter or
other communication, written or oral to the Contractor. Whenever it shall
be necessary or required to prove the delivery of any notice, an affidavit
describing such delivery shall be conclusive evidence of such delivery.
24. Waivers
A. No waiver by the Board of any term or condition hereof shall be
effective unless in writing and signed by the Director or his
designee. Any waiver shall be specifically limited to its terms, and
shall not be deemed applicable to subsequent like circumstances.
B. Any purported oral waiver shall be void.
25. Cancellation
A. If the Contractor violates any provision of this Contract the
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Chancellor or his designee may pursue legal or equitable remedies
available to the Board. In addition, the Chancellor or his designee
may seek to have the Contractor declared in default by the Board of
Review pursuant to Article 8 of the Bylaws of the Board of
Education. In the event that the Board of Review shall determine the
Contractor to be in default, the Board may cancel this Contract and
shall thereafter be relieved of all liability hereunder.
B. In the event of breach of this Contract by the Contractor, the Board
shall have the right to cancel and terminate said Contract, and the
Contractor shall be liable to the Board for any additional cost of
completion of the within services, the Board's other costs in
connection with the termination, reletting and completion of the
services. All such costs, along with any liquidated damages provided
herein, may be assessed by the Board against the Contractor and
deducted by the Board from payments to be made to the Contractor
under this or any other Contract at any time entered into between
the Contractor and the Board or City. In the event that said costs
and liquidated damages exceed all sums owed at the termination date
of this Contract, the Contractor shall pay the amount of such excess
to the Board upon notice from the Board of said amount, and in the
event that said costs and liquidated damages are less than the sum
payable under this Contract as if same had been completed by the
Contractor, the Contractor shall forfeit all claims to the
difference to the Board. If the Board undertakes to secure the
services or any part thereof under this section of the Contract,
amount of services secured, the cost and excess cost, if any, of
completing this Contract, and the amount of liquidated damages
hereunder, shall be conclusive and binding upon the Contractor, its
assigns and all other claimants.
26. Investigations
1.1 The parties to this agreement agree to cooperate fully and
faithfully with any investigation, audit or inquiry conducted by a
State of New York (State) or City of New York (City) governmental
agency or authority that is empowered directly or by designation to
compel the attendance of witnesses and to examine witnesses under
oath, or conducted by the Inspector General of a governmental agency
that is a party in interest to the transaction, submitted proposal,
contract, lease, permit, or license that is the subject of
transaction, the investigation, audit or inquiry.
1.2 (a) If any person who has been advised that his or her statement,
and any information from such statement, will not be used
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against him or her in any subsequent criminal proceeding refuses
to testify before a grand jury or other governmental agency or
authority empowered directly or by designation to compel the
attendance of witnesses and to examine witnesses under oath
concerning the award of or performance under any transaction,
agreement, lease, permit, contract, or license entered into with
the Board, the City, the State, or any political subdivision or
public authority thereof, or the Port Authority of New York and
New Jersey, or any local development corporation within the
City, or any public benefit corporation organized under the laws
of the State of New York, or;
1.2 (b) If any person refuses to testify for a reason other than the
assertion of his or her privilege against self incrimination in
an investigation, audit, or inquiry conducted by the Board or a
City or State governmental agency or authority empowered
directly or by designation to compel the attendance of witnesses
and to take testimony under oath, or by the Inspector General of
the governmental agency that is a party in interest in, and is
seeking testimony concerning the award of, or performance under,
any transaction, agreement, lease, permit, contract, or license
entered into with the City, the State, or any political
subdivision thereof or any local development corporation within
the City, then;
1.3 (a) The commissioner or agency head whose agency is a party in
interest to the transaction, submitted bid, submitted proposal,
contract, lease, permit, or license shall convene a hearing,
upon not less than five (5) days written notice to the parties
involved to determine if any penalties should attach for the
failure of a person to testify.
1.3 (b) If any non-governmental party to the hearing requests an
adjournment, the commissioner or agency head who convened the
hearing may upon granting the adjournment, suspend any contract,
lease, permit, or license pending the final determination
pursuant to paragraph 1.5 below without the Board or City
incurring any penalty or damages for delay or otherwise.
1.4 The penalties which may attach after a final determination by
the commissioner or agency head may include but shall not
exceed:
(a) the disqualification for a period not to exceed five (5)
years from the date of an adverse determination for any
person, or any entity of which such person was a member
of at the time the testimony was sought, from submitting
bids for, or transacting business with, or entering into
or
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obtaining any contract, lease, permit or license with or
from the Board or the City, and/or
(b) The cancellation or termination of any and all such
existing Board or City contracts, leases, permits or
licenses that the refusal to testify concerns and that
have not been assigned as permitted under this
agreement, nor the proceeds of which pledged, to an
unaffiliated and unrelated institutional lender for fair
value prior to the issuance of the notice scheduling the
hearing, without the Board or the City incurring any
penalty or damages on account of such cancellation or
termination; monies lawfully due for goods delivered,
work done, rentals, or fees accrued prior to the
cancellation or termination shall be paid by the Board
or the City.
1.5 The commissioner or agency head shall consider and address in
reaching his or her determination and in assessing an appropriate
penalty the factors in paragraphs (a) and (b) below. He or she may
also consider, if relevant and appropriate, the criteria established
in paragraphs (c) and (d) below in addition to any other information
which may be relevant and appropriate;
(a) The partys' good faith endeavors or lack thereof to
cooperate fully and faithfully with any governmental
investigation or audit, including but not limited to the
discipline, discharge, or disassociation of any person
failing to testify, the production of accurate and
complete books and records, and the forthcoming
testimony of all other members, agents, assignees or
fiduciaries whose testimony is sought.
(b) The relationship of the person who refused to testify to
any entity that is a party to the hearing, including,
but not limited to, whether the person whose testimony
is sought has an ownership interest in the entity and/or
the degree of authority and responsibility the person
has within the entity.
(c) The nexus of the testimony sought to the subject entity
and its contracts, leases, permits or licenses with the
Board or the City.
(d) The effect a penalty may have on an unaffiliated and
unrelated party or entity that has a significant
interest in an entity subject to penalties under 1.4
above, provided that the party or entity has given
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actual notice to the commissioner or agency head upon
the acquisition of the interest, or at the hearing
called for in 1.3(a) above gives notice and proves that
such interest was previously acquired. Under either
circumstance the party or entity must present evidence
at the hearing demonstrating the potential adverse
impact a penalty will have on such person or entity.
1.6 (a) The term "license" or "permit" as used herein shall be defined
as a license, permit, franchise or concession not granted as a
matter of right.
(b) The term "person" as used herein shall be defined as any
natural person doing business alone or associated with another
person or entity as a partner, director, officer, principal or
employee.
(c) The term "entity" as used herein shall be defined as any firm,
partnership, corporation, association, or person that receives
monies, benefits, licenses, leases, or permits from or through
the Board or the City or otherwise transacts business with the
Board or the City.
(d) The term "member" as used herein shall be defined as any
person associated with another person or entity as partner,
director, officer, principal or employee.
27. Reports, Inspection and Maintenance of Records
A. The Contractor shall promptly provide all reports required by the
Board, including without limitation, financial, program,
statistical, analytical, narrative and progress reports. Unless
otherwise provided herein, the final payment hereunder shall not be
made until all reports have been submitted and approved by the
Board.
B. The contractor shall, until six (6) years after completion of its
services hereunder or six (6) years after date of termination of
this Contract, whichever is later, maintain and retain complete and
correct books and records relating to all aspects of the
Contractor's obligations hereunder, including, without limitation,
accurate cost and accounting records specifically identifying the
expenses incurred by the Contractor in performing such obligations,
including, without limitation, the following costs: payroll expense,
and all other related records necessary to assure a proper
accounting of funds, including property, personal records, cash
receipts and disbursements, journals and ledgers. Records must be
maintained separately, so as to identify clearly the expenses
applicable to this Contract and
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be distinguishable from all other costs not incurred under this
Contract.
C. The Contractor shall make its staff, premises, books, records,
operations, and Services provided under this contract, and those of
its subcontractors, available to the Board and to any person, agency
or entity designated by the Board, at any time, for program audit,
fiscal audit, inspection, observation, sampling, visitation and
evaluation, and shall render all assistance and cooperation for said
purposes.
D. In its record keeping the Contractor shall also comply with all
federal, state and local laws and regulations pertaining to such
records, including, without limitation, the regulations of the
Comptroller, and shall require its subcontractors to do likewise.
E. In the event that any Federal, state or local government agency, or
other public or private agency conducts an audit of any of the
Contractor's operations, within five (5) working days after receipt
by the Contractor of notice of the commencement of such audit the
Contractor shall give notice of such commencement to the Board; and
within five (5) working days after receipt by the Contractor of a
copy of any resulting interim or final audit report, the Contractor
shall supply one copy thereof to the Board.
28. Non-Assignment of Contract
The Contractor shall give its personal attention to the faithful
performance of this Contract. Contractor covenants that it will not
assign, transfer, convey, sublet or otherwise dispose of this Contract or
its right, title or interest therein or its power to execute such
Contract, to any other person or corporation without the previous written
consent of the Chancellor or his designee. If the Contractor in any way
violates the terms of this provision, the Board shall have the right to
cancel and terminate this Contract, and the Board shall thereupon be
relieved from all liability hereunder. Nothing contained herein shall be
construed to affect an assignment by the Contractor for the benefit of its
creditors made pursuant to the statutes of the State of New York. No right
under this Contract, or to any monies due or to become due hereunder,
shall be asserted against the Board or the City in law or in equity by
reason of a purported assignment of this Contract, or any part thereof,
or of any monies due or to become due hereunder, unless authorized as
aforesaid.
29. Transfer of Corporate Stock
The Contractor agrees that it will notify the Director of any change in
corporate officers, directors or managing agents, or the
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organization of the corporation including but not limited to, a change in
corporate voting power, transfer or sale of corporate assets, transfer or
sale of corporate stock over 3% or any other action which may effect the
interests of the Board as a party to this Contract.
30. Contractor's Staff
The Contractor shall employ or contract for the services of only competent
workmen, consultants, independent contractors or other employees which
are, or may reasonably be, necessary for the performance of the Services
hereunder.
The Contractor warrants that, to its knowledge, no employee of the
Contractor is currently employed in any capacity by the Board of Education
of the City of New York, and that the Contractor shall be solely
responsible for said employee's work, direction, safety and compensation
unless otherwise provided by the Contract.
The Contractor agrees to immediately remove from any part of the work to
be performed hereunder any employee, and not engage such employee in the
performance of this Contract, if the Contractor is notified in writing
that, in the opinion of either the Chancellor, or his designee, such
employee is incompetent or otherwise impedes the performance of the
services hereunder.
31. Confidentiality of Records
All personally identifiable student and staff information obtained by or
furnished to the Contractor by the Board, and all reports and studies
containing such information prepared or assembled by the Contractor, are
to be kept strictly confidential by the Contractor and shall not be
provided or disclosed to any third party without the express written
permission of the Chancellor or his designee. The Contractor shall limit
access to such material in its control to those of its employees
performing services pursuant to this Contract strictly on a need to know
basis. The Contractor shall restrict its use of the information to its
performance under this Contract and shall return all such material to the
Board upon the completion of the services herein.
32. Testimony
If the subject matter of this Contract at any time becomes involved in any
action or proceeding, to which the Board or the City is a party, before
any court, board, tribunal, panel, arbitrator, referee or agency, the
Contractor shall provide such knowledgeable witnesses as the Board shall
require, free of additional compensation of any kind. Nothing herein shall
require the Contractor to provide testimony in any proceeding in which it
is a party with interests opposed to those of the Board.
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33. Indemnification
The Contractor shall protect, indemnify and hold harmless the Board from
any and all claims, suits, actions, costs and damages to which the Board
may be subjected by reason of injury to person or property, or wrongful
death, as may result from any act, omission, carelessness, malpractice or
incompetence of the Contractor, or anyone employed or engaged by the
Contractor, in connection with the performance of this Contract.
34. Conflict of Interest Prohibited
A. Except in accordance with applicable provisions of law and
regulations governing such employment, the Contractor may not employ
or contract for the services of 1.) any present employee of the
Board or 2.) any person who is presently on leave from employment
with the Board, or 3.) any former employee of the Board.
B. The Contractor warrants that, other than a bona fide employee or
contractor regularly working as a sales representative for the
Contractor, no person, selling agency, or other entity has solicited
or secured this Contract, or has been employed or retained to do so,
for a commission, percentage, brokerage fee or contingent fee.
C. The Contractor shall not give, and warrants that it has not given or
promised to give, any gift or thing of value to any officer,
employee or other person whose salary is payable in whole or part
from Board or City Funds, or other funds under this contract. The
phrase "gift or thing of value" shall include, without limitation,
money, tangible goods, services, loans, promises or negotiable
instruments.
D. If the Contractor violates any provision of this paragraph, the
Board may, at its option, (1.) cancel and terminate this Contract
and be relieved of all liability hereunder, (2.) deduct all amounts
paid by the Contractor or other value given by the Contractor in
violation of this paragraph, from payments made or to be made to the
Contractor under this or any other contract at any time, (3.)
require the refund of any funds paid hereunder or (4.) any
combination of the foregoing. Any breach of the warranties or
violation of the provisions of this paragraph shall be grounds to
preclude the Contractor or its principals as a responsible bidder on
other Board or City contracts.
35. Anti-Trust Clauses
The Contractor hereby assigns, sells and transfers to the Board all right,
title and interest in and to any claims and causes of action
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arising under the antitrust laws of New York State or of the United States
relating to the particular goods or services purchased or procured by the
Board or City under this Contract.
36. Merger
This written Agreement constitutes the entire agreement of the parties,
and no other prior or contemporaneous agreement, oral or otherwise,
regarding the subject matter of this Agreement shall be deemed to exist or
bind any of the parties hereto, or to vary any of the terms contained
herein.
37. Participation In An International Boycott
A. The Contractor agrees that neither it nor any substantially-owned
affiliated company is participating or shall participate in an
international boycott in violation of the provisions of the Export
Administration Act of 1969, as amended, or the regulations of the
United States Department of Commerce promulgated thereunder.
B. Upon the final determination by the Commerce Department or any other
agency of the United States as to, conviction of the Contractor or a
substantially-owned affiliated company thereof, participation in an
international boycott in violation of the provisions of the Export
Administration act of 1969, as amended, or the regulations
promulgated thereunder, the Comptroller or the Chancellor or his
designee may, at his option, render forfeit and void this Contract.
C. The Contractor shall comply in all respects, with the provisions of
Section 343-10.0 of the Administrative Code of the City of New York
and rules and regulations issued by the Comptroller thereunder.
38. Discrimination
In connection with the performance of work under this Contract, the
Contractor agrees as follows:
a) The Contractor will not discriminate against any employee or
applicant for employment because of race, creed, color, age, sex,
national origin, handicap, marital status, religion or political
beliefs or affiliations. The Contractor will take action to ensure
that applicants are employed, and that employees are treated during
employment, without regard to the foregoing categories. Such action
shall include but not be limited to the following: employment;
upgrading; demotions or transfer; recruitment or recruitment
advertising; layoff or termination; rates of pay or other forms of
compensation; and selection for training, including apprenticeship.
The Contractor agrees to post
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in conspicuous places, available to employees and applicants for
employment, notices to be provided by the Board setting forth the
provisions of this nondiscrimination clause.
b) The Contractor shall not discriminate against any employee or
applicant for employment on the basis of sex pursuant to Title IX of
the Education Amendments of 1972 (20 United States Code Annotated,
Section 1681 et seq.).
c) The Contractor will, in all solicitations or advertisements for
employees placed by or on behalf of the contractor, state that all
qualified applicants will receive consideration for employment
without regard to race, creed, color, age, sex, or national origin.
d) The Contractor will send to each labor union or representative of
workers with which it has a collective bargaining agreement or other
contract or understanding, a notice to be provided by the Board
advising the said labor union or workers' representatives of the
contractor's commitments under this section, and shall post copies
of the notice in conspicuous places available to employees and
applicants for employment.
e) The Contractor will comply with all provisions of law prohibiting
discrimination because of race, creed, color, age, sex, or national
origin.
f) The Contractor will comply with all provisions of Executive Order
No. 11246 of September 24, 1965, and of the rules, regulations, and
relevant orders of the Secretaries of Labor and Health and Human
Services created thereby. The contractor will furnish all
information and reports required by Executive Order No.11246 of
September 24, 1965, and by the rules, regulations, and orders of
said Secretaries issued pursuant thereto, and will permit access to
its books, records, and accounts by the Board and the Secretaries
for purposes of investigation to ascertain compliance with such
rules, regulations and orders. In the event of the Contractor's
non-compliance with the nondiscrimination clause of this Contract,
or with any of the said rules, regulations or orders, this Contract
may be cancelled in whole or in part and the Contractor may be
declared ineligible for further Government contracts in accordance
with procedures authorized in Executive Order No. 11246 of September
24, 1965, and such other sanctions may be imposed and remedies
invoked as provided in the said Executive Order by rule, regulation
or order of the Secretaries of Labor and Health and Human Services,
or as otherwise provided by law.
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39. Equal Employment Opportunity Requirements for Non-Construction
Contractors, Vendors and Suppliers
The attention of all bidders is particularly directed to the various
orders, rules, regulations and procedures set forth in the contract
documents with respect to identifying and eliminating both overt and
covert discriminatory employment practices.
I. Policy
It is the policy of the Board of Education, City of New York, in
accordance with the Labor Law of the State of New York and other
applicable laws, to provide equal opportunity for all qualified
persons, to prohibit discrimination in employment because of race,
creed, color, age, sex, national origin, handicap, marital status,
religion or political beliefs or affiliations and to promote the
full realization of equal opportunity through an affirmative,
continuing program of compliance by all contractors, suppliers and
vendors doing business with the Board of Education and their
subcontractors.
II. Implementation
The Director of the Office of Equal Opportunity shall be responsible
for the implementation and administration of this policy. He or she
shall be directly responsible to the Deputy Chancellor of the Board
of Education and shall be responsible for issuing all orders, rules,
regulations and procedures as may be deemed necessary or convenient
for carrying out and implementing the policy set forth in Section 1.
III. Definition of terms for the purpose of these Orders, Rules and
Procedures
A. Non-Construction Contract
Any Agreement, or commitment by the Board of Education, to
purchase or lease supplies, equipment or services. The term
"Non-Construction Contract" excludes contracts of the Board of
Education related to the erection, construction,
reconstruction, rehabilitation, alteration, conversion,
extension, repair or demolition of buildings or improvements
to real property, with the exception of supplies, equipment
and materials therefore, and work, labor or services relating
to architectural, engineering or consultant services.
B. Contractor
Any person or entity employing workers, who bids for, or who
is awarded a non-construction contract.
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Serial No. 9888
C. Employee of Non-Construction Contractor
Any person employed full or part time, in any capacity, by a
person, partnership, corporation or business association, that
has bid on, is bidding on, or has been awarded a
non-construction contract or purchase order for work, labor,
supplies, equipment, materials, goods or services by the
Board.
D. Minority Group Members
Blacks, Hispanics (non-European), Asian-Americans and American
Indians.
E. Program of Affirmative Action
A detailed, result-oriented set of written procedures which
when implemented with conscientious effort results in
compliance with the equal opportunity policy herein, through
full utilization and equal treatment of minority group members
and women at all levels in all segments of Contractor's
workforce. An effective program of affirmative action shall
include, but not necessarily be limited to, the following
ingredients:
1. Development or reaffirmation of the Contractor's equal
emp1oyment opportunity policy);
2. Dissemination of the policy;
3. Responsibility for implementation;
4. A survey and analysis of employment at all levels and in
all categories and aspects of its workforce, which
determines if and at which levels, categories and
aspects the Contractor or sub-contractor is deficient in
the utilization of minority group members and women;
5. Establishment of goals and timetables toward the
attainment of which the Contractor's or subcontractor's
good faith effort must be directed to remedy any
identifiable underutilization of minority group members
and women;
6. An analysis of employment policies and practices,
including but not limited to seniority systems,
recruitment training, promotion, insurance, and job
benefits, and their effects upon minority group members
and women;
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Serial No. 9888
7. Corrective actions taken, or to be taken, toward the
elimination of any employment policy or practice having
a discriminatory effect on minority group members and
women.
F. Goals and Timetables
Projected levels of achievement resulting from an analysis by
the Contractor or subcontractor of its deficiencies, and of
what it can reasonably do to remedy them within a specified
time frame.
G. Underutilization
Having fewer minority group members and women in a particular
job classification than would reasonable be expected by their
availability in the appropriate labor force.
IV. Bidding and Awarding of Contracts
A. Pre-Award Conference
Prior to the award of Contract to the apparent low bidder and
if requested in writing by the Director of the Office of Equal
Opportunity (hereinafter referred to as the Director"), such
bidder shall attend a pre-award conference to be held in the
Office of Equal Opportunity of the Board of Education for the
purpose of acquainting him or her with the statutory and
contractual requirements and what specific measures shall
constitute an acceptable program of affirmative action.
B. Program of Affirmative Action
Prior to the award of Contract to the lowest responsible
bidder and upon demand, the low bidder must submit to the
Director a detailed written Program of Affirmative Action
(hereinafter referred to as "P.A.A."). In the event the low
bidder fails to submit an acceptable P.A.A. within the
allotted time stipulated in the demand, the Director may
recommend that the low bid be rejected, the amount of the bid
deposit, if any, be forfeited, and that the low bidder be
disqualified from bidding on Board of Education work for a
period of one year. The P.A.A. shall:
1. Apply to all Board of Education non-construction
contracts except that, with regard to contracts,
subcontracts or purchase orders under $25,000, the
Director is authorized to make modifications as may be
appropriate in the individual case;
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Serial No. 9888
2. Encompass all phases of the employment process,
including evaluation of job classifications to ensure
job relatedness, recruitment, selection, validity of
examinations, retention, layoffs, seniority,
assignments, training, promotion, salary and benefits;
3. Be considered by the Board of Education in its
determination as to whether a numerical low bidder will
be judged the lowest responsible bidder entitled to
award thereof. The Director shall be the sole judge of
the program's acceptability;
4. In addition to the above, fulfill the requirements of
subdivisions (a) through (g) of this section:
(a) The P.A.A. shall include measurable goals, reasonable
timetables and specific programs to be implemented by
the Contractor to identify and eliminate deficiencies in
employment practices with respect to the
under-utilization of minority group men and women in the
Contractor's workforce and a projection of the minority
utilization in the Contractor's workforce for the life
of the contract and for at least a one-year period
succeeding its completion. This statement and projection
shall include present and projected (1) rates of hiring
and promotion of minority group members and women in
specific job categories at each wage rate within each
level of employment and according to major
organizational unit, and (2) percentages of minority
group and women utilization in specific job categories
at each wage rate within each level of employment and
according to major organizational units, within the
Contractor's workforce.
(b) The P.A.A. shall include all of the Contractor's
facilities within New York City as well as those
facilities located elsewhere within the continental
limits of the United States.
(c) The P.A.A. shall specify the union(s) or other employee
organizations to which the Contractor's employees belong
and shall include commitments to good faith efforts to
effect equal employment opportunity changes directly or
indirectly, in programs by such unions or organizations
to recruit, train or otherwise select members if such
changes are deemed necessary. The P.A.A shall also
include a copy of any agreement with an employee
association which affects employment policies and
practices.
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Serial No. 9888
(d) The P.A.A., or portion thereof, shall be submitted in
such format as shall be specified by the Director of the
Office of Equal Opportunity.
(e) The P.A.A. shall include a commitment to submit to the
Director a separate P.A.A., of the form and substance
specified in subdivisions (a) through (g) hereof, for
each subcontractor prior to its approval by the Board of
Education. Every subcontract made by a non-construction
contractor shall also contain these rules, regulations
and orders in their entirety or their incorporation by
reference.
(f) If the P.A.A. shall include written evidence or other
proof which shows that minority entrepreneurs have been
solicited and given an equal opportunity to submit
proposals and that such proposals have been given equal
consideration for award.
(g) Unless exempted by the Board of Education, no specific
commitment, including goals for minority group
employment and adoption of equal employment practices,
contained in the P.A.A. shall be acceptable, which is
not at least equal to any such commitment contained in
the most recent previous P.A.A., if any, of the
Contractor or subcontractor.
V. Compliance Inspection Report
A. Prior to the award of Contract to the lowest responsible
bidder and upon demand, the low bidder must submit to
the Director of Equal Opportunity, a Compliance
Inspection Report. The completed Compliance Report must
be returned to the Office of Equal Opportunity within
twelve (12) calendar days from the effective date stated
on the Requisition for Information accompanying the
Report form.
Failure to submit the Compliance Inspection Report
within the period of time specified above may result in
a rejection of the bid and the disqualification of the
bidder from bidding on Board of Education work for a
period of one year.
B. The Compliance Inspection Report shall be submitted in a
form provided by or approved by the Director, and shall
indicate and furnish explanations for any current or
anticipated departures from the total labor force
projections, or minority group labor force projections
in the contractor's or subcontractor's P.A.A., or from
planned corrective action relating to employment
policies as stated in the P.A.A.
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Serial No. 9888
VI. Contractor's Implementation
Good faith efforts must be made to implement these
affirmative action steps during the performance of the
Contract. The effectiveness of the affirmative action
program shall be measured by the extent of progress made
toward an equitable participation which reflects the
appropriate available minority and female workforce and
the lack of such progress shall be a factor considered
in determining whether there have been good faith
efforts to implement the program.
VII. Sanctions and Remedies
A. It is agreed that if the Contractor does not comply with
the equal opportunity provisions herein stated, as
solely determined by the Board of Education, the said
Contract may be cancelled, terminated, or suspended in
whole or in part and the Contractor may be declared
ineligible for further Board of Education contracts
and/or subject to such other sanctions as may be imposed
and remedies involved by the Board of Education in its
discretion.
B. Prime Contractors shall be responsible for the
compliance of their subcontractors. Failure of its
subcontractor to comply with the provisions hereof or
with affirmative action contractual provisions, shall be
grounds for the imposition of sanctions and remedies
against a prime contractor. Such sanctions and remedies
include the authority of the Director to halt scheduled
payments to Contractors who consistently fail to comply
with the provisions hereof.
C. No sanctions or remedies shall be imposed on a bidder,
Contractor or subcontractor without affording such
bidder, Contractor or subcontractor an opportunity for a
compliance review. The purpose of the compliance review
is to enable the bidder, Contractor or subcontractor to
present written evidence as to why it should not be held
in non-compliance with the Board of Education's Policy
of Equal Opportunity. The bidder, Contractor or
subcontractor shall be allowed at least twelve (12)
calendar days to present such evidence. If at the end of
such period compliance is not reached, and the Director
maintains his or her position of non-compliance, the
bidder, Contractor or subcontractor may appeal to the
Board of Review of the Board of Education. Conformity to
technical rules of evidence at the Board of Review
hearing shall not be required. The determination of such
Board of Review appeal shall be final and conclusive,
subject only to judicial review.
D. Each of the foregoing sections or subdivisions hereof
shall be construed to be independent of all other
sections and
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Serial No. 9888
subdivisions unless the contrary is clearly indicated by
the text.
For further information concerning these rules, regulations or
procedures contractors may consult with the Office of Equal
Opportunity of the Board of Education.
40. Supervision
The Contractor shall comply with all orders and instructions
of the Director not inconsistent with or prohibited by the
terms of this Contract.
The scope and substance of said orders and instructions shall
be in the discretion of the Director so that the Director may
properly discharge his function of providing safe and reliable
transportation to the students.
41. Reserved Rights
The rights, powers, privileges and remedies reserved to the
Board and to the City by this Contract are cumulative and
shall be in addition to and not in derogation of any other
rights or remedies which the City and the Board may have at
law or in equity with respect to the subject matter of this
contract, and a waiver thereof at any time or in any instance
shall not affect any other time or instance.
42. Choice of Law, Consent to Jurisdiction and Venue
This Contract shall be deemed to be executed in the City of
New York, State of New York, regardless of the domicile of the
Contractor, and shall be governed by and construed in
accordance with the laws of the State of New York.
The parties agree that any and all claims asserted by or
against the Board or City arising under this Contract or
related thereto shall be heard and determined either in the
courts of the United States located in New York City ("Federal
Courts") or in the courts of the State of New York, ("New York
State Courts") located in the City of New York and County of
Kings. To effect this agreement and intent, the Contractor
agrees:
(a) If the City or Board initiates any action against the
Contractor in Federal Court or in the New York State Court,
service of process may be made on the Contractor either in
person, wherever such Contractor may be found, or by
registered mail addressed to the Contractor at its address as
set forth in this Contract, or to such other address as the
Contractor may provide to the City or Board in writing; and
(b) With respect to any action between the City or Board and the
Contractor in New York State Court, the Contractor hereby
expressly
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Serial No. 9888
waives and relinquishes any rights it might otherwise have (i)
to move to dismiss on grounds of fourm non conveniens, (ii) to
remove to Federal Court; and (iii) to move for a change of
venue to a New York State Court outside Kings County.
(c) With respect to any action between the City or Board and the
Contractor in Federal court located in New York City, the
Contractor expressly waives and relinquishes any right it
might otherwise have to move to transfer the action to a
United States Court outside the City of New York.
(d) If the Contractor commences any action against the City or
Board in a court located other than in the City and State of
New York, upon request of the City or Board, the Contractor
shall either consent to a transfer of the action, to a court
of competent jurisdiction located in the City and State of New
York or, if the Contractor shall consent to dismiss such
action without prejudice and may thereafter reinstitute the
action in a court of competent jurisdiction in New York City.
If any provision(s) of this Article is held unenforceable for
any reason, each and all other provision(s) shall nevertheless
remain in full force and effect.
43. Bidders Anti-Apartheid and Export Administration Act and Arms
Export Control Act Provision
Local Law No. 19 of 1985, enacted by the City Council and
signed by the Mayor on March 15, 1985, adds a new section
343-11.0 to the Administrative Code of the City of New York,
which provides for certain restriction on City contracts to
express the opposition of the people of the City of New York
to the policy of apartheid and to encourage companies doing
business in South Africa and Namibia to support change. The
local 1aw became effective on July 13, 1985.
Pursuant to Local Law No. 19, bidders are asked to covenant
and represent, as a material condition of their contract, that
they and their substantially owned subsidiaries will not sell
goods or services to certain agencies of the South African
government. For contracts awarded before July 13, 1986,
bidders are asked to affirm under oath in a form acceptable to
the Department that they have not made such sales since July
13, 1985 and will not do so during the term of the contract.
For contracts awarded on or after July 13, 1986, bidders will
be asked to covenant and represent that they have not made
such sales within 12 months prior to the award of the contract
and will not do so during the term of the contract. Bidders
for supply contracts are also asked to covenant and represent
that they will not supply goods to the City which originate in
South Africa or Namibia. For the purposes of this affirmation,
construction contractors shall not be deemed to be supply
contractors. Bidders are
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Serial No. 9888
not required to agree to these conditions. However, if the
lowest responsible bidder does not agree to the conditions,
and there is another responsible bidder who does agree to the
conditions, and whose bid is within five percent of the bid of
the lowest responsible bidder, the bids will be referred to
the Board of Estimate, which may determine that it is in the
public interest that the contract be awarded to other than the
lowest responsible bidder.
In accordance with ss. 343-11.0 of the Administrative Code of
the City of New York, the Contractor hereby covenants and
represents:
1) that the Contractor and its substantially owned subsidiaries
have not, since July 13, 1985, sold or agreed to sell, and
shall not during the term of this Contract, sell or agree to
sell, goods or services other than food or medical supplies
directly to the following agencies of the South African
government or directly to a corporation owned or controlled by
such government and established expressly for the purposes of
procuring such goods and services for such specific agencies:
a) the police
b) the military
c) the prison system, or
d) the department of cooperation and development; and
2) in the case of a Contract to supply goods, that none of the
goods to be supplied to the City originated in the Republic of
South Africa or Namibia.
The contractor agrees that the covenants and representations in
sub-section A above are material conditions of this Contract. In the
event the Department receives information that the Contractor is in
violation of sub-section A, the Department shall review information
and give the Contractor an opportunity to respond. If the Department
finds that a violation has occurred, the Department shall have the
right to terminate this Contract and procure the supplies, services
or work from another source in any manner the Department deems
proper. In the event of such termination, the Contractor shall pay
to the Department, or the Department in its sole discretion may
withhold from any amounts otherwise payable to the Contractor, the
difference between the contract price for the uncompleted portion of
this Contract and the cost to the Department of completing
performance of this Contract either itself or by engaging another
contractor or contractors. In the case of a requirements contract,
the Contractor shall be liable for such difference in price for the
entire amount of supplies required by the Department for the
uncompleted term of this Contract. In the case of a construction
contract, the Department
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Serial No. 9868
shall also have the right to hold the Contractor in partial or total
default in accordance with the default provisions of this Contract.
The rights and remedies of the Department hereunder shall be in
addition to, and not in lieu of, any rights and remedies the
Department has pursuant to this Contract or by operation of law.
AGREED
BY: ________________________
TITLE: ______________________
DATE: ______________________
ACKNOWLEDGEMENT BY INDIVIDUAL
Sworn to before me this ____ day of ______________________, 19 __,
personally came __________________________________ to me known and known to me
to be the same person described and who executed the foregoing instrument and
he/she acknowledged to me that he/she executed the same for the purposes therein
mentioned.
_______________________________________
Notary Public or Commissioner of Deeds
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Serial No. 9888
ACKNOWLEDGEMENT BY A CORPORATION
State, City and County of New York, ss:
On this _________ day of ___________________, l9__ before me personally came
___________________________________________ who being by me duly sworn, did
depose and say that he/she resides in the City of_______________; that he/she is
the ____________________________ of the ______________________________________
the Corporation described in and which executed the foregoing instrument; that
he/she knows the seal of said Corporation; that the seal affixed to the said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said Corporation; and that he/she signed his/her name thereto by
like order for the purposes therein mentioned.
_______________________________________
Notary Public or Commissioner of Deeds
================================================================================
ACKNOWLEDGEMENT BY A PARTNERSHIP
State, City and County of New York, ss:
On this ________ day of ________________, 19__, before me personally came
_________________________ to me known and known to me to be a member of
______________________________________________ the firm described in and which
executed the foregoing instrument and he/she acknowledged to me that he/she
subscribed the name of said firm thereto on behalf of said firm for the purposes
therein mentioned.
_______________________________________
Notary Public or Commissioner of Deeds
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Serial No. 9888
Export Administration Act and Arms Export Control Act
The following provision is incorporated into the Contract:
By executing this Contract, the Contractor covenants and represents that it and
its substantially owned subsidiaries have not since July 13, 1985 violated, and
shall not during the period of this contract violate, the Export Administration
Act of 1979 as amended (50 U.S.C. ss. 2401 et seq.) or the Arms Export Control
Act of 1976 as amended (22 U.S.C. ss. 2778) by 1awfully exporting or reexporting
goods to the Republic of South Africa or Namibia. Upon a final determination by
the United States Department of Commerce or any other agency of the United
States or a court that the Contractor or its substantially owned subsidiary has
violated the Export Administration Act or the Arms Export Control Act by
unlawfully exporting or reexporting goods to the Republic of South Africa or
Namibia, the Department shall have the right to terminate this Contract and
procure the supplies, services or work from another source in any manner the
Department deems proper. In the event of such termination, the contractor shall
pay to the Department, or the Department in its sole discretion may withhold
from any amounts otherwise payable to the Contractor, the difference between the
contract price for the uncompleted portion of this Contract and the cost to the
Department of completing performance of this Agreement either itself or by
engaging another contractor or contractors. In the case of a requirements
contract, the Contractor shall be liable for the said difference in price for
the entire amount of supplies required by the Department for the uncompleted
term of this Contract. In the case of a construction contract, the Department
shall also have the right to hold the Contractor in partial or total default in
accordance with the default provisions of this Contract. The rights and remedies
of the Department hereunder shall be in addition to, and not in lieu of, any
rights and remedies the Department has pursuant to this Contract or by operation
of law.
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Serial No. 9888
PERFORMANCE BOND
KNOW ALL MEN BY THESE PRESENTS, THAT we,__________________________________
________________________________________________________________________________
hereinafter referred to as the 'Principal', and ________________________________
_______________________________________________________________________________
hereinafter referred to as the 'Surety' are held and firmly bound to the BOARD
OF EDUCATION OF THE CITY OF NEW YORK, hereinafter referred to as the 'Board', or
to its successors and assigns, in the penal sum of ____________________________
Dollars, lawful money of the United States, for the payment of which said sum of
money well and truly to be made, we, and each of us, bind ourselves, our heirs,
executors, administrators, successors and assigns, jointly and severally, firmly
by these presents.
WHEREAS, the Principal is about to enter, or has entered, into a
Contract in writing with the Board for the transportation of pupils, a copy of
which Contract is annexed to and hereby made a part of this bond as through
herein set forth in full;
NOW, THEREFORE, the conditions of this obligation are such that if
the principal, his/her or its representatives or assigns, during the period
beginning on the first day of September 198_ and ending on the 30th day of June
198_ shall well and faithfully perform the conditions of said Contract and all
modifications, amendments, additions and alterations therein with respect to
performance by the Principal during said period and shall indemnify and save
harmless the Board from all cost damages which it may suffer by reason of
failure so to do and shall fully reimburse and repay the Board for all outlay
and expense which the Board may incur in making good any such default with
respect to performance by Principal during the period of this bond, then this
obligation shall be void, otherwise the same to remain in full force and effect.
The Surety, for value received, hereby stipulates and agrees, if
requested to do so by the Board, fully to perform and complete the work to be
performed under the Contract pursuant to the terms, conditions and covenants
thereof, during the period of this bond if for any cause the Principal fails or
neglects to fully perform and complete such work. The Surety further agrees to
commence such work within twenty (20) days after written notice thereof from the
Board.
The Surety, for value received, for itself and its successors and
assigns, hereby stipulates and agrees that the obligation of said Surety and its
bond shall in no way be impaired or affected by any modification, omission,
addition or change in or to the Contract or the work to be performed during the
period of this bond, or by payment thereunder, before the time required therein,
or by any waiver or any provisions thereof, or by any assignment, subletting
other transfer thereof of any work to be performed or any moneys due to or to
become due thereunder, and said Surety does hereby waive notice of any and all
such extensions, modifications, omissions, additions, changes, payments,
waivers, assignments, subcontracts and transfers, and hereby expressly
stipulates and agrees that any and all things done and omitted to be done by and
in relation to assignees, subcontractors, and other transferees shall have the
same effect as to said Surety as though done or omitted to be done by or in
relation to said Principal.
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Exhibit 10.16
EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
Extension and Sixth Amendment Agreement made and entered into on the date
expressed at the end of this document by and between the BOARD OF EDUCATION OF
THE CITY OF NEW YORK ("B0E"), 110 Livingston Street, Brooklyn, New York 11201,
and the Contractor whose signature appears at the end of this document (the
"Contractor").
WITNESSETH:
In consideration of the following stipulations, terms and conditions, the
parties to this Extension and Sixth Amendment Agreement further agree as
follows:
WHEREAS, in 1979 the BOE publicly solicited competitive bids for the
transportation of regular education pupils under Contract Serial No. 0065,
Contract Serial No. 0075 and Contract Serial No. 8107; and,
WHEREAS, in 1986 the BOE publicly solicited competitive bids for
transportation of open enrollment pupils and pupils attending regular classes in
public and non-public schools under Contract Serial No. 9888; and,
WHEREAS, the Contractor submitted a bid(s) under one or more of the
aforementioned contract serial numbers and was duly awarded a contract(s)
including certain Employee Protection Provisions for the transportation of
regular education pupils; and,
WHEREAS, the original terms of all contracts under Serial Nos. 0065, 0075,
and 8107 would have expired on June 30, 1983 unless extended, and Section 305,
Paragraph 14 (a) of the State Education Law authorizes extensions and provides a
method for appropriate payment increases; and,
WHEREAS, in 1983 the BOE and the Contractors agreed to amend and extend
all Serial Nos. 0065, 0075 and 8107 contracts through June 30, 1986; and,
WHEREAS, in 1986 the BOE and the Contractors agreed to amend and extend
further all Serial Nos. 0065, 0075 and 8107 contracts through June 30, 1989;
and,
WHEREAS, in 1989 the BOE and the Contractors agreed to amend and extend
further all Serial Nos. 0065, 0075 and 8107 contracts through June 30, 1992;
and,
WHEREAS, the original terms of all contracts under Serial No. 9888 who
would have expired in June 30, 1991, unless extended; and State Education Law
Section 305, Subdivision 14(a) allows extensions and provide a method for
appropriate vehicle rate increase; and,
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
WHEREAS, in 1991, the BOE and the Contractors agreed for the first time to
amend and extend contracts under Serial No. 9888 through June 30, 1994; and,
WHEREAS, in 1991, the BOE Office of Auditor General ("OAG") commenced a
currently continuing review and audit of annual rate increases paid to
contractors during the school years 1986-87 through 1994-95 pursuant to
provisions in previous and existing Extension and Amendment Agreements as
allowed by State Education Law Section 305, Sub-division 14(a); and, this
review has resulted in the release of preliminary findings which have
proposed various adjustments to the daily rates per vehicle of many
contractors as well as the recovery of alleged overpayments to some of the
contractors during the affected period; and,
WHEREAS, some of the contractors have instigated litigation in the Supreme
Court of the State of New York in New York County under the Index No. 20841/92
(IAS Part 17, Justice Goodman) to prevent the BOE from acting upon the OAG's
findings to adjust daily vehicles rates prospectively and to recover alleged
overpayments, which litigation is still pending either judicial resolution or
settlement, and which the Contractor does hereby agree, confess, acknowledge and
stipulate that he/she/it has been apprised fully of such litigation; and,
WHEREAS, in 1992 the BOE and the Contractors agreed to amend and extend
further all Serial Nos. 0065, 0075 and 8107 contracts through June 30, 1995;
and,
WHEREAS, in 1994 the BOE and the Contractors agreed to amend and extend
further contracts under Serial No. 9888, by which such contracts have been
extended through June 30, 1997; and,
WHEREAS, in 1995 the City of New York, the BOE, the Contractors, and
delegates of the Amalgamated Transit Union, Local Division 1181-1061, the
Transit Workers' Union, Local 100, and various other labor organizations that
represent school bus workers entered into negotiations to deal with the
increasing costs of school bus service in the face of markedly diminished City
and school district financial resources; and, the City of New York, the BOE, the
Contractors, and the labor organizations reached an accord that averted the
possibility of school bus service interruptions and that produced significant
prospective cost savings for the City and the BOE; and,
WHEREAS, the BOE now determines that contracts under Serial Nos. 0065,
0075, 8107 (sixth amendment of Serial Nos. 0065, 0075 and 8107) and 9888 (third
amendment of Serial No. 9888) should be still further amended and extended, and
the Contractor does hereby so agree, acknowledge and stipulate; and,
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
WHEREAS, the parties mutually desire to make this extension agreement and
amendment to the aforesaid contracts as heretofore amended and extended ("the
Contract");
NOW THEREFORE, the parties whose names and signatures appear at the end of
this document do hereby further agree and covenant as follows:
(A) (1) TERM OF EXTENSION AGREEMENT. All references to the termination of the
Contract, by whatever terminology, shall be deemed hereafter to read "June
30, 2000, unless further extended;" provided however, that if, prior to
5:00 P.M. on December 19, 1995, the Contractor shall have exercised an
option to terminate the Contract as of June 30, 1996, the Contract shall so
terminate; and, provided further, that if the Contractor has not, in
December 1995, exercised the option to terminate, then if prior to 5:00 PM
on December 19, 1996, the Contractor shall have exercised an option to
terminate the Contract as of June 30, 1997, the Contract shall so
terminate; and provided further that if the Contractor shall not have
exercised an option to terminate, then if prior to 5:00 PM on December 19,
1997, the Contractor shall have exercised an option to terminate the
Contract as of June 30, 1998, the Contractor shall so terminate; and
provided further that if the Contractor shall not have exercised an option
to terminate, then if prior to 5:00 PM on December 19, 1998, the Contractor
shall have exercised an option to terminate the Contract as of June 30,
1999, the Contractor shall so terminate; and, provided still further, that
the Contractor's aforementioned December option to terminate effective June
30th next succeeding may be exercised by a Contractor only if the
Contractor demonstrates that its insurance premiums including any
Automobile Insurance Plan (AIP) surcharges and excess pass-along costs for
the minimum liability coverage required by the Contract will have increased
as of January 1, 1995 more than six-percent (6%) over the January 1, 1994
premiums, and as of January 1, 1996 more than seven percent (7%) over the
January 1, 1995 premiums and as of January 1, 1997, more than (7%) over the
January 1, 1996, premiums and as of January 1, 1998, more than (7%) over
the January 1, 1997 premiums.
(2) To be effective the Contractor's Notice of Exercise of the Option to
Terminate must be received at the Office of the Director of the Office of
Pupil Transportation, in writing signed by the Contractor, by the date and
time specified.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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(3) If the Contractor fails to comply strictly with the above requirements
the Contract shall continue without interruption.
(B) ARTICLE V - A entitled "PAYMENT DURING PERIOD OF EXTENSION," will be
further amended to read as follows for the term of this Extension and Amendment
Agreement:
"V - A. "PAYMENT DURING PERIOD OF EXTENSION"
(1) Notwithstanding the provisions of Article V, during this Extension
Period, the daily rate per vehicle will be deemed to be adjusted each year
according to the following formulae subject to the Director's approval of
all or any portion(s) of the Contractor's claims in the below described
annual Cost Justification Financial Statements:
(a) (1) For Contracts under Serial Nos. 0065, 0075, and 8107 during
the Thirteenth Extension Year of July 1, 1995 through June 30,
1996, the Contractor's daily rates per vehicle shall be equal to
ninety-eight-and-one-half per cent (98.5%) of the daily rates per
vehicle provided in extension and amendment agreements of the
Contracts which had been in effect for the Twelfth Extension Year
of July 1, 1994 through June 30, 1995.
(2) For Contracts under Serial No. 9888 during the Fifth
Extension Year of July 1, 1995 through June 30, 1996, the
Contractor's daily rates per vehicle shall be equal to
ninety-eight-and-one-half per cent (98.5%) of the daily rates per
vehicle provided in extension and amendment agreements of the
Contracts which had been in effect for the Fourth Extension Year
of July 1, 1994 through June 30, 1995.
(b) (1) For Contracts under Serial Nos. 0065, 0075, and 8107 during
the Fourteenth Extension Year of July 1, 1996 through June 30,
1997, the Contractor's daily rates per vehicle shall be deemed to
be augmented by an amount not to exceed whichever of the
following represents the least amount of actual increase:
(i) the same percentage by which the Consumer Price Index as
of May 1996 shall have increased over the Consumer Price
Index as of May 1995;
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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(ii) two-and-two-tenths percent (2.2%) over the base daily
rates per vehicle paid during the Thirteenth Extension Year
of July 1, 1995 through June 30, 1996; or,
(iii) the amount in dollars expressed as a percentage by
which the Contractor's actual costs during the Extension
Year of July 1, 1995 through June 30, 1996 shall have
increased over the Contractor's actual costs during the
Extension Years of July 1, 1993 through June 30, 1994.
(2) For Contracts under Serial No. 9888 during the Sixth Extension
Year of July 1, 1996 through June 30, 1997, the Contractor's daily
rates per vehicle shall be deemed to be augmented by an amount not
to exceed whichever of the following represents the least amount of
actual increase:
(i) the same percentage by which the Consumer Price Index as
of May 1996 shall have increased over the Consumer Price
Index as of May 1995;
(ii) two-and-two-tenths per cent (2.2%) over the base daily
rates per vehicle paid during the Fifth Extension Year of
July 1, 1995 through June 30, 1996; or,
(iii) the amount in dollars expressed as a percentage by
which the Contractor's actual costs during the Fifth
Extension Year of July 1, 1995 through June 30, 1996 shall
have increased over the Contractor's actual costs during the
Third Extension Year of July 1, 1993 through June 30, 1994,
plus the percentage of the Contractor's actual cost
increases from the Second Extension Year of July 1, 1992
through June 30, 1993 to the Third Extension Year of July 1,
1993 through June 30, 1994.(1)
- ----------
(1) This "cost carry-forward" is permitted to the extent that such
percentage has not yet been absorbed by any previous rate augmentation, and it
is allowed because of the daily rate freeze, i.e., zero percent (0%) increase,
during the Fourth Extension Year of July 1, 1994 through June 30, 1995.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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(c) (1) For Contracts under Serial Nos. 0065, 0075, and 8107 during
the Fifteenth Extension Year of July 1, 1997 through June 30,
1998, the Contractor's daily rates per vehicle shall be deemed to
be augmented by an amount not to exceed whichever of the
following represents the least amount of actual increase:
(i) the same percentage by which the Consumer Price Index as
of May 1997 shall have increased over the Consumer Price
Index as of May 1996;
(ii) two-and-six-tenths percent (2.6%) over the base daily
rates per vehicle paid during the Fourteenth Extension Year
of July 1, 1996 through June 30, 1997; or,
(iii) the amount in dollars expressed as a percentage by
which the Contractor's actual costs during the Fourteenth
Extension Year of July 1, 1996 through June 30, 1997 shall
have increased over the Contractor's actual costs during the
Thirteenth Extension Year of July 1, 1995 through June 30,
1996, plus the percentage of the Contractor's actual cost
increases from the Thirteenth Extension Year of July 1, 1995
through June 30, 1996 over the Eleventh Extension Year of
July 1, 1993 through June 30, 1994 to the extent that such
percentage exceeded two-and-two-tenths percent (2.2%) and
was consequently disallowed for the Fourteenth Extension
Year of July 1, 1996 through June 30, 1997.(2)
(2) For Contracts under Serial No. 9888, during the Seventh
Extension Year of July 1, 1997 through June 30, 1998, the
Contractor's daily rates per vehicle shall be deemed to be augmented
by an amount not to exceed whichever of the following represents the
least amount of actual increase:
- ----------
(2) This "cost carry-forward" is allowed only for that percentage of the
Contractor's cost increases from the Thirteenth over the Eleventh Extension
Years that exceeded two-and-two-tenths percent (2.2%) and because of such a low
fixed rate hike cap.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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(i) the same percentage by which the Consumer Price Index as
of May 1997 shall have increased over the Consumer Price
Index as of May 1996;
(ii) two-and-six-tenths percent (2.6%) over the base daily
rates per vehicle paid during the Sixth Extension Year of
July 1, 1996 through June 30, 1997; or,
(iii) the amount in dollars expressed as a percentage by
which the Contractor's actual costs during the Sixth
Extension Year of July 1, 1996 through June 30, 1997 shall
have increased over the Contractor's actual costs during
the Fifth Extension Year of July 1, 1995 through June 30,
1996, plus the percentage of the Contractor's actual cost
increases from the Second Extension Year of July 1, 1992
through June 30, 1993 to the Third Extension Year of July 1,
1993 through June 30, 1994(3) plus the percentage of each
Contractor's actual cost increases from the Fifth Extension
Year of July 1, 1995 through June 30, 1996 over the Third
Extension Year of July 1, 1993 through June 30, 1994 to the
extent that such percentage exceeded two-and-two-tenths
percent (2.2%) and was consequently disallowed for the Sixth
Extension Year of July 1, 1996 through June 30, 1997.(4)
(d) (1) For Contracts under Serial Nos. 0065, 0075, and 8107
during the Sixteenth Extension Year of July 1, 1998 through
June 30, 1999, the Contractor's daily rates per vehicle shall
be deemed to be augmented by an amount not to exceed whichever
of
- ----------
(3)As in Note 1, this "cost carry-forward" is allowed to the extent that
such percentage has not been absorbed by any previous rate augmentation, and it
is allowed because of the daily rate freeze, i.e., zero percent (0%) increase,
during the Fourth Extension Year of July 1, 1994 through June 30, 1995.
(4)As in Note 2, the second "cost-carry-forward" is allowed only for that
percentage of the Contractor's cost increases that exceeded two-and-two-tenths
percent (2.2%), and it is allowed because of such a low fixed rate augmentation
cap.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
the following represents the lesser amount of actual increase:
(i) the same percentage by which the Consumer Price Index as
of May 1998 shall have increased over the Consumer Price
Index as of May 1997; or,
(ii) the amount in dollars expressed as a percentage by
which the Contractor's actual costs during the Fifteenth
Extension Year of July 1, 1997 through June 30, 1998 shall
have increased over the Contractor's actual costs during the
Fourteenth Extension Year of July 1, 1996 through June 30,
1997, plus each of the percentages of the Contractor's
actual cost increases from (a) the Fourteenth Extension Year
(July 1, 1996 through June 30, 1997) over the Thirteenth
Extension Year (July 1, 1995 through June 30, 1996) to the
extent that such exceed two-and-six-tenths percent
(2.6%),(5) and (b) the Thirteenth Extension Year (July 1,
1995 through June 30, 1996) over the Eleventh Extension Year
(July 1, 1993 through June 30, 1994) to the extent that such
exceeds two- and two-tenths percent (2.2%).(6)
(2) For Contracts under Serial No. 9888 during the Eighth Extension
Year from July 1, 1998 through June 30, 1999, the Contractor's daily
rates per vehicle shall be deemed to be augmented by an amount not
to exceed whichever of the following represents the lesser amount of
actual increase:
(i) the same percentage by which the Consumer Price Index as
of May 1998 shall have in-
- ----------
(5) This "cost carry-forward" is allowed only for that percentage of the
Contractor's actual cost increases that exceeded two-and-six-tenths percent
(2.6%) and it is allowed due to such a low fixed rate augmentation cap.
(6) As in Note 2, the second "cost carry-forward" is allowed due to such a
low fixed rate augmentation cap but only to the extent that the Contractor's
cost increases beyond two-and-two-tenths percent (2.2%) shall not as yet have
been absorbed by the rate augmentation for the Fifteenth Extension Year.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
creased over the Consumer Price Index as of May 1997; or,
(ii) the amount in dollars expressed as a percentage by
which the Contractor's actual costs during the Seventh
Extension Year of July 1, 1997 through June 30, 1998 shall
have increased over the Contractor's actual costs during the
Sixth Extension Year of July 1, 1996 through June 30, 1997,
plus the following percentages to the extent that such have
not yet been absorbed by any previous rate augmentation: (a)
the percentage of the Contractor's actual cost increases
from the Second Extension Year of July 1, 1992 through June
30, 1993 to the Third Extension Year of July 1, 1993 through
June 30, 1994,(7) (b) the percentages of the Contractor's
actual cost increases from the Sixth Extension Year (July 1,
1996 through June 30, 1997) over the Fifth Extension Year
(July 1, 1995 through June 30, 1996),(8) and (c) the
percentage of the Contractor's actual cost increases from
the Fifth Extension Year (July 1, 1995 through June 30,
1996) over the Third Extension Year (July 1, 1993 through
June 30, 1994).(9)
(e) (1) For Contracts under Serial Nos. 0065, 0075, and 8107 during
the Seventeenth Extension Year of
- ----------
(7) As in Note 1, this "cost carry-forward" is allowed to the extent that
such percentage has not been absorbed by any previous rate augmentation, and it
is allowed because of the daily rate freeze, i.e., zero percent (0%) increase,
during the Fourth Extension Year of July 1, 1994 through June 30, 1995.
(8) As in Note 6, the second "cost carry-forward" is allowed due to such a
low fixed rate augmentation cap but only to the extent that the Contractor's
cost increases beyond two-and-six-tenths percent (2.6%) shall not as yet have
been absorbed by any previous rate augmentation.
(9) As in Note 6, the third "cost carry-forward" is allowed due to such a
low fixed rate augmentation cap but only to the extent that the Contractor's
cost increases beyond two-and-two-tenths percent (2.2%) shall not as yet have
been absorbed by any previous rate augmentation.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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July 1, 1999 through June 30, 2000, the Contractor's daily
rates per vehicle shall be deemed to be augmented by an amount
not to exceed whichever of the following represents the lesser
amount of actual increase:
(i) the same percentage by which the Consumer Price Index as
of May 1999 shall have increased over the Consumer Price
Index as of May 1998; or,
(ii) the amount in dollars expressed as a percentage by
which the Contractor's actual costs during the Sixteenth
Extension Year of July 1, 1998 through June 30, 1999 shall
have increased over the Contractor's actual costs during the
Fifteenth Extension Year of July 1, 1997 through June 30,
1998.
(2) For Contracts under Serial No. 9888 during the Ninth Extension
Year of July 1, 1999 through June 30, 2000, the Contractor's daily
rates per vehicle shall be deemed to be augmented by an amount not
to exceed whichever of the following represents the lesser amount of
actual increase:
(i) the same percentage by which the Consumer Price Index as
of May 1999 shall have increased over the Consumer Price
Index as of May 1998; or,
(ii) the amount in dollars expressed as a percentage by
which the Contractor's actual costs during the Eighth
Extension Year of July 1, 1998 through June 30, 1999, shall
have increased over the Contractor's actual costs during the
Seventh Extension Year of July 1, 1997 through June 30,
1998, plus the percentage of the Contractor's actual cost
increases from the Second Extension Year of July 1, 1992
through June 30, 1993 to the Third Extension Year of July 1,
1993 through June 30, 1994.(10)
- ----------
(10) As in Note 1, the "cost carry-forward" is allowed to the extent that
such percentage has not been absorbed by any previous rate augmentation, and it
is allowed because of the daily rate freeze, i.e., zero percent (0%) increase,
during the Fourth Extension Year of July 1, 1994 through June 30, 1995.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
(2) Notwithstanding the foregoing payment increase provisions, where there
is a decrease in the regional consumer price index for the New York, New
York-Northeastern, New Jersey area as based upon the index for all urban
consumers (CPI-U) during the preceding twelve month period, the amount to
be paid to the Contractor in the succeeding extension year will reflect
that decrease in a manner satisfactory to the New York State Commissioner
of Education.
(3) Definitions. The definitions below control the meanings of the
described terms wherever they appear in this Contract. These definitions
add to and supplement any definitions or instructions expressed in the
original Contract and, as such, do not supersede, revoke, replace, revise
or limit any similar or analogous provisions in the original Contract.
(a) For Contracts under Serial Nos. 0065, 0075 and 8107 the following
shall apply:
(i) "Thirteenth Extension Year" means July 1, 1995 through June
30, 1996.
(ii) "Fourteenth Extension Year" means July 1, 1996 through June
30, 1997.
(iii) "Fifteenth Extension Year" means July 1, 1997 through June 30,
1998.
(iv) "Sixteenth Extension Year" means July 1, 1998 through June 30,
1999.
(v) "Seventeenth Extension Year" means July 1, 1999 through June
30, 2000.
(b) For Contracts Under Serial No. 9888 the following shall apply:
(i) "Fifth Extension Year" means July 1, 1995 through June 30,
1996.
(ii) "Sixth Extension Year" means July 1, 1996 through June 30,
1997.
(iii) "Seventh Extension Year" means July 1, 1997 through June 30,
1998.
(iv) "Eighth Extension Year" means July 1, 1998 through June 30,
1999.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
(v) "Ninth Extension Year" means July 1, 1999 through June 30, 2000.
(c) The term "Consumer Price Index," as of a given date, is defined as that
statistic of the United States Department of Labor or its successor agency
which the New York State Education Department deems as the "regional
consumer price index for the New York, New York-Northeastern, New Jersey
area, based upon the index for all urban consumers (CPI-U)," according to
Section 305, Paragraph 14(a) of the State Education Law or as the same may
be updated, revised or otherwise changed during the life of this Extension
and Sixth Amendment Agreement.
(d) The term "contractor's average cost per vehicle day" for a given
extension year is defined as a Contractor's "total net allowable costs" for
that extension year divided by the total number of "vehicle days." The term
"total net allowable costs" is limited to those expenses determined by the
BOE to be related directly to transportation services provided to the BOE
pursuant to this Contract. The term "vehicle days" is defined as the total
number of "authorized vehicles" the Contractor actually operates multiplied
by the number of school days, which number is hereby fixed at 182 school
days per extension year (220 school days per extension year for 12 month
contracts) for the term of this Extension and Amendment Agreement.(11) The
term "authorized vehicles" is defined as the total number of contract and
additional vehicles, but excluding spare vehicles, that the Contractor has
been granted expressly by the Director. If the Director grants the
- ----------
(11) The numbers 182 (ten month contracts) and 220 (twelve month contracts)
represent average numbers of school days per extension year for the three
extension years preceding the instant Extension and Amendment Agreement, i.e.,
1992-93, 1993-94 and 1994-95 Extension Years. These averages shall be reviewed
every three (3) years during this Extension and Amendment Agreement and such
further extension and amendment agreements thereafter, if any. Whereupon a
triennial review finds that one or both average numbers of school days per
extension year have changed as based upon the fluctuation of actual school days
per annum, the affected fixed number(s) of school days shall be revised up or
down accordingly for the next extension year(s), but only if the change in the
affected average number(s) at least equals two (2) school days. In each
subsequent triennial review, if any, the effects of changes in the numbers of
school days from the preceding triennial review(s) shall be viewed cumulatively.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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Contractor additional vehicles after December 15 of a given extension year,
such additional vehicles shall not be counted among the "authorized
vehicles" until the start of the succeeding extension year, if indeed the
Contractor continues to furnish such additional vehicles during the
succeeding extension year. (12)
(e) The term "Cost Justification Financial Statement" is defined as a
written accountant's review report prepared by a Certified Public
Accountant (CPA) or Public Accountant (PA) licensed by the State of New
York, except as otherwise noted herein. This review report shall state that
a review was performed in accordance with AICPA standards and that the
information in the financial statements is the representation of
management, and it describes the nature of the review as distinct from an
audit. The report shall give the limited assurance that, based on the
review, the CPA/PA is not aware of any material modifications that should
be made to the financial statement in order for it to be in conformity with
generally accepted accounting principles. Contractors who have not had a
Certified Public Accountant audited report done for any purpose within two
(2) years of this extension agreement commencement date shall be required
to submit a certified audited statement by a Certified Public Accountant
for its first cost justification statement under this extension agreement.
In addition, the Certified Public Accountant or Public Accountant preparing
a report or review must state
- ----------
(12) This exclusion of additional vehicles granted after each December 15th
shall not apply to any vehicles that the Contractor obtains by way of assignment
or other transfer of contract, if such is approved by the BOE. Except for the
one-and-one-half percent (1.5%) daily rate reduction for the 1995-96 Extension
Year, the annual rate augmentation, if any, for each additional vehicle granted
after December 15th of a given extension year shall not become effective until
the succeeding extension year, whereupon any such rate augmentation shall
commence (without retroactivity) cumulatively with the following extension
year's rate increase, if any. For cost justification purposes, the Contractor
shall not add or combine any costs associated with additional vehicles granted
after each December 15th into the Contractor's other operating costs for that
extension year but shall begin to add or combine such costs (without
retroactivity) into other operating costs only at the outset of the succeeding
extension year, i.e, each such additional vehicle shall be treated for cost
justification purposes as if it had been initially granted to the Contractor
effective July 1st of the given following extension year.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
that he or she has studied the cost justification manual supplied by the
Board and has applied the standards contained in the Board's manual to the
development of the Cost Justification Financial Statement. In addition, the
accountant must have no interest in this Contract or the Contractor and
must so certify in writing. The financial statement will utilize a form
prescribed by the Director as approved by the State Education Department.
(4) Cost Justification Financial Statements. Section 305 of the State Education
Law requires the Contractor to substantiate any cost increases which he/she
claims to justify annual payment increases during the term of this Extension and
Sixth Amendment Agreement. In consultation with the BOE Office of Auditor
General, the Director of the Office of Pupil Transportation shall determine
whether to approve all or any portion(s) of the claims in each of the
Contractor's annual Cost Justification Financial Statements as described
immediately below:
(a) To substantiate any payment increases received under this Article V - A
during the Extension Year of July 1, 1996 through June 30, 1997, the
Contractor must submit by September 30, 1996 (i) a cost justification
financial statement by an independent Certified Public Accountant or Public
Accountant which details the total costs incurred by the Contractor for all
of its operations and, separately, for its operations under this Contract
for the Extension Years 1995-96 and for 1993-1994 and (ii) for contracts
under Serial Nos. 9888, an additional cost justification financial
statement by an independent Certified Public Accountant or Public
Accountant which details the total costs incurred by the Contractor for all
of its operations and, separately, for its operations under Contract Serial
No. 9888 for the Extension Year 1992-93 and Extension Year 1993-1994.
(b) To substantiate any payment increases received under this Article V - A
during the Extension Year of July 1, 1997 through June 30, 1998, the
Contractor must submit by September 30, 1997 (i) a cost justification
financial statement by an independent Certified Public Accountant or Public
Accountant which details the total costs incurred by the Contractor for all
of its operations and, separately, for its operations under this Contract
for the Extension Years 1996-1997 and the 1995-1996, (ii) an additional
cost justification financial statement by an independent Certified Public
Accountant or Public Accountant which details the total costs incurred by
the Contractor for all of its operations and, separately, for its
operations under this Contract for Extension Years 1995-96
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
and 1993-1994 (to account for a cost carry-forward, if any), and (iii) for
contracts under Serial No. 9888, an additional cost justification financial
statement by an independent Certified Public Accountant or Public
Accountant which details the total costs incurred by the Contractor for all
of its operations and, separately, for its operations under Contract Serial
No. 9888 for Extension Years 1992-93 and 1993-1994 (to account for a cost
carry-forward, if any).
(c) To substantiate any payment increases received under this Article V - A
during the Extension Year of July 1, 1998 through June 30, 1999, the
Contractor must submit by September 30, 1998, (i) a cost justification
financial statement by an independent Certified Public Accountant or Public
Accountant which details the total costs incurred by the Contractor for all
of its operations and, separately, for its operations under this Contract,
for the Extension Years 1997-1998 and 1996-1997, (ii) an additional cost
justification financial statement by an independent Certified Public
Accountant or Public Accountant which details the total costs incurred by
the Contractor for all of its operations and, separately, for its
operations under this Contract for Extension Years 1996-97, 1995-1996 and
1993-1994, (to account for a cost carry-forward, if any), and (iii) for
contracts under Serial No. 9888, an additional cost justification financial
statement by an independent Certified Public Accountant or Public
Accountant which details the total costs incurred by the Contractor for all
of its operations and, separately, for its operations under Contract Serial
No. 9888 for Extension Years 1992-93 and 1993-1994 (to account for a cost
carry-forward, if any).
(d) To substantiate any payment increases received under this Article V - A
during the Extension Year of July 1, 1999 through June 30, 2000, the
Contractor must submit by September 30, 1999, (i) a cost justification
financial statement by an independent Certified Public Accountant or Public
Accountant which details the total costs incurred by the Contractor for all
of its operations and, separately, for its operations under this Contract
for the Extension Years 1998-1999 and 1997-1998, and (ii) for contracts
under Serial No. 9888, an additional cost justification financial statement
by an independent Certified Public Accountant or Public Accountant which
details the total costs incurred by the Contractor for all of its
operations and, separately, for its operations under Contract Serial No.
9888 for Extension Years 1992-93 and 1993-94 (to account for a cost
carry-forward, if any).
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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(e) The Contractor shall, until six (6) years after completion of its
services hereunder, or six (6) years after date of termination of this
Extension, whichever is later, maintain and retain complete and correct
books and records relating to all aspects of the Contractor's obligations
hereunder. Records must be maintained separately, so as to identify clearly
the expenses applicable to this Extension Contract and be distinguishable
from all other costs not incurred under this Extension Contract.
(f) As a minimum, the Contractor will supply in each annual cost
justification financial statement all data required by the New York State
Education Department related to this Contract, and the submittal shall
include, but is not necessarily limited to, New York State Education
Department approved cost justification forms. The Contractor must supply
promptly any and all additional cost data as required by the BOE or the
State Education Department.
(g) To be eligible to "carry forward" unabsorbed cost increases arising
from the daily rate freeze, i.e., zero percent (0%) increase, during the
Fourth Extension Year of Contract Serial No. 9888, the Contractor must meet
eligibility conditions and must adhere to rules, procedures and definitions
expressed in Appendix A. The said eligibility conditions, rules,
procedures, and definitions for the allowance of a "cost carry-forward" of
such unabsorbed cost increases under Contract Serial No. 9888 are hereby
incorporated by this reference into this Extension and Amendment Agreement
as if set forth herein in their entirety, and a copy of the said
eligibility conditions, rules, procedures, and definitions is hereto
annexed as "Appendix A."
(h) To be eligible to "carry forward" unabsorbed cost increases arising
from cost growth, if any, greater than the two-and-two-tenths percent
(2.2%) fixed cap during the 1996-97 Extension Year and the two and
six-tenths percent (2.6%) fixed cap during the 1997-98 Extension Year of
Contract Serial Nos. 0065, 0075, 8107 and 9888, the Contractor must meet
eligibility conditions and must adhere to rules, procedures and definitions
expressed in Appendix B. The said eligibility conditions, rules,
procedures, and definitions for the allowance of a "cost carry-forward" of
such unabsorbed cost increases under Contract Serial Nos. 0065, 0075, 8107
and 9888 are hereby incorporated by this reference into this Extension and
Amendment Agreement as if set forth herein in their entirety, and a copy of
the said eligibility conditions,
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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rules, procedures, and definitions is hereto annexed as "Appendix B."
(i) In each annual Cost Justification Financial Statement, the
Contractor must supply all data required by the New York State
Education Department related to this Contract, and each submittal
shall include, but is not necessarily limited to, New York State
Education Department approved cost justification forms.
(5) Required Analysis of Costs. To determine the allowable increase in costs for
the extension year, as specified in Section V-A 1 of this agreement, the
following analysis of the Cost Justification Financial Statement must be
undertaken:
Step 1: Divide the total applicable annual operating costs by the
number of vehicle days for both the base year and the year
previous to the base year to determine the average daily
cost per vehicle for each of those years. The base year is
the year immediately preceding the extension year.
Step 2: Subtract the average daily cost per vehicle for the year
previous to the base year from the average daily cost per
vehicle for the base year to determine the increase in the
average daily cost per vehicle.
Step 3: Divide the increase in the average daily cost per vehicle
by the average daily cost per vehicle for the year previous
to the base year to determine the percent increase in the
average daily cost per vehicle.
Step 4: Compare the percent increase in the average daily cost per
vehicle to the percentage by which the Consumer Price Index
as of May of the base year shall have increased over the
Consumer Price Index as of May of the year previous to the
base year and to the appropriate percentage cap in the
increase for each extension year as stipulated in Section
V-A 1 of this agreement. Whichever is the least of the three
percentages will be the allowable increase applied to the
daily rate for the extension year.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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Step 5: Repeat steps 1 to 4 for any allowable cost increases accrued
during the period of the Eleventh to Thirteenth Extension
Years (Third to Fifth Extension Years for Contract Serial
No. 9888) and, when appropriate, any allowable cost
increases accrued during the Fourteenth to Fifteenth
Extension Years (Sixth to Seventh Extension Years for
Contract Serial No. 9888). Determine the percent increase in
the average daily cost per vehicle from the Eleventh to
Thirteenth Extension Years (Third to Fifth Extension Years
for Contract Serial No. 9888) and, when appropriate, from
the Fourteenth to Fifteenth Extension Years (Sixth to
Seventh Extension Years for Contract Serial No. 9888).
If the percent increase in the average daily cost per
vehicle resulting in Step 3 is insufficient to justify fully
the Consumer Price Index increment in Step 4 or any
applicable fixed cap, add the percent increase of the
Eleventh to Thirteenth Extension Years (Third to Fifth
Extension Years for Contract Serial No. 9888), if any, to
the percent increase in Step 3. If there is any percent
increase in the average daily cost per vehicle still
unabsorbed, such increase may be carried forward to the
Sixteenth Extension Year (Eighth Extension Year for Contract
Serial No. 9888). For the Sixteenth Extension Year only
(Eighth Extension Year for Contract Serial No. 9888), also
add the unabsorbed increase of the Fourteenth to Fifteenth
Extension Years (Sixth to Seventh Extension Years for
Contract Serial No. 9888), if any, to the percent increase
in Step 3.
(6) Allowable Cost Increases. Only increases in "net allowable costs" will
justify augmentation of the daily vehicle rate from one extension year to the
next. "Allowable costs" are limited by the following: costs not attributable to
the Contractor's operations pursuant to this Contract, costs which are not
ordinary and/or reasonable, costs which are not documented, and costs disallowed
by the New York State Education Department and/or BOE auditors are not permitted
to justify increases of the daily rate per vehicle. The Director and the Office
of Auditor General shall have the right, power and authority to prescribe
standardized miscellaneous cost categories for all contractors.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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(7) Access to Subcontractors. If with the approval of the Director, the
Contractor subcontracts any portion of the services under this Contract, the
Contractor must include in any such subcontract agreement a provision which
allows full and unimpeded access by the BOE, the New York State Education
Department or the New York City Office of the Comptroller to the books and
records of a subcontractor for inspection, audit and copying purposes. The
Contractor agrees and covenants to render all necessary assistance to obtain any
requested documents from subcontractors. The Contractor's inability to obtain
requested documentation from any such entities will not excuse a failure to
provide the documentation as a means to justify payment increases.
(8) Absence of Cost Justification Financial Statement. The Contractor's failure
to submit an annual Cost Justification Financial Statement by the deadline date
as above expressed will result in the forfeiture of any increase later justified
for the period from the service start date to the day the statement is received
at the Office of Pupil Transportation, unless the Director determines that
reasonable circumstances exist to excuse the Contractor's late submittal.
(9) Cost Increase Surety Bond or Letter of Credit. If the Contractor desires to
receive the annual daily vehicle rate(s) augmentation in advance of the "final"
results of the BOE audit of each year's Cost Justification Financial
Statement(s), the Contractor must post by September 30th of each Extension Year
a surety payment bond or letter of credit to insure the refund of any
overpayments or debts the BOE deems to be due and owing from the Contractor.
Each bond or letter of credit must insure expressly against the Contractor's
inability to justify claims in each annual Cost Justification Financial
Statement to the extent of all payment increases the BOE will make to the
Contractor during each prospective Extension Year. Each bond or letter of credit
must be issued by a company or bank licensed or approved to do business in New
York State by the Superintendent of Insurance or the Superintendent of Banks,
respectively. The coverage period of each bond or letter of credit must extend
from September 1st of each Extension Year until such date as the Contractor
receives from the BOE "final" written notice of the results of the audit of each
year's Cost Justification Financial Statement. If an open ended term for a bond
or letter of credit cannot be obtained, then the Contractor must renew the bond
or letter of credit for a given Extension Year annually until such time as the
"final" audit result notice has been received. A renewed bond(s) or letter(s) of
credit for each Extension Year must be in addition to the bond(s) or letter(s)
of credit the contractor obtains for each subsequent Extension Year. (The
Contractor may consolidate the bonds or letters of credit to
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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insure the justification of payment increases for more than one Extension Year
only if the amount of the consolidated bond or letter of credit reflects the
total accumulation of payment increases which "final" audit result notices have
not yet certified.) Each bond or letter of credit must extend to the BOE a claim
submittal period of at least ninety (90) days beyond the date of the
Contractor's receipt of the "final" audit result notice for the purpose of
recouping any overpayments based on the Contractor's inability to justify all or
any portion of each annual vehicle rate increase. Each bond or letter of credit
must name both the BOE and the City of New York as the insured parties. To
calculate the amount of a bond or letter of credit, use the following formula:
the daily rate per vehicle for each contract item (i.e., for a given Extension
Year) multiplied by the total number of vehicles for each contract item (i.e.,
for a given Extension Year excluding spare and maintenance vehicles) multiplied
by 180 days and multiplied again by the percentage of payment increase as
reflected either by the Consumer Price Index for the month of May for each
Extension Year or the maximum cap for a given Extension Year, whichever is less.
(a) Exemption from Cost Increase Surety Bond. If the Contractor
provides a performance bond, letter of credit or a cash performance
deposit for a given prospective Extension Year, the Contractor may
forego the Cost Increase Surety Bond requirements in this Paragraph
(B) (9), provided that the Contractor submits by September 30th of
each Extension Year a written consent that the BOE may deduct such
amounts of money as the BOE deems to be properly due and owing from
the Contractor from any money to be earned by the Contractor under any
Contract at any time. The verified consent will be on a form approved
and supplied by the Director.
(b) A Contractor who is not required to provide a Performance Bond or
Letter of Credit because it provides 15 or fewer vehicles pursuant to
this agreement, may choose to either present the BOE with the
aforedescribed cost increase Surety Bond or consent to have the
increase in payments coming due to it withheld until the approval of
its cost justification statement.
(10) Retroactive Payments.
(a) Contractors will be entitled to receive retroactive payment
increases without any interest only after the date of approval and to
the extent of such approval of the cost justification statement, and
the Contractor will
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not be entitled to receive retroactive payment in one lump sum but
only in monthly installments to be determined at the Director's sole
discretion.
(b) Should any retroactive payments promised by the foregoing language
of Paragraph 9 be deemed or found to be illegal or otherwise improper
due to being in violation of any Federal, State, New York City or BOE
law, rule, regulation, by-law or official written policy (e.g., the
BOE "Standard Operating Procedures for Financial Management Centers"),
then the BOE, its employees or agents cease to have any and all
obligations to pay same and contractor's obligations hereunder remain
unchanged.
(c) The Contractor hereby agrees and covenants to refrain from any
litigation and to release, hold harmless and indemnify the BOE and the
City of New York (including reasonable attorney fees) concerning any
claims, actions or special proceedings by the Contractor or any other
party arising from denial(s) or postponement(s) of any payment
increase(s) or any portion(s) thereof due to the Contractor's failure
to meet the express terms, conditions and deadlines of this paragraph
9.
(11) Adjustments to Later Payments. Based on the BOE's audit of the Contractor's
annual statements and financial records, the BOE may make any necessary
adjustments in any later payments which become due and owing to the Contractor
during a given Extension Year to compensate for any excesses of payments over
cost increases.
(12) Refund of Overpayment. The Contractor further agrees and covenants to
refund any and all additional monies due to the BOE within thirty (30) days of
the final audit report, if the amount of each year's payment excess over
allowable cost increase is greater than any payments due and owing for the
balance of a given Extension Year, except where a refund is obtained from the
bond herein described.
(13) In the event of any apparent inconsistencies between any other provisions
of the Contract and this Article V - A, the provisions of this Article V - A
will prevail.
(C) MISALLOCATION OF COSTS. To prevent unjust enrichment through
misrepresentation or falsification of cost increase claims, the Contractor
hereby agrees, consents and covenants to abide in all respects by the following
rules for the treatment of fixed,
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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variable or other costs utilized to establish increased expenses from one given
Extension Year to the next:
(1) Allocation of Costs. If the Contractor misallocates any cost item(s), the
allocation will be disallowed. Improper allocation or "misallocation" is defined
as a transgression of one or more of the following precepts:
(a) Only those of the Contractor's fixed, variable or other costs
which are directly attributable to the performance and/or
administration of BOE pupil transportation contract work will be
considered allowable expense items. Costs attributable to a
contractor's other operations, whether in the public or private
sector, will not be allowed to justify payment increases.
(b) Costs must be attributable solely to the specific group of
contracts covered by this Extension Agreement, i.e., Contract Serial
Nos. 0065, 0075, 8107 and 9888. Expenses allocable to BOE pupil
transportation contracts other than these serial numbers must not
appear in any materials presented to justify payment increases under
this Extension Agreement.
(c) Costs must be attributable solely to the corporate, partnership,
sole proprietorship or other entity which constitutes the Contractor.
Expenses allocable to a parent or other affiliated entity must not
appear on the Contractor's cost justification financial statement.
Where employees, offices, storage and maintenance facilities or other
cost items are shared by several affiliated or unaffiliated entities,
all or some of which hold separate BOE transportation contracts,
assertions of expense increases must reflect only those percentages of
utilization directly allocable to the claimant Contractor.
(d) Allocation of costs must be based on the number of vehicle days
and not merely the number of vehicles under contract.
(e) Such other forms of misallocation of costs as may be determined by
the BOE, the New York City Office of the Comptroller or the New York
State Education Department, in accordance with the terms and
conditions of this Contract.
(D) AMENDMENTS TO PERFORMANCE SECURITY PROVISIONS.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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(1) The Contractor has the following options available to assure full and
faithful performance of the Contract:
(a) Provide a confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution equal in value to ten percent (10%)
of the contract value which may be reduced each month by ten percent
(10%) of the monthly payment authorized by the Contractor to be
retained by the BOE during the Extension Year from July 1, 1995
through June 30, 1996. Whereupon at any time during this Extension
Agreement there shall be any increase(s) or decrease(s) in the
Contractor's number of contract and/or additional vehicles beyond five
percent (5%) of the Contractor's total fleet (excluding spare and
maintenance vehicles), the BOE and the Contractor shall adjust the
performance security accordingly to maintain the level at a constant
ten percent (10%) of the contract value; and, for each instance of any
increases, the Contractor shall furnish additional performance
security via confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution or written authorization of retainage
within thirty (30) days of the award of each increase in the number of
vehicles. The amounts retained shall be deposited in an interest
bearing account maintained by the New York City Office of the
Comptroller with annual reports of the amounts retained and interest
earned provided to the Contractor. This retainage will be returned to
the Contractor with interest after the conclusion of the full and
faithful performance of this Extension Agreement, or whereupon the
Contractor replaces the retainage with confirmed irrevocable Letter(s)
of Credit from an acceptable financial institution in an amount equal
to ten percent (10%) of the contract value at the time of the
conversion.
(b) Provide a confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution equal in value to ten percent (10%)
of the contract value which may be reduced each month by five percent
(5%) of the monthly payment authorized by the Contractor to be
retained by the BOE during the Extension Years of July 1, 1995 through
June 30, 1996 and July 1, 1996 through June 30, 1997. Whereupon at any
time during this Extension Agreement there shall be any increase(s) or
decrease(s) in the Contractor's number of contract and/or additional
vehicles beyond five percent (5%) of the Contractor's total fleet
(excluding spare and maintenance vehicles), the BOE and the Contractor
shall adjust the performance
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
security accordingly to maintain the level at a constant ten percent
(10%) of the contract value; and, for each instance of increase, the
Contractor shall furnish additional performance security via confirmed
irrevocable Letter(s) of Credit from an acceptable financial
institution or written authorization of retainage within thirty (30)
days of the award of each increase in the number of vehicles. The
amounts retained shall be deposited in an interest bearing account
maintained by the New York City Office of Comptroller with annual
reports of the amounts retained and interest earned provided to the
Contractor. This retainage will be returned to the Contractor with
interest after the full and faithful performance of this Extension
Agreement, or whereupon the Contractor replaces such retainage with a
confirmed irrevocable Letter(s) of Credit from an acceptable financial
institution in an amount equal to ten percent (10%) of the contract
value at the time of the conversion.
(c) Provide a confirmed irrevocable Letter(s) of Credit from an
acceptable financial institution equal in value to ten percent (10%)
of the contract value renewable each year at an amount equal to ten
percent (10%) of the then current value of the Contract.
(d) Provide any combination of cash security deposit and confirmed
irrevocable Letter(s) of Credit from an acceptable financial
institution equal to ten percent (10%) of the contract value.
Whereupon at any time during this Extension Agreement there shall be
any increase(s) or decrease(s) in the Contractor's number of contract
and/or additional vehicles beyond five percent (5%) of the
Contractor's total fleet (excluding spare and maintenance vehicles),
the BOE and the Contractor shall adjust the performance security
accordingly to maintain the level at a constant ten percent (10%) of
the contract value; and, for each instance of increase, the Contractor
shall furnish additional performance security via confirmed
irrevocable Letter(s) of Credit from an acceptable financial
institution or written authorization for retainage within thirty (30)
days of the award of each increase in the number of vehicles. Any cash
security deposit(s) shall be deposited in an interest bearing account
maintained by the New York City Office of Comptroller with annual
reports of the amounts held and interest earned provided to the
Contractor. Any cash security deposit will be returned to the
Contractor with
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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interest after the full and faithful performance of this Extension
Agreement
(2) Companies who are subject to common control as determined by the Board
of Education based upon an analysis of (a) ownership of the corporation's
assets; (b) coincidence of corporate officers and directors; and (c) such
other factors as the Board of Education determines to be relevant, are
deemed to be one contractor.
If the Board determines companies to be the subject of common control,
contractors will be required to provide the appropriate performance
security for the number of vehicles operated by the companies that are
determined to be the subject common control.
For the purpose of determining common control and performance security
requirements, all BOE transportation contracts will be considered.
(E) Section E of the Extension & Fourth Amendment Agreement of Contract Serial
Nos. 0065, 0075 and 8107 and Section E of the Extension & Second Amendment
of Contract Serial No. 9888 is hereby amended to read as follows:
"1. Priority in Hiring and Master Seniority Lists:
"There shall be established two industry-wide Master Seniority Lists. One
list shall be composed of all operators (drivers), mechanics, and
dispatchers and the other list shall be composed of escorts
(matrons-attendants) who were employed as of June 30, 1995, under a
contract between their employers and the Board for the transportation of
school children in the City of New York, who are furloughed or become
unemployed as a result of loss of contract or any part thereof by their
employers, or as the result of a reduction in service directed by the Board
during the term of the contract, in accordance with their date of entry
into the industry. All operators (drivers), mechanics, dispatchers and
escorts (matrons-attendants) on the Master Seniority Lists who participated
in the Division 1181 A.T.U. - New York Employees Pension Fund and Plan as
of June 30, 1995, and who do not exercise their option to withdraw from the
Fund and Plan shall continue to participate in such Pension Plan.
"Any existing contractor or individual who conducted business as a sole
proprietor, or as a member of a partnership or who held a controlling
interest in a corporation that performed
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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service pursuant to contract expiring in June, 1995 (contractor) shall give
priority in employment on September, 1995 or thereafter on the basis of
position on the Master Seniority List of any additional or replacement
operators, mechanics and dispatchers beyond those performing service as of
June 30, 1995 consistent with the number of employees required by the
specifications of the contract expiring June, 1995 for the number of
vehicles providing service to the Board as of June 30, 1995 to individuals
from the Master Seniority List until such list is exhausted.
"Any new contractors, i.e. those who did not provide service pursuant to
contract expiring June, 1995 (new contractor), shall give priority in
employment in September, 1995 or thereafter on the basis of seniority to
every operator (driver), mechanic and dispatcher performing service
pursuant to such contract starting from the first employee from the Master
Seniority List until such list is exhausted.
"Should the Board determine to require the contractor to provide escort
service in addition to the operator, and in the event that all escorts
(matrons-attendants) on the Master Seniority List, who were employed as of
June 30, 1995, are not employed as escorts by contractors for the beginning
of service in September of 1995, then said escorts shall be employed in
order of their position on the Master Seniority List.
"2. Compensation
"All operators (drivers), mechanics, dispatchers and escorts
(matrons-attendants) on the industry-wide Master Seniority Lists shall be
employed and paid on a full-time basis based upon the wage scale received
from prior employer under pupil transportation contracts.
"The contractor shall compensate operators (drivers), mechanics and
dispatchers and escorts (matrons-attendants) who appear on the Master
Seniority Lists and who are employed pursuant to contracts to be awarded as
follows for the term of the contract:
"(a) operators (drivers, and dispatchers at a daily rate of pay, including
any COLA, for each day of service, not less than that paid pursuant to
any applicable labor collective bargaining agreement.
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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"(b) mechanics at a daily rate of pay, including any COLA, for each day of
service, not less than that paid pursuant to any applicable labor
collective bargaining agreement.
"(c) escorts (matrons-attendants) at a daily rate of pay, including any
COLA, for each day of service, not less than that paid pursuant to any
applicable labor collective bargaining agreement.
"Such operators (drivers) and escorts (matrons-attendants) shall be
available for extended service, without additional compensation, which
shall be defined as performance within the particular job category (i.e.
drivers as drivers, and escorts (matrons-attendants) as escorts
(matrons-attendants) ) within the eight (8) hour work day within the spread
(8 within 10 hours) provided for in the collective bargaining agreement
covering said employees, if any.
"3. Welfare
"Contributions by the contractor for providing welfare benefits to
operators (drivers), mechanics, dispatchers and escorts
(matrons-attendants), in the event the contractor employs escorts, who
appear on the Master Seniority List shall be no less than $410 per employee
per month on a twelve month basis during each year of the contract.
"4. Pensions
"The contractor shall sign an agreement with Division 1181 A.T.U. - New
York Employees Pension Fund and Plan to participate in such plan on behalf
of all operators (drivers), mechanics, dispatchers and escorts
(matrons-attendants), in the event the contractor employs escorts who
appear on the Master Seniority Lists and who participated in the Fund and
Plan as of June 30, 1995. This requirement shall not be interpreted to
require a contractor to enter into a collective bargaining agreement with
the union nor shall it prohibit the contractor from entering into a
collective bargaining agreement with the union. The contractor shall file a
copy of the executed agreement with the Trustees of the Fund and Plan to
participate in said Fund and Plan and with the Secretary of the Board with
the acknowledgment of the Notice of Award.
"The contractor shall contribute $48.15 per week per operator (driver),
mechanic and dispatcher on the Master Seniority
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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List, and participating in the Plan and Fund as of June 30, 1995, for forty
weeks each year for the term of the contract, or such greater amount as may
be required, based on contributions by contractors on behalf of the
majority of employees participating in the Fund and Plan pursuant to a
collective bargaining agreement with Local 1181 - 1061. The contractor
shall withhold $23.00 a week from each operator, mechanic and dispatcher
participating in said Fund and Plan for forty weeks each year for the term
of the contract, or such greater amount as may be required based on
contributions of a majority of the operators (drivers), mechanics or
dispatchers contributing to the Fund and Plan.
"Such contractors who provide escort service, shall contribute $44.15 per
week per escort (matron-attendant) for forty weeks each year for the term
of the contract, or such greater amount as may be required based on
contributions by contractors on behalf of the majority of employees
participating in the Fund and Plan pursuant to a collective bargaining
agreement with Local 1181 - 1061. The contractor shall withhold $18.00 per
week from each escort, (matron-attendant) participating in said Fund and
Plan and Fund for forty weeks each year for the term of the contract, or
such greater amount as may be required based on contributions of the
majority of the escorts contributing to the Fund and Plan.
"In connection with employees who are on the Master Seniority List and who
do not participate in the Local 1181 - 1061 Fund and Plan, they shall not
be required to participate in the Plan but shall participate in the
collective bargaining agreement, if any, of their employer.
"The contractor shall pay all such amounts to the Fund and Plan within
seven days after the end of each payroll period.
"5. Enforcement
"In addition to any other remedies provided in the contract between the
Board and the contractor, such as default and/or termination, if the
contractor is found to be in violation of the foregoing employee protection
provisions regarding the payment of wages, welfare benefit contributions,
pension contributions, or other aspects of compensation or benefits, then
the Director of the Office of Pupil Transportation, within thirty (30) days
of written notice, shall withhold the appropriate amounts from any payments
due to the contractor and pay them directly to the applicable union for the
benefit of the employees affected, to the Division 1181 A.T.U. - New
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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York Employees Pension Fund or other applicable union pension fund for the
benefit of the employees affected or to the appropriate Welfare Fund for
the benefit of the employees affected. If the affected employees are not
affiliated with any union, then the Board shall investigate on their behalf
allegations of employee protection provision violations regarding the
payment of wages, welfare benefit or health insurance contributions,
pension or similar savings plan contributions, or other aspects of
compensation or benefits. Upon a finding of any such violation(s), the
Director of the Office of Pupil Transportation shall withhold the
appropriate amounts from any payments due to the Contractor and pay them
directly to the employees or to such health insurance companies or other
institutions as appropriate.
"In the event any contractor willfully fails to comply, the Board of
Education shall act to cancel such contractor's contract; provided,
however, that the Board shall not be required to act so as to cause a
disruption of service.
"6. Contractors providing a total of five vehicles or less pursuant to all
contracts with the Board for the transportation of pupils shall not be
subject to the foregoing provisions with respect to operators (drivers),
mechanics and dispatchers.
"Escorts (matron-attendants) shall not be included in the exclusion
provided in this paragraph six (6).
"7. For the purposes of this section, corporate bidders who are subject to
common control as determined by the Board based upon analysis of:
"(a) ownership of the corporations' assets,
"(b) coincidence of corporate officers and directors, and
"(c) such other factors as the Board determines to be relevant,
are deemed to be one bidder.
"8. The Board may in its sole and unfettered discretion change any date
which determines employee protected status, employer status or any other
status, which is contained in any employee protection provisions of the
Contract. The Master Seniority Lists will be updated to June 30, 1995 as
permitted in accordance with pre-existing collective bargaining agree-
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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ments executed prior to the date of execution of this Contract.
Furthermore, the rates quoted herein may not be reflective of current labor
rates in effect. The contractor should pay special attention to the fact
that many employees on the Master Seniority Lists have been in the
industry for many years and therefore may be entitled to substantial wages,
pension and welfare benefits and wage accruals.
"The date for inclusion on the Master Seniority List is hereby updated to
the last school day in June, 1995 as permitted in accordance with
pre-existing collective bargaining agreement executed prior to the date of
this Extension Agreement and Amendment Agreement."
(F) MISCELLANEOUS VEHICLE SPECIFICATIONS AND OPERATIONAL AMENDMENTS. Any terms,
conditions and specifications to the contrary notwithstanding, the Contract is
hereby amended as follows:
(1) List of Vehicles. Before September of this Extension Year or at any
other time stated by the Director, the Contractor must provide a list of
all vehicles, including spare and maintance vehicles, to be operated during
this Extension Year. This list must show for every vehicle the year, make,
type, seating capacity, registration number, bus number, license plate
number, owner, lessee (if applicable), and the expiration date of the New
York State Department of Transportation approval sticker. The information
must be provided on forms approved and supplied by the BOE, and the
Contractor must supply a copy of the title or certificate of registration
for each listed vehicle. Whenever any changes occur in the list of
vehicles, the Contractor must update the list within ten (10) business
days. In addition, the Contractor must provide at the same time written
assurance that all vehicles are equipped with two-way radios.
(2) Age and Condition of Vehicles. The vehicles affected by this provision
include all originally contracted vehicles, (i.e., "contract vehicles") and
all additional and spare vehicles. Except for the age of vehicles, nothing
contained in this Paragraph (2) and/or any of its subparagraphs shall be
deemed or construed in any manner or to any extent whatsoever to act and/or
operate in abrogation or derogation of any other individual or cumulative
provisions of the Contract, as heretofore amended and extended.
(a) The Contractor shall furnish service, maintenance and repairs of
all vehicles used in the performance of this contract in compliance
with (i) all manufacturer's
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guidelines for maintenance, service and repairs, (ii) all Federal and State
of New York statutes, regulations, rules, guidelines and policies
applicable to service, maintenance and repair of school bus vehicles, (iii)
all New York State Department of Transportation and New York State
Department of Motor Vehicles policies, rules and regulations; and (iii)
Federal and State regulations applicable to maintenance and repair of
school bus vehicles, and (iv) all New York State Education Department,
policies, rules and regulations applicable to service, maintenance and
repair of school bus vehicles. The Contractor shall maintain and, upon
demand, shall present to the Director contemporaneously kept, accurate,
complete, orderly and written records of the school bus vehicle,
maintenance and repair activities performed in accordance with the
foregoing.
(b) The Director shall have the right to disapprove any vehicles under this
Contract and to require the Contractor to furnish an acceptable replacement
vehicles in the event that the Director determines in his/her reasonable
judgement any such vehicle(s) to be unfit for service.
(c) The Contractor may continue to use the vehicles that are in service as
of the date of the execution of this Extension and Amendment Agreement
throughout the term of said Extension and Amendment Agreement, provided
each such vehicle is in compliance with subparagraph (a) and (b) hereof.
However, any new vehicles that shall be placed into service during the term
of this Extension and Amendment Agreement shall be not more than five years
old at the time such vehicle is placed into service. Vehicles transferred
among contractors that are subject to common control shall not be
considered as new vehicles under the preceding sentence. In his/her
reasonable discretion, the Director may allow the continued use of any
given contractor's vehicles that are in service as of the date of the
execution of this Extension and Amendment Agreement upon an assignment of
the Contract, if and to the extent any such assignment shall be approved in
accordance with the terms and conditions of the Contract, as heretofore
amended and extended.
(3) Use of Vehicles. Article XII entitled "Use of Vehicles" in Contract
Serial Nos. 0065, 0075 and 8107 and Article 36 entitled "Use of Vehicles"
in Contract Serial No. 9888, are hereby amended by the addition of sixth
and seventh unnumbered
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paragraphs at the end of each such Article to read as follows:
"In addition to all other uses of vehicles prescribed in pupil
transportation contracts, the Director shall have the right, power and
authority to require the Contractor to provide vehicles during the hours
between the transportation of pupils to school for the morning sessions and
the pick-up of pupils for homeward bound trips for service to other mayoral
and/or non-mayoral City of New York agencies and to any other public
agencies and/or private organizations, as determined by the Director. While
not previously invoked to any great extent during the period of the
Contract, the provisions of the third unnumbered paragraph contained in
this Article XII are still in full force and effect as stated herein. The
Contractor shall be entitled to payment for such services as stipulated in
this contract. At no time shall such service interfere with the timely
transportation of pupils to and from school."
(4) New Laws, Rules, Regulations, By-Laws or School Bus Safety Features.
Whereupon any Federal, State, local or Board of Education laws, rules,
regulations or by-laws are enacted, updated, revised, amended or otherwise
changed in any manner which require the Contractor to undertake any new or
revised procedures affecting school bus personnel or operations (i.e.,
school bus personnel drug or alcohol testing, driver licensing or training
procedures, etc.) or the introduction onto vehicles of new safety features
or any other equipment (i.e., increased seat-back padding, back-up beepers,
stop arms, safety sensors, seat belts, etc.), the Contractor must comply
promptly. The Contractor must assume the full cost of compliance with any
new or revised driver, and/or operational procedures or for the purchase
and installation of new safety features or other equipment in compliance
with any such changes and will not be entitled to any additional
remuneration from the BOE except as expressly permitted by law.
(5) Railroad Crossings. Each driver must make a full stop at all railroad
crossings, except that no stop is necessary at any railroad crossing where
a police officer, New York City Department of Transportation traffic
control officer, or a traffic control signal directs traffic to proceed.
(G) MISCELLANEOUS FINANCIAL AMENDMENTS. Any express terms, conditions and
specifications to the contrary notwithstanding, the Contract is hereby amended
as follows:
(1) Chapter 902 Service. On days when public schools are not in session,
the Contractor is required nevertheless to provide
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service pursuant to Chapter 902 of the Laws of 1985. The Contractor must
comply with the Director's instructions concerning the numbers of vehicles
and the vehicular routes to maximize efficient utilization. The Contractor
will be paid only for those vehicles which operate on those days as
expressly authorized by the Director.
(2) Further Amendments. The Contractor hereby agrees and covenants to
execute any further amendment to the Contract that the New York State
Education Department requires to secure the Department's approval of this
Extension and Sixth Amendment Agreement and to maintain the continuity of
funding.
(3) Cancellation. (a) General Terms and Conditions Section 7 entitled,
"Cancellation," is amended so that the Director may seek to have the
Contractor declared by the Chancellor's Board of Review to be in default of
the Contract either as a whole or merely in one or more "items" of the
Contract, i.e., the Contract is divisible into its several "items." Upon a
finding of default, the Chancellor's Board of Review will have the right,
power and authority to terminate the whole Contract or merely one or more
contractual "items."
(b) General Terms and Conditions Section 7 entitled, "Cancellation,"
is amended by the addition of a new paragraph "D" to read as follows:
"In the event of significant or repeated safety violations due to
acts of commission or omission by the Contractor or by its employees,
which result from the Contractor's failure to conduct its operations
in accordance with good practices in the pupil transportation
business, the BOE shall have the right to terminate the contract upon
thirty days advance written notice to the Contractor, unless the
Contractor can establish to the Director's reasonable satisfaction
that the Contractor's record of safety will thereafter be satisfactory
in accordance with good industry practices. For purposes of this
provision, "safety violations" shall mean significant or repeated
violation of safety laws and/or regulations of the United the New York
State Department of Transportation, The New York City Department of
Transportation, and the BOE Office of Pupil Transportation, provided
that prior to terminating this agreement for repeated safety
violations the BOE Office of Pupil Transportation shall provide the
contractor with notice and an opportunity to cure."
(c) General Terms and Conditions Section 7 entitled, "Cancellation,"
is amended by the addition of a new
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paragraph "E" to read as follows: "In the event of an indictment of
the Contractor, any of its principals, officers, or management
employees on the basis of acts of commission or omission involving or
affecting the provision of pupil transportation services under any BOE
pupil transportation contract(s) including, but not limited to, acts
of commission or omission which excessively increase BOE costs of
doing business, the BOE will have the right, at the Director's
discretion, either to terminate the Contract upon thirty days advance
written notice to the Contractor or to require the Contractor to
obtain the employment termination and ownership divestiture of the
indicted party. Before a final decision on either alternative
disposition, the Director will afford the Contractor a personal
meeting to allow for a full, open discussion of relevant issues."
(d) General Terms and Conditions Section 7 entitled, "Cancellation,"
is amended by the addition of a new paragraph "F" to read as follows:
"Nothing herein shall otherwise limit the rights and remedies of the
Director as set forth in this contract."
(4) Insurance Cost Increase Provision. Whereupon the Legislature amends the
State Education Law to allow the Board of Education to obtain State funding
to reimburse the Contractor for any amount of demonstrated and approved
increases in the cost of insurance, this Contract will be deemed
automatically amended to allow such reimbursement according to the exact
terms of any such statutory provision.
(a) Interim Insurance Provision. For only so long as the State
Education Law does not provide expressly for reimbursement of vehicle
insurance cost increases, the Board of Education agrees and consents
for a limited time to a partial or complete suspension of the
application of the two percent (2%) prompt payment discount but only
to the for Contract Serial Nos. 0065, 0075, and 8107, but only to the
extent of the Contractor's annual proof of eligibility.
(b) To be eligible for a partial or complete suspension of the 2%
prompt payment discount for each Extension Year, the Contractor must
meet eligibility conditions and adhere to rules, procedures and
definitions for the annual submittal of an "Insurance Rate Increase
Claim Statement," as such are expressed in Appendix C. The said
eligibility conditions, rules, procedures and
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definitions for partial or complete suspension of the two percent (2%)
prompt payment discount for each Extension Year are hereby
incorporated by this reference into this Extension and Amendment
Agreement as if set out herein in their entirety, and a copy of the
said eligibility conditions, rules, procedures and definitions is
hereto annexed as Appendix C.
(5) Increase or Decrease in the Number of Vehicles. Article XIII- A of
Contracts under Serial Nos. 0065, 0075 AND 8107, entitled, "INCREASE OR
DECREASE IN THE NUMBER OF VEHICLES DURING THE PERIOD OF EXTENSION," as
added by the 1992 Extension and Amendment Agreement, shall be amended at
Paragraph (h) to read as follows:
"1. Notwithstanding the provisions of Article XIII, at any time during
the period of extension the number of vehicles required in an item may
be increased or decreased and the schedules may be adjusted due to
changes in pupil population, default or voluntary surrender of a
contract or changes in policy or directives adopted by the Board of
Education, the City of New York, the State Department, and/or the
Financial Control Board; provided however, that in no event shall the
total number of vehicles originally awarded to a contractor be reduced
by more than forty percent (40%) of the total number of vehicles
originally awarded. Compensation to the contractor shall be adjusted
to the number of vehicles actually used in the performance of this
Contract, and the Board of Education shall not be liable for payments
for any vehicles eliminated to the extent provided above."
2. "If the Director eliminates any vehicle(s) from the number
originally awarded to the Contractor and later offers again a
vehicle(s) of the same type(s) and geographical service area(s) due to
any resumed need, the Contractor shall be entitled to restoration up
to and including the number of vehicles of the same type(s) and
geographical service area(s) originally awarded pursuant to the
procedures specified above in Paragraph B.
"The Director shall offer any 'additional' vehicle(s) first to the
contractor with the lowest 'current' weighted average daily rate per
vehicle in the relevant contractual item, pursuant to the procedures
specified above in Paragraph B. Additional vehicles will be offered
first to the Contractor will the lowest current
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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daily weighted average. The ranking will include both those
Contractors who are under an extension agreement and those Contractors
who are under the terms of Contracts for similar work. If all the
contractors in a particular item refuse an offer of additional
vehicles, the additional vehicles will then be offered to the
contractors providing service under this extension in order of the
lowest current daily rate in all items.
"The term 'lowest weighted average daily rate per vehicle,' which is
used to determine the order in which contractors are affected by both
the decrease provisions of Paragraph A and the increase provisions of
Paragraph B concerning both original vehicles and all additional
vehicles, shall reflect the current rates paid by the Board of
Education at the time of an offer.
3. All vehicles awarded under this provision will be treated as
additional not contract vehicles.
(6) Pending Litigation. (a) The Contractor does hereby acknowledge that
he/she is fully aware and apprised of pending litigation cases concerning
cost justification which have been consolidated under the caption of, A.C.
Transportation. Inc., et al., v. Board of Education of City of New York, et
al., Index No. 30841/92 (S. Ct. New York County) (the "litigation").
Subject to the final judicial disposition or settlement of the litigation,
the Contractor does hereby consent, agree and covenant that the daily
rate(s) per vehicle to be paid by the BOE to the Contractor during the
period of the 1995-2000 Extension and Amendment Agreement shall be the
daily rate(s) per vehicle approved by the BOE Office of Auditor General and
as first decreased and thereafter augmented each Extension Year pursuant to
provisions contained herein (the "OAG Rate"), unless the Contractor shall
make a written request to the Director to be paid the daily rate(s) per
vehicle based on such rate(s) paid during the Tenth Extension Year (Second
Extension Year in Contract Serial No. 9888), as augmented during the
Eleventh and Twelfth Extension Years (Third and Fourth Extension Years in
Contract Serial No. 9888), decreased during the Thirteenth Extension Year
(Fifth Extension Year in Contract Serial No. 9888), and thereafter
augmented during the Fourteenth, Fifteenth, Sixteenth and Seventeenth
Extension Years (Sixth, Seventh, Eighth and Ninth Extension Years in
Contract Serial No. 9888) pursuant to provisions contained herein (The
"Contractor's Rate").
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(b) To be effective, the Contractor's written request to be paid at a
higher daily rate(s) per vehicle must state that the Contractor does
consent, agree and covenant to be bound by the terms and conditions of
any settlement(s) or final judicial disposition(s) in the litigation.
To be effective, the Contractor's written request must also state that
the Contractor shall provide collateral annually in a form and amount
acceptable to the BOE Office of Auditor General sufficient to secure
the difference(s) each Extension Year between the OAG Rate and the
Contractor's Rate (the "Annual Rate Difference"), i.e., the
difference(s) between the daily rate(s) per vehicle in fact paid
during the Tenth Extension Year (Second Extension Year in Contract
Serial No. 9888), as augmented during the Eleventh and Twelfth
Extension Years (Third and Fourth Extension Years in Contract Serial
No. 9888), decreased during the Thirteenth Extension Year (Fifth
Extension Year in Contract Serial No. 9888), and augmented during the
Fourteenth, Fifteenth, Sixteenth and Seventeenth Extension Years
(Sixth, Seventh, Eighth and Ninth Extension Years in Contract Serial
No. 9888) pursuant to provisions contained herein, and such daily
rate(s) per vehicle, which has or shall have been determined to be
appropriate by the BOE Office of Auditor General for the Eleventh and
Twelfth Extension Years (Third and Fourth Extension Years in Contract
Serial No. 9888), decreased during the Thirteenth Extension Year
(Fifth Extension Year in Contract Serial No. 9888), and augmented
during the Fourteenth, Fifteenth, Sixteenth and Seventeenth Extension
Years (Sixth, Seventh, Eighth and Ninth Extension Years in Contract
Serial No. 9888), pursuant to the provisions contained herein.
(c) The BOE shall be required to surrender or release such collateral
to the Contractor only on the following conditions: (i) upon the
settlement(s) or final judicial disposition(s) of the said litigation
cases and upon the Contractor's payment to the BOE of any amounts
agreed or determined to be due and owing from the Contractor to the
BOE; and, (ii) if and to the extent that a higher daily rate(s) per
vehicle than that approved by BOE Office of Auditor General is
sustained upon a final judicial disposition(s) of the lawsuits.
(d) The following forms of collateral are deemed to be acceptable: (i)
if the BOE withheld retainage as performance security from the
Contractor during the Twelfth Extension Year (Fourth Extension Year in
Contract Serial No. 9888) and the estimated cumulative performance
security retainage amounts for the Thirteenth, Fourteenth, Fifteenth,
Sixteenth and Seventeenth Extension Years (Fifth, Sixth, Seventh,
Eighth and
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Ninth Extension Years in Contract Serial No. 9888) are equal to or
greater than the minimum collateral amounts estimated by the BOE
Office of Auditor General for the Thirteenth, Fourteenth, Fifteenth,
Sixteenth and Seventeenth Extension Years (Fifth, Sixth, Seventh,
Eighth and Ninth Extension Years in Contract Serial No. 9888), the
Contractor may use such retainage for the Thirteenth, Fourteenth,
Fifteenth, Sixteenth and Seventeenth Extension Years (Fifth, Sixth,
Seventh, Eighth and Ninth Extension Years in Contract Serial No.
9888), as collateral, provided the Contractor furnishes a written
agreement each year to the Director that such retainage shall be
pledged as collateral against any rate reduction(s) and overpayment
recovery by the BOE; (ii) if the Contractor's monthly service payments
plus performance security retainage for the Thirteenth, Fourteenth,
Fifteenth, Sixteenth and Seventeenth Extension Years (Fifth, Sixth,
Seventh, Eighth and Ninth Extension Years in Contract Serial No.
9888), are equal to or greater than the minimum collateral amounts
estimated by the BOE Office of Auditor General for the Thirteenth,
Fourteenth, Fifteenth, Sixteenth and Seventeenth Extension Years
(Fifth, Sixth, Seventh, Eighth and Ninth Extension Years in Contract
Serial No. 9888), the Contractor shall provide to the Director a
written agreement to receive monthly service payments on or about the
twenty-fifth (25th) day following each month of service with no
surrender by the BOE of the Two Percent (2%) Prompt Payment Discount
if payment shall be delayed by more than thirty (30) days after the
BOE's receipt of each monthly invoice, as provided in Article V of the
Contract; (iii) the Contractor shall provide a confirmed, irrevocable
Letter of Credit from an acceptable financial institution for the
benefit of the BOE, and/or renewed annually, in an amount minimally
equal to the collateral deemed necessary by the BOE Office of the
Auditor General; (iv) a surety payment bond on which the BOE shall
appear as the insured, issued by an insurer licensed to do business in
the State of New York, renewed annually in an amount minimally equal
to the collateral deemed necessary by the BOE Office of Auditor
General; (v) the Contractor shall furnish title vested in the BOE to a
frozen bank account to be held by the BOE in escrow in an amount
minimally equal to the collateral deemed necessary by the BOE Office
of Auditor General; and/or, (vi) in the event that the Contractor does
not elect one of the foregoing forms of collateral provided for in
this subparagraph (d), the Contractor's daily rate(s) per vehicle
shall be reduced to a level(s) approved by the BOE Office of Auditor
General, the disputed difference(s) shall be held by the BOE in escrow
for the Contractor in an interest bearing account maintained by the
Comptroller of the City of New York pending the outcome of
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the litigation, and such amount shall be payable to the Contractor in
accordance with subparagraph (c) hereof.
(e) If the Contractor elects under Article (G), Paragraph (6) (d) (vi)
above to receive the reduced daily rate(s) per vehicle during the
1995-96 Extension Year, then the amount to be escrowed shall be the
difference(s) between 98.5% of the higher daily rate(s) and 98.5% of
the reduced daily rate(s), and the daily rate(s) per vehicle to be
paid to the Contractor during the 1995-96 Extension Year shall be
98.5% of the reduced daily rate(s).
(f) If the litigation is unresolved prior to June of the Thirteenth,
Fourteenth, Fifteenth, Sixteenth or Seventeenth Extension Years
(Fifth, Sixth, Seventh, Eighth and Ninth Extension Years in Contract
Serial No. 9888), the BOE shall retain from the Contractor's monthly
service payment(s) for June of each Extension Year any underpayment in
collateral for the year then ended, as determined by the BOE Office of
Auditor General. The BOE shall hold such retainage in escrow for the
Contractor in an interest bearing account maintained by the
Comptroller of the City of New York pending the outcome of the
litigation.
(H) GENERAL MISCELLANEOUS AMENDMENTS. Any express terms, conditions and
specifications to the contrary notwithstanding, the Contract is hereby
amended as follows:
(1) Standardization of Contracts. The Contractor hereby acknowledges,
consents, stipulates, agrees and covenants that contracts awarded
under Serial Nos. 0065, 0075, 8107 and 9888, as well as such contracts
that may be awarded in the future pursuant to competitive bids in the
same or substantially similar terms and conditions all form an
interwoven system for the provision of pupil transportation services
as fully and completely as if they were awarded simultaneously, and,
therefore, constitute one contract. This includes contracts which
successor vendors obtain through assignments, mergers, acquisitions,
management agency agreements or any other means. Therefore, any
individual contractor with more than one contract will be deemed for
all intents and purposes to possess one contract. Furthermore, any
group of vendor entities subject to common ownership or control which
holds more than one contract will be deemed for all intents and
purposes to be one contractor with one contract. It is agreed that
this provision shall not be used in any way to prejudice the position
of any party relating to issues raised in the
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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Cost Justification Litigation described immediately above at Article
(G) Paragraph (6).
(2) Changes Affecting the Contractor. The Contractor agrees and
covenants to provide written notice to the BOE on forms prescribed by
the Director of each change affecting the following: partners, sole
proprietors, management control, Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer or the organization of
ownership of the contractor entity, i.e., the corporation, partnership
or sole proprietorship. Changes in the contractor entity include, but
are not limited to, the following: corporate or partner voting power;
sale, transfer or other alienation of corporate, partnership or sole
proprietorship assets; sale or transfer of corporate stock or
partnership interest over five percent (5%); or, any other action
which may affect the interests of the BOE as a party to this Contract.
(3) Office of Pupil Transportation. All references in the Contract and
any previous extension and amendment agreements to the "Bureau of
Pupil Transportation" are hereby amended to read, "Office of Pupil
Transportation."
(4) School Bus Contractor's Manual of Procedures and Requirements. The
Office of Pupil Transportation's School Bus Contractor's Manual of
Procedures and Requirements (the "Contractor's Manual"), issued on
June 1, 1982, is hereby incorporated by reference and made a part of
this Contract as if the "Contractor's Manual" were set out herein in
its entirety. Contractors and their employees, agents, successors,
assigns, subcontractors, and subcontractor's employees must observe
and comply fully with all rules, requirements and procedures as
expressed in the "Contractor's Manual." The Director will have the
right, power, authority and sole discretion to add, delete, revise,
update, reissue or otherwise change any or all rules, procedures
and/or requirements in the "Contractor's Manual" at any time without
prior notice to any party. Any and all provisions of the Contract,
including but not limited to the Article regarding Liquidated Damages,
which refer to Pupil Transportation Handbook Nos. 1, 2 and/or 3 are
hereby amended to refer solely to the "Contractor's Manual."
(5) Standards of Professional Conduct and Performance. If the Director
promulgates new standards of professional conduct and/or minimum
levels of competency or performance for drivers and escorts, the
Contractor must ensure that all affected employees are made fully
aware of, and act in full compliance with, such new standards. In
addition, the Contractor must certify in the manner prescribed by the
Director that each and
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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every driver, escort and other affected employee has received written
notification of such new standards.
(6) Uniform Attire of Transportation Crews. Unnumbered Paragraph 9 of
Article XVII entitled, "Vehicle Operator Standards," is hereby amended
to add the following provisions: (a) on August 15th prior to the start
of this Extension Year, the Contractor will submit one (1) complete
sample each of the current or new uniforms to be worn by drivers; (b)
within five (5) business days of the submittal, the Director will have
sole discretion to approve or disapprove the Contractor's choice of
uniform attire for any class of employees, i.e., this provision
affects current choices of uniforms as well as prospective choices;
(c) whereupon the Director disapproves any choice of uniform attire,
the Contractor must replace at no expense to the BOE the affected
uniform items with those acceptable to the Director; and, (d) the
Contractor must submit for approval to the Director any proposed
change(s) in any item(s) of uniform attire before such change(s)
becomes effective.
(7) Advertising on Vehicles. (a) The Contractor hereby agrees and
warrants to cooperate fully and completely with the Board of Education
regarding the placement of advertisements on the two (2) exterior
sides of all standard size vehicles, including spare vehicles. The
Contractor shall not be responsible for any costs, labor or other work
associated with the installation, repair, maintenance, replacement
and/or removal of advertisements or the repair and/or maintenance of
school bus vehicles in relation thereto. In addition, the Contractor
must not cause, incur or allow any costs, expenses or other
liabilities on its own part concerning anything whatsoever directly or
indirectly related to the placement, repair, maintenance and/or
removal of advertisements on school bus vehicles or the repair or
maintenance of school bus vehicles in connection with such
advertisements, and the Contractor shall not demand, nor be entitled
to, any compensation from the Board of Education for any such costs,
expenses or other liabilities.
(b) The Contractor shall allow the Board or the Board's agents,
employees, contractors, subcontractors or other representatives to
affix any and all such advertisements to the Contractor's vehicles by
any means the Board selects including, but not limited to, metal
and/or plastic frames and/or direct application, adhesive decals,
provided that the BOE or its agent, contractor and/or subcontractor
shall be responsible for the cost to restore the vehicle bodies with
respect to any damage upon removal. The Contractor shall cooperate
fully to provide access to all of its vehicles under
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EXTENSION AND SIXTH AMENDMENT OF CONTRACT
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the Contract, including spare vehicles, at such times when they are
not in use for Board transportation service including the early
morning, midday and evening hours, as the Board or the Board's agents,
employees, contractors, subcontractors or other representatives shall
schedule with at least three (3) business days advance notice.
Whereupon any advertisement or any component part thereof becomes
damaged to any extent or destroyed, for any reason whatsoever, and/or
whereupon any vehicle sustains damage or requires repairs or
maintenance due to any advertisements or any component part thereof,
the Contractor shall notify the Board or the Board's designated
agents, employees, contractors, subcontractors or other
representatives within twenty-four (24) hours by calling an "(800)"
telephone number which the Board shall supply to the Contractor. If
the Contractor is dissatisfied for any reason with any vehicle repairs
or maintenance supplied by the Board or the Board's designated agents,
employees, contractors, subcontractors or other representatives, the
Contractor shall submit any such claim or dispute in writing to the
Director of the Office of Pupil Transportation for resolution whose
decision shall be final and binding upon the Contractor, except for
administrative appeal to the Chancellor's Board of Review pursuant to
Section 8.3 of the Board of Education's Bylaws.
(c) The Contractor hereby consents, acknowledges and agrees that any
and all revenues or other consideration derived from the placement of
advertisements on the Contractor's vehicles shall be and remain
forever the sole and exclusive property of the Board of Education and
not the Contractor. The Contractor further agrees to follow in every
respect any and all rules, regulations, requirements, specifications
or procedures concerning school bus advertisements that the Board may,
in its sole discretion, promulgate in the Board's "SCHOOL BUS
CONTRACTOR'S MANUAL OF PROCEDURES AND REQUIREMENTS," as currently or
hereafter updated, revised or otherwise changed.
(8) Access to Premises. The Contractor and their employees, agents,
successors, assigns, subcontractors and subcontractor's employees must
grant to OPT inspectors, BOE administrative personnel, City of New
York administrative personnel and State of New York administrative
personnel full cooperation and access to all premises, vehicles, books
and records for the purpose of vehicle and garage inspections and
related functions as well as the review and audit of the Contractor's
records to ascertain compliance with the Contract and/or any Federal,
State, local and/or Board of Education laws, rules, regulations and/or
by-laws.
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(9) Unlawful or Unenforceable Provisions Void. Whereupon this
Extension and Sixth Amendment Agreement is found to contain any
unlawful or unenforceable provision(s) which is not essential to
continued performance or which is not material to the intent and
inducement of the parties, such provision(s) will be deemed of no
effect and will, upon application of either party, be stricken from
this document without thereafter affecting the binding force of the
remainder of this Extension and Sixth Amendment Agreement.
(10) Approval and Execution. This Extension and Sixth Amendment
Agreement will not become binding or effective upon the Board of
Education until the following series of events will have transpired:
(a) approval as to form by the BOE Office of Legal Services; (b)
authorization by a resolution duly adopted by a vote of the Board of
Education which will be deemed to be incorporated herein; (c)
execution on behalf of the Board of Education by the Chancellor or
his/her designee; (d) approval by the New York State Commissioner of
Education; (e) initial registration with Comptroller and
re-registration with the Comptroller each year thereafter; and, (f)
initial approval and subsequent annual re-approval by the New York
State Financial Control Board pursuant to the New York State Emergency
Act for the City of New York, the rules and regulations of said Board
so require.
(11) Implementation of the State Education Law. This Extension and
Sixth Amendment Agreement is intended to implement the provisions of
the New York State Education Law, Section 305, Subdivision 14 and the
attendant regulations of the New York State Commissioner of Education.
Whereupon there exist any inconsistency between the Board of Education
and the State Education Department concerning this statutory
provision, the attendant regulations of the Commissioner of Education
and/or any formula(e) for reimbursement of funds, this Extension and
First Amendment Agreement will be deemed amended automatically to
conform to the interpretation of the State Education Department but
only for the protection of the Board of Education's interests and only
at the Board of Education's option.
(12) The Comptroller will endorse hereon during the term of this
Contract his/her certificates that there are appropriations or funds
applicable thereto sufficient to pay the estimated expense to execute
and operate this Contract during the respective fiscal periods.
(13) As used herein, the singular will include the plural and vice
versa.
(14) All other provisions of the Contracts under Serial Nos. 0065,
0075 and 8107, as amended by the Contract Amendment Agreement of May
25, 1979, the 1983 Extension Agreement and
43
<PAGE>
EXTENSION AND SIXTH AMENDMENT OF CONTRACT
FOR REGULAR EDUCATION PUPIL TRANSPORTATION SERVICES
First Amendment Agreement, the 1986 Extension Agreement and Second
Amendment Agreement as amended further on June 24, 1986, and the 1989
Extension Agreement and Third Amendment Agreement and 1992 Extension
and Fourth Amendment Agreement, except those provisions herein noted
and revised, will remain in full force and effect.
(15) All other provisions of the Contract under Serial No. 9888 as
amended by the 1991 Extension Agreement and First Amendment and the
1994 Extension Agreement and Second Amendment as amended, except those
provisions herein noted and revised, will remain in full force and
effect.
(16) The Contractor does hereby consent and agree to cooperate with
the BOE concerning the elimination of the Contractor's payment of
Federal, State and local sales, excise and use taxes on purchases,
leases and other transfers which the Contractor makes, effects, causes
or allows in the performance of the Contract. The particular rules and
procedures concerning the elimination of such taxes shall be
promulgated in the Board's "SCHOOL BUS CONTRACTOR'S MANUAL OF
PROCEDURES AND REQUIREMENTS," a draft copy of which shall be
circulated to the contractors for comment before final promulgation.
Such rules and procedures may include, but are not necessarily limited
to, the following: (A) the Contractor's use of the Board's tax exempt
status when making, effecting, causing or allowing purchases, leases
and other transfers in the performance of the Contract (the Board
shall furnish the Contractor with appropriate forms and procedures),
provided that the Contractor shall remain the purchaser or lessee of
its vehicles, goods, commodities, supplies, equipment and so forth;
and, (B) the Contractor's cooperation through the production of
documentary evidence, as specified by the Board, with any and all
attempts by the Board to seek and obtain refunds of any and all
Federal, State and local excise, sales and use taxes which the
Contractor has paid during the applicable statutory period of
limitation for goods, fuel, commodities, services, leases, etc. in the
performance of the Contract. Whereupon the Board requires the
Contractor to produce documentary evidence in the course of any
attempt by the Board to seek and obtain such refunds of taxes, the
Board shall pay the Contractor, as consideration for such cooperation,
twenty percent (20%) of any refund amount attributable to the
Contractor's purchases, leases and other transfers, but only when and
after such refund amounts are actually received by the Board.
44
<PAGE>
IN WITNESS WHEREOF the parties have executed this Extension Agreement and Sixth
Amendment Agreement in septuplicate the year and day below written.
For the Board For the Contractor
/s/ [ILLEGIBLE] for the AMBOY BUS COMPANY
- ----------------------- ----------------------------------
Chancellor (Print full name above)
46-81 METROPOLITAN AVENUE
----------------------------------
RIDGEWOOD, NEW YORK 11385
----------------------------------
(Print address above)
/s/ Michael P. Comeys BY: /s/ [ILLEGIBLE]
- ----------------------- ----------------------------------
Approved as to Form Sign in ink above - Print
name and title below)
/s/ Michael Gatto
----------------------------------
Sec Treas
----------------------------------
/s/ Michael P. Comeys
- ------------------------
NOTICE OF LEGAL SERVICES
DATED: January 2, 1996
Subscribed and sworn to me this 3
day of January, 1996
/s/ Marilyn C. Wise
-----------------------------------
Notary Public
MARILYN C. WISE
Notary Public; State of New York
No. 41-4836893
Qualified in Queens County
Commission Expires 10/31/97
-45-
<PAGE>
This Extension Agreement pertains to the following Bid Serial Number(s), Item(s)
and number of contract vehicles originally awarded per Item.
Number of Contract
Bid Serial Number(s) Item Vehicles
- -------------------- ---- ------------------
006503 WBK-19-23 6
007501 WBK-20 17
988842 WBK-21 73
988842 WM-l-C 59
988818 WO-25-B 36
988842 WO-26 47
006502 WO-27-B 16
988818 WO-29 38
-46-
<PAGE>
APPENDIX A
For Contracts under Serial No. 9888 only where the Contractor meets conditions
of eligibility, any allowable cost increases accrued during the period from the
Second Extension Year through the Third Extension Year may be carried forward
"below-the-line" to supplement those cost increases which are used to justify an
augmentation of the daily rate per vehicle for the Fifth Extension Year and any
subsequent extension years. To be eligible to carry forward such cost increases,
the Contractor must provide annually a cost increase comparison between the
Second and Third Extension Years which identifies all items of cost increase
and, separately, the percentage of cost increase, if any, to be carried forward
and applied to a given subsequent base year. For purposes of this subparagraph,
the term "base year" is defined as the year immediately preceding the given
subsequent extension year to which the cost increases from the Second to Third
Extension Years are to be applied. The BOE Auditor General may prescribe
additional eligibility conditions as deemed appropriate in his/her sole
discretion. The term "below-the-line" is defined to mean that cost increases
from the period of the Second to Third Extension Years, which are carried
forward, are deemed as allocated to the period of accrual i.e., the Second and
Third Extension Years, and not to the subsequent extension year(s) to which they
are carried forward and applied both supplementally and "below-the-line" as
prior cost increases that have not yet been absorbed by the lesser of an annual
Consumer Price Index increment or a fixed annual rate augmentation cap. Once a
cost increase item has been carried forward and applied "below-the-line" to a
given base year, it may not be used again in any base year.
(i)
<PAGE>
APPENDIX B
For all Contracts under Serial Nos. 0065, 0075, 8107 and 9888 where the
Contractor meets conditions of eligibility, any allowable cost increases accrued
during the period of the Eleventh to Thirteenth Extension Years (Third to Fifth
Extension Years for Contract Serial No. 9888) may be carried forward
"below-the-line" to supplement those cost increases which are used to justify
the augmentations of the daily rates per vehicle for the Fifteenth and Sixteenth
Extension Years (Seventh and Eighth Extension Years for Contract Serial No.
9888). In addition, where the Contractor meets conditions of eligibility, any
allowable cost increases accrued during the period of the Fourteenth to
Fifteenth Extension Years (Sixth to Seventh Extension Years for Contract Serial
No. 9888) may be carried forward "below-the-line" to supplement those cost
increases which are used to justify an augmentation of the daily rates per
vehicle for the Sixteenth Extension Year (Eighth Extension Year for Contract
Serial No. 9888). To be eligible to carry forward such cost increases, the
Contractor must provide annually a cost comparison between the Eleventh and
Thirteenth Extension Years (Third and Fifth Extension Years for Contract Serial
No. 9888) and the Fourteenth and Fifteenth Extension Years (Sixth and Seventh
Extension Years for Contract Serial No. 9888) (when appropriate for each
contract serial number, respectively) that identifies all items of cost increase
and, separately, the percentage of cost increase, if any, to be carried forward
and applied to a given subsequent base year. For purposes of this subparagraph,
the term "base year" is defined as the year immediately preceding the given
subsequent extension year to which the cost increases from the Eleventh to
Thirteenth and/or the Fourteenth to Fifteenth Extension Years (Third to Fifth
and Sixth to Seventh Extension Years for Contract Serial No. 9888) are to be
applied. The BOE Auditor General may prescribe additional eligibility conditions
as deemed appropriate in his/her sole discretion. The term "below-the-line" is
defined to mean that cost increases from the periods of the Eleventh to
Thirteenth and Fourteenth to Fifteenth Extension Years (Third to Fifth and Sixth
to Seventh Extension Years for Contract Serial No. 9888), which are carried
forward, are deemed as allocated to the period of accrual, i.e., the Eleventh to
Thirteenth and Fourteenth to Fifteenth Extension Years (Third to Fifth and Sixth
to Seventh Extension Years for Contract Serial No. 9888), respectively, and not
to the subsequent extension year(s) to which they are carried forward and
applied both supplementally and "below-the-line" as prior cost increases that
have not as yet been absorbed by the lesser of an annual Consumer Price Index
increment or a fixed annual rate augmentation cap. Once a cost increase item
accrued during the Eleventh to Thirteenth and/or Fourteenth to Fifteenth
Extension Years (Third to Fifth and Sixth to Seventh Extension Years for
Contract Serial No. 9888) has been carried forward and applied "below-the-line"
to a given base year, it may not be used again in any later base year.
(i)
<PAGE>
APPENDIX C
(1) Eligibility for Discount Suspension. For contracts under Serial Nos. 0065,
0075 and 8107 to be eligible for a suspension of the two percent (2%) prompt
payment discount, to which the BOE is otherwise entitled under the provisions of
the Contract, the Contractor must demonstrate in an annual "Vehicle Insurance
Rate Increase Claim Statement" that increases of insurance premium rates have
created unreasonable financial burdens. Each annual "Vehicle Insurance Rate
Increase Claim Statement" will be subject to approval at the sole discretion of
the Director, in consultation with the BOE Office of Auditor General.
Eligibility for a suspension of the two percent (2%) prompt payment discount
also rests on the Contractor's showing that the insurance premiums, which
reflect annual increases are sufficient to provide minimum levels of coverage
required pursuant to the BOE Resolution of September 6, 1985, as amended, and
the Contract, as amended. The extent of the discount suspension, if any, is
governed by the provisions herein below.
(2) The term "Vehicle Insurance Rate Increase Claim Statement" is defined as a
written accountant's review report prepared by an independent Certified Public
Accountant ("CPA") or Public Accountant ("PA") licensed by the State of New
York. Each such review report must state (a) that a review was performed in
accordance with the standards of the American Institute of Certified Public
Accountants ("AICPA"), (b) that the information and data contained in the
"Vehicle Insurance Rate Increase Claim Statement" are the representations of the
Contractors management and (c) that it describes the nature of the review as
distinct from an audit. Each such review report must furnish at least the
limited assurance that, based upon the review, the CPA/PA is not aware of any
material modifications that should be made to the "Vehicle Insurance Rate
Increase Claim Statement" in order for it to conform to the AICPA's generally
accepted accounting principles. Contractor's who have not had a CPA audited
report performed for tax, securities or other operation-wide purpose within two
(2) years of the commencement date of this Extension and Amendment Agreement
must submit a certified and audited "Vehicle Insurance Rate Increase Claim
Statement" prepared by an independent CPA for the 1995-96 Extension Year.
Furthermore, the CPA or PA who prepares each "Vehicle Insurance Rate Increase
Claim Statement" and each review report must state that he/she has studied the
cost justification manual supplied by the BOE and has applied the standards
contained therein for the development of the "Vehicle Insurance Rate Increase
Claim Statement." Still further, the CPA or PA must have no interest in this
Contract, the Contractor or any of the Contractor's parent, subsidiary or other
affiliated entities and must so certify in writing. The "Vehicle Insurance Rate
Increase Claim Statement" shall utilize form prescribed by the Director as
approved by the State Education Department.
(i)
<PAGE>
(3) Documentation of Vehicle Insurance Rate Increases. The Contractor must
submit a copy of the full insurance policy and a copy of all invoices from the
insurance carrier(s) noting the full amount of premiums which are the subject of
any claims. During the 1995-96 and 1996-97 Extension Years, the base year for
the vehicle insurance calculation is January 1, 1991, through December 31, 1991.
During the 1997-98, 1998-99 and 1999-2000 Extension Years, the base year for the
vehicle insurance calculation is January 1, 1994 through December 31, 1994.
(a) During the Extension Year from July 1, 1995 through June 30, 1996, the
Contractor must show the difference between all premiums paid for required
coverage for the period from January 1, 1995 through December 31, 1995 and
the amount of such coverage for the period from January 1, 1991 through
December 31, 1991. For a complete suspension of the discount, the
difference between the two (2) years must be equal to or greater than the
value of the two percent (2%) discount for each year, as adjusted by the
annual percentages of increase provided above in Paragraph (B) of this
Extension Agreement, and as calculated on a monthly basis at the coverage
levels prescribed by the BOE during the balance of the Contract. To the
extent that the difference is between zero percent (0%) to two percent
(2%), there shall be a proportionate reduction in the suspension of the
discount.
(b) During the Extension Year from July 1, 1996 through June 30, 1997, the
Contractor must show the difference between all premiums paid for required
coverage for the period from January 1, 1996 through December 31, 1996 and
the amount of such coverage for the period from January 1, 1991 through
December 31, 1991. For a complete suspension of the discount, the
difference between the two (2) years must be equal to or greater than the
value of the two percent (2%) discount for each year, as adjusted by the
annual percentages of increase provided above in Paragraph (B) of this
Extension Agreement, and as calculated on a monthly basis at the coverage
levels prescribed by the BOE during the balance of the Contract. To the
extent that the difference is between zero percent (0%) to two percent
(2%), there will be a proportionate reduction in the suspension of the
discount.
(c) During the Extension Year from July 1, 1997 through June 30, 1998, the
Contractor must show the difference between all premiums paid for required
coverage for the period from January 1, 1997 through December 31, 1997 and
the amount paid for such coverage for the period from January 1, 1994
through December 31, 1994. For a complete suspension of the discount, the
difference between the two (2) years must be equal to or greater than the
value of the two percent (2%) discount for each year as adjusted by the
annual percentage of increase
(ii)
<PAGE>
provided above in Paragraph (B) of this Extension Agreement and as
calculated on a monthly basis at the coverage levels prescribed by the BOE
during the balance of the contract period. To the extent that the
difference is between zero percent (0%) to two percent (2%), there will be
a proportionate reduction in the suspension of the discount.
(d) During the Extension Year from July 1, 1998 through June 30, 1999, the
Contractor must show the difference between all premiums paid for required
coverage for the period from January 1, 1998 through December 31, 1998 and
the amount paid for such coverage for the period from January 1, 1994
through December 31, 1994. For a complete suspension of the discount, the
difference between the two (2) years must be equal to or greater than the
value of the two percent (2%) discount for each year as adjusted by the
annual percentage of increase provided above in Paragraph (B) of this
Extension Agreement and as calculated on a monthly basis at the coverage
levels prescribed by the BOE during the balance of the contract period. To
the extent that the difference is between zero percent (0%) to two percent
(2%), there will be a proportionate reduction in the suspension of the
discount.
(e) During the Extension Year from July 1, 1999 through June 30, 2000, the
Contractor must show the difference between all premiums paid for required
coverage for the period from January 1, 1999 through December 31, 1999 and
the amount paid for such coverage for the period from January 1, 1994
through December 31, 1994. For a complete suspension of the discount, the
difference between the two (2) years must be equal to or greater than the
value of the two percent (2%) discount for each year as adjusted by the
annual percentage of increase provided above in Paragraph (B) of this
Extension Agreement and as calculated on a monthly basis at the coverage
levels prescribed by the BOE during the balance of the contract period. To
the extent that the difference is between zero percent (0%) to two percent
(2%) there will be a proportionate reduction in the suspension of the
discount.
(iii)
<PAGE>
Exhibit 10.17
NYC D.O.T. CONTRACT
ATLANTIC PARATRANS
7 North Street Staten Island, NY
<PAGE>
[Letterhead of New York City Transit]
October 19, 1995
Mr. David Kessler
Vice President
Atlantic Paratrans, Inc.
1752 Shore Pkwy.
Brooklyn, NY 11213
Re: Contract No. 94E5461B Modification #1 - Zones 2 & 3
Dear David:
As previously mentioned, enclosed are five copies of the above referenced
contract modification.
Please sign all five copies, returning all five to the address below:
Gail H. Eisenfeld
New York City Transit Authority
130 Livingston St., Room 6052B
Brooklyn, New York 11201
Thank You.
Sincerely yours,
/s/ Gail
Gail H. Eisenfeld
Procurement Manager
Material Division
1312a/ge
MTA New York City Transit is an agency of the Metropolitan Transportation
Authority
Peter E. Stangl, Chairman and Chief Executive Officer
<PAGE>
NEW YORK CITY TRANSIT AUTHORITY
CONTRACT MODIFICATION/CHANGE ORDER
Change Order No.: 1
Contract No: 94E5461B
Contract Title: Five Borough Paratransit Carrier Service
Contractor: Atlantic Paratrans, Inc.
1752 Shore Parkway
Brooklyn, NY 11214
This Modification/Change Order, when properly executed, constitutes
authorization to proceed with the changes describe herein and changes the amount
of the contract as noted.
- --------------------------------------------------------------------------------
DESCRIPTION OF CHANGE
- --------------------------------------------------------------------------------
1. ARTICLE 110, Payment, Paragraph B only shall be deleted in its entirety and
changed to read as follows:
B. Payment will be made to the Contractor on:
(1) a fixed payment basis for items allowed in the fixed price
portion of this contract;
(2) A variable payment basis for each service hour operated by the
Contractor at the direction of NYC Transit;
(3) a pass-through payment basis to include
(a) a per unit monthly cost for revenue vehicles acquired by
the Contractor with the prior approval of NYC Transit;
(b) a per vehicle cost for insurance; and
(c) tolls for revenue vehicles.
Mobilization costs will be paid upon submission of invoices in a
form acceptable to NYC Transit.
2. ARTICLE 125, Warranty Work and Parts: Delete the last sentence, which will be
relocated to become the last sentence of ARTICLE 126, Vehicle Equivalency
Procedure.
<PAGE>
3. ARTICLE 126 , Vehicle Equivalency Procedure: At the end of this Article,
include the following sentence, "All submissions will then be forwarded to the
Chairman of the Vehicle Equivalency Committee in a timely fashion for
consideration as an `approved equal'."
4. PARAGRAPH 2.9, Technical Specifications, (Page T-2), delete the paragraph in
its entirety and replace with the following: "As of the contract start date,
service hours for Zones 1, 2, 3 and 4 are 6 am to 8 pm on weekdays and 10 am to
12 midnight on weekends and holidays. Beginning 7/1/96, service hours for Zones
1, 2, 3 and 4 are 6 am to 8 pm on weekdays and 6 am to midnight on weekends and
holidays. Beginning 10/1/96, service hours for Zones 1, 2, 3 and 4 are 6 am to
midnight on weekdays, weekends and holidays.
5. PARAGRAPH 2.11, Technical Specifications, (Page T-3), delete the phrase
"within 90 calendar days" and replace with "at least 90 days in advance."
6. PARAGRAPH 2.20 of the Technical Specifications (Page T-4) shall be changes to
read as follows:
"Payment will be made to the contractor on (1) a fixed payment basis for
items allowed in the fixed price portions of this contract, (2) a variable
payment basis for each service hour operated by the carrier at the direction of
NYC transit and (3) a pass-through basis to include costs for revenue vehicles,
revenue vehicle insurance and tolls for revenue service vehicles calculated on a
monthly basis in accordance with Article 110, Payment, and Article 111, Invoices
and Audit."
7. PARAGRAPH 5.8, Technical Specifications (Page T-8) delete the following
sentence: "PMMIS hardware provided by the carrier shall be acquired, installed
and tested by the carrier during Phase III." Replace with the following
sentence: "PMMIS hardware provided by the carrier shall be acquired, installed
and tested by the carrier during Phase I."
8. PARAGRAPH 13.8B, Vehicle Equivalency Procedure, Technical Specifications
(page T-20), delete in its entirety and replace with the following: Any
contractor proposing a vehicle with specifications that differ from those listed
in Appendices A, B, C and D must submit those vehicle specifications as stated
in Article 126, Vehicle Equivalency Procedure, page C-22.
9. PARAGRAPH 13.11, Technical Specifications (page T-20), delete the last
sentence and replace with the following: "All equipment considered for
reassignment are built on 1993 or newer chassis."
10. PARAGRAPH 14.11, Technical Specifications (page T-23), in the last sentence
delete "one day" and replace with "two days...."
11. SECTION 28.1 through SECTION 28.5 shall be renumbered Section 27.1 through
Section 27.5.
12. SECTION 27.1 through SECTION 27.4, Estimated Contract Quantities shall be
changed to reflect new dates for mobilization and contract duration as follows:
2
<PAGE>
Section 27.1 Zone 1 - Manhattan and the Bronx
Mobilization Date: October 1, 1995
Contract Period Beginning April 1, 1996: Term 5 years
1st Year - 4/1/96 through 3/31/97
2nd Year - 4/1/97 through 3/31/98
3rd Year - 4/1/98 through 3/31/99
4th Year - 4/1/99 through 3/31/00
5th Year - 4/1/00 through 3/31/01
Section 27.2 Zone 2 - Queens
Mobilization Date: November 1, 1995
Contract Period Beginning May 1, 1995: Term 5 Years
1st Year - 5/1/96 through 4/30/97
2nd Year - 5/1/97 through 4/30/98
3rd Year - 5/1/98 through 4/30/99
4th Year - 5/1/99 through 4/30/00
5th Year - 5/1/00 through 4/30/01
Section 27.3 - Zone 3 - Brooklyn
Mobilization Date: December 1, 1995
Contract Period Beginning June 1, 1995: Term 5 Years
1st Year - 6/1/96 through 5/31/97
2nd year - 6/1/97 through 5/31/98
3rd Year - 6/1/98 through 5/31/99
4th Year - 6/1/99 through 5/31/00
5th Year - 6/1/00 through 5/31/01
Section 27.4 - Zone 4 - Staten Island
Mobilization Date: November 1, 1995
Contract Period Beginning May 1, 1996: Term 5 Years
1st Year - 5/1/96 through 4/30/97
2nd Year - 5/1/97 through 4/30/98
3rd Year - 5/1/98 through 4/30/99
4th Year - 5/1/99 through 4/30/00
5th Year - 5/1/00 through 4/30/01
13. SECTION 29, Lease Agreement, Technical Specifications (page T-47) delete the
words, "The language in paragraph 30.3...." and replace with "The language in
paragraph 29.3...."
3
<PAGE>
14. PART III, TECHNICAL SPECIFICATIONS: the cause "in this RFP" as stated in
many paragraphs of this Contract, is deemed to mean "in this Contract" as well.
- --------------------------------------------------------------------------------
All terms, covenants, and conditions of the Original Agreement 94E5461B
remain in force and effect except as herein stated.
A. Original Contract Amount $77,044,351.00
--------------
B. New Mod #1 (No Change Amount) $ - 0 -
--------------
C. New Contract Amount (A+B) $77,044,351.00
--------------
- --------------------------------------------------------------------------------
CONTRACTOR: ATLANTIC PARATRANS, INC. NEW YORK CITY TRANSIT AUTHORITY
Signature: /s/ David S. Kessler Signature:____________________________
Name: David S. Kessler Name: Joy Fairtile
Title: Vice-President Title: Asst. Chief Proc. Officer
Date: October 23, 1995 Material Division
Date: _________________________
- --------------------------------------------------------------------------------
RETURN EXECUTED COPIES TO NEW YORK CITY TRANSIT AUTHORITY, 130 LIVINGSTON ST.,
Room 6052A, BROOKLYN, NY 11201 ATTN: Gail H. Eisenfeld, Procurement Manager
4
<PAGE>
[Letterhead of New York City Transit]
October 20, 1995
Mr. David Kessler
Atlantic Paratrans, Inc.
1752 Shore Parkway
Brooklyn, NY 11214
Re: NOTICE TO PROCEED, Contract Number 94E5461B, Five Borough Paratransit
Carrier Service, Zones 2 & 3
Dear Mr. Kessler:
As you have been advised, the subject contract has been awarded to your firm.
New mobilization instructions have been sent to you under separate cover. This
letter is the NOTICE TO PROCEED with those mobilization instructions.
Please acknowledge receipt of this letter by signing below and indicate the date
of receipt. Return this letter to Gail Eisenfeld, Procurement at 130 Livingston
St., Room 6052A, Brooklyn, NY 11201.
Sincerely yours,
/s/ Stanley Grill
Stanley Grill
Chief Procurement Officer
Materiel Division
___________________________________________
ACKNOWLEDGEMENT: Signature and Date
MTA New York City Transit is an agency of the Metropolitan Transportation
Authority
Peter E. Stangl, Chairman and Chief Executive Officer
<PAGE>
[Letterhead of New York City Transit]
October 20, 1995
Mr. David Kessler
Vice President/Director of Transportation
Atlantic Paratrans, Inc.
1752 Shore Parkway
Brooklyn, New York 11214
Dear Mr. Kessler:
In accordance with Contract 94E5461B, the purpose of this letter is to provide
you with sufficient requirements to prepare your start-up plans for approval to
start your actual mobilization activity. The items specified are vehicle levels,
minimum facility square footage and the starting first quarter's vehicle service
hours as follows:
VEHICLES
Zone 2 - Queens - 55*
Zone 3 - Brooklyn - 66*
* These are starting levels for the beginning of the respective contract years.
Additional vehicles will be required for the ramp-up activities in the in the
latter part of 1996. We will advise you of the additional requirements at a
later date. When submitting your plan, assume you will receive 1 large and 6
small vans that will be reassigned from the current Queens operator. Also, your
plan should include the mix of vehicles types that were accepted in the executed
contracts.
You may start this service with any vehicle approved by the project manager for
use that is no older than March 1994.
FACILITIES
Zone 2 - Queens - 32,350 square feet
Zone 3 - Brooklyn - 36,533 square feet
FIRST QUARTER VEHICLE SERVICE HOURS
Zone 2 - Queens - 30,755 hours
Zone 3 - Brooklyn - 37,078 hours
MTA New York City Transit is an agency of the Metropolitan Transportation
Authority
Peter E. Stangl, Chairman and Chief Executive Officer
<PAGE>
Page 2
As a reminder, as the contract requires, please ensure that your accounting
records are not commingled with any other business owned or operated by the
principals of your company.
Sincerely,
/s/ Dennis A. Erkus
Dennis A. Erkus
Director, Operations
Divisions of Paratransit & ADA Compliance
cc: G. Millis
K. DeDonno
P. Baker
E. Kalomiris
G. Eisenfeld
Contractor File
<PAGE>
[Letterhead of New York City Transit]
September 22, 1995
Mr. David Kessler
Vice President
Atlantic Paratrans, Inc.
1752 Shore Parkway
Brooklyn, NY 11214
Re: Contract 94E5461B - Five Borough Paratransit Carrier
Contracts - Zone 2 and 3
Dear Mr. Kessler:
You are hereby notified that the above subject contract has been awarded to
Atlantic Paratrans, Inc. The contract is deemed to be in effect as of the date
of this letter.
This contract is in the not to exceed amount of $77,044,351. The demand
estimates contained in this contract are currently being reviewed.
Mobilization instructions will follow shortly.
Attached is a fully executed original copy of your contract with the
Authority. If you have any questions, please call Gail Eisenfeld, Procurement
Manager, at (718) 694-3171.
Sincerely,
/s/ Stanley Grill
Stanley Grill
Chief Procurement Officer
Material Division
Enclosure
MTA New York City Transit is an agency of the Metropolitan Transportation
Authority
Peter E. Stangl, Chairman and Chief Executive Officer
<PAGE>
[ILLEGIBLE]
CHGS: CS DIV. AUTHORITY OPERATING AUTHORITY
R.C # 7196
ACCT. # 808.99 ACCEPTANCE AND ORDER
FUNCT. # 806
-------------------------
CON. DEPT. |X|
PURCH DEPT. |_|
130 LIVINGSTON STREET
BROOKLYN, NY 11201
-------------------------
- ------------------------------------------------
Atlantic Paratrans, Inc. Proc. Manager: G. Eisenfeld
1752 Shore Parkway Tel. No.: (718) 694-3177
Brooklyn, NY 11214 Project Man: D. Erkus
Attn: D. Kessler Tel. No.: (212) 373-5635
- ------------------------------------------------
YOU ARE HEREBY NOTIFIED THAT YOUR BID FOR THE ARTICLES LISTED IN THE
SCHEDULE BELOW HAS BEEN ACCEPTED AND YOU ARE HEREBY DIRECTED TO FURNISH SAME IN
ACCORDANCE WITH THE TERMS THEREOF TO BE DELIVERED AT TIME DESIGNATED IN SAID
PROPOSAL.
GOODS WILL NOT BE ACCEPTED OR BILLS AUDITED FOR PAYMENT, UNLESS THE FOLLOWING
CONDITIONS ARE COMPLIED WITH:
PLACE ORDER NUMBER AND DELIVERY POINT ON ALL BILLS, PACKING SLIPS AND SHIPPING
LABELS.
BILLS MUST BE SUBMITTED IN DUPLICATE FOR EACH DELIVERY MADE. MAIL TO: N.Y.C.
TRANSIT AUTHORITY OR MANHATTAN AND BRONX SURFACE TRANSIT OPERATING AUTHORITY per
contract terms.
--------------------------------
SEPARATE INVOICES REQUIRED
FOR EACH DELIVERY POINT
--------------------------------
SEND MEMORANDUM BILL WITH EACH SHIPMENT, INCLUDING PRICES, TO DELIVERY POINT.
MAKE DELIVERIES BETWEEN 8 A.M. AND 3 P.M. DAILY, EXCEPT SATURDAY AND SUNDAY.
- ---------------------------------------------------------------
DELIVERY POINT: SEE STOREROOM COLUMN BELOW FOR DESIGNATION. TRANS
ADDRESSES OF STOREROOMS ON REVERSE SIDE. CODE 15
- ---------------------------------------------------------------
================================================================================
NO. ORDER DATE ORDER NO: MARK ALL BILLS AND SHIPMENTS DELIVERY DATE
E5461B 9/22/95 E-2098 SEE BELOW
WITH THIS NUMBER
- --------------------------------------------------------------------------------
[ILLEGIBLE] Shipping Instructions:
Contract 94E5461B See Below
<TABLE>
<CAPTION>
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[ILLEGIBLE] STORE QUANTITY UNIT
ROOM MEAS. DESCRIPTION UNIT PRICE AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THIS MATERIAL IS EXEMPT FROM ALL EXCISE TAX
FOR ACCOUNTING PURPOSES ONLY
Furnish and deliver Paratransit Access-
a-Ride service for Zones 2 and 3 (Boroughs
of Queens and Brooklyn) in accordance
with Contract #94E5461B.
TOTAL AMOUNT NOT TO
EXCEED $77,044,351
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=========================================================================================================
</TABLE>
NOTE: THAT PURSUANT TO THE DIRECTIVE OF JOSEPH H. MURPHY, COMMISSIONER OF
TAXATION AND FINANCE OF THE STATE OF NEW YORK DATED 7/22/65. THIS PURCHASE
MAY BE ACCEPTED IN LIEU OF AN EXEMPTION CERTIFICATE, WITH THE VENDOR
RETAINING A COPY TO PROVE THAT THE SALE WAS EXEMPT.
THIS ORDER SUBJECT TO NON-DISCRIMINATION CLAUSE ON REVERSE SIDE.
_________________________________
AUTHORIZED PROCUREMENT OFFICER
<PAGE>
-------------------------------------
NEW YORK CITY TRANSIT AUTHORITY
DIVISION OF MATERIEL
PROCUREMENT SUB-DIVISION
CONTRACT #94E5461
FIVE BOROUGH PARATRANSIT CARRIER SERVICE
---------------------------------------
<PAGE>
FIVE BOROUGH PARATRANSIT CARRIER SERVICE CONTRACTS
CONTRACT 94E5461
TABLE OF CONTENTS
SECTION
PART I Contract Terms and Conditions
PART II General Contract Provisions
PART III Technical Specifications
Appendices
ATTACHMENTS:
Attachment I: PRICE SCHEDULE
Attachment II: Schedule A - Insurance and Bonding Requirements
Attachment III: Schedule D - Federal Contract Provisions
Attachment IV: Schedule F - Certification and Disclosure Forms
Attachment V: Schedule C - Disadvantaged Business Enterprise
Participation
Attachment VI: Schedule G - Rider to Contract Documents
Attachment VII: FAR Part 31
<PAGE>
CONTRACT 94E5461
FIVE BOROUGH PARATRANSIT CARRIER SERVICE
PART I
CONTRACT TERMS AND CONDITIONS PAGE
----------------------------- ----
ARTICLE
101 DEFINITIONS ...................................................... C-1
102 SCOPE OF WORK .................................................... C-5
103 TERM OR AGREEMENT ................................................ C-6
104 TIME AND STANDARDS OF PERFORMANCE ................................ C-6
105 DELIVERY AND WORK PRODUCTS AND MATERIALS ......................... C-8
106 DRUG AND ALCOHOL PROGRAM ......................................... C-8
107 SUSPENSION OF PERFORMANCE ........................................ C-8
108 PERMITS .......................................................... C-8
109 GRAND JURY TESTIMONY ............................................. C-8
110 PAYMENT .......................................................... C-9
111 INVOICES AND AUDIT ............................................... C-11
112 LIQUIDATED DAMAGES ............................................... C-13
113 ENTIRE AGREEMENT ................................................. C-18
114 PROSECUTION OF THE WORK .......................................... C-18
115 RISK OF LOSS ..................................................... C-19
116 SUBCONTRACTORS ................................................... C-20
117 RELATIONSHIP OF CONTRACTOR TO THE AUTHORITY ...................... C-20
118 DISCLOSURE ....................................................... C-21
119 MOST FAVORED CUSTOMER ............................................ C-21
120 PUBLICITY ........................................................ C-21
121 AMENDMENTS ....................................................... C-21
122 ATTACHMENTS ...................................................... C-21
123 RESCISSION ....................................................... C-22
124 ORDER OF PREFERENCE .............................................. C-22
125 WARRANTY WORK AND PARTS: VEHICLE MAINTENANCE AGREEMENTS .......... C-22
126 VEHICLE EQUIVALENCY PROCEDURE .................................... C-22
<PAGE>
PART II
CONTRACT TERMS AND CONDITIONS
94E5461
AGREEMENT, made this_______ day of ____________,199_, between the NEW YORK
CITY TRANSIT AUTHORITY (hereinafter the "Authority"), with offices at 370 Jay
Street, Brooklyn, NY 11201, and ____________________ (hereinafter the
"Contractor"), a Corporation, with offices at______________________
WITNESSETH:
WHEREAS, the Authority desires to retain a Contractor to provide Americans
with Disabilities Act mandated Paratransit (Access-a-Ride) service for Zone
_________ as set forth in Part III, Technical Specifications;
WHEREAS, the Contractor represents that it possesses the necessary
knowledge and experience to perform the Work and services herein described; and
WHEREAS, the Authority desires to retain Contractor on the terms and
conditions set forth in this Agreement and Contractor has agreed to accept such
compensation based upon the rates set forth in the Price Schedule designated
herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto do hereby agree as follows:
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NEW YORK CITY TRANSIT AUTHORITY
Materiel Division - Procurement
CONTRACT PROVISIONS
ARTICLE 101 DEFINITIONS
The following terms used in this Contract shall, except where, by the
context, it is clear that another meaning is intended, be construed as follows:
1. "Access-a-Ride" shall mean New York City Transit Authority
paratransit service.
2. "Adaptive Device" shall mean a tool used by persons with physical
disabilities to help with mobility and communication.
3. "Addenda" or "Addendum" shall mean the additional Contract
provisions relating to the Contract issued in writing by the
Authority prior to the Award Date.
4. "Add-on Trips" shall mean stand-by trips not provided in a driver's
daily manifest to be dispatched real-time to driver.
5. "Advance Reservations" shall mean paratransit service mode requiring
passengers to call to place a reservation for paratransit service.
6. "Annual Paratransit Plan Update" shall mean the report required
annually by the Federal Transit Administration which documents
Americans with Disabilities Act.
7. "Authority" or "NYC Transit" (or the initials "T.A" or "N.Y.C.T.A.")
shall mean the New York City Transit Authority, a public benefit
corporation existing by virtue of the Public Authorities Law, Title
9 of Article 5, and any other authority, board, body, commission
official or officials to which or to whom the powers now belonging
to the said Authority with respect to the location, construction,
equipment, maintenance and operation of transit facilities shall by
virtue of any act or acts hereinafter pass or be held to appertain.
8. "Award Date" shall mean the date of the Notice of Award is issued.
9. "Brochure Rack" shall mean a pamphlet display fixture to be
furnished by the New York City Transit Authority and installed by
carriers in the interior of Access-a-Ride vehicles.
10. "Bus Block" shall mean a segment of vehicle platform time in
non-revenue and revenue service.
11. "Call Holding" shall mean the queuing of customer calls awaiting
availability of a reservations operator.
12. "Call Reservations" shall mean an Access-a-Ride function providing
customers with on-line confirmation of their advance registration
trip request.
13. "Carrier" shall mean an operator of, or party submitting a proposal
to operate some or all of, the Access-a-Ride service.
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14. "Carrier No-Show" shall mean a failure by the Contractor to pick up
a passenger.
15. "Centralized Reservations and Scheduling System (CRSS)" shall mean
an automated system supporting paratransit ride reservations,
scheduling and reporting.
16. "City" shall mean the City of New York, according to its boundaries
at the date of this Contract.
17. "Command Center" shall mean a New York City Transit Authority site
for operating Access-a-Ride reservations, scheduling and customer
assistance functions during Phase 3 of operations.
18. "Conditional Eligibility" shall mean service restrictions of some
Access-a-Ride participants.
19. "Contract," "Contract Documents" or "Agreement" shall mean the
ATTACHMENTS, APPENDIX, PROPOSER'S PROPOSAL, CONTRACT TESTIMONIUM,
GENERAL CONTRACT PROVISIONS, INFORMATION FOR PROPOSERS
(IFP),SPECIFIC CONTRACT PROVISIONS, SCHEDULES deemed included (if
any), TECHNICAL SPECIFICATIONS (if any), FORMS OF BONDS (if any),
CONTRACT DRAWINGS (if any), all ADDENDA hereafter issued (if any),
and the Notice of Award.
20. "Contractor" shall mean the Proposer to whom this Contract is
awarded, its successors and assignees. For convenience the
Contractor may be hereinafter referred to as if the Contractor were
an individual. The word "he" shall , as the sense may require
include "she", "it" and "they", the word "him" shall include "her",
"it" and "them", and the word "his" shall include "her", "its" and
"their".
21. "Contractor Cancellation" shall mean Unauthorized Access-a-Ride
carrier cancellation of scheduled passenger trip.
22. "Contractor Early" shall mean vehicle arrival more than 15 minutes
before scheduled passenger pick-up time.
23. "Contractor Late" shall mean vehicle arrival more than 15 minutes
after scheduled passenger pick-up time.
24. "Customer Assistance Division" shall mean a Sub-division of NYC
Transit which provides customer information and complaint
management.
25. "Customer No-Show" shall mean Access-a-Ride participant not
available for properly scheduled trip.
26. "Deadheading" shall mean any vehicle time and mileage when vehicle
is not in revenue service.
27. "Depot" shall mean the Carrier's operation facility.
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28. "Directed," "required," "permitted," "ordered," "designated,"
"selected'" "prescribed," or words of like import used in the
specifications or upon the drawings (if any) shall mean,
respectively, the direction, requirement, permission, order,
designation, selection or prescription of the Project Manager; and
similarly the words "approved," "approved manner," "approval,"
"acceptable," "satisfactory," "equal," "necessary," or words of like
import shall mean, respectively, approved by, or acceptable or
satisfactory to, or equal, or necessary in the opinion of the
Project Manager.
29. "Dispatch Log" shall mean the dispatchers daily record of service
and vehicle information.
30. "Disputes Resolution Officer" or "DRO" shall mean the individual
designated by the Authority to resolve disputes between the parties.
31. "DOT" shall mean the United States Department of Transportation.
32. "Driver Bid" mean the process by which carrier personnel are
assigned regular work
33. "Engineer" shall have the same meaning as "Project Manager".
34. "En Route Relief" shall mean a change in revenue vehicle drivers in
the field during carrier service hours.
35. "Federal" or words of like import shall mean the United States of
America.
36. "Inspector" shall mean any representative of the Project Manager
designated to act as an inspector.
37. "Late Trip Cancellation" shall mean customer cancellation after 5:00
p.m. the night before a trip.
38. "Law shall mean the Constitution and laws of the United States and
of the State of New York, the New York City Charter, the City Code,
and each and every other law, rule, regulation, requirement, order,
judgment, decree, or ordinance of every kind whatsoever issued by
any government entity, applicable to or affecting the Contract, the
Work and all persons engaged in the Work (including any of the
foregoing which concern health, safety, environmental protection,
and non-discrimination).
39. "Legal Proceeding" shall mean every action, litigation, arbitration,
administrative proceedings, and other legal or equitable proceeding
of any kind whatsoever.
40. "Liens" shall mean any and every lien of kind whatsoever against the
Work, any monies due or to become due from the Authority to
Contractor, and/or any other property of the Authority, for or on
account of the work, including any Public Lien.
41. "Maintenance Campaign" shall mean inspections of heating and air
conditioning equipment and revenue vehicles.
42. "Manufacturer" - See "Supplier".
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43. "MTA" shall mean the Metropolitan Transportation Authority and any
other board, body, commission, official or officials to which or to
whom the powers now belonging to the said Authority in respect to
the planning, financing, location, construction, equipment,
maintenance and operation of mass transportation facilities or the
purchase of Rapid Transit cars under the provisions of Article 5,
Title 11 of the Public Authorities Law of the State of New York
shall, by virtue of any act or acts, hereafter pass or be held to
appertain.
44. "New York City Transit System" (or "system") shall mean the transit
system within the City of New York operated by the New York City
Transit Authority.
45. "New York State" shall mean the State of New York.
46. "Non-revenue Equipment" shall mean vehicles used by the Contractor
that are not in revenue service; it may include vehicles used for
supervisory and maintenance functions.
47. "Notice" or "notice" shall mean a written notice.
48. "Notice of Award" shall mean a document that apprises the Contractor
that this Contract has been approved by the NYCTA.
49. "On-Line Confirmation" shall mean confirmation to a customer of
his/her requested ride at the time the customer makes the
reservation.
50. "On-Time Performance" shall mean plus or minus 15 minutes from the
scheduled pick-up time.
51. The term "Original Equipment Manufacturer" or "O.E.M." shall mean
the standards, requirements, recommendations of the respective
Manufacturer.
52. "Pigtail" shall mean a long cord used in the remote control
operation of a wheelchair lift in a lift vehicle.
53. "Post Trip Vehicle Inspection" shall mean the daily inspection of
the revenue vehicle immediately following completion of revenue
service tour.
54. "Pre-trip Vehicle Inspection" shall mean inspection of the revenue
vehicle immediately preceding the revenue service tour.
55. "Project Manager" shall mean the individual designated by the
Authority to administer this Contract or his duly authorized
representative and any successor or successors duly appointed or any
deputy or substitute who shall be appointed by the Authority.
56. "Pull-In" shall mean the return of the revenue vehicle to the
assigned depot facility.
57. "Pull-Out" shall mean the revenue vehicle departure from the
assigned depot facility to enter revenue services.
58. "Pull-Out/Pull-in Logs" shall mean dispatcher records of vehicle
pull-outs and pull-ins.
59. "Pull Out Ready Line " shall mean the revenue vehicles available for
revenue service pull-out at the beginning of each peak period.
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60. "Repeaters" shall mean repeating radio signals during radio
transmissions.
61. "Revenue Service" shall mean the period of time from the initial
departure of the revenue vehicle from the assigned depot to the last passenger
drop-off and return of revenue vehicle to the assigned depot.
62. "Service Hour" shall mean each hour that a revenue vehicle is in
revenue service.
63. "Service Capacity" shall mean the sum total of passenger trips
scheduled to be completed, including passenger late cancellations, passenger
no-shows and completed trips.
64. "SI System" shall mean the International System of Units.
65. "State" -- See "New York State."
66. "Subcontractor" shall mean an individual or organization who enters
into a contract to furnish labor or services only or labor and materials or
apparatus in connection with the Work directly or indirectly for or on behalf of
the Contractor and whether or not in privity of Contract with the Contractor.
67. "Subscription" shall mean regularly scheduled paratransit service
available without a reservation.
68. "Supplier" shall mean an individual or organization who furnishes
materials, equipment or supplies to the Contractor either directly or
indirectly, for incorporation in the Work.
69. "Timely Trip Cancellation" shall mean a trip cancellation received
before 5 p.m. the day before a trip is scheduled.
70. The term "Warranty Unit" or "warranty unit" shall mean any Unit
returned pursuant to the Warranty Provisions of this Contract.
71. "Work" or "Project" shall be defined as all the required obligations
of the Contractor hereunder, including but not limited to, the performance of
any labor or services, the supplying of any goods or materials, the furnishing
or repair and/or remanufacture of any equipment or any other resources or
requirements or deliverables necessary to perform, construct, accomplish and
complete this Contract's objectives as stated in Article 102 below.
72. "UMTA" shall mean the United States Department of Transportation Urban
Mass Transportation Administration, now known as the Federal Transit
Administration.
73. "United States Government" -- See "Federal."
ARTICLE 102 SCOPE OF WORK
The New York City Transit Authority (hereafter referred to as "the
Authority," "NYC Transit" or "NYCTA") hereby retains the Contractor, and the
Contractor hereby agrees to perform the services as described in the Technical
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<PAGE>
Specifications, which is appended hereto and incorporated herein. (Part
III). All performance obligations specified herein and in Scope of Work shall be
referred to as the "Work." Contract shall perform all Work in accordance with
the highest professional standards.
ARTICLE 103 TERM OF AGREEMENT
This Agreement shall become effective upon the date of the notice to
proceed and shall continue in effect for a period of five years (plus a
mobilization period) unless terminated sooner.
ARTICLE 104 TIME AND STANDARDS OF PERFORMANCE
A. Contractor shall complete all Work assigned hereunder within the period
of time specified by the Contract.
B. The Contractor shall adhere to the following performance standards.
1. On Time Performance: the Contractor shall provide ninety (90)
percent on time performance for all scheduled pick-ups and drop-offs. On-time is
deemed to mean plus or minus fifteen (15) minutes from the scheduled time.
2. Advanced Reservation Shared Ride Time: the Contractor shall not
require any customer to ride on an advanced reservation shared ride that is
twice as long as an advanced reservation non-shared ride.
3. Subscription Shared Ride Time: the Contractor shall not require any
customer to ride on any revenue vehicle in shared ride subscription service when
that ride is twice as long as an advanced reservation non-shared ride.
4. Reservationist Response: the Contractor shall provide a sufficient
number of reservationists during Phase Two operations so as to provide immediate
(no call holding or waiting) access to customers calling for a ride a minimum of
seventy-five (75) percent of the time. Remaining calls should be answered within
two minutes of customers accessing the automated call distribution system.
5. Cancellation "Hot Line" Response: the Contractor shall provide a
sufficient number of operators during the hours of 6:00 a.m. to 10:00 p.m.
weekdays and weekends to handle the Cancellation "Hot Line" so as to provide
customers canceling reservations immediate access (no call holding or call
waiting) to personnel at a minimum of seventy-five (75) percent of the time.
Remaining call should be answered within two minutes of initial access. During
non-business hours, all calls must be captured by the Automated Call
Distribution System and reviewed by the Contractor no later than 6:00 a.m. the
following morning.
6. Phase Two Posting and Delivery of Trip Tickets and PMMIS
deliverables shall be made within three (3) business days of the actual trips.
7. Telephone Recording Cassettes Tapes shall be delivered to NYCTA no
later than three (3) business days after Contractor's receipt of request from
NYCTA.
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8. Signed Trip Tickets: during Phase Two operations, all trip tickets
must be handled in the manner specific in paragraphs 11.20 and 11.21, Technical
Specifications.
9. Preventative Maintenance of Revenue Vehicles: the Contractor shall
be required to perform ninety-five (95) percent of all Type A, B and C
inspections within three (3) business days and 400 miles or less from the
scheduled maintenance date and mileage requirements. The Contractor is
specifically exempted from this requirement during the first month of Phase Two
operations.
10. Pre and Post Trip Vehicle Inspection: the Contract shall implement
a program to establish a ninety-nine percent conformance with paragraph 14.4,
Technical Requirements.
11. Accidents/Incidents:
a. Reporting: The Contractor shall provide a verbal report to the NYC
Transit Project Manager or duly authorized representative within one hour of the
accident or incident involving injury to a customer, Access-a-Ride employee or
any other person or where damage is in excess of $1,000. A written report to
follow the verbal report is required within 24 hours. All other incidents are to
be reported verbally and in writing within 24 hours of the event.
b. Repairs: The Contractor must repair all damage to vehicles or
facilities within 30 days.
12. Deadheading: the Contractor will adhere to a maximum thirty (30)
minute deadheading limit at both the beginning and end of any revenue vehicle
work block.
13. Complaints: the Contractors shall maintain a ratio of complaints to
completed trips to 1:2,500.
14. Productivity: the Contractor shall maintain a trip per hour ration
of no less than 1.80 trips per revenue vehicle hour, measured from vehicle
pull-out to pull-in during Phase Two.
15. Heating and Air Conditioning: the Contractor shall properly
maintain operating heating and air conditioning systems on all revenue vehicles.
No revenue vehicle shall be operated in revenue service for longer than two (2)
days without properly functioning heating or air conditioning systems as
described in paragraph 14.11, Technical Specifications.
16. Cleanliness of Revenue Vehicles: The Contractor shall be
responsible for maintaining the appearance and cleanliness of all vehicles used
in the Paratransit service. The Contractor shall implement and maintain a
regular schedule of vehicle washing.
(a) Vehicle Exteriors: Vehicles shall be washed at least twice each week
to maintain a clean exterior appearance. Clean is defined as no visible dirt
buildup from a distance of 25 feet. In the event of inclement weather, the
Contractor may suspend vehicle washing for no later than 24 hours after the end
of the inclement weather, at which time the Contractor will resume vehicle
washing.
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(b) Vehicle Interiors: At a minimum, interiors shall be swept trash
emptied and cleaned daily; fully mopped, windows cleaned and driver's area
cleaned once a week; and fully cleaned throughout once a month.
ARTICLE 105 DELIVERY OF WORK PRODUCTS AND MATERIALS
Upon request of the Authority, the Contractor shall deliver forthwith to
the Authority any Work products produced and all data, studies, reports,
material, specifications, plans, charts, photographs, exhibits prepared,
developed or kept in connection with, or as part of this project, and all their
material and records of whatsoever nature prepared, developed or kept in
connection with, or as part of, this project ("Work Products"). Without the
necessity of any demand by the Authority, Contractor shall deliver to the
Authority, prior to the expiration or upon the earlier termination of this
Agreement, all Work Products, which shall become the property of the Authority.
This paragraph does not apply to any records or documents pertaining to the
operation of Contractor's business. The Contractor may retain copies of those
records or documents which it considers necessary for proof of performance.
ARTICLE 106 DRUG AND ALCOHOL PROGRAM
The Contractor shall comply with all applicable federal, state and local
drug testing requirements in effect on the date of this Contract's execution and
any such requirements as become effective thereafter.
ARTICLE 107 SUSPENSION OF PERFORMANCE
The Authority may at any time, and without cause, direct the Contractor to
stop Work under this contract for a period of time. Such direction shall be
given by at least ten days notice in writing which shall specify the period
during which work shall be stopped. The Contractor shall resume Work upon the
date specified in such direction, or upon such other date as the Authority may
thereafter specify in writing. The period during which work shall have been
stopped may be deemed added to the contract term at the sole discretion of the
Authority. Stoppage of Work under this ARTICLE shall not give rise to any claim
against the Authority.
ARTICLE 108 PERMITS
A. The Contractor, at its own expense, shall apply for, request, process
and obtain all permits and approvals required for, necessary for, or in
connection with the Work.
B. The Contractor is required by the New York State Department of Motor
Vehicles (NYSDMV) to comply with the requirements of Article 19-A, Part 6 of the
Vehicle and Traffic Law and all other relevant federal, state and city
regulations including those of the Taxi and Limousine Commission (TLC).
ARTICLE 109 GRAND JURY TESTIMONY
Upon refusal of the Contractor as an individual or as member, partner,
director or officer of the Contractor, if the Contractor be a firm, partnership
or corporation, when called before a grand jury, governmental
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department, commission, agency or any other body which is empowered to compel
the attendance of witnesses and examine them under oath, to testify in an
investigation or to answer any relevant questions concerning any transaction or
contract entered into with the State, or any political subdivision thereof, or a
public authority or with any public department, agency or official of the State
or any political subdivision thereof, when immunity has been granted to the
witness against subsequent use of such testimony, or any evidence derived
therefrom in any subsequent criminal proceeding:
1. Such individual, or any firm, partnership or corporation of which he
is a member, partner, director or officer shall be disqualified for
a period of five (5) years after such refusal from submitting bids
for, or entering into or obtaining any contracts, leases, permits or
licenses with the City of New York, the Metropolitan Transportation
Authority (MTA) or the New York City Transit Authority or submitting
bids for or entering into, or obtaining any contracts, leases,
permits or licenses which will be paid out of any monies under the
control or collected by the City, the Metropolitan Transportation
Authority (MTA), the New York City Transit Authority and/or shall be
subject to such other action appropriate under the circumstances,
and
2. this contract and any and all such existing contracts, leases,
permits or licenses made with or obtained by any such individual or
with or by the firm, partnership, or corporation of which he is a
member, partner, director or officer may be canceled or terminated
by the City, the Metropolitan Transportation Authority (MTA) or the
New York City Transit Authority or the contracting agency or be
subject to such action appropriate under the circumstances thereto
without incurring any penalty or damages on account of such
cancellation or termination, but any monies owing for goods
delivered, work done, or rentals, permit or license fees due, prior
to the cancellation or termination, shall be paid.
ARTICLE 110 PAYMENT
A. It is agreed that for all services and Work rendered or to be rendered,
and for all costs and expenses incurred under this Agreement, the Authority will
pay, and the Contractor will accept as full payment the amounts set forth in the
Price Schedule (Technical Specifications, Attachment No. I, at a total cost not
to exceed $______.
B. Payment will be made to the Contractor on:
(1) a fixed payment basis for items allowed in the fixed price portion
of this contract;
(2) a variable payment basis for each service hour operated by the
Contractor at the director of NYC Transit
(3) a per vehicle cost for insurance; and
(4) a per unit monthly cost for revenue vehicles acquired by the
Contractor with the prior approval of NYC Transit.
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(5) mobilization costs will be paid upon submission of an invoice in a
form acceptable to NYC Transit.
C. Fixed costs shall be subject to the U.S. Department of Labor's New
York, New York-Northern New Jersey CPIU (Consumer Price Index for all Urban
Consumers) on an annual basis.
D. Variable costs shall be subject to General Contract Provisions Article
222, QUANTITIES ARE APPROXIMATE/VARIABLE QUANTITIES CLAUSE
E. NYC Transit shall pay the Contractor for actual vehicle service hours
less adjustments for excessive deadheading. No payment shall be made to the
Contractor in excess of the sum total of vehicle hours plus 2% defined by the
run-blocks provided by NYC Transit. [See Article III(A)(2)].
F. Payment will be made by NYC Transit for only those revenue vehicles
receiving pre-approval and authorization for use by NYC Transit.
G. There shall be deducted and retained as security eight (8) percent of
the value of work certified for payment in each invoice. Such retained monies
("retainage") shall be held as security for the faithful performance by the
Contractor of all the conditions, covenants and requirements specified and
provided in this Agreement. Beginning in the first month of the second year
after the Contract start date specified in the Notice to Proceed, one-twelfth
(1/12) of the monies retained in Contract Year One shall be returned to the
Contractor. The same formula shall be applied in the third, forth and fifth
years of the Contract term. Monies retained in the fifth year of the Contract
shall be returned in accordance with final payment provisions. Retained monies
will not be returned with interest.
H. All payments are subject to audit and revision by the Authority. In
general allowable costs shall be as specified in Federal Acquisition Regulations
(FAR) Part 31 made a part of the Agreement by ATTACHMENT NO. VII.
ARTICLE 111 INVOICES AND AUDIT
a. The Authority shall make payments to the Contractor upon the following
terms:
1. Fixed Costs: Monthly Lump Sum Payment - one twelfth (1/12) of each
annually fixed cost paid monthly to the Contractor as set forth in the Authority
approved fixed price schedule. Adjustments may be made by NYC Transit if it is
found that the Contractor has not provided the services, personnel, goods or any
other item contained in the Contractor's approved fixed price schedule.
2. Variable Costs; Monthly payment per Vehicle Service Hours - payment
for vehicle service hours invoiced by the Contractor to the NYCTA not in excess
of two (2%) percent of the vehicle service hours indicated in bus blocks and
runs provided provided by NYC Transit to the Contractor. All invoices for
Vehicle Service hours must be supported by complete and adequate documentation.
Additional payment will be made for any authorized tolls for which the
Contractor has provided the required documentation.
3. Insurance Costs: Monthly Payment per insured revenue vehicle for any
NYCTA approved revenue vehicles.
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4. (a) Revenue Vehicle Leasing Costs: Monthly payment per lease vehicle
for any NYCTA approved leased vehicle. Contractor must provide backup and
support documentation.
(b) Revenue Vehicle Purchase Costs: Consistent with paragraph 13.7 of
the Technical Specifications on page T-19, as amended, reimbursement for the
costs of such vehicles will be made on a monthly basis, in an amount equal to
1/60 of the approved cost of such vehicles. Contractor must provide backup and
support documentation. At the end of the 60 month amortization period for each
such vehicle, NYC Transit may, at its option, purchase from the Contractor such
vehicle for $1.00.
5. Liquidated damages and fare revenue paid by customers shall be
deducted by the NYCTA from the Contractor's fixed price payment each month.
6. Mobilization Costs: will be paid upon submission of an invoice in a
form acceptable to NYC Transit.
7. Final Payment: After the expiration of the Contract, or its
termination, the Contractor shall submit an invoice marked "Invoice for Final
Payment" covering all items not previously invoiced. This "Invoice for Final
Payment" shall contain or be accompanied by the information or supporting
documentation, and shall otherwise be in the form, described in this ARTICLE or
elsewhere in this Contract. Any dispute over the proper amount of the final
payment is subject to the dispute resolution provisions (ARTICLE 211) of this
Contract.
8. The Authority shall pay the Contractor within thirty (30) days of
its receipt of the Contractor's invoices in a form satisfactory to the
Authority. In no event, however, shall an invoice be submitted sooner than
forty-five (45) days after the start of work. Payment shall be deemed made upon
mailing by the Authority.
B. Contractor shall certify that each invoice is accurate. Any false
certification shall render the invoice void, and the Authority shall be entitled
to recover immediately any monies paid on such invoices.
C. All payments are subject to audit and revision by the Authority.
Contractor shall make its records available for three years (3) after the later
of termination of, or final payment under this Agreement.
D. Invoices:
1. Proper Invoice: In addition to any other requirement set forth in
this contract with respect to what constitutes a proper invoice or for the
Contractor to be entitled to receive payment, the Contractor's invoice, in
triplicate, must set forth:
(a) a description, with specificity, of the goods delivered, Work
performed, services rendered, or other event initiating entitlement to payment
pursuant to the terms of this contract;
(b) that portion of the contract price related to such payment less any
deductions, such as retainage, required pursuant to the terms hereof; and
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(c) the contract number.
Should the invoice not be calculated correctly, such as not taking into
account retainage as a deduction, the Authority may either reject the invoice or
treat the invoice as proper only to the extent of the correct calculation of the
amount thereof.
2. Supporting Documentation: The following are in addition to any other
requirement set forth in this contract with respect to what supporting
documentation must accompany an invoice:
a. A sworn certificate or equivalent document signed by a knowledgeable
officer of the Contractor that the services covered by the contract have been
performed for the period covered by the invoice.
b. In the event the contract provides for payment upon achieving stated
milestones of performance, the Contractor's invoice relating to any milestone
must be accompanied by a copy of the Project Manager's certificate, or
equivalent document, that the milestone has been achieved.
c. In the event that the payment request is based upon a "deliverable,"
the Contractor's invoice must be accompanied by appropriate documentation that
the deliverable has been delivered in accordance with the contract, and if this
contract requires acceptance thereof as a condition precedent to payment, that
the deliverable has been so accepted.
d. Invoices must also be accompanied by all affidavits, time records,
staffing and other records provided for or required by the contract to establish
the amount of payment and/or performance of the Work billed, as well as a
statement with sufficient specificity which establishes the basis on which the
payment is due according to the contract. Any documentation generated by the
Authority, such as Certificate of Acceptance, will be issued in accorance with
the terms of the contract.
3. Inspection, Review and Audit: In addition to any other requirements
pertaining to the right of the Authority or other entity to perform inspections,
reviews or audits with respect to any payment or to the contract as a whole, the
Authority reserves the right to inspect, review and/or audit each invoice for
payment to verify that the invoice amount is consistent with the materials,
labor, goods and/or services provided and is in accordance with the provisions
of the contract, as well as to determine the resources applied or used by the
Contractor in fulfilling the terms of the contract or otherwise to verify that
the Work, goods or services billed for were provided in accordance therewith.
The Authority will require ten (10) Authority business days from the receipt of
invoice date within which to perform this function.
4. Set-off: The Authority shall have the right to set off against any
payment due the Contractor under this contract any unpaid legally enforceable
debt owed by the Contractor to the Authority, as outlined in the Authority's
Prompt Payment Rules adopted by its Board on March 25, 1988.
5. Designated Payment Office: The Designated Payment Office, to which all
invoices and supporting documentation are required to be submitted under this
contract, is as follows:
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E. The Contractor must submit the original and one copy of the invoice and
supporting documentation to the Designated Payment Office:
New York City Transit Authority
Disbursements Department
130 Livingston Street, 7th Floor
Brooklyn, N.Y. 11201
The Contractor must submit one copy of an invoice to:
New York City Transit Authority
Paratransit Division
10 Columbus Circle, 17th Floor
New York, New York 11019
Attention: Glenn Millis, Chief Paratransit Division, 94E5461
Either of the above may be changed at any time by the Authority upon
notification in writing to the Contractor.
ARTICLE 112 LIQUIDATED DAMAGES
A. NYC Transit intends to monitor performance on this Contract closely.
Techniques that will be used to assess the Contractor's performance include, but
are not limited to, radio monitoring, telephone monitoring and recording,
on-street service monitoring, dispatch center inspection and random facility and
vehicle inspections. The Contractor must recognize that strict adherence to the
Contract terms and conditions in providing clean, safe, reliable,
customer-friendly effective service to the disabled community is of paramount
importance. Poor performance on the part of the Contractor resulting from a
failure of the Contractor in exercising due diligence in the performance of the
tasks listed herein may result in the imposition of liquidated damages. In the
event the Contractor shall fail to comply with the provisions set forth in this
Contract, the liquidated damages set forth in this item are hereby fixed and the
parties agree that the damages that NYC Transit will suffer by reason of such
failure to comply are not a penalty. NYC Transit reserves the right to
substitute performance standards upon consultation (and agreement) with the
Contractor. The Contractor shall strive at all times to provide service in a
manner that will maximize both productivity and efficient paratransit service.
NYC Transit shall have the right to enter the Contractor's premises at any time
without advance notice or authorization from the Contractor in order to observe
the Contractor's operations only.
B. Should liquidated damages be assessed, the Contractor shall be so
notified in writing. The assessed amount will then be deducted from the payments
due the Contractor for the month in which the liquidated damage(s) occurred. NYC
Transit will cooperate with the Contractor to fully explore any concerns
regarding the service and performance standards. Prior to assessing any
liquidated damage(s), the following procedures will occur:
1. NYC Transit will notify the Contractor in writing of performance
problems with respect to the service standards. The Contractor
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shall be given a reasonable amount of time to take corrective action with
respect to the problem identified by NYC Transit.
2. Should the problem not be correct, NYC Transit shall issue a second
letter indicating NYC Transit's intent to monitor the service closely in order
to assess the liquidated damages.
3. Within forty-eight hours of assessment of liquidated damages, the
Contractor will be given written notice of each failure to conform to the terms
of this Contract and the liquidated damages assessment resulting from each
failure Supporting documentation will be provided at that time. Should the
Contractor wish to contest all or part of a notice of assessment of liquidated
damages, it must, within ten (10) business days from the date of such notice,
respond in writing to NYC Transit stating the reasons why such assessment is
improper, after which NYC Transit may affirm, modify, or withdraw the assessment
as it deems appropriate. If the Contractor fails to contest a notice of
assessment of liquidated damages within ten (10) business days from the date of
such notice, the assessment shall become final and binding upon the Contractor
without further notice from NYC Transit.
C. The following liquidated damages shall apply, unless otherwise agreed
upon:
1. PERFORMANCE:
a. On Time Performance:
The Contractor shall provide ninety (90) percent on time
performance for all schedule pick-ups and drop-offs. On-time shall mean plus or
minus fifteen (15) minutes from the agreed to time. If the Contractor has failed
to provide ninety (90) percent on-time performance for all scheduled pick-ups
and drop-offs each month, the carrier will be assessed liquidated damages of
$250 for each day that NYC Transit determines the Contractor is less than ninety
(90) percent on time.
NYC Transit may make this determination from sampling
Contractor's completed trips, the sampling to be taken from a combination of
route manifests, field surveys, customer surveys or any other reasonable
sampling methods.
b. Shared Ride Time - Advanced Reservation:
The Contractor shall not require any customer to share an
advanced reservation ride which is twice as long as the same ride on a
non-shared basis. In the event that NYC Transit determines that the Contractor
has exceeded this limitation, NYC Transit may assess liquidated damages in the
amount of $25 per day per occurrence.
c. Shared Ride Time - Subscription:
The Contractor shall not require any customer to share a
subscription ride which is twice as long as the same ride on a non-shared basis.
In the event that NYC Transit determines that the Contractor has exceeded this
limitation, NYC Transit may assess $25 per day per occurrence.
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2. RESERVATIONIST RESPONSE:
In order to provide efficient and customer-friendly service, it is
important that the Contractor provide a sufficient number of reservationists
during Phase Two Operations so as to provide the customer with immediate (no
call holding nor call waiting) access to the Contractor's reservation system a
minimum of seventy-five (75) percent of the time, with the remaining twenty-five
(25) percent of the calls answered within two minutes of automated call
distribution.
In the event that NYC Transit determines that the Contractor has exceeded
these limitations, NYC Transit may assess liquidated damages in the amount of
$100 per day.
3. CANCELLATION "HOT LINE RESPONSE":
Between the hours of 6:00 a.m. and 10:00 p.m. on weekdays and weekend, all
cancellations shall be handled by "live" personnel, not by recording devices so
as to provide the customer with immediate (no call holding nor call waiting)
access to the Contractor's reservation system a minimum of seventy-five (75)
percent of the time, with the remaining twenty-five (25) percent of the calls
answered within two minutes of automated call distribution. During non business
hours, all calls shall be captured by the automated call distribution system and
reviewed by the Contractor no later than 6:00 a.m. each morning.
In the event that NYC Transit determines that the contractor has exceeded
these limitation, NYC Transit may assess $100 per day.
4. CASSETTE TAPES:
Cassettes tapes from tape recording devices shall be delivered to NYC
Transit within three (3) business days from date of receipt of the request by
NYC Transit. In the event that NYC Transit determines that the Contractor has
failed to do so, NYC Transit may assess damages in the amount of $50 per day per
occurrence.
5. TRIP TICKETS:
During Phase Two Operations, all trip tickets shall be processed as stated
in paragraphs 11.20 and 11.21, Technical Specifications and delivered to NYC
Transit within three (3) business days of the actual trips. In the event that
NYC Transit determines that the Contractor has failed to achieve this standard,
the NYC Transit may assess liquidated damages in the amount of $250 per day.
6. PREVENTATIVE MAINTENANCE OF REVENUE VEHICLES:
In order to maintain a serviceable fleet, the Contractor shall be required
to perform ninety-five (95) percent of all Type A, B and C inspections no more
than 400 miles and within three (3) business days the scheduled maintenance
date. The Contractor is expressly excepted from this requirement during the
first month of Phase Two Operations.
In the event that NYC Transit determines that the Contractor has exceeded
the limitation set forth herein, NYC Transit may assess liquidated damages in
the amount of $500 per vehicle for each vehicle found in non-compliance.
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7. PRE & POST TRIP VEHICLE INSPECTION:
The Contractor shall implement a program to establish a ninety-nine (99)
percent compliance with pre and post vehicle inspections as detailed in
Paragraph 14.2, Technical Specifications. In the event that NYC Transit
determines that the Contractor has exceeded this limitation, NYC Transit may
assess $100 per day for each day the Contractor is found to be in
non-compliance.
8. ACCIDENT, DAMAGE REPAIRS:
The Contractor is required to repair all accident damage to revenue and
non-revenue vehicles within thirty (30) days from date of the accident. In the
event that NYC Transit determines that the carrier has exceeded this limitation,
NYC Transit may assess liquidated damages in the amount of $50 per day per
vehicle.
9. COMPLAINTS:
Contractors shall maintain a ratio of complaints to completed trips of
1:2,500. Complaints relating to NYC Transit policy or procedure shall be not
considered for the purposes of assessing liquidated damages. In the event that
NYC Transit determines that the carrier has exceeded this limitation, NYC
Transit may assess liquidated damages in the amount of $1000 for the month in
which the carrier exceeded the limitation.
11. TRIPS:
a. Late Trips:
In the event that NYC Transit determines that the Contractor is more than
30 minutes late for a scheduled pick-up, NYC Transit may assess liquidated
damages in the amount of $40.
b. Failed Trips:
In the event that NYC Transit determines that the Contractor is over 45
minutes late for a passenger, the trip will be considered a failure and the
NYCTA may assess liquidated damages in the amount of $60.
c. Missed Trips:
In the event that NYC Transit determines that the Contractor did not
perform the trip and that the Contractor's vehicle was a no-show, the trip will
be considered a missed trip and NYC Transit may assess liquidated damages in the
amount of $80. The Contractor will also be required to reimburse the customer
who was to be picked up by the no-show vehicle for any reasonable expenses
incurred by the customer in order for the customer to arrange and complete the
trip independently of the Contractor.
11. VEHICLE CLEANLINESS:
In order to provide a positive public image and appearance, the Contractor
will be responsible for maintaining the appearance and cleanliness of all
revenue and non-revenue vehicles used in AAR services. The word
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appearance is deemed to mean a vehicle without readily apparent or visible
accident damage. In the event that NYC Transit determines that a vehicle is
below the cleanliness standards described in Paragraph 10.16, Technical
Specifications, or that the carrier is not performing exterior or interior
vehicle cleaning, the NYC Transit may assess liquidated damages in the amount of
$10 per vehicle per day.
12. DRIVERS:
a. Dress Requirements:
In the event that NYC Transit determines that a driver in revenue
service is seen out of uniform or in a dirty or damaged uniform as described in
Section 15, Driver Requirements, Technical Specifications, NYC Transit may
assess liquidated damages in the amount of $25 per occurrence.
b. Training Requirements:
In the event that NYC Transit determines that a driver in revenue
service has not satisfactorily passed all required training, NYC Transit may
assess liquidated damages in the amount of $100 per driver per day. The driver
will be immediately removed from service and will not be permitted to drive
again until NYC Transit has certified that the driver has been properly trained.
c. Vehicle Operation/Driving Requirements:
In the event that NYC Transit determines that a driver has been
employed in revenue service after notification by NYC Transit to the Contractor
that the driver is not to be allowed to operate any AAR revenue vehicle, NYC
Transit may assess liquidated damages in the amount of $1000 per driver per day.
13. RECORDKEEPING:
If the Contractor fails to accurately keep, complete, and/or return
billing and other required paperwork within the time periods specified, the
Contractor shall be charged at the rate of $10 per day per item.
14. ACCIDENT REPORTING:
If the Contractor fails to report an accident within the required time
period, the Contractor will be charged liquidated damages of $400 per accident,
per day the report is late.
15. UNAUTHORIZED USE OF VEHICLES:
If NYC Transit determines that a Contractor has used any AAR revenue
service for any purpose other than that described in this RFP or otherwise
directly authorized in writing by NYC Transit, the Contractor will be assess
liquidated damages of $1,000 per vehicle per incident.
16. UNSAFE CONDUCT:
If NYC Transit determines that the Contractor's drivers or facility
support staff have engaged in any conduct or unsafe action which creates a
safety hazard, the Contractor will be assessed liquidated damages of $100 per
incident.
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17. HEATING/AIR CONDITIONING
The Contractor shall be assessed liquidated damages of $25 per day for
each vehicle found not in compliance with heating and air conditioning standards
set forth herein.
ARTICLE 113 ENTIRE AGREEMENT
This Contract constitutes the entire agreement and understanding between
the parties, all prior and contemporaneous representations, understandings and
agreements having been merged therein.
ARTICLE 114 PROSECUTION OF THE WORK
A. If, during the prosecution of the Work, unforeseen difficulties of
any nature be encountered, the Contractor shall take every necessary
or proper precaution to overcome the unforeseen difficulty according
to the direction of the Project Manager and as provided in these
Contract Documents.
B. All goods and workmanship shall be of the best class in every
respect, and the Transit Authority Project Manager shall be the sole
judge of quality and efficiency.
C. In all operations connected with the Work, all local laws and
ordinances of the City of New York and all laws of the State of New
York which control or limit in any way the actions of those engaged
in the Work, or affecting the Work belonging to or used to them,
shall be strictly complied with, and further, the Contractor shall
comply with all applicable Federal, State and Municipal Regulations
regarding the transportation of goods in and around the City and
State of New York.
D. The Contractor shall employ only competent, skillful, and faithful
personnel to do the Work.
E. The Contractor hereby represents that prior to submitting his
proposal, he examined the locations of the Technical Specifications
in details and satisfied himself as to the intent of the Technical
Specifications relating to the Work to be performed, and he shall
not at any time make any claim for damage or extension of time, or
ny other demand because of any misinterpretation or misunderstanding
of the Technical Specifications, or because of any lack of
information.
F. All goods of whatever kind which, during their installation become
damaged from any cause whatsoever, shall be removed and shall be
replaced by new, undamaged goods without any additional cost to the
Authority.
G. The Contractor shall furnish all labor, material, plant, tools
supplies and other means necessary to perform the Work described in
the Contract Documents in accordance with the Technical
Specifications; and shall perform such Work within the direction and
to the satisfaction of the Project Manager.
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H. The Contractor agrees to deliver and install conforming goods in
accordance with the Technical Specifications.
I. All Work by the Contractor shall be within the time specified in the
Scope of Work. If for any reason the Work cannot be performed by the
date or dates specified, the Contractor must immediately furnish the
Authority with written notice of such delay and reason thereof.
Extension of time will be granted only if the delay is deemed by the
Authority to be unavoidable as provided for in Paragraph L below.
J. Time is of the essence of this Contract. In the event of a delay in
the Work for which the Contractor is not entitled to an extension of
time under Paragraph L, the Authority may recover all damages for
such delay.
K. If the Work under this Contract should be unavoidably delayed, the
Authority may extend the time for completion of the Contract for the
determined number of days of excusable delay provided the Contractor
advised the Authority as required under Paragraph J above. A delay
is unavoidable only if the delay was substantial and in fact caused
the Contractor to miss performance dates and arose from unforeseen
causes beyond the Contractor's control, provided the Contractor has
taken reasonable precautions to prevent delays due to such causes
and further provided such delays were not caused directly or
substantially by acts, omissions, negligence, or mistakes of the
Contractor, the Contractor's suppliers, or their agents, and could
not adequately have been guarded against by contractual or legal
means.
L. The Contractor agrees to make no claim for damages for delay in
performance of this Contract occasioned by any act or omission of
the Authority or any of its representatives, and agrees that any
such claim shall be fully compensated for by an extension of time to
complete performance of the Work as provided herein.
M. The acceptance of Work after the date fixed for completion of
performance shall not be deemed a waiver of the right of the
Authority to terminate this Contract with respect to the unperformed
portion thereof or to require the delivery of any undelivered goods
in accordance with this Contract.
ARTICLE 115 RISK OF LOSS
A. Contractor assumes the risk of, and shall be responsible for, any loss
or damage to Authority property, including property, including property and
equipment leased by the Authority, used in the performance of this Contract,
and caused, either directly or indirectly by the acts, conduct, omissions or
lack of good faith of the Contractor, its officers, managerial personnel, and
employees or any person, firm, company, agent or others engaged by the
Contractor as expert, consultant, specialist, or subcontractor hereunder.
B. In the event that any such Authority property is lost or damaged,
except for normal wear and tear, then the Authority shall have the right to
withhold further payments hereunder for the purpose of set-off, in sufficient
sums to cover such loss or damage.
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C. The Contractor agrees to indemnify the Authority and hold it harmless
from any and all liability or claim for damages due to any such loss or damage
to any such Authority property described in Subsection (a) above.
D. The rights and remedies of the Authority provided herein shall not be
exclusive and are in addition to any other rights and remedies provided by law
or by the Contract.
ARTICLE 116 SUBCONTRACTORS
A. If the Contractor will cause any part of this Contract to be
performed by a Subcontractor, the provisions of this Contract will
apply to such Subcontractor and its officers, agents and employees
in all respects as if it and they were employees of the Contractor;
and the Contractor will not be in any manner thereby discharged from
its obligations and liabilities hereunder, but will be liable
hereunder for all acts and negligence of the Subcontractor, its
officers, agents and employees, as if they were employees of the
Contractor. The employees of the Subcontractor will be subject to
the same provisions hereof as the employees of the Contractor; and
the Work performed by the Subcontractor will be subject to the
provisions hereof as if performed directly by the Contractor.
B. The Contractor, before making any subcontract for any portion of the
Work, will state in writing to the Authority the name of the
proposed subcontractor, the portion of the Work which the
subcontractor is to do, the place of business of such subcontractor,
and such other information as the Authority may require. The
Authority will have the right to require the Contractor not to award
any subcontract to a person, firm or corporation disapproved by the
Authority.
C. Before entering into any subcontract hereunder, the Contractor will
inform the subcontractors fully and completely of all provisions and
requirements of this Contract relating either directly or indirectly
to the Work to be performed. Such Work performed by such
subcontractor will strictly comply with the requirements of this
Contract.
D. In order to qualify as a subcontractor satisfactory to the
Authority, in addition to the other requirements herein provided,
the subcontractor must be prepared to prove to the satisfaction of
the Authority that it has the necessary facilities, skill and
experience, and ample financial resources to perform the work in a
satisfactory manner. To be considered skilled and experienced, the
subcontractor must show to the satisfaction of the Authority that it
has satisfactorily performed Work of the same general type which is
required to be performed under this Contract.
ARTICLE 117 RELATIONSHIP OF CONTRACTOR TO THE AUTHORITY
The relationship of Contractor to the Authority is that of an independent
Contractor, and said Contractor, in accordance with its status as such,
covenants and agrees that it will conduct itself consistent with such
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status, that it will neither hold itself out as nor claim to be an officer or
employee of the Authority (or the MTA or the City) by reason hereof, and that it
will not, by reason hereof, make any claim, demand or application to, or for any
right or privilege applicable to an officer or employee of the Authority (or the
MTA or the City), including, but not limited to, Workers' Compensation coverage,
Unemployment Insurance Benefits, Social Security coverage or retirement
membership or credit.
ARTICLE 118 DISCLOSURE
Contractor hereby represents that to the best of its knowledge neither it
nor any of its personnel has been the subject of any investigation or has any of
them been convicted or indicted for commission of any crime involving
misconduct, corruption, bribery, or fraud in connection with any public contract
in the State of New York or any other jurisdiction, except as has been
specifically disclosed in writing to the Authority, and that, should any such
conviction or indictment be obtained or any such investigation commenced prior
to the expiration of the term hereof, regardless of the date of the occurrence
giving rise to the subject matter of such conviction, indictment or
investigation, it will be disclosed in writing to the Authority. Breach of this
provision is expressly understood to constitute a material breach hereof.
ARTICLE 119 MOST FAVORED CUSTOMER
The Contractor warrants and represents that the prices, warranties,
benefits and terms set forth herein are at least equal to or more favorable to
the Authority than the prices, warranties, benefits, and terms now charged or
offered by the Contractor to other customers under similar circumstances and
terms and conditions, or that may be charged or offered during the term hereof
for the same or substantially similar products or services.
ARTICLE 120 PUBLICITY
A. Prior written approval of the Authority is required before the
Contractor or any of its employees, servants, agents or independent contractor
may, at any time, either during or after completion or termination of this
Contract, make any statement to the press or issue any material for publicity
through any media of communication bearing on the Work performed or data
collected under this Contract.
B. If the Contractor wishes to publish a work dealing with any aspect of
performance under this Contract, or of the results and accomplishments attained
in such performance, such publication requires the prior written approval of the
Authority, which approval may be conditioned upon the Authority's obtaining
royalties from the Contractor, and also obtaining a non-exclusive and
irrevocable license to reproduce, publish, or otherwise use and authorize others
to use the publication.
ARTICLE 121 AMENDMENTS
This Contract may be amended only by an instrument in writing executed by
the Authority and Contractor.
ARTICLE 122 ATTACHMENTS
Attachment Numbers I, II, III, IV, V, VI and VII are incorporated in this
Contract and shall be deemed to apply to the entire Contract.
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ARTICLE 123 RESCISSION
In the event that the Authority elects to execute this Contract prior to
submission by the Contractor of any required document, such as insurance
policies, performance bond and DBE documentation, and approval of such items by
the Authority, the Authority may, in its sole discretion, rescind this Contract
if all such matters have not been resolved to the Authority's satisfaction
within thirty (30) Days after execution hereof.
ARTICLE 124 ORDER OF PREFERENCE
If there is a conflict between provisions of this Agreement, the following
order of precedence shall apply
A. Attachments
B. Technical Specifications
C. Terms and Conditions
D. Price Schedule
ARTICLE 125 WARRANTY WORK AND PARTS: VEHICLE MAINTENANCE AGREEMENTS
The Contractor may choose to enter into agreements with vehicle manufacturers or
dealers by which the Contractor will perform warranty work or receive warranty
parts in exchange for cash or other valuable consideration. Any such agreement
entered into between the Contractor and a third party must receive prior written
approval by the NYCTA. The value of that work or parts received shall be passed
along in full to the NYCTA. The value of work performed or parts received shall
be the fair market value at the time of performance or delivery of parts.
The total value of any work performed or parts received shall be reported to the
NYCTA and shall be deducted from the subsequent Fixed Cost: Monthly Lump Sum
Payment as described in ARTICLE III, Invoices and Audit, (A)(1).
All submissions will then be forwarded to the Chairman of the Vehicle
Equivalency Committee in a timely fashion for consideration as an "approved
equal."
ARTICLE 126: VEHICLE EQUIVALENCY PROCEDURE
Any Contractor proposing a vehicle with specifications that differ from those
listed in Appendices A, B, C and D must submit those vehicle specifications to
the NYCTA Vehicle Equivalency Committee. All such submissions must be sent to
the Paratransit Director of Contract Administration as follows:
Mr. Dennis Erkus
Director, Contract Administration
Paratransit Division
New York City Transit Authority
10 Columbus Circle
New York, NY 10019
Tel. No. (212) 353-5635
Fax No. (212) 977-5126
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective with the date set forth in the Notice to Proceed.
_______________________________________________________________________________
CONTRACTOR: NEW YORK CITY TRANSIT AUTHORITY:
Signature: ______________________ Signature: _________________________
Name: ___________________________ Name: ______________________________
Title: __________________________ Title: _____________________________
Date: ___________________________ Date: ______________________________
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ACKNOWLEDGMENT FOR CONTRACTOR
STATE OF ______________________)
) ss.:
COUNTY OF _____________________)
On this ______________________ day of _________________________, 1994
before me personally appeared _________________________ to me known, who, being
by me first duly sworn, did depose and say that he resides at No.
________________________________________________________ in the City of
__________________, in the County of ________________________ in the State of
_________________: that he is ____________________ of
___________________________, the corporation described in and which executed the
foregoing contract; that she knows the corporate seal of said corporation; that
one of the seals affixed to said contract is such corporate seal; that it was
affixed thereto by order of the Board of Directors of said corporation, and that
she signed his name thereto by like authority.
__________________________
Notary Public
<PAGE>
PRICE SCHEDULE
CONTRACT # 94E5461
FIVE BOROUGH PARATRANSIT CARRIER SERVICE
<TABLE>
<CAPTION>
Attachment 1
Circle Proposed Zone(s) [ 1 ] [ 2 ] [ 3 ] [ 4 ] [ All ] Page 1 of 7
Phase 1 - Start Up Team (Payment Category - Mobilization Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Consultant Labor, On-Site $
- --------------------------------------------------------------------------------------------
2 Consultant Labor, Off-Site $
- --------------------------------------------------------------------------------------------
3 Consultant Travel (give number of trips) $
- --------------------------------------------------------------------------------------------
4 Consultant Automobile Rental/Parking $
- --------------------------------------------------------------------------------------------
5 Consultant Lodging (nights, rate) $
- --------------------------------------------------------------------------------------------
6 Consultant Meals $
- --------------------------------------------------------------------------------------------
7 Consultant Telephone $
- --------------------------------------------------------------------------------------------
8 Consultant Xerox $
- --------------------------------------------------------------------------------------------
9 Consultant Printing $
- --------------------------------------------------------------------------------------------
10 Consultant Office Rental $
- --------------------------------------------------------------------------------------------
11 Consultant Utilities $
- --------------------------------------------------------------------------------------------
12 Consultant Miscellaneous $
- --------------------------------------------------------------------------------------------
Subtotal $
=================
Phase 1 - Start Up, Other (Payment Category - Mobilization Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
13 Project Manager $
- --------------------------------------------------------------------------------------------
14 Operations Manager $
- --------------------------------------------------------------------------------------------
15 Maintenance Manager $
- --------------------------------------------------------------------------------------------
16 Driver Supervisors $
- --------------------------------------------------------------------------------------------
17 Dispatcher Supervisors $
- --------------------------------------------------------------------------------------------
18 Scheduler Supervisor $
- --------------------------------------------------------------------------------------------
19 Reservationist Supervisor $
- --------------------------------------------------------------------------------------------
20 Benefits. Lines 13 to 19 $
- --------------------------------------------------------------------------------------------
21 Dispatchers $
- --------------------------------------------------------------------------------------------
22 Schedulers $
- --------------------------------------------------------------------------------------------
23 Reservationists $
- --------------------------------------------------------------------------------------------
24 Benefits. Lines 21 to 23 $
- --------------------------------------------------------------------------------------------
25 Drivers $
- --------------------------------------------------------------------------------------------
26 Mechanics $
- --------------------------------------------------------------------------------------------
27 Servicemen $
- --------------------------------------------------------------------------------------------
28 Benefits, Lines 25 to 27 $
- --------------------------------------------------------------------------------------------
29 Fuel $
- --------------------------------------------------------------------------------------------
30 Maintenance Parts & Fluids $
- --------------------------------------------------------------------------------------------
31 Tires $
- --------------------------------------------------------------------------------------------
32 Office Equipment $
- --------------------------------------------------------------------------------------------
33 Office Furnishings $
- --------------------------------------------------------------------------------------------
34 Telephone $
- --------------------------------------------------------------------------------------------
35 Xerox $
- --------------------------------------------------------------------------------------------
36 Printing $
- --------------------------------------------------------------------------------------------
37 Facility Rental $
- --------------------------------------------------------------------------------------------
38 Facility Renovations $
- --------------------------------------------------------------------------------------------
39 Utilities $
- --------------------------------------------------------------------------------------------
40 Business Insurance $
- --------------------------------------------------------------------------------------------
41 Vehicle Insurance $
- --------------------------------------------------------------------------------------------
42 Revenue Vehicles $
- --------------------------------------------------------------------------------------------
43 Non-Revenue Vehicles $
- --------------------------------------------------------------------------------------------
44 Computer Equipment $
- --------------------------------------------------------------------------------------------
45 Computer Support Services $
- --------------------------------------------------------------------------------------------
46 Tools $
- --------------------------------------------------------------------------------------------
47 Licenses, Taxes, Permits $
- --------------------------------------------------------------------------------------------
48 Other Equipment (Detail) $
- --------------------------------------------------------------------------------------------
49 Other Operating (Detail) $
- --------------------------------------------------------------------------------------------
50 Other Overheads $
- --------------------------------------------------------------------------------------------
51 Miscellaneous $
- --------------------------------------------------------------------------------------------
Subtotal $
=================
=================
TOTAL $
=================
</TABLE>
<PAGE>
PRICE SCHEDULE
CONTRACT # 94E5461
FIVE BOROUGH PARATRANSIT CARRIER SERVICE
<TABLE>
<CAPTION>
Year ONE, 1995-1996 Attachment 1
Circle Proposed Zone(s) [ 1 ] [ 2 ] [ 3 ] [ 4 ] [ All ] Page 2 of 7
Phase 2 - Operations (Payment Category - Fixed Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Consultant Labor, On-Site $
- --------------------------------------------------------------------------------------------
2 Consultant Labor, Off-Site $
- --------------------------------------------------------------------------------------------
3 Consultant Travel (give number of trips) $
- --------------------------------------------------------------------------------------------
4 Consultant Automobile Rental/Parking $
- --------------------------------------------------------------------------------------------
5 Consultant Lodging (nights, rate) $
- --------------------------------------------------------------------------------------------
6 Consultant Meals $
- --------------------------------------------------------------------------------------------
7 Consultant Telephone $
- --------------------------------------------------------------------------------------------
8 Consultant Xerox $
- --------------------------------------------------------------------------------------------
9 Consultant Printing $
- --------------------------------------------------------------------------------------------
10 Consultant Office Rental $
- --------------------------------------------------------------------------------------------
11 Consultant Utilities $
- --------------------------------------------------------------------------------------------
12 Consultant Miscellaneous $
- --------------------------------------------------------------------------------------------
13 Project Manager $
- --------------------------------------------------------------------------------------------
14 Operations Manager $
- --------------------------------------------------------------------------------------------
15 Maintenance Manager $
- --------------------------------------------------------------------------------------------
16 Benefits, Lines 13 to 15 $
- --------------------------------------------------------------------------------------------
17 Computer Support Services $
- --------------------------------------------------------------------------------------------
18 Telephone $
- --------------------------------------------------------------------------------------------
19 Xerox $
- --------------------------------------------------------------------------------------------
20 Printing $
- --------------------------------------------------------------------------------------------
21 Facility Rental $
- --------------------------------------------------------------------------------------------
22 Utilities $
- --------------------------------------------------------------------------------------------
23 Business Insurance $
- --------------------------------------------------------------------------------------------
24 Reservation Supervisor $
- --------------------------------------------------------------------------------------------
25 Reservationists $
- --------------------------------------------------------------------------------------------
26 Scheduler Supervisor $
- --------------------------------------------------------------------------------------------
27 Schedulers $
- --------------------------------------------------------------------------------------------
28 Dispatcher Supervisor $
- --------------------------------------------------------------------------------------------
29 Dispatchers $
- --------------------------------------------------------------------------------------------
30 Benefits, Lines 24 to 29 $
- --------------------------------------------------------------------------------------------
31 Licenses, Taxes, Permits $
- --------------------------------------------------------------------------------------------
32 Other Equipment (Detail) $
- --------------------------------------------------------------------------------------------
33 Other Operating (Detail) $
- --------------------------------------------------------------------------------------------
34 Other Overheads $
- --------------------------------------------------------------------------------------------
35 Miscellaneous $
- --------------------------------------------------------------------------------------------
36 Non-Revenue Vehicles $
- --------------------------------------------------------------------------------------------
37 Computer Support Services $
- --------------------------------------------------------------------------------------------
Subtotal Fixed Costs: Subtotal $
=================
Profit: Profit $
=================
Phase 2 - Operations (Payment Category - Variable Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
38 Driver Supervisors $
- --------------------------------------------------------------------------------------------
39 Drivers $
- --------------------------------------------------------------------------------------------
40 Mechanics $
- --------------------------------------------------------------------------------------------
41 Servicemen $
- --------------------------------------------------------------------------------------------
42 Benefits, Lines 38 to 41 $
- --------------------------------------------------------------------------------------------
43 Fuel $
- --------------------------------------------------------------------------------------------
44 Maintenance Parts & Fluids $
- --------------------------------------------------------------------------------------------
45 Tires $
- --------------------------------------------------------------------------------------------
46 Miscellaneous Maintenance $
- --------------------------------------------------------------------------------------------
Subtotal Variable Costs: Subtotal $
=================
Profit: Profit $
=================
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
47 Vehicle Hours Bid
- --------------------------------------------
48 Subtotal Line 40 to 48
- --------------------------------------------
49 Divide Line 50 by Line 49
- --------------------------------------------
50 Variable Cost Per Vehicle Hour Per Vehicle Hour $
- -------------------------------------------- =================
Phase 2 - Operations (Payment Category - Pass Through)
- --------------------------------------------------------------------------------------------
51 Lift Van (Large) (month) $
- --------------------------------------------------------------------------------------------
52 Lift Van (Small) (month) $
- --------------------------------------------------------------------------------------------
53 Ramp Equipped MiniVan (month) $
- --------------------------------------------------------------------------------------------
54 Sedan (month) $
- --------------------------------------------------------------------------------------------
55 Tolls (month) $
- --------------------------------------------------------------------------------------------
56 Revenue Vehicle Insurance (month) $
- --------------------------------------------------------------------------------------------
Subtotal Pass-Through Costs: Subtotal $
=================
=================
Total Bid $
=================
</TABLE>
<PAGE>
PRICE SCHEDULE
CONTRACT # 94E5461
FIVE BOROUGH PARATRANSIT CARRIER SERVICE
<TABLE>
<CAPTION>
Year TWO, 1996-1997 Attachment 1
Circle Proposed Zone(s) [ 1 ] [ 2 ] [ 3 ] [ 4 ] [ All ] Page 3 of 7
Phase 2 & 3 - Operations (Payment Category - Fixed Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Consultant Labor, On-Site $
- --------------------------------------------------------------------------------------------
2 Consultant Labor, Off-Site $
- --------------------------------------------------------------------------------------------
3 Consultant Travel (give number of trips) $
- --------------------------------------------------------------------------------------------
4 Consultant Automobile Rental/Parking $
- --------------------------------------------------------------------------------------------
5 Consultant Lodging (nights, rate) $
- --------------------------------------------------------------------------------------------
6 Consultant Meals $
- --------------------------------------------------------------------------------------------
7 Consultant Telephone $
- --------------------------------------------------------------------------------------------
8 Consultant Xerox $
- --------------------------------------------------------------------------------------------
9 Consultant Printing $
- --------------------------------------------------------------------------------------------
10 Consultant Office Rental $
- --------------------------------------------------------------------------------------------
11 Consultant Utilities $
- --------------------------------------------------------------------------------------------
12 Consultant Miscellaneous $
- --------------------------------------------------------------------------------------------
13 Project Manager $
- --------------------------------------------------------------------------------------------
14 Operations Manager $
- --------------------------------------------------------------------------------------------
15 Maintenance Manager $
- --------------------------------------------------------------------------------------------
16 Benefits, Lines 13 to 15 $
- --------------------------------------------------------------------------------------------
17 Computer Support Services $
- --------------------------------------------------------------------------------------------
18 Telephone $
- --------------------------------------------------------------------------------------------
19 Xerox $
- --------------------------------------------------------------------------------------------
20 Printing $
- --------------------------------------------------------------------------------------------
21 Facility Rental $
- --------------------------------------------------------------------------------------------
22 Utilities $
- --------------------------------------------------------------------------------------------
23 Business Insurance $
- --------------------------------------------------------------------------------------------
24 Reservation Supervisor $
- --------------------------------------------------------------------------------------------
25 Reservationists $
- --------------------------------------------------------------------------------------------
26 Scheduler Supervisor $
- --------------------------------------------------------------------------------------------
27 Schedulers $
- --------------------------------------------------------------------------------------------
28 Dispatcher Supervisor $
- --------------------------------------------------------------------------------------------
29 Dispatchers $
- --------------------------------------------------------------------------------------------
30 Benefits, Lines 24 to 29 $
- --------------------------------------------------------------------------------------------
31 Licenses, Taxes, Permits $
- --------------------------------------------------------------------------------------------
32 Other Equipment (Detail) $
- --------------------------------------------------------------------------------------------
33 Other Operating (Detail) $
- --------------------------------------------------------------------------------------------
34 Other Overheads $
- --------------------------------------------------------------------------------------------
35 Miscellaneous $
- --------------------------------------------------------------------------------------------
36 Non-Revenue Vehicles $
- --------------------------------------------------------------------------------------------
37 Computer Support Services $
- --------------------------------------------------------------------------------------------
Subtotal Fixed Costs: Subtotal $
=================
Profit: Profit $
=================
Phase 2 & 3 - Operations (Payment Category - Variable Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
38 Driver Supervisors $
- --------------------------------------------------------------------------------------------
39 Drivers $
- --------------------------------------------------------------------------------------------
40 Mechanics $
- --------------------------------------------------------------------------------------------
41 Servicemen $
- --------------------------------------------------------------------------------------------
42 Benefits, Lines 38 to 41 $
- --------------------------------------------------------------------------------------------
43 Fuel $
- --------------------------------------------------------------------------------------------
44 Maintenance Parts & Fluids $
- --------------------------------------------------------------------------------------------
45 Tires $
- --------------------------------------------------------------------------------------------
46 Miscellaneous Maintenance $
- --------------------------------------------------------------------------------------------
Subtotal Variable Costs: Subtotal $
=================
Profit: Profit $
=================
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
47 Vehicle Hours Bid
- --------------------------------------------
48 Subtotal Line 40 to 48
- --------------------------------------------
49 Divide Line 50 by Line 49
- --------------------------------------------
50 Variable Cost Per Vehicle Hour Per Vehicle Hour $
- -------------------------------------------- =================
Phase 2 & 3 - Operations (Payment Category - Pass Through)
- --------------------------------------------------------------------------------------------
51 Lift Van (Large) (month) $
- --------------------------------------------------------------------------------------------
52 Lift Van (Small) (month) $
- --------------------------------------------------------------------------------------------
53 Ramp Equipped MiniVan (month) $
- --------------------------------------------------------------------------------------------
54 Sedan (month) $
- --------------------------------------------------------------------------------------------
55 Tolls (month) $
- --------------------------------------------------------------------------------------------
56 Revenue Vehicle Insurance (month) $
- --------------------------------------------------------------------------------------------
Subtotal Pass-Through Costs: Subtotal $
=================
=================
Total Bid $
=================
</TABLE>
<PAGE>
PRICE SCHEDULE
CONTRACT # 94E5461
FIVE BOROUGH PARATRANSIT CARRIER SERVICE
<TABLE>
<CAPTION>
Year THREE, 1997-1998 Attachment 1
Circle Proposed Zone(s) [ 1 ] [ 2 ] [ 3 ] [ 4 ] [ All ] Page 4 of 7
Phase 3 - Operations (Payment Category - Fixed Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Consultant Labor, On-Site $
- --------------------------------------------------------------------------------------------
2 Consultant Labor, Off-Site $
- --------------------------------------------------------------------------------------------
3 Consultant Travel (give number of trips) $
- --------------------------------------------------------------------------------------------
4 Consultant Automobile Rental/Parking $
- --------------------------------------------------------------------------------------------
5 Consultant Lodging (nights, rate) $
- --------------------------------------------------------------------------------------------
6 Consultant Meals $
- --------------------------------------------------------------------------------------------
7 Consultant Telephone $
- --------------------------------------------------------------------------------------------
8 Consultant Xerox $
- --------------------------------------------------------------------------------------------
9 Consultant Printing $
- --------------------------------------------------------------------------------------------
10 Consultant Office Rental $
- --------------------------------------------------------------------------------------------
11 Consultant Utilities $
- --------------------------------------------------------------------------------------------
12 Consultant Miscellaneous $
- --------------------------------------------------------------------------------------------
13 Project Manager $
- --------------------------------------------------------------------------------------------
14 Operations Manager $
- --------------------------------------------------------------------------------------------
15 Maintenance Manager $
- --------------------------------------------------------------------------------------------
16 Benefits, Lines 13 to 15 $
- --------------------------------------------------------------------------------------------
17 Computer Support Services $
- --------------------------------------------------------------------------------------------
18 Telephone $
- --------------------------------------------------------------------------------------------
19 Xerox $
- --------------------------------------------------------------------------------------------
20 Printing $
- --------------------------------------------------------------------------------------------
21 Facility Rental $
- --------------------------------------------------------------------------------------------
22 Utilities $
- --------------------------------------------------------------------------------------------
23 Business Insurance $
- --------------------------------------------------------------------------------------------
24 Reservation Supervisor $
- --------------------------------------------------------------------------------------------
25 Reservationists $
- --------------------------------------------------------------------------------------------
26 Scheduler Supervisor $
- --------------------------------------------------------------------------------------------
27 Schedulers $
- --------------------------------------------------------------------------------------------
28 Dispatcher Supervisor $
- --------------------------------------------------------------------------------------------
29 Dispatchers $
- --------------------------------------------------------------------------------------------
30 Benefits, Lines 24 to 29 $
- --------------------------------------------------------------------------------------------
31 Licenses, Taxes, Permits $
- --------------------------------------------------------------------------------------------
32 Other Equipment (Detail) $
- --------------------------------------------------------------------------------------------
33 Other Operating (Detail) $
- --------------------------------------------------------------------------------------------
34 Other Overheads $
- --------------------------------------------------------------------------------------------
35 Miscellaneous $
- --------------------------------------------------------------------------------------------
36 Non-Revenue Vehicles $
- --------------------------------------------------------------------------------------------
37 Computer Support Services $
- --------------------------------------------------------------------------------------------
Subtotal Fixed Costs: Subtotal $
=================
Profit: Profit $
=================
Phase 3 - Operations (Payment Category - Variable Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
38 Driver Supervisors $
- --------------------------------------------------------------------------------------------
39 Drivers $
- --------------------------------------------------------------------------------------------
40 Mechanics $
- --------------------------------------------------------------------------------------------
41 Servicemen $
- --------------------------------------------------------------------------------------------
42 Benefits, Lines 38 to 41 $
- --------------------------------------------------------------------------------------------
43 Fuel $
- --------------------------------------------------------------------------------------------
44 Maintenance Parts & Fluids $
- --------------------------------------------------------------------------------------------
45 Tires $
- --------------------------------------------------------------------------------------------
46 Miscellaneous Maintenance $
- --------------------------------------------------------------------------------------------
Subtotal Variable Costs: Subtotal $
=================
Profit: Profit $
=================
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
47 Vehicle Hours Bid
- --------------------------------------------
48 Subtotal Line 40 to 48
- --------------------------------------------
49 Divide Line 50 by Line 49
- --------------------------------------------
50 Variable Cost Per Vehicle Hour Per Vehicle Hour $
- -------------------------------------------- =================
Phase 3 - Operations (Payment Category - Pass Through)
- --------------------------------------------------------------------------------------------
51 Lift Van (Large) (month) $
- --------------------------------------------------------------------------------------------
52 Lift Van (Small) (month) $
- --------------------------------------------------------------------------------------------
53 Ramp Equipped MiniVan (month) $
- --------------------------------------------------------------------------------------------
54 Sedan (month) $
- --------------------------------------------------------------------------------------------
55 Tolls (month) $
- --------------------------------------------------------------------------------------------
56 Revenue Vehicle Insurance (month) $
- --------------------------------------------------------------------------------------------
Subtotal Pass-Through Costs: Subtotal $
=================
=================
Total Bid $
=================
</TABLE>
<PAGE>
PRICE SCHEDULE
CONTRACT # 94E5461
FIVE BOROUGH PARATRANSIT CARRIER SERVICE
<TABLE>
<CAPTION>
Year FOUR, 1998-1999 Attachment 1
Circle Proposed Zone(s) [ 1 ] [ 2 ] [ 3 ] [ 4 ] [ All ] Page 5 of 7
Phase 3 - Operations (Payment Category - Fixed Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Consultant Labor, On-Site $
- --------------------------------------------------------------------------------------------
2 Consultant Labor, Off-Site $
- --------------------------------------------------------------------------------------------
3 Consultant Travel (give number of trips) $
- --------------------------------------------------------------------------------------------
4 Consultant Automobile Rental/Parking $
- --------------------------------------------------------------------------------------------
5 Consultant Lodging (nights, rate) $
- --------------------------------------------------------------------------------------------
6 Consultant Meals $
- --------------------------------------------------------------------------------------------
7 Consultant Telephone $
- --------------------------------------------------------------------------------------------
8 Consultant Xerox $
- --------------------------------------------------------------------------------------------
9 Consultant Printing $
- --------------------------------------------------------------------------------------------
10 Consultant Office Rental $
- --------------------------------------------------------------------------------------------
11 Consultant Utilities $
- --------------------------------------------------------------------------------------------
12 Consultant Miscellaneous $
- --------------------------------------------------------------------------------------------
13 Project Manager $
- --------------------------------------------------------------------------------------------
14 Operations Manager $
- --------------------------------------------------------------------------------------------
15 Maintenance Manager $
- --------------------------------------------------------------------------------------------
16 Benefits, Lines 13 to 15 $
- --------------------------------------------------------------------------------------------
17 Computer Support Services $
- --------------------------------------------------------------------------------------------
18 Telephone $
- --------------------------------------------------------------------------------------------
19 Xerox $
- --------------------------------------------------------------------------------------------
20 Printing $
- --------------------------------------------------------------------------------------------
21 Facility Rental $
- --------------------------------------------------------------------------------------------
22 Utilities $
- --------------------------------------------------------------------------------------------
23 Business Insurance $
- --------------------------------------------------------------------------------------------
24 Reservation Supervisor $
- --------------------------------------------------------------------------------------------
25 Reservationists $
- --------------------------------------------------------------------------------------------
26 Scheduler Supervisor $
- --------------------------------------------------------------------------------------------
27 Schedulers $
- --------------------------------------------------------------------------------------------
28 Dispatcher Supervisor $
- --------------------------------------------------------------------------------------------
29 Dispatchers $
- --------------------------------------------------------------------------------------------
30 Benefits, Lines 24 to 29 $
- --------------------------------------------------------------------------------------------
31 Licenses, Taxes, Permits $
- --------------------------------------------------------------------------------------------
32 Other Equipment (Detail) $
- --------------------------------------------------------------------------------------------
33 Other Operating (Detail) $
- --------------------------------------------------------------------------------------------
34 Other Overheads $
- --------------------------------------------------------------------------------------------
35 Miscellaneous $
- --------------------------------------------------------------------------------------------
36 Non-Revenue Vehicles $
- --------------------------------------------------------------------------------------------
37 Computer Support Services $
- --------------------------------------------------------------------------------------------
Subtotal Fixed Costs: Subtotal $
=================
Profit: Profit $
=================
Phase 3 - Operations (Payment Category - Variable Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
38 Driver Supervisors $
- --------------------------------------------------------------------------------------------
39 Drivers $
- --------------------------------------------------------------------------------------------
40 Mechanics $
- --------------------------------------------------------------------------------------------
41 Servicemen $
- --------------------------------------------------------------------------------------------
42 Benefits, Lines 38 to 41 $
- --------------------------------------------------------------------------------------------
43 Fuel $
- --------------------------------------------------------------------------------------------
44 Maintenance Parts & Fluids $
- --------------------------------------------------------------------------------------------
45 Tires $
- --------------------------------------------------------------------------------------------
46 Miscellaneous Maintenance $
- --------------------------------------------------------------------------------------------
Subtotal Variable Costs: Subtotal $
=================
Profit: Profit $
=================
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
47 Vehicle Hours Bid
- --------------------------------------------
48 Subtotal Line 40 to 48
- --------------------------------------------
49 Divide Line 50 by Line 49
- --------------------------------------------
50 Variable Cost Per Vehicle Hour Per Vehicle Hour $
- -------------------------------------------- =================
Phase 3 - Operations (Payment Category - Pass Through)
- --------------------------------------------------------------------------------------------
51 Lift Van (Large) (month) $
- --------------------------------------------------------------------------------------------
52 Lift Van (Small) (month) $
- --------------------------------------------------------------------------------------------
53 Ramp Equipped MiniVan (month) $
- --------------------------------------------------------------------------------------------
54 Sedan (month) $
- --------------------------------------------------------------------------------------------
55 Tolls (month) $
- --------------------------------------------------------------------------------------------
56 Revenue Vehicle Insurance (month) $
- --------------------------------------------------------------------------------------------
Subtotal Pass-Through Costs: Subtotal $
=================
=================
Total Bid $
=================
</TABLE>
<PAGE>
PRICE SCHEDULE
CONTRACT # 94E5461
FIVE BOROUGH PARATRANSIT CARRIER SERVICE
<TABLE>
<CAPTION>
Year FIVE, 1999-2000 Attachment 1
Circle Proposed Zone(s) [ 1 ] [ 2 ] [ 3 ] [ 4 ] [ All ] Page 6 of 7
Phase 3 - Operations (Payment Category - Fixed Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Consultant Labor, On-Site $
- --------------------------------------------------------------------------------------------
2 Consultant Labor, Off-Site $
- --------------------------------------------------------------------------------------------
3 Consultant Travel (give number of trips) $
- --------------------------------------------------------------------------------------------
4 Consultant Automobile Rental/Parking $
- --------------------------------------------------------------------------------------------
5 Consultant Lodging (nights, rate) $
- --------------------------------------------------------------------------------------------
6 Consultant Meals $
- --------------------------------------------------------------------------------------------
7 Consultant Telephone $
- --------------------------------------------------------------------------------------------
8 Consultant Xerox $
- --------------------------------------------------------------------------------------------
9 Consultant Printing $
- --------------------------------------------------------------------------------------------
10 Consultant Office Rental $
- --------------------------------------------------------------------------------------------
11 Consultant Utilities $
- --------------------------------------------------------------------------------------------
12 Consultant Miscellaneous $
- --------------------------------------------------------------------------------------------
13 Project Manager $
- --------------------------------------------------------------------------------------------
14 Operations Manager $
- --------------------------------------------------------------------------------------------
15 Maintenance Manager $
- --------------------------------------------------------------------------------------------
16 Benefits, Lines 13 to 15 $
- --------------------------------------------------------------------------------------------
17 Computer Support Services $
- --------------------------------------------------------------------------------------------
18 Telephone $
- --------------------------------------------------------------------------------------------
19 Xerox $
- --------------------------------------------------------------------------------------------
20 Printing $
- --------------------------------------------------------------------------------------------
21 Facility Rental $
- --------------------------------------------------------------------------------------------
22 Utilities $
- --------------------------------------------------------------------------------------------
23 Business Insurance $
- --------------------------------------------------------------------------------------------
24 Reservation Supervisor $
- --------------------------------------------------------------------------------------------
25 Reservationists $
- --------------------------------------------------------------------------------------------
26 Scheduler Supervisor $
- --------------------------------------------------------------------------------------------
27 Schedulers $
- --------------------------------------------------------------------------------------------
28 Dispatcher Supervisor $
- --------------------------------------------------------------------------------------------
29 Dispatchers $
- --------------------------------------------------------------------------------------------
30 Benefits, Lines 24 to 29 $
- --------------------------------------------------------------------------------------------
31 Licenses, Taxes, Permits $
- --------------------------------------------------------------------------------------------
32 Other Equipment (Detail) $
- --------------------------------------------------------------------------------------------
33 Other Operating (Detail) $
- --------------------------------------------------------------------------------------------
34 Other Overheads $
- --------------------------------------------------------------------------------------------
35 Miscellaneous $
- --------------------------------------------------------------------------------------------
36 Non-Revenue Vehicles $
- --------------------------------------------------------------------------------------------
37 Computer Support Services $
- --------------------------------------------------------------------------------------------
Subtotal Fixed Costs: Subtotal $
=================
Profit: Profit $
=================
Phase 3 - Operations (Payment Category - Variable Cost)
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
38 Driver Supervisors $
- --------------------------------------------------------------------------------------------
39 Drivers $
- --------------------------------------------------------------------------------------------
40 Mechanics $
- --------------------------------------------------------------------------------------------
41 Servicemen $
- --------------------------------------------------------------------------------------------
42 Benefits, Lines 38 to 41 $
- --------------------------------------------------------------------------------------------
43 Fuel $
- --------------------------------------------------------------------------------------------
44 Maintenance Parts & Fluids $
- --------------------------------------------------------------------------------------------
45 Tires $
- --------------------------------------------------------------------------------------------
46 Miscellaneous Maintenance $
- --------------------------------------------------------------------------------------------
Subtotal Variable Costs: Subtotal $
=================
Profit: Profit $
=================
- --------------------------------------------------------------------------------------------
# Item Quantity Unit Price Extension
- --------------------------------------------------------------------------------------------
47 Vehicle Hours Bid
- --------------------------------------------
48 Subtotal Line 40 to 48
- --------------------------------------------
49 Divide Line 50 by Line 49
- --------------------------------------------
50 Variable Cost Per Vehicle Hour Per Vehicle Hour $
- -------------------------------------------- =================
Phase 3 - Operations (Payment Category - Pass Through)
- --------------------------------------------------------------------------------------------
51 Lift Van (Large) (month) $
- --------------------------------------------------------------------------------------------
52 Lift Van (Small) (month) $
- --------------------------------------------------------------------------------------------
53 Ramp Equipped MiniVan (month) $
- --------------------------------------------------------------------------------------------
54 Sedan (month) $
- --------------------------------------------------------------------------------------------
55 Tolls (month) $
- --------------------------------------------------------------------------------------------
56 Revenue Vehicle Insurance (month) $
- --------------------------------------------------------------------------------------------
Subtotal Pass-Through Costs: Subtotal $
=================
=================
Total Bid $
=================
</TABLE>
<PAGE>
PRICE SCHEDULE
CONTRACT # 94E5461
FIVE BOROUGH PARATRANSIT CARRIER SERVICE
Summary: Year ONE to Year FIVE Attachment 1
Circle Proposed Zone(s) [ 1 ] [ 2 ] [ 3 ] [ 4 ] [ All ] Page 7 of 7
MOBILIZATION COSTS: $
=================
TOTAL FIXED COSTS: $
=================
PROFIT ON FIXED COSTS: $
=================
TOTAL VARIABLE COSTS: $
=================
PROFIT ON VARIABLE COSTS: $
=================
SUBTOTAL: $
=================
TOTAL PASS-THROUGH COSTS: $
=================
=================
GRAND TOTAL: $
=================
<PAGE>
Exhibit 10.18
ATLANTIC EXPRESS TRANSPORTATION CORP.
as obligor
and the Guarantors referred to herein
$110,000,000
10-3/4% Senior Notes due 2004
------------------------------------
INDENTURE
Dated as of February 4, 1997
------------------------------------
THE BANK OF NEW YORK,
Trustee
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions ............................................... 1
Section 1.2 Other Definitions ......................................... 19
Section 1.3 Incorporation by Reference of Trust Indenture Act ......... 19
Section 1.4 Rules of Construction ..................................... 20
ARTICLE 2
THE NOTES
Section 2.1 Form and Dating ........................................... 20
Section 2.2 Execution and Authentication .............................. 21
Section 2.3 Registrar, Paying Agent and Depository .................... 22
Section 2.4 Paying Agent to Hold Money in Trust ....................... 22
Section 2.5 Holder Lists .............................................. 23
Section 2.6 Transfer and Exchange ..................................... 23
Section 2.7 Replacement Notes ......................................... 28
Section 2.8 Outstanding Notes ......................................... 28
Section 2.9 Treasury Notes ............................................ 29
Section 2.10 Temporary Notes ........................................... 29
Section 2.11 Cancellation .............................................. 30
Section 2.12 Defaulted Interest ........................................ 30
Section 2.13 Legends ................................................... 30
ARTICLE 3
REDEMPTION
Section 3.1 Notices to Trustee ........................................ 31
Section 3.2 Selection of Notes to Be Redeemed ......................... 32
Section 3.3 Notice of Redemption ...................................... 32
Section 3.4 Effect of Notice of Redemption ............................ 33
Section 3.5 Deposit of Redemption Price ............................... 33
Section 3.6 Notes Redeemed in Part .................................... 34
Section 3.7 Optional Redemption ....................................... 34
i
<PAGE>
Page
----
ARTICLE 4
COVENANTS
Section 4.1 Payment of Notes .......................................... 35
Section 4.2 Maintenance of Office or Agency ........................... 35
Section 4.3 Reports ................................................... 36
Section 4.4 Compliance Certificate .................................... 37
Section 4.5 Taxes ..................................................... 38
Section 4.6 Stay, Extension and Usury Laws ............................ 38
Section 4.7 Limitation on Restricted Payments ......................... 38
Section 4.8 Limitation on Restrictions on Subsidiary Dividends ........ 41
Section 4.9 Limitation on Incurrence of Indebtedness .................. 42
Section 4.10 Limitation on Asset Sales ................................. 45
Section 4.11 Limitation on Transactions With Affiliates ................ 48
Section 4.12 Limitation on Liens ....................................... 48
Section 4.13 Corporate Existence ....................................... 49
Section 4.14 Repurchase Upon a Change of Control ....................... 49
Section 4.15 Maintenance of Properties ................................. 51
Section 4.16 Maintenance of Insurance .................................. 52
Section 4.17 Restrictions on Sale and Issuance of Subsidiary Stock ..... 52
Section 4.18 Line of Business .......................................... 52
ARTICLE 5
SUCCESSORS
Section 5.1 When the Company May Merge, etc ........................... 53
Section 5.2 Successor Substituted ..................................... 54
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Events of Default ......................................... 54
Section 6.2 Acceleration .............................................. 57
Section 6.3 Other Remedies ............................................ 58
Section 6.4 Waiver of Past Defaults ................................... 58
Section 6.5 Control by Majority ....................................... 58
Section 6.6 Limitation on Suits ....................................... 59
Section 6.7 Rights of Holders to Receive Payment ...................... 59
Section 6.8 Collection Suit by Trustee ................................ 60
Section 6.9 Trustee May File Proofs of Claim .......................... 60
Section 6.10 Priorities ................................................ 61
ii
<PAGE>
Page
----
Section 6.11 Undertaking for Costs ..................................... 61
ARTICLE 7
TRUSTEE
Section 7.1 Duties of Trustee ......................................... 62
Section 7.2 Rights of Trustee ......................................... 63
Section 7.3 Individual Rights of Trustee .............................. 64
Section 7.4 Trustee's Disclaimer ...................................... 64
Section 7.5 Notice of Defaults ........................................ 65
Section 7.6 Reports by Trustee to Holders ............................. 65
Section 7.7 Compensation and Indemnity ................................ 65
Section 7.8 Replacement of Trustee .................................... 66
Section 7.9 Successor Trustee by Merger, etc .......................... 68
Section 7.10 Eligibility; Disqualification ............................. 68
Section 7.11 Preferential Collection of Claims Against Company ......... 68
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations ...................... 69
Section 8.2 Application of Trust Money ................................ 71
Section 8.3 Repayment to the Company .................................. 71
Section 8.4 Reinstatement ............................................. 71
ARTICLE 9
AMENDMENTS
Section 9.1 Without Consent of Holders ................................ 72
Section 9.2 With Consent of Holders ................................... 73
Section 9.3 Compliance with Trust Indenture Act 74
Section 9.4 Revocation and Effect of Consents ......................... 75
Section 9.5 Notation on or Exchange of Notes .......................... 75
Section 9.6 Trustee to Sign Amendments, etc ........................... 75
ARTICLE 10
COLLATERAL AND SECURITY AND GUARANTY
Section 10.1 Collateral Documents ...................................... 76
Section 10.2 Opinions .................................................. 76
Section 10.3 Release of Collateral ..................................... 77
iii
<PAGE>
Page
----
Section 10.4 Certificates of the Company ............................... 77
Section 10.5 Authorization of Actions to be Taken by the Trustee
Under the Security Documents .............................. 78
Section 10.6 Authorization of Receipt of Funds by the Trustee Under
the Security Documents .................................... 78
Section 10.7 Guaranty .................................................. 78
Section 10.8 Execution and Delivery of Guaranty ........................ 80
Section 10.9 Limitation on Guarantor's Liability ....................... 81
Section 10.10 Rights under the Guaranty ................................. 81
Section 10.11 Primary Obligations ....................................... 82
Section 10.12 Guarantee by Subsidiary ................................... 82
Section 10.13 Release of Guarantors ..................................... 83
ARTICLE 11
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls .............................. 83
Section 11.2 Notices ................................................... 83
Section 11.3 Communication by Holders with Other Holders ............... 85
Section 11.4 Certificate and Opinion as to Conditions Precedent ........ 85
Section 11.5 Statements Required in Certificate or Opinion ............. 85
Section 11.6 Rules by Trustee and Agents ............................... 86
Section 11.7 Legal Holidays ............................................ 86
Section 11.8 No Recourse Against Others ................................ 86
Section 11.9 Governing Law ............................................. 86
Section 11.10 No Adverse Interpretation of Other Agreements ............. 87
Section 11.11 Successors ................................................ 87
Section 11.12 Severability .............................................. 88
Section 11.13 Counterpart Originals ..................................... 88
Section 11.14 Table of Contents, Headings, etc .......................... 88
SIGNATURES
EXHIBIT A- FORM OF NOTE .............................................. A-1
EXHIBIT B- CERTIFICATE OF TRANSFEROR ................................. B-1
EXHIBIT C- FORM OF GUARANTY .......................................... C-1
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INDENTURE, dated as of February 4, 1997, among Atlantic Express
Transportation Corp., a New York corporation (the "Company"), the Guarantors
named herein and The Bank of New York, a New York banking corporation, as
trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Company's
10-3/4% Senior Secured Notes due 2004.
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.
"AETG" means Atlantic Express Transportation Group Inc., a New York
corporation..
"Acquired Debt" means Indebtedness of a Person existing at the time
such Person is merged with or into the Company or a Restricted Subsidiary or
becomes a Restricted Subsidiary, other than Indebtedness incurred in connection
with, or in contemplation of, such Person merging with or into the Company or a
Restricted Subsidiary or becoming a Restricted Subsidiary, provided, that
Indebtedness of such other Person that is redeemed, defeased, retired or
otherwise repaid at the time, or immediately upon consummation of the
transaction by which such other Person is merged with or into the Company or a
Restricted Subsidiary or becomes a Restricted Subsidiary shall not be Acquired
Debt.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
(i) the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; (ii) in the case of a
corporation, beneficial ownership of 10% or more of any class of Capital Stock
of such Person; and (iii) in the case of an individual (A) members of such
Person's immediate family (as defined in Instruction 2 of Item 404(a) of
Regulation S-K under the Securities Act) and (B) trusts, any trustee or
beneficiaries of which are such Person or members of such Person's immediate
family. Notwithstanding the foregoing, neither the Initial Purchaser nor any of
its Affiliates will be deemed to be Affiliates of the Company. Notwithstanding
the foregoing, neither the Initial Purchaser nor any of its respective
Affiliates will be deemed to be Affiliates of the Company.
<PAGE>
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means any (i) transfer (as hereinafter defined), other
than in the ordinary course of business, of any assets of the Company or any
Restricted Subsidiary or (ii) direct or indirect issuance of any Capital Stock
of any Restricted Subsidiary, in each case to any Person (other than the Company
or a Restricted Subsidiary and other than directors' qualifying shares). For
purposes of this definition, (a) any series of transfers that are part of a
common plan shall be deemed a single Asset Sale and (b) the term "Asset Sale"
shall not include any disposition of all or substantially all of the assets of
the Company that is governed under and complies with Article 5 of this
Indenture.
"Bankruptcy Law" means title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means the board of directors or any duly
constituted committee of any corporation or of a corporate general partner of a
partnership and any similar body empowered to direct the affairs of any other
entity.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, as to any Person, the obligations
of such Person under a lease that are required to be classified and accounted
for as capital lease obligations under GAAP, and the amount of such obligations
at any date shall be the capitalized amount of such obligations at such date,
determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, and (ii) with respect to
any other Person, any and all partnership or other equity interests of such
Person.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $250,000,000 and commercial paper issued by others rated at least
A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2
or the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition and (iii) investments in
money market funds substantially all of
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whose assets comprise securities of the types described in clauses (i) and (ii)
above.
"Change of Control" means (i) the transfer (in one transaction or a
series of transactions) of all or substantially all of the Company's assets to
any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) other than to one or more Existing Holders, (ii) the liquidation or
dissolution of the Company or the adoption of a plan by the stockholders of the
Company relating to the dissolution or liquidation of the Company, (iii) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), except for one or more Existing Holders, of beneficial
ownership, directly or indirectly, of more than 50% of the aggregate ordinary
voting power of the total outstanding Voting Stock of AETG, (iv) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company or AETG (together with any new
directors who are designated pursuant to the Stockholders' Agreement or approved
by a vote of at least 662/3% of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company or AETG, as the case may be,
then still in office or (v) the failure by AETG to own 51% of the voting power
of the total outstanding Voting Stock of the Company.
"Closing Date" means the date upon which the Series A Notes are
first issued.
"Collateral" means any assets of the Company or any of its
Subsidiaries defined as "Collateral" in any of the Security Documents and assets
from time to time in which a Lien exists as security for any of the Obligations.
"Collateral Agent" shall mean the Secured Party as defined in the
Security Agreement.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties at such time.
"Company" means the party named as such above, until a successor
replaces such Person in accordance with the terms of this Indenture, and
thereafter means such successor.
"Company Order" means a written request or order signed in the name
of the Company by its Chairman of the Board, President or Senior Vice President,
and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee.
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"Consolidated EBITDA" means, with respect to any Person (the
referent Person) for any period, consolidated income (loss) from operations of
such Person and its subsidiaries for such period, determined in accordance with
GAAP, plus (to the extent such amounts are deducted in calculating such income
(loss) from operations of such Person for such period, and without duplication)
amortization, depreciation and other non-cash charges (including, without
limitation, amortization of goodwill, deferred financing fees and other
intangibles but excluding non-cash charges incurred after the date of this
Indenture that require an accrual of or a reserve for cash charges for any
future period); provided, that (i) the income from operations of any Person
(including, without limitation, any Unrestricted Subsidiary) that is not a 90%
Owned Subsidiary or that is accounted for by the equity method of accounting
will be included only to the extent of the amount of dividends or distributions
paid during such period to the referent Person or a 90% Owned Subsidiary of the
referent Person, and (ii) the income from operations of any Restricted
Subsidiary will not be included to the extent that declarations of dividends or
similar distributions by that Restricted Subsidiary are not at the time
permitted, directly or indirectly, by operation of the terms of its organization
documents or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
owners.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the consolidated interest expense (net of interest income) of
such Person and its subsidiaries for such period, whether paid or accrued
(including amortization of original issue discount, noncash interest payment,
and the interest component of Capital Lease Obligations), to the extent such
expense was deducted in computing Consolidated Net Income of such Person for
such period.
"Consolidated Net Income" means, with respect to any Person (the
referent Person) for any period, the aggregate of the Net Income of such Person
and its subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP; provided, that (i) the Net Income of any Person
(including, without limitation, any Unrestricted Subsidiary) that is not a
Wholly Owned Subsidiary or that is accounted for by the equity method of
accounting will be included in calculating the referent Person's Consolidated
Net Income only to the extent of the amount of dividends or distributions paid
during such period to the referent Person or a Wholly Owned Subsidiary of the
referent Person, (ii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition will
be excluded, and (iii) the Net Income of any Subsidiary will be excluded to the
extent that declarations of dividends or similar distributions by that
Subsidiary of such Net Income are not at the time permitted, directly or
indirectly, by operation of the terms of its organization documents or any
agreement, instrument, judgment, decree, order, statute, rule or
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governmental regulation applicable to that Subsidiary or its owners.
"Consolidated Net Worth" means, with respect to any Person, the
total stockholders' equity of such Person determined on a consolidated basis in
accordance with GAAP, adjusted to exclude (to the extent included in calculating
such equity), (i) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock of such Person and its consolidated subsidiaries, and
(ii) all upward revaluations and other write-ups in the book value of any asset
of such person or a consolidated subsidiary of such person subsequent to the
Closing Date, and (iii) all Investments in persons that are not consolidated
Restricted Subsidiaries.
"Corporate Trust Office" shall be at the address of the Trustee
specified in Section 11.2 or such other address as the Trustee may specify by
notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event that is, or after notice or the passage of
time or both would be, an Event of Default.
"Definitive Notes" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1 and 2 thereof.
"Depository" means the Person specified in Section 2.3 hereof as the
Depository with respect to the Notes issuable in global form, until a successor
shall have been appointed and become such pursuant to the applicable provision
of this Indenture, and, thereafter, "Depository" shall mean or include such
successor.
"Disqualified Stock" means any Equity Interest that (i) either by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable) is or upon the happening of an event would be required
to be redeemed or repurchased prior to the final stated maturity of the Notes or
is redeemable at the option of the holder thereof at any time prior to such
final stated maturity or (ii) is convertible into or exchangeable at the option
of the issuer thereof or any other Person for debt securities.
"DTC" means The Depository Trust Company.
"Equity Interests" means Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series B Notes for
Series A Notes.
"Existing Holders" shall mean the Majority Stockholders and the
Preferred Stockholder.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, and in the rules and regulations of the Commission, that
are in effect on the date of this Indenture.
"Global Note" means a Note that contains the paragraph referred to
in footnote 1 and the additional schedule referred to in footnote 2 in the form
of the Note attached hereto as Exhibit A.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantors" means all direct or indirect current and future
Restricted Subsidiaries.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" of any Person means (without duplication) (1) all
liabilities and obligations, contingent or otherwise, of such Person (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, debentures, notes or other similar instruments, (iii) representing the
deferred purchase price of property or services (other than liabilities incurred
in the ordinary course of business which are not more than 90 days past due),
(iv) created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (v) as lessee
under capitalized leases, (vi) under bankers' acceptance and letter of credit
facilities, (vii) to purchase, redeem, retire, defease or otherwise acquire for
value any Disqualified Stock, or (viii) in
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respect of Hedging Obligations, (2) all liabilities and obligations of others of
the type described in clause (1), above, that are Guaranteed by such Person, and
(3) all liabilities and obligations of others of the type described in clause
(1), above, that are secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights) owned by
such Person; provided, that the amount of such Indebtedness shall (to the extent
such Person has not assumed or become liable for the payment of such
Indebtedness in full) be the lesser of (x) the fair market value of such
property at the time of determination and (y) the amount of such Indebtedness.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Initial Purchaser" means Jefferies & Company, Inc.
"Intercreditor Agreement" means any intercreditor agreement between
the lenders under the Revolving Credit Facility and the Collateral Agent, dated
the Closing Date, substantially in the form of that certain Intercreditor
Agreement between Congress Financial Corporation and the Collateral Agent.
"Interest Coverage Ratio" means, for any period, the ratio of (i)
Consolidated EBITDA of the Company for such period, to (ii) Consolidated
Interest Expense of the Company for such period. In calculating the Interest
Coverage Ratio for any period, pro forma effect shall be given to: (a) the
incurrence, assumption, guarantee, repayment, repurchase, redemption or
retirement by the Company or any of its Subsidiaries of any Indebtedness (other
than under the Revolving Credit Facility) subsequent to the commencement of the
period for which the Interest Coverage Ratio is being calculated but on or prior
to the date on which the event for which the calculation is being made, as if
the same had occurred at the beginning of the applicable period; and (b) the
occurrence of any Asset Sale during such period by reducing Consolidated EBITDA
for such period by an amount equal to the Consolidated EBITDA (if positive)
directly attributable to the assets sold and by reducing Consolidated Interest
Expense by an amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness assumed by third parties or repaid with the
proceeds of such Asset Sale, in each case as if the same had occurred at the
beginning of the applicable period. For purposes of making the computation
referred to above, acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, and Transportation Contracts that have been entered
into or terminated, subsequent to the commencement of such period but on
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or prior to the date on which the event for which the calculation is being made
shall be given effect on a pro forma basis, assuming that all such acquisitions
and terminations and the effectiveness of all such contracts had occurred on the
first day of such period. Without limiting the foregoing, the financial
information of the Company with respect to any portion of such four fiscal
quarters that falls before the Closing Date shall be adjusted to give pro forma
effect to the issuance of the Notes and the application of the proceeds
therefrom as if they had occurred at the beginning of such four fiscal quarters.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of loans,
Guarantees, advances or capital contributions (excluding (i) commission, travel
and similar advances to officers and employees of such Person made in the
ordinary course of business and (ii) bona fide accounts receivable arising from
the sale of goods or services in the ordinary course of business consistent with
past practice), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, and any other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed.
"Lien" means any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Liquidated Damages" has the meaning set out in the Registration
Rights Agreement.
"Majority Stockholders" means Domenic Gatto, Michael Gatto and
Patrick Gatto.
"Material Subsidiary" means any Subsidiary (a) that is a
"Significant Subsidiary" of the Company as defined in Rule 1-02 of Regulation
S-X promulgated by the Commission or (b) is otherwise material to the business
of the Company.
"Net Income" means, with respect to any Person for any period, the
net income (loss) of such Person for such period, determined in accordance with
GAAP, excluding any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with any Asset Sales
and
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dispositions pursuant to sale and leaseback transactions, and excluding any
extraordinary gain (but not loss), together with any related provision for taxes
on such gain (but not loss).
"Net Proceeds" means the aggregate proceeds received in the form of
cash or Cash Equivalents in respect of any Asset Sale (including payments in
respect of deferred payment obligations when received), net of (i) the
reasonable and customary direct out-of-pocket costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions), other than any such costs payable to an Affiliate of the
Company, (ii) taxes actually payable directly as a result of such Asset Sale
(after taking into account any available tax credits or deductions and any tax
sharing arrangements), (iii) amounts required to be applied to the permanent
repayment of Indebtedness in connection with such Asset Sale, and (iv)
appropriate amounts provided as a reserve by the Company or any Restricted
Subsidiary, in accordance with GAAP, against any liabilities associated with
such Asset Sale and retained by the Company or such Restricted Subsidiary, as
the case may be, after such Asset Sale, including, without limitation, pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
arising from such Asset Sale.
"90% Owned Subsidiary" means a Restricted Subsidiary at least 90% of
each class of the Capital Stock of which is owned by the Company or one or more
Wholly Owned Subsidiaries.
"Notes" means, collectively, the Series A Notes and the Series B
Notes.
"Obligations" means any principal, interest, premium, penalties,
fees, indemnifications, reimbursements, damages and other obligations and
liabilities of the Company or any of the Guarantors under this Indenture, the
Security Documents, the Notes or the Guarantees of the Notes.
"Officers" means the Chairman of the Board, the President, the Chief
Financial Officer, Chief Operating Officer, the Treasurer, any Assistant
Treasurer, Controller, Secretary, any Assistant Secretary or any Senior Vice
President of the Company.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the President, Chief
Financial Officer, Treasurer, Controller or a Senior Vice President of the
Company.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee. Such counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.
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"Permitted Affiliate Transactions" means (i) employment agreements
entered into by the Company or any Restricted Subsidiary in the ordinary course
of business with the approval of a majority of the disinterested members of the
Company's Board of Directors; (ii) transactions between or among the Company and
its 90% Owned Subsidiaries; (iii) reasonable and customary fees and compensation
paid to and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any Restricted Subsidiary as determined in good
faith by a majority of the disinterested directors of the Company's Board of
Directors or, if none, unanimously by such Board of Directors; (iv) the "Park &
Ride Lease" between Showplace Bowling Center Inc., as lessor, and Atlantic
Express Coachways Inc., as lessee, and the lease between Dom-Rich Associates,
Inc., as lessor, and Staten Island Bus, Inc., as lessee, in each case in effect
as of the Closing Date; and (v) annual premiums paid to Atlantic North Casualty
Company, in the ordinary course of business, for insurance; provided, that such
premiums do not exceed the annual aggregate deductibles on the Company's
insurance policies then in effect.
"Permitted Amount" during any fiscal year means the sum of (i) the
management fees required to be paid by AETG under Section 5.02 of the
Stockholders' Agreement during such fiscal year and (ii) the Permitted Expense
Amount.
"Permitted Expense Amount" means (a) for fiscal year 1996, $100,000;
and (b) for each fiscal year thereafter, 1.05 times the Permitted Expense Amount
for the immediately preceding fiscal year.
"Permitted Investments" means (i) Investments in the Company, any
Guarantor or any Wholly Owned Subsidiary (including without limitation,
Guarantees of Indebtedness of any such Person), (ii) Investments in an aggregate
amount not to exceed $1 million in Restricted Subsidiaries other than Wholly
Owned Subsidiaries, (iii) Investments in Cash Equivalents, (iv) Investments in a
Person, if as a result of such Investment (a) such Person becomes a Wholly Owned
Subsidiary or (b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Subsidiary, (v) Hedging
Obligations, (vi) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers, (vii) Investments
as a result of consideration received in connection with an Asset Sale made in
compliance with Section 4.10 of this Indenture, (viii) Investments in Atlantic
North Casualty Company, but only to the extent necessary under applicable law or
reasonably required by the Commissioner of the Vermont Department of Banking,
Insurance, Securities and Health Care Administration, to permit Atlantic North
Casualty Company to provide insurance policies to the Company and its Restricted
Subsidiaries in the ordinary course of
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business as contemplated under clause (v) of the definition of "Permitted
Affiliate Transactions," and (ix) Investments existing on the Closing Date.
"Permitted Liens" means (i) Liens in favor of the Company or its
Restricted Subsidiaries other than with respect to intercompany Indebtedness,
(ii) Liens on property of a Person existing at the time such Person is acquired
by, merged into or consolidated with the Company or any Restricted Subsidiary,
provided, that such Liens were not created in contemplation of such acquisition
and do not extend to assets other than those subject to such Liens immediately
prior to such acquisition, (iii) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary, provided, that
such Liens were not created in contemplation of such acquisition and do not
extend to assets other than those subject to such Liens immediately prior to
such acquisition, (iv) Liens incurred in the ordinary course of business in
respect of Hedging Obligations, (v) Liens incurred in the ordinary course of
business to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations (exclusive of obligations
constituting Indebtedness) of a like nature including, without limitation, cash
retainages, (vi) Liens existing or created on the date of this Indenture, (vii)
Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested or remedied in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided, that any
reserve or other appropriate provision as may be required in conformity with
GAAP has been made therefor, (viii) Liens arising by reason of any judgment,
decree or order of any court with respect to which the Company or any of its
Restricted Subsidiaries is then in good faith prosecuting an appeal or other
proceedings for review, the existence of which judgment, order or decree is not
an Event of Default under this Indenture, (ix) encumbrances consisting of zoning
restrictions, survey exceptions, utility easements, licenses, rights of way,
easements of ingress or egress over property of the Company or any of its
Restricted Subsidiaries, rights or restrictions of record on the use of real
property, minor defects in title, landlord's and lessor's liens under leases on
property located on the premises rented, mechanics' liens, warehouseman's liens,
supplier's liens, repairman's liens, vendors' liens, and similar encumbrances,
rights or restrictions on personal or real property, in each case not
interfering in any material respect with the ordinary conduct of the business of
the Company or any of its Restricted Subsidiaries, (x) Liens incidental to the
conduct of business or the ownership of properties incurred in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, bids, and government contracts and leases and subleases, (xi) Liens for
any interest or title of a lessor under any Capitalized Lease Obligation
permitted to be incurred under this Indenture; provided, that such Liens do not
extend to any property or asset that
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is not leased property subject to such Capitalized Lease Obligation, (xii) any
extension, renewal, or replacement (or successive extensions, renewals or
replacements), in whole or in part, of Liens described in clauses (i) through
(xi) above, (xiii) Liens securing the Notes, and (xiv) Liens in addition to the
foregoing, which in the aggregate, are secured by assets with a fair market
value not in excess of $100,000 at any time.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof, or any other entity.
"Preferred Stockholder" means the legal owner of Series A
convertible preferred stock, par value $0.01 per share of AETG, on the Closing
Date.
"Public Equity Offering" means a bona fide underwritten public
offering of Qualified Capital Stock of the Company, pursuant to a registration
statement filed with and declared effective by the Commission in accordance with
the Securities Act.
"Purchase Money Liens" means Liens to secure or securing Purchase
Money Obligations permitted to be incurred under this Indenture.
"Purchase Money Obligations" means Indebtedness representing, or
incurred to finance, the cost (i) of acquiring or improving any assets and (ii)
of construction or build-out of manufacturing, distribution or administrative
facilities (including Purchase Money Obligations of any other Person at the time
such other Person is merged with or into or is otherwise acquired by the
Company), provided, that (a) the principal amount of such Indebtedness does not
exceed 100% of such cost, including construction charges, (b) any Lien securing
such Indebtedness does not extend to or cover any other asset or property other
than the asset or property being so acquired or improved and (c) such
Indebtedness is incurred, and any Liens with respect thereto are granted, within
180 days of the acquisition or improvement of such property or asset.
"QIB" shall mean "qualified institutional buyer" as defined in Rule
144A.
"Qualified Capital Stock" means, with respect to any Person, Capital
Stock of such Person other than Disqualified Capital Stock.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Closing Date, by and among the Company, the
Guarantors and the Initial Purchaser as such agreement may be amended, modified
or supplemented from time to time.
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"Responsible Officer" when used with respect to the Trustee, means
any officer within the corporate trust department of the Trustee located at the
Corporate Trust Office (or any successor group of the Trustee) or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the designated officers, and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Investment" means any Investment other than a Permitted
Investment. The aggregate amount of each Investment constituting a Restricted
Payment since the date of this Indenture shall be reduced by the aggregate
after-tax amount of all payments made to the Company and its Restricted
Subsidiaries with respect to such Investments; provided, that (i) the maximum
amount of such payments so excluded shall not exceed the original amount of such
Investment and (ii) such payments shall also be excluded from the calculations
contemplated by clauses (x) through (z) under Section 4.7(a)(3) of this
Indenture.
"Restricted Securities" means Notes that bear or are required to
bear the legends set forth in Exhibit A hereto.
"Restricted Subsidiary" means a Subsidiary other than an
Unrestricted Subsidiary.
"Revolving Credit Facility" means the Loan and Security Agreement,
entered into on the Closing Date between Congress Financial Corporation, as
lender, and the Restricted Subsidiaries, as borrowers, and the Company, as
Guarantor, as the same may be amended, modified, renewed, refunded, replaced or
refinanced from time to time, including (i) any related notes, letters of
credit, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time, and (ii) any notes, guarantees,
collateral documents, instruments and agreements executed in connection with
such amendment, modification, renewal, refunding, replacement or refinancing.
"Rule 144A" means Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the Security and Pledge Agreement, dated
as of the date hereof, by and between AETG, the Company and the Restricted
Subsidiaries, on the one hand, and the Collateral Agent on the other, as amended
or supplemented from time to time.
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"Security Documents" means, collectively, the Security Agreement,
the Intercreditor Agreement, the Trademark Security Agreement and any other
document, instrument or agreement executed or delivered by the Company or any of
its Subsidiaries from time to time pursuant to which the Company or any such
Subsidiary shall grant a Lien on any of their respective properties, assets or
revenues to secure payment of the Obligations hereunder and under the Notes or
relating to intercreditor matters.
"Series A Notes" means the Company's 10-3/4% Series A Senior Notes
due 2004, as authenticated and issued under this Indenture.
"Series B Notes" means the Company's 10-3/4% Series B Senior Notes
due 2004, as authenticated and issued under this Indenture.
"Stockholders' Agreement" means the Stockholders Agreement, dated
February 28, 1994, by and among AETG and the stockholders of AETG that are party
thereto, as such agreement is amended and in effect on the Closing Date.
"subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Voting Stock thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other subsidiaries
of that Person or a combination thereof and (ii) any partnership in which such
Person or any of its subsidiaries is a general partner.
"Subsidiary" means any subsidiary of the Company.
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of
the Closing Date, by and between the Company and AETG as in effect on the date
hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as amended, as in effect on the date hereof until such time as
this Indenture is qualified under the TIA, and thereafter as in effect on the
date on which this Indenture is qualified under the TIA.
"Trademark Security Agreement" means the Collateral Assignment of
Trademarks (Security Agreement), dated as of the Closing Date, between the
Company and The Bank of New York, as amended or supplemented from time to time.
"transfer" means any direct or indirect sale, assignment, transfer,
lease, conveyance, or other disposition (including, without limitation, by way
of merger or consolidation).
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"Transportation Contract" means a written contract entered into by
the Company or its Restricted Subsidiaries pursuant to which services for school
bus transportation, paratransit, coach transportation or Pre-K/Medicaid
transportation and related services are provided by the Company or any of its
Restricted Subsidiaries to a governmental entity or agency.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (a) Atlantic North Casualty Company
and (b) any other Subsidiary that has been designated by the Company (by written
notice to the Trustee as provided below) as an Unrestricted Subsidiary;
provided, that a Subsidiary may not be designated as an "Unrestricted
Subsidiary" unless (i) such Subsidiary does not own any Capital Stock of, or own
or hold any Lien on any property of, the Company or any Restricted Subsidiary
(other than such Subsidiary), (ii) neither immediately prior thereto nor after
giving pro forma effect to such designation, would there exist a Default or
Event of Default, (iii) immediately after giving effect to such designation on a
pro forma basis, the Company could incur at least $1.00 of Indebtedness pursuant
to Section 4.9(a) of this Indenture and (iv) the creditors of such Subsidiary
have no direct or indirect recourse (including, without limitation, recourse
with respect to the payment of principal or interest on Indebtedness of such
Subsidiary) to the assets of the Company or of a Restricted Subsidiary (other
than such Subsidiary). The Board of Directors of the Company may designate any
Unrestricted Subsidiary (other than Atlantic North Casualty Company) to be a
Restricted Subsidiary only if (a) no Default or Event of Default is existing or
will occur as a consequence thereof and (b) immediately after giving effect to
such designation, on a pro forma basis, the Company could incur at least $1.00
of Indebtedness pursuant to Section 4.9(a) of this Indenture. Each such
designation shall be evidenced by filing with the Trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions. The Company shall be deemed to make an Investment in each Subsidiary
designated as an "Unrestricted Subsidiary" immediately following such
designation in an amount equal to the Investment in such Subsidiary and its
subsidiaries immediately prior to such designation; provided, that if such
Subsidiary is subsequently redesignated as a Restricted Subsidiary, the amount
of such Investment shall be deemed to be reduced (but not below zero) by the
fair market value of the net consolidated assets of such Subsidiary on the date
of such redesignation.
"U.S. Government Obligations" means direct obligations of the United
States of America, or any agency or instrumentality
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thereof for the payment of which the full faith and credit of the United States
of America is pledged.
"Voting Stock" means, with respect to any Person, (i) one or more
classes of the Capital Stock of such Person having general voting power to elect
at least a majority of the board of directors, managers or trustees of such
Person (irrespective of whether or not at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency) and (ii) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (i) above.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years (rounded to the nearest
one-twelfth) obtained by dividing (i) the then outstanding principal amount of
such Indebtedness into (ii) the total of the products obtained by multiplying
(x) the amount of each then remaining installment, sinking fund, serial maturity
or other required payments of principal, including payment at final maturity, in
respect thereof, by (y) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or one or more Wholly Owned Subsidiaries.
Section 1.2. Other Definitions.
Defined in
Term Section
------------------------------------------------------
"Affiliate Transaction".................... 4.11
"Change of Control Offer".................. 4.14
"Change of Control Payment"................ 4.14
"Change of Control Payment Date"........... 4.14
"Definitive Notes"......................... 2.1
"Event of Default"......................... 6.1
"Excess Proceeds".......................... 4.10
"Excess Proceeds Offer".................... 4.10
"Excess Proceeds Offer Period"............. 4.10
"Excess Proceeds Payment Date"............. 4.10
"Global Note".............................. 2.1
"Guaranty"................................. 10.7
"Hedging Obligations"...................... 4.9(b)
"Paying Agent"............................. 2.3
"Purchase Amount".......................... 4.10
"Purchase Money Indebtedness".............. 4.9(b)
"Refinance"................................ 4.9(b)
"Refinancing Indebtedness"................. 4.9(b)
"Registrar"................................ 2.3
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"Restricted Payments"...................... 4.7
Section 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes means the Company, the Guarantors and
any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE NOTES
Section 2.1. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A attached hereto, the terms of which are
incorporated in and made a part of this Indenture. Each Note shall include the
Guaranty
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executed by each of the Guarantors in the form of Exhibit C attached hereto, the
terms of which are incorporated and made a part of this Indenture. The Notes may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Note shall be dated
the date of its authentication. The Notes shall be issued in denominations of
$1,000 and integral multiples thereof.
The Notes will be issued (i) in global form (the "Global Note"),
substantially in the form of Exhibit A attached hereto (including the text
referred to in footnotes 1 and 2 thereto) and (ii) in definitive form (the
"Definitive Notes"), substantially in the form of Exhibit A attached hereto
(excluding the text referred to in footnotes 1 and 2 thereto). The Global Note
shall represent the aggregate amount of outstanding Notes from time to time
endorsed thereon; provided, that the aggregate amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of the Global
Note to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.6 hereof.
Section 2.2. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. If an Officer whose signature is on a Note no longer holds
that office at the time the Note is authenticated, the Note shall nevertheless
be valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Note has been authenticated under this Indenture. The form of
Trustee's certificate of authentication to be borne by the Notes shall be
substantially as set forth in Exhibit A attached hereto.
The Trustee shall, upon a Company Order, authenticate for original
issue up to $110,000,000 aggregate principal amount of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed $110,000,000
except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authenticating by the Trustee includes
authenticating by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate of the Company.
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The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Note is registered as the owner of such
Note for the purpose of receiving payment of principal of and (subject to the
provisions of this Indenture and the Notes with respect to record dates)
interest on such Note and for all other purposes whatsoever, whether or not such
Note is overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
Section 2.3. Registrar, Paying Agent and Depository.
The Company shall maintain (i) an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and (ii)
an office or agency where Notes may be presented for payment ("Paying Agent").
The Company initially appoints the Trustee as Registrar and Paying Agent. The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee of the name and address of any Agent not a party to this Indenture.
If the Company fails to appoint or maintain another entity as Registrar or
Paying Agent, the Trustee shall act as such. The Company or any of its
Subsidiaries may act as Paying Agent or Registrar, except that for purposes of
Articles Three and Eight and Sections 4.1, 4.10 and 4.14 neither the Company nor
any of its Subsidiaries shall act as Paying Agent.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which shall incorporate the provisions
of the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent.
The Company initially appoints DTC to act as Depository with respect
to the Global Notes. The Trustee shall act as custodian for the Depository with
respect to the Global Notes.
Section 2.4. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes and shall notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if
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other than the Company or a Subsidiary of the Company) shall have no further
liability for the money delivered to the Trustee. If the Company or a Subsidiary
of the Company acts as Paying Agent (subject to Section 2.3), it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
Section 2.5. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders,
including the aggregate principal amount thereof, and the Company shall
otherwise comply with TIA ss. 312(a).
Section 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes
are presented by a Holder to the Registrar with a request (1) to register the
transfer of the Definitive Notes or (2) to exchange such Definitive Notes for an
equal principal amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, that the Definitive
Notes so presented (A) have been duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing; and (B) in the case
of a Restricted Security, such request shall be accompanied by the following
additional documents:
(i) if such Restricted Security is being delivered to the Registrar
by a Holder for registration in the name of such Holder, without transfer,
a certification to that effect (in substantially the form of Exhibit B
attached hereto); or
(ii) if such Restricted Security is being transferred to a QIB in
accordance with Rule 144A or pursuant to an effective registration
statement under the Securities Act, a
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certification to that effect (in substantially the form of Exhibit B
attached hereto); or
(iii) if such Restricted Security is being transferred in reliance
on another exemption from the registration requirements of the Securities
Act, a certification to that effect (in substantially the form of Exhibit
B attached hereto) and an opinion of counsel reasonably acceptable to the
Company and the Registrar to the effect that such transfer is in
compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in a
Global Note. A Definitive Note may be exchanged for a beneficial interest in a
Global Note only upon receipt by the Trustee of a Definitive Note, duly endorsed
or accompanied by appropriate instruments of transfer, in form satisfactory to
the Trustee, together with:
(i) written instructions directing the Trustee to make an
endorsement on the Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global Note, and
(ii) if such Definitive Note is a Restricted Security, a
certification (in substantially the form of Exhibit B attached hereto) to
the effect that such Definitive Note is being transferred to a QIB in
accordance with Rule 144A;
in which case the Trustee shall cancel such Definitive Note and cause the
aggregate principal amount of Notes represented by the Global Note to be
increased accordingly. If no Global Note is then outstanding, the Company shall
issue and the Trustee shall authenticate a new Global Note in the appropriate
principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depository in accordance with this Indenture and the procedures of the
Depository therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note. Upon receipt by the Trustee of written
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transfer instructions (or such other form of instructions as is customary for
the Depository), from the Depository (or its nominee) on behalf of any Person
having a beneficial interest in a Global Note, the Trustee shall, in accordance
with the standing instructions and procedures existing between the Depository
and the Trustee, cause the aggregate principal amount of Global Notes to be
reduced accordingly and, following such reduction, the Company shall execute and
the Trustee shall authenticate and make available for delivery to the transferee
a Definitive Note in the appropriate principal amount; provided, that in the
case of a Restricted Security, such instructions shall be accompanied by the
following additional documents:
(i) if such beneficial interest is being transferred to the Person
designated by the Depository as being the beneficial owner, a
certification to that effect (in substantially the form of Exhibit B
attached hereto); or
(ii) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A or pursuant to an effective registration
statement under the Securities Act, a certification to that effect (in
substantially the form of Exhibit B attached hereto); or
(iii) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the Securities
Act, a certification to that effect (in substantially the form of Exhibit
B attached hereto) and, if the Trustee deems it appropriate, an opinion of
counsel reasonably acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the Securities Act.
Definitive Notes issued in exchange for a beneficial interest in a
Global Note shall be registered in such names and in such authorized
denominations as the Depository shall instruct the Trustee.
(e) Transfer and Exchange of Global Notes. Notwithstanding any other
provision of this Indenture, the Global Note may not be transferred as a whole
except by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository; provided, that if:
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(i) the Depository notifies the Company that the Depository is
unwilling or unable to continue as Depository and a successor Depository
is not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Notes under
this Indenture,
then the Company shall execute and the Trustee shall authenticate and make
available for delivery, Definitive Notes in an aggregate principal amount equal
to the aggregate principal amount of the Global Note in exchange for such Global
Note.
(f) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in the Global Note have either been exchanged for
Definitive Notes, redeemed, repurchased or cancelled, the Global Note shall be
returned to or retained and cancelled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in the Global Note is exchanged for
Definitive Notes, redeemed, repurchased or cancelled, the aggregate principal
amount of Notes represented by such Global Note shall be reduced accordingly and
an endorsement shall be made on such Global Note by the Trustee to reflect such
reduction.
(g) General Provisions Relating to Transfers and Exchanges. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Definitive Notes and Global Notes at the
Registrar's request. All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or Global Notes shall
be legal, valid and binding obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Notes or Global Notes surrendered upon such registration of transfer or
exchange.
No service charge shall be made to a Holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchange (without transfer to another person) pursuant to Sections
2.10, 3.7, 4.10, 4.14 and 9.5 of this Indenture).
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The Company shall not be required to (i) issue, register the
transfer of or exchange Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for redemption under
Section 3.2 hereof and ending at the close of business on the day of selection;
or (ii) register the transfer of or exchange any Note so selected for redemption
in whole or in part, except the unredeemed portion of any Note being redeemed in
part; or (iii) register the transfer of or exchange a Note between a record date
and the next succeeding interest payment date.
Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for all
purposes, and neither the Trustee, any Agent nor the Company shall be affected
by notice to the contrary.
(h) Exchange of Series A Notes for Series B Notes. The Series A
Notes may be exchanged for Series B Notes pursuant to the terms of the Exchange
Offer. The Trustee and Registrar shall make the exchange as follows:
The Company shall present the Trustee with an Officers' Certificate
certifying the following:
(A) upon issuance of the Series B Notes, the transactions
contemplated by the Exchange Offer have been consummated; and
(B) the principal amount of Series A Notes properly tendered in
the Exchange Offer that are represented by a Global Note and
the principal amount of Series A Notes properly tendered in
the Exchange Offer that are represented by Definitive Notes,
the name of each Holder of such Definitive Notes, the
principal amount at maturity properly tendered in the Exchange
Offer by each such Holder and the name and address to which
Definitive Notes for Series B Notes shall be registered and
sent for each such Holder.
The Trustee, upon receipt of (i) such Officers' Certificate, (ii) an
Opinion of Counsel (x) to the effect that the Series B Notes have been
registered under Section 5 of the Securities Act and this Indenture has been
qualified under the
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TIA and (y) with respect to the matters set forth in Section 6(p) of the
Registration Rights Agreement and (iii) a Company Order, shall authenticate (A)
a Global Note for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of Series A Notes represented by a Global Note
indicated in such Officers' Certificate as having been properly tendered and (B)
Definitive Notes representing Series B Notes registered in the names of, and in
the principal amounts indicated in such Officers' Certificate.
If the principal amount at maturity of the Global Note for the
Series B Notes is less than the principal amount at maturity of the Global Note
for the Series A Notes, the Trustee shall make an endorsement on such Global
Note for Series A Notes indicating a reduction in the principal amount at
maturity represented thereby.
The Trustee shall deliver such Definitive Notes for Series B Notes
to the Holders thereof as indicated in such Officers' Certificate.
Section 2.7. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee shall authenticate
a replacement Note if the Trustee's requirements for replacements of Notes are
met. If required by the Trustee or the Company, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent or any authenticating
agent from any loss that any of them may suffer if a Note is replaced. The
Company or the Trustee may charge for its expenses in replacing a Note.
Every replacement Note is an obligation of the Company and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance
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with the provisions hereof, and those described in this Section as not
outstanding.
If a Note is replaced pursuant to Section 2.7 hereof, the replaced
Note ceases to be outstanding unless the Trustee receives proof satisfactory to
it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
Subject to Section 2.9 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only Notes
that a Trustee knows to be so owned shall be considered as not outstanding.
Section 2.10. Temporary Notes.
Pending the preparation of definitive Notes, the Company (and the
Guarantors) may execute, and upon Company Order the Trustee shall authenticate
and make available for delivery, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company (and the Guarantors)
shall cause definitive Notes to be prepared without unreasonable delay. The
definitive Notes shall be printed, lithographed or engraved, or provided by any
combination thereof, or in any other manner permitted by the rules and
regulations of any principal national securities exchange, if any, on which the
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Notes are listed, all as determined by the Officers executing such definitive
Notes. After the preparation of definitive Notes, the temporary Notes shall be
exchangeable for definitive Notes upon surrender of the temporary Notes at the
office or agency maintained by the Company for such purpose pursuant to Section
4.2 hereof, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes, the Company (and the Guarantors) shall execute, and
the Trustee shall authenticate and make available for delivery, in exchange
therefor the same aggregate principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall retain or
destroy cancelled Notes in accordance with its normal practices (subject to the
record retention requirement of the Exchange Act) unless the Company directs
them to be returned to it. The Company may not issue new Notes to replace Notes
that have been redeemed or paid or that have been delivered to the Trustee for
cancellation. All cancelled Notes held by the Trustee shall be returned to the
Company.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, which date shall be at the earliest
practicable date but in all events at least five Business Days prior to the
payment date, in each case at the rate provided in the Notes and in Section 4.1
hereof. The Company shall, with the consent of the Trustee, fix or cause to be
fixed each such special record date and payment date. At least 15 days before
the special record date, the Company (or the Trustee, in the name of and at the
expense of the Company) shall mail to the Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
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Section 2.13. Legends.
(a) Except as permitted by subsections (b) or (c) hereof, each Note
shall bear legends relating to restrictions on transfer pursuant to the
securities laws in substantially the form set forth on Exhibit A attached
hereto.
(b) Upon any sale or transfer of a Restricted Security (including
any Restricted Security represented by a Global Note) pursuant to Rule 144 under
the Securities Act or pursuant to an effective registration statement under the
Securities Act:
(i) in the case of any Restricted Security that is a Definitive
Note, the Registrar shall permit the Holder thereof to exchange such
Restricted Security for a Definitive Note that does not bear the legends
required by subsection (a) above; and
(ii) in the case of any Restricted Security represented by a Global
Note, such Restricted Security shall not be required to bear the legends
required by subsection (a) above, but shall continue to be subject to the
provisions of Section 2.6(c) hereof; provided, that with respect to any
request for an exchange of a Restricted Security that is represented by a
Global Note for a Definitive Note that does not bear the legends required
by subsection (a) above, which request is made in reliance upon Rule 144,
the Holder thereof shall certify in writing to the Registrar that such
request is being made pursuant to Rule 144.
(c) The Company (and the Guarantors) shall issue and the Trustee
shall authenticate Series B Notes in exchange for Series A Notes accepted for
exchange in the Exchange Offer. The Series B Notes shall not bear the legends
required by subsection (a) above unless the Holder of such Series A Notes is
either (A) a broker-dealer who purchased such Series A Notes directly from the
Company to resell pursuant to Rule 144A or any other available exemption under
the Securities Act, (B) a Person participating in the distribution of the Series
A Notes or (C) a Person who is an affiliate (as defined in Rule 144A) of the
Company.
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ARTICLE 3
REDEMPTION
Section 3.1. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at
least 45 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of Section 3.7 pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
Section 3.2. Selection of Notes to Be Redeemed.
If less than all the Notes are to be redeemed, the Trustee shall
select the Notes to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed,
or, if the Notes are not so listed, pro rata, by lot or by such method as the
Trustee deems to be fair and reasonable.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice of redemption by first class mail to each Holder
whose Notes are to be redeemed at such Holder's registered address.
The notice shall identify the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Note is being redeemed in part only, the portion of
the principal amount of such Note to be
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redeemed and that, after the redemption date, upon cancellation of
the original Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such
redemption payment, interest on Notes or portions of Notes called
for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or the section of this
Indenture pursuant to which the Notes called for redemption are
being redeemed; and
(8) the CUSIP number of the Notes to be redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the name of the Company and at its expense; provided that the
Company shall deliver to the Trustee, at least 45 days (unless a shorter period
is acceptable to the Trustee) prior to the redemption date, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption has been mailed to the Holders in
accordance with Section 3.3 herein, Notes called for redemption become due and
payable on the redemption date at the redemption price. At any time prior to the
mailing of a notice of redemption to the Holders pursuant to Section 3.3, the
Company may withdraw, revoke or rescind any notice of redemption delivered to
the Trustee without any continuing obligation to redeem the Notes as
contemplated by such notice of redemption.
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Section 3.5. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit with the
Trustee (to the extent not already held by the Trustee) or with the Paying Agent
money in immediately available funds sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Trustee or
the Paying Agent shall return to the Company any money deposited with the
Trustee or the Paying Agent by the Company in excess of the amounts necessary to
pay the redemption price of, and accrued interest on, all Notes to be redeemed.
Interest on the Notes to be redeemed shall cease to accrue on the
applicable redemption date, whether or not such Notes are presented for payment,
if the Company makes or deposits the redemption payment in accordance with this
Section 3.5. If any Note called for redemption shall not be paid upon surrender
for redemption because of the failure of the Company to comply with the
preceding paragraph, interest shall be paid on the unpaid principal, from the
redemption date until such principal is paid, and to the extent lawful on any
interest not paid on such unpaid principal, in each case at the rate provided in
the Notes.
Section 3.6. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and the Trustee shall authenticate for the Holder at the expense of the
Company a new Note equal in principal amount to the unredeemed portion of the
Note surrendered.
Section 3.7. Optional Redemption.
(a) Except as set forth in Section 3.7(b), the Notes are not
redeemable at the Company's option prior to February 1, 2001. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon, if any, to the
applicable redemption date, if redeemed during the 12-month period beginning on
February 1 of the years indicated below:
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Year Percentage
---- -------------------------
2001 105.375%
2002 102.688%
2003 and thereafter 100.000%
(b) Notwithstanding the foregoing, at any time or from time to time
prior to February 1, 2000, the Company may, at its option, redeem up to
one-third of the original principal amount of the Notes, at a redemption price
of 110.75% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the applicable redemption date, with the net cash proceeds of one or
more Public Equity Offerings; provided, that (a) such redemption shall occur
within 90 days of the date of closing of such public offering and (b) at least
$73.3 million aggregate principal amount of Notes remains outstanding
immediately after giving effect to each such redemption.
ARTICLE 4
COVENANTS
Section 4.1. Payment of Notes.
The Company shall pay the principal and premium, if any, of, and
interest on, the Notes on the dates and in the manner provided in the Notes.
Principal, premium, if any, and interest shall be considered paid on the date
due if the Paying Agent, other than the Company or a Subsidiary of the Company,
holds on or before that date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal, premium,
if any, and interest then due. Such Paying Agent shall return to the Company, no
later than three Business Days following the date of payment, any money that
exceeds such amount of principal, premium, if any, and interest then due and
payable on the Notes. The Company shall pay any and all amounts, including
without limitation Liquidated Damages, if any, on the dates and in the manner
required under the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest) on
overdue installments of interest (without regard to any applicable grace period)
at the same rate to the extent lawful.
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Section 4.2. Maintenance of Office or Agency.
The Company shall maintain an office or agency (which may be an
office of the Trustee, Registrar or co-registrar) in the Borough of Manhattan,
The City of New York where Notes may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Company in respect of
the Notes and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency for such purposes. The
Company shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.3.
Section 4.3. Reports.
(a) The Company shall file with the Trustee, within 15 days after
the time of filing with the Commission, copies of the reports, information and
other documents (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
If the Company is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Commission and the Trustee all
such reports, information and other documents as it would be required to file if
it were subject to the requirements of Section 13 or 15(d) of the Exchange Act;
provided, that the Company shall not be in default of the provisions of this
Section 4.3 for any failure to file reports with the Commission solely by
refusal by the Commission to accept the same for filing. The Company shall
deliver (or
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cause the Trustee to deliver) copies of all reports, information and documents
required to be filed with the Trustee pursuant to this Section 4.3 to the
Holders at their addresses appearing in the register of Notes maintained by the
Registrar. The Company shall also comply with the provisions of TIA ss. 314(a).
(b) If the Company is required to furnish annual, quarterly or
current reports to its stockholders pursuant to the Exchange Act, the Company
shall cause any annual, quarterly, current or other financial report furnished
by it generally to its stockholders to be filed with the Trustee and mailed to
the Holders at their addresses appearing in the register of Notes maintained by
the Registrar. If the Company is not required to furnish annual, quarterly or
current reports to its stockholders pursuant to the Exchange Act, the Company
shall cause the financial statements of the Company and its consolidated
Subsidiaries (and similar financial statements for all unconsolidated
Subsidiaries, if any), including any notes thereto (and, with respect to annual
reports, an auditors' report by an accounting firm of established national
reputation), and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," comparable to that which would have been required to
appear in annual or quarterly reports filed under Section 13 or 15(d) of the
Exchange Act to be so filed with the Trustee and mailed to the Holders promptly,
but in any event, within 90 days after the end of each of the fiscal years of
the Company and within 45 days after the end of each of the first three quarters
of each such fiscal year.
(c) So long as is required for an offer or sale of the Notes to
qualify for an exemption under Rule 144A, the Company (and the Guarantors)
shall, upon request, provide the information required by clause (d)(4)
thereunder to each Holder and to each beneficial owner and prospective purchaser
of Notes identified by any Holder of Restricted Securities.
Section 4.4. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate (provided, that one of the
signatories to such Officers' Certificate shall be the Company's principal
executive officer, principal financial officer or principal accounting officer)
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to
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determine whether each has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that each of the Company and its Subsidiaries has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof or thereof (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he may have knowledge and what action each is taking or
proposes to take with respect thereto).
(b) The year-end financial statements delivered pursuant to Section
4.3 above shall be accompanied by a written statement of the independent public
accountants of the Company (which shall be a firm of established national
reputation reasonably satisfactory to the Trustee) that in making the
examination necessary for certification of such financial statements nothing has
come to their attention which would lead them to believe that either the Company
or any of its Subsidiaries has violated any provisions of this Indenture or, if
any such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) So long as any of the Notes are outstanding, the Company shall
deliver to the Trustee forthwith upon any Officer becoming aware of (i) any
Default or Event of Default or (ii) any event of default under any mortgage,
indenture or instrument referred to in Section 6.1(5) hereof, an Officers'
Certificate specifying such Default, Event of Default or other event of default
and what action the Company is taking or proposes to take with respect thereto.
Section 4.5. Taxes.
The Company shall, and shall cause its Subsidiaries to, file all tax
returns required to be filed and to pay prior to delinquency all material taxes,
assessments and governmental levies except as contested in good faith and by
appropriate proceedings and for which reserves have been established in
accordance with GAAP.
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Section 4.6. Stay, Extension and Usury Laws.
The Company (and each Guarantor) covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company and
each Guarantor (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law and covenants that it shall not,
by resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee but shall suffer and permit the execution of every
such power as though no such law has been enacted.
Section 4.7. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on
account of any Equity Interests of the Company or any of its
Subsidiaries (other than (x) dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or
(y) dividends or distributions payable to the Company or any 90%
Owned Subsidiary),
(ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interest of the Company, any Subsidiary or any other
Affiliate of the Company (other than any such Equity Interest owned
by the Company or any Wholly Owned Subsidiary),
(iii) make any principal payment on, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness of
the Company or any Guarantor that is subordinated in right of
payment to the Notes or such Guarantor's Guarantee thereof, as the
case may be, prior to any scheduled principal payment, sinking fund
payment or other payment at the stated maturity thereof,
(iv) make any Restricted Investment, or
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(v) make any payment or transfer any assets to, or on behalf
of, AETG or any of its Affiliates
(all such payments and other actions set forth in clauses (i)
through (v) above being collectively referred to as "Restricted
Payments") unless, at the time of such Restricted Payment:
(1) no Default or Event of Default has occurred and is
continuing or would occur as a consequence thereof,
(2) immediately after giving effect thereto on a pro forma
basis, the Company could incur at least $1.00 of additional
Indebtedness under Section 4.9(a) hereof, and
(3) such Restricted Payment (the value of any such payment, if
other than cash, being determined in good faith by the Board of
Directors and evidenced by a resolution set forth in an Officers'
Certificate delivered to the Trustee), together with the aggregate
of all other Restricted Payments made after the date of this
Indenture (including Restricted Payments permitted by clauses (i)
and (ii) of Section 4.7(b) and excluding Restricted Payments
permitted by the other clauses therein), is less than the sum of (x)
50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the beginning of the first
quarter commencing immediately after the Closing Date to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, 100% of such deficit), plus (y) 100% of the aggregate net
cash proceeds (or of the net cash proceeds received upon the
conversion of non-cash proceeds into cash) received by the Company
from the issuance or sale, other than to a Subsidiary, of Equity
Interests of the Company (other than Disqualified Stock) after the
date of this Indenture and on or prior to
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the time of such Restricted Payment, plus (z) 100% of the aggregate
net cash proceeds (or of the net cash proceeds received upon the
conversion of non-cash proceeds into cash) received by the Company
from the issuance or sale, other than to a Subsidiary, of any
convertible or exchangeable debt security of the Company that has
been converted or exchanged into Equity Interests of the Company
(other than Disqualified Stock) pursuant to the terms thereof after
the date of this Indenture and on or prior to the time of such
Restricted Payment (including any additional net cash proceeds
received by the Company upon such conversion or exchange).
(b) The provisions of subsection (a) above shall not prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment
would not have been prohibited by the provisions of this Indenture,
(ii) the redemption, purchase, retirement or other acquisition
of any Equity Interests of the Company or Indebtedness of the
Company or any Restricted Subsidiary in exchange for Equity
Interests of the Company (other than Disqualified Stock),
(iii) the redemption, repurchase or payoff of any Indebtedness
with proceeds of any Refinancing Indebtedness permitted to be
incurred pursuant to the provisions of Section 4.9(b)(viii) hereof,
(iv) payments by the Company to AETG pursuant to the Tax
Sharing Agreement,
(v) distributions, loans or advances to AETG in an aggregate
amount not to exceed the Permitted Amount during any fiscal year;
provided, that such amounts are used by AETG to pay ordinary
operating expenses and Management Fees pursuant to Section 5.02 of
the Stockholders' Agreement,
(vi) Permitted Affiliate Transactions or
(vii) other Restricted Payments in an aggregate amount not to
exceed $1.0 million;
provided, that with respect to clauses (v), (vi) and (vii) above, no
Default or Event of Default shall have occurred and be continuing at
the time, or shall occur as a consequence thereof.
(c) Not later than the date of making each Restricted Payment (other
than Restricted Payments contemplated by Section 4.7(b)), the Company shall
deliver to the Trustee an Officers'
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Certificate stating that such Restricted Payment is permitted, and setting forth
the basis upon which the calculations required by this Section 4.7 were
computed, which calculations may be based upon the Company's latest available
financial statements.
Section 4.8. Limitation on Restrictions on Subsidiary Dividends.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary
(a) to (1) pay dividends or make any other distributions to the
Company or any of its Restricted Subsidiaries (A) on such Restricted
Subsidiary's Capital Stock or (B) with respect to any other interest or
participation in, or measured by, such Restricted Subsidiary's profits or (2)
pay any indebtedness owed to the Company or any of its Restricted Subsidiaries,
or
(b) to make loans or advances to the Company or any of its
Restricted Subsidiaries, or
(c) to transfer any of its assets to the Company or any of its
Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by
reason of:
(i) the Revolving Credit Facility, as in effect on the Closing
Date, or any refinancings, amendments, modifications or supplements
thereof containing dividend or other payment restrictions that are
not materially more restrictive than those contained in the
Revolving Credit Facility on the Closing Date,
(ii) this Indenture, the Security Documents and the Notes,
(iii) applicable law,
(iv) restrictions with respect to a Subsidiary that was not a
Subsidiary on the Closing Date in existence at the time such Person
becomes a Subsidiary (but not created as a result of or in
anticipation of such Person
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becoming a Subsidiary); provided, that such restrictions are not
applicable to any other Person or the properties or assets of any
other Person,
(v) customary non-assignment and net worth provisions of any
contract or lease entered into in the ordinary course of business,
(vi) customary restrictions on the transfer of assets subject
to a Lien permitted under this Indenture imposed by the holder of
such Lien,
(vii) restrictions imposed by any agreement to sell assets or
Capital Stock to any Person pending the closing of such sale, and
(viii) permitted Refinancing Indebtedness (including
Indebtedness Refinancing Acquired Debt), provided, that such
restrictions contained in any agreement governing such Refinancing
Indebtedness are not materially more restrictive than those
contained in any agreements governing the Indebtedness being
Refinanced.
Section 4.9. Limitation on Incurrence of Indebtedness.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, (1) create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable with respect
to, contingently or otherwise (collectively, "incur"), any Indebtedness
(including Acquired Debt) or (2) issue any Disqualified Stock; provided, that
the Company may incur Indebtedness (including Acquired Debt or Indebtedness
incurred under the Revolving Credit Facility) or issue shares of Disqualified
Stock and any Restricted Subsidiary may incur Acquired Debt or Indebtedness
incurred under the Revolving Credit Facility, in each case if (x) no Default or
Event of Default shall have occurred and be continuing at the time of, or would
occur after giving effect on a pro forma basis to such incurrence or issuance,
and (y) the Interest Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least equal to the ratio
set forth below opposite the period in which such incurrence or issuance occurs,
determined on a pro forma basis (including a pro forma
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application of the net proceeds therefrom), as if the additional Indebtedness
(including Acquired Debt or Indebtedness incurred under the Revolving Credit
Facility) had been incurred, or the Disqualified Stock had been issued, as the
case may be, at the beginning of such four-quarter period:
Period Ending Ratio
------------- -----
February 1, 1998......................... 2.00
February 1, 1999 and thereafter.......... 2.25
; provided, that in the case of Indebtedness (other than Purchase Money
Indebtedness, Acquired Debt or Indebtedness incurred under the Revolving Credit
Facility) the Weighted Average Life to Maturity and final stated maturity of
such Indebtedness exceeds the Weighted Average Life to Maturity and final stated
maturity of the Notes.
(b) The limitations of Section 4.9(a) shall not prohibit the
incurrence of:
(i) Indebtedness under the Revolving Credit Facility,
provided, that the aggregate principal amount of Indebtedness so
incurred on any date, together with all other Indebtedness incurred
pursuant to this clause (i) and outstanding on such date, shall not
exceed $30.0 million, less any repayments thereunder pursuant to
Section 4.10 hereof,
(ii) performance bonds, appeal bonds, surety bonds, insurance
obligations or bonds and other similar bonds or obligations incurred
in the ordinary course of business,
(iii) obligations incurred to fix the interest rate on any
variable rate Indebtedness otherwise permitted by this Indenture
("Hedging Obligations"),
(iv) Indebtedness arising out of Capital Lease Obligations or
Purchase Money Obligations (collectively, "Purchase Money
Indebtedness") in an aggregate amount not to exceed $10.0 million
outstanding at any time,
(v) Indebtedness owed by (1) a Restricted Subsidiary to the
Company or to a Wholly Owned Subsidiary or (2) the Company to a
Wholly Owned Subsidiary,
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(vi) Indebtedness outstanding on the date of this Indenture,
including the Notes,
(vii) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business;
provided, that such Indebtedness is extinguished within three
Business Days of incurrence, and
(viii) Indebtedness issued in exchange for, or the proceeds of
which are contemporaneously used to extend, refinance, renew,
replace, or refund (collectively, "Refinance") Indebtedness referred
to in clause (vi) above or this clause (viii) or Indebtedness
incurred pursuant to the Interest Coverage Ratio test set forth in
Section 4.9(a) hereof ("Refinancing Indebtedness"); provided, that
(A) the principal amount of such Refinancing Indebtedness does not
exceed the principal amount of Indebtedness so Refinanced (plus the
premiums required to be paid, and the out-of-pocket expenses (other
than those payable to an Affiliate of the Company) reasonably
incurred, in connection therewith), (B) the Refinancing Indebtedness
has a final scheduled maturity that exceeds the final stated
maturity, and a Weighted Average Life to Maturity that is equal to
or greater than the Weighted Average Life to Maturity, of the
Indebtedness being Refinanced, and (C) the Refinancing Indebtedness
ranks, in right of payment, no more favorable to the Notes as the
Indebtedness being Refinanced.
Section 4.10. Limitation on Asset Sales.
The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Sale unless (i) the Company or such Restricted
Subsidiary receives consideration at the time of such Asset Sale at least equal
to the fair market value (as determined in good faith by the Board of Directors
as evidenced by a resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the Trustee) of the assets subject to such Asset Sale,
(ii) at least 85% of the consideration for such Asset Sale is in the form of
cash, Cash Equivalents or liabilities of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes or any Guarantee of the Notes) that are assumed by the transferee of such
assets (provided, that
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following such Asset Sale there is no further recourse to the Company and its
Restricted Subsidiaries with respect to such liabilities), and (iii) within 12
months of such Asset Sale, the Net Proceeds thereof are (a) invested in assets
related to the business of the Company or its Restricted Subsidiaries or (b) to
the extent not used as provided in clause (a), applied to make an offer to
purchase Notes as described below (an "Excess Proceeds Offer"); provided, that
if (x) the amount of Net Proceeds from any Asset Sale not invested pursuant to
clause (a) above is less than $5.0 million or (y) the Net Proceeds from an Asset
Sale of Collateral with respect to which the Lien thereon is subordinate to the
Lien securing obligations under the Revolving Credit Facility are used to repay
obligations under the Revolving Credit Facility, the Company shall not be
required to make an offer pursuant to clause (b). Pending the final application
of any such Net Proceeds, the Company or any Restricted Subsidiary may
temporarily reduce Indebtedness under the Revolving Credit Facility or
temporarily invest such Net Proceeds in Cash Equivalents.
The amount of Net Proceeds not invested as set forth in the
preceding clause (a) constitutes "Excess Proceeds." If the Company elects, or
becomes obligated to make an Excess Proceeds Offer, the Company shall offer to
purchase Notes having an aggregate principal amount equal to the Excess Proceeds
(the "Purchase Amount"), at a purchase price equal to 100% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to the
purchase date. The Company must commence such Excess Proceeds Offer not later
than 30 days after the expiration of the 12-month period following the Asset
Sale that produced Excess Proceeds. If the aggregate purchase price for the
Notes tendered pursuant to the Excess Proceeds Offer is less than the Excess
Proceeds, the Company and its Restricted Subsidiaries may use the portion of the
Excess Proceeds remaining after payment of such purchase price for general
corporate purposes.
Each Excess Proceeds Offer shall remain open for a period of 20
Business Days and no longer, unless a longer period is required by law (the
"Excess Proceeds Offer Period"). Promptly after the termination of the Excess
Proceeds Offer Period (the "Excess Proceeds Payment Date"), the Company shall
purchase and mail or deliver payment for the Purchase Amount for the Notes or
portions thereof tendered, pro rata or by such other method as may be required
by law, or, if less than the Purchase Amount has been tendered, all Notes
tendered pursuant to the
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Excess Proceeds Offer. The principal amount of Notes to be purchased pursuant to
an Excess Proceeds Offer may be reduced by the principal amount of Notes
acquired by the Company through purchase or redemption (other than pursuant to a
Change of Control Offer) subsequent to the date of the Asset Sale and
surrendered to the Trustee for cancellation.
Each Excess Proceeds Offer shall be conducted in compliance with all
applicable laws, including without limitation, Regulation 14E of the Exchange
Act and the rules thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.10, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.10 by virtue
thereof. The Company shall not, and shall not permit any of its Subsidiaries to,
create or suffer to exist or become effective any restriction that would impair
the ability of the Company to make an Excess Proceeds Offer upon an Asset Sale
or, if such Excess Proceeds Offer is made, to pay for the Notes tendered for
purchase.
The Company shall, no later than 30 days following the expiration of
the 12-month period following the Asset Sale that produced Excess Proceeds,
commence the Excess Proceeds Offer, if an Excess Proceeds Offer is required by
the terms of this Indenture, by mailing to the Trustee and each Holder, at such
Holder's last registered address, a notice, which shall govern the terms of the
Excess Proceeds Offer, and shall state:
(1) that the Excess Proceeds Offer is being made pursuant to
this Section 4.10, the principal amount of Notes which shall be
accepted for payment and that all Notes validly tendered shall be
accepted for payment on a pro rata basis;
(2) the purchase price and the date of purchase;
(3) that any Notes not tendered or accepted for payment
pursuant to the Excess Proceeds Offer shall continue to accrue
interest;
(4) that, unless the Company defaults in the payment of the
purchase price with respect to any Notes tendered, Notes accepted
for payment pursuant to the Excess
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Proceeds Offer shall cease to accrue interest after the Excess
Proceeds Payment Date;
(5) that Holders electing to have Notes purchased pursuant to
an Excess Proceeds Offer shall be required to surrender their Notes,
with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Company prior to the close of
business on the third Business Day immediately preceding the Excess
Proceeds Payment Date;
(6) that Holders shall be entitled to withdraw their election
if the Company receives, not later than the close of business on the
second Business Day preceding the Excess Proceeds Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes the Holder
delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased;
(7) that Holders whose Notes are purchased only in part shall
be issued Notes representing the unpurchased portion of the Notes
surrendered; provided that each Note purchased and each new Note
issued shall be in principal amount of $1,000 or whole multiples
thereof; and
(8) the instructions that Holders must follow in order to
tender their Notes.
On or before the Excess Proceeds Payment Date, the Company shall (i)
accept for payment on a pro rata basis the Notes or portions thereof tendered
pursuant to the Excess Proceeds Offer, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
accepted and (iii) deliver to the Trustee the Notes so accepted, together with
an Officers' Certificate stating that the Notes or portions thereof tendered to
the Company are accepted for payment. The Paying Agent shall promptly mail to
each Holder of Notes so accepted payment in an amount equal to the purchase
price of such Notes, and the Trustee shall promptly authenticate and mail to
such Holders new Notes equal in principal amount to any unpurchased portion of
the Note surrendered.
The Company shall make a public announcement of the results of the
Excess Proceeds Offer as soon as practicable after
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the Excess Proceeds Payment Date. For the purposes of this Section 4.10, the
Trustee shall act as the Paying Agent.
Section 4.11. Limitation on Transactions With Affiliates.
The Company shall not, and shall not permit any of the Restricted
Subsidiaries to, directly or indirectly, sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into any contract, agreement, understanding, loan, advance
or guarantee with, or for the benefit of, any Affiliate (each of the foregoing,
an "Affiliate Transaction"), except for (i) Affiliate Transactions, which
together with all Affiliate Transactions that are part of a common plan, have an
aggregate value of not more than $1.0 million; provided, that such transactions
are conducted in good faith and on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction at such time on an arm's-length basis from
a Person that is not an Affiliate of the Company or such Restricted Subsidiary,
(ii) Affiliate Transactions, which together with all Affiliate Transactions that
are part of a common plan, have an aggregate value of not more than $5.0
million; provided, that a majority of the disinterested members of the Board of
Directors of the Company determine that such transactions are conducted in good
faith and on terms that are no less favorable to the Company or the relevant
Restricted Subsidiary than those that would have been obtained in a comparable
transaction at such time on an arm's-length basis from a Person that is not an
Affiliate of the Company or such Restricted Subsidiary, (iii) Affiliate
Transactions for which the Company delivers to the Trustee an opinion as to the
fairness to the Company or such Restricted Subsidiary from a financial point of
view, issued by an investment banking firm of national standing and (iv)
Permitted Affiliate Transactions and other Restricted Payments permitted by the
provisions described in Section 4.7 hereof.
Section 4.12. Limitation on Liens.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
(a) any Lien on any asset (including, without limitation, all real, tangible or
intangible property) of the Company or any Restricted Subsidiary, whether now
owned or hereafter acquired, or on any income or profits therefrom, or assign or
convey any right to receive income therefrom, except
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(i) Liens securing Indebtedness permitted to be incurred under the Revolving
Credit Facility; provided, that the Notes are secured by a second priority
security interest in the assets subject to such Liens, (ii) Purchase Money
Liens, and (iii) Permitted Liens or (b) without limiting the foregoing, any
consensual Lien on any vehicle owned or leased by the Company or any Restricted
Subsidiary on the Closing Date (other than, in the case of any leased vehicles,
the Lien of the lessor thereof as in effect on the Closing Date).
Section 4.13. Corporate Existence.
Subject to Article 5 of this Indenture, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its respective Subsidiaries, in accordance with their
respective organizational documents (as the same may be amended from time to
time) and (ii) its (and its Subsidiaries) rights (charter and statutory),
licenses and franchises; provided, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any Subsidiary, if the Board of Directors on behalf of the
Company shall determine in good faith that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries
taken as a whole and that the loss thereof is not adverse in any material
respect to the Holders.
Section 4.14. Repurchase Upon a Change of Control.
Upon the occurrence of a Change of Control, the Company shall notify
the Trustee in writing thereof and shall make an offer to purchase all of the
Notes then outstanding as described below (the "Change of Control Offer") at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase (the "Change of
Control Payment").
The Change of Control Offer shall be made in compliance with all
applicable laws, including without limitation, Regulation 14E of the Exchange
Act and the rules thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.14, the Company shall
comply with the applicable securities laws and regulations
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and shall not be deemed to have breached its obligations under this Section 4.14
by virtue thereof.
Within 30 days following any Change of Control, the Company shall
commence the Change of Control Offer by mailing to the Trustee and each Holder a
notice, which shall govern the terms of the Change of Control Offer, and shall
state that:
(i) the Change of Control Offer is being made pursuant to this
Section 4.14 and that all Notes tendered will be accepted for
payment,
(ii) the purchase price and the purchase date, which shall be
a Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed (the "Change of Control Payment
Date"),
(iii) that any Note not tendered for payment pursuant to the
Change of Control Offer shall continue to accrue interest,
(iv) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest on the
Change of Control Payment Date,
(v) that any Holder electing to have Notes purchased pursuant
to a Change of Control Offer shall be required to surrender such
Notes, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes completed, to the Paying Agent at the
address specified in the notice prior to the close of business on
the third Business Day preceding the Change of Control Payment Date,
(vi) that any Holder shall be entitled to withdraw such
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes
such Holder delivered for purchase, and a statement that such Holder
is withdrawing his election to have such Notes purchased,
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(vii) that a Holder whose Notes are being purchased only in
part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral
multiple thereof,
(viii) the instructions that Holders must follow in order to
tender their Notes, and
(ix) the circumstances and relevant facts regarding such
Change of Control.
On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment the Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and not withdrawn, and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating that the Notes or portions thereof tendered to the Company
are accepted for payment. The Paying Agent shall promptly mail to each Holder of
Notes so accepted payment in an amount equal to the purchase price for such
Notes, and the Trustee shall authenticate and mail to each Holder a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any, provided, that each such new Note will be in principal amount of $1,000
or an integral multiple thereof.
The Company shall make a public announcement of the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date. For the purposes of this Section 4.14, the Trustee shall act as
the Paying Agent.
Section 4.15. Maintenance of Properties.
The Company shall, and shall cause each of its Subsidiaries to,
maintain their properties and assets in normal working order and condition as on
the date of this Indenture (reasonable wear and tear excepted) and make all
necessary repairs, renewals, replacements, additions, betterments and
improvements thereto, as shall be reasonably necessary for the proper conduct of
the business of the Company and its Subsidiaries taken as a whole; provided,
that nothing herein shall prevent the Company or any of its Subsidiaries from
discontinuing any
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maintenance of any such properties if such discontinuance is
desirable in the conduct of the business of the Company and its Subsidiaries
taken as a whole.
Section 4.16. Maintenance of Insurance.
The Company shall, and shall cause each of its Subsidiaries to,
maintain liability, casualty and other insurance (including self-insurance
consistent with prior practice such as insurance by the Atlantic North Casualty
Company that is a Permitted Affiliate Transaction) with responsible insurance
companies in such amounts and against such risks as is in accordance with
customary industry practice in the general areas in which the Company and its
Subsidiaries operate.
Section 4.17. Restrictions on Sale and Issuance of Subsidiary Stock.
The Company shall not sell, and shall not permit any of its
Restricted Subsidiaries to issue or sell, any shares of Capital Stock of any
Restricted Subsidiary (other than directors' qualifying shares) to any Person
other than the Company or a Wholly Owned Subsidiary; provided, that the Company
and its Restricted Subsidiaries may sell all of the Capital Stock of a
Restricted Subsidiary owned by the Company and its Restricted Subsidiaries if
the Net Proceeds from such Asset Sale are used in accordance with the provisions
of Section 4.10 of this Indenture.
Section 4.18. Line of Business.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than (a) the business conducted or
proposed to be conducted by the Company and the Restricted Subsidiaries on the
Closing Date and (b) any transportation business that is ancillary or
complementary to any business described in clause (a) above.
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ARTICLE 5
SUCCESSORS
Section 5.1. When the Company May Merge, etc.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or transfer all or substantially
all of its properties or assets (determined on a consolidated basis for the
Company and its Restricted Subsidiaries) in one or more related transactions to,
any other Person unless:
(i) the Company is the surviving Person or the Person formed
by or surviving any such consolidation or merger (if other than the
Company) or to which such transfer has been made is a corporation
organized and existing under the laws of the United States, any
state thereof or the District of Columbia,
(ii) the Person formed by or surviving any such consolidation
or merger (if other than the Company) or the Person to which such
transfer has been made assumes all the Obligations of the Company,
pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under the Notes, this Indenture, the
Security Documents and the Registration Rights Agreement,
(iii) immediately before and after such transaction, no
Default or Event of Default exists, and
(iv) the Company, or any Person formed by or surviving any
such consolidation or merger, or to which such transfer has been
made, (A) has a Consolidated Net Worth (immediately after the
transaction but prior to any purchase accounting adjustments
resulting from the transaction) not less than 90% of the
Consolidated Net Worth of the Company immediately preceding the
transaction and (B) shall be permitted, at the time of such
transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable
four-quarter period, to incur at least $1.00 of additional
Indebtedness pursuant to Section 4.9(a) hereof.
The Company shall deliver to the Trustee prior to the consummation
of any proposed transaction an Officers' Certificate to the foregoing effect, an
Opinion of Counsel, stating all
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conditions precedent to the proposed transaction provided for in this Indenture
have been complied with and a written statement from a firm of independent
public accountants of established national reputation reasonably satisfactory to
the Trustee stating that the proposed transaction complies with clause (iv).
For purposes of this Section 5.1, the transfer of all or
substantially all of the properties and assets of one or more Subsidiaries of
the Company, which properties and assets, if held by the Company instead of such
Subsidiaries, would constitute all or substantially all of the properties and
assets of the Company on a consolidated basis, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.
Section 5.2. Successor Substituted.
In the event of any transaction (other than a lease) contemplated by
Section 5.1 hereof in which the Company is not the surviving Person, the
successor formed by such consolidation or into or with which the Company is
merged or to which such transfer is made, or formed by such reorganization, as
the case may be, shall succeed to, and be substituted for, and may exercise
every right and power of, the Company, and the Company shall be discharged from
its Obligations under this Indenture, the Notes, the Security Documents and the
Registration Rights Agreement with the same effect as if such successor Person
had been named as the Company herein or therein.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any
Note when the same becomes due and payable and the Default continues
for a period of 30 days;
(2) the Company defaults in the payment of the principal (or
premium, if any) on any Note when the same becomes due and payable
at maturity, upon redemption, by acceleration, in connection with an
Excess Proceeds Offer, a Change of Control Offer or otherwise;
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(3) the Company defaults in the performance of or breaches the
provisions of Sections 4.7 or 4.9 hereof and the Default continues
for 30 days; or the Company defaults in the performance of or
breaches the provisions of Sections 4.10, 4.14 or Article 5 hereof;
(4) the Company or any Guarantor fails to comply with any of
its other agreements or covenants in, or provisions of, the Notes or
this Indenture and the Default continues for 30 days after written
notice thereof has been given to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes, such
notice to state that it is a "Notice of Default;"
(5) a default occurs under (after giving effect to any
waivers, amendments, applicable grace periods or any extension of
any maturity date) any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any Restricted
Subsidiary (or the payment of which is guaranteed by the Company or
any Restricted Subsidiary), whether such Indebtedness or guarantee
now exists or is created after the date of this Indenture, if (a)
either (i) such default results from the failure to pay principal on
such Indebtedness or (ii) as a result of such default the maturity
of such Indebtedness has been accelerated, and (b) the principal
amount of such Indebtedness, together with the principal amount of
any other such Indebtedness with respect to which such a payment
default (after the expiration of any applicable grace period or any
extension of the maturity date) has occurred, or the maturity of
which has been so accelerated, exceeds $2.5 million in the
aggregate;
(6) a final non-appealable judgment or judgments for the
payment of money (other than judgments as to which a reputable
insurance company has accepted full liability) is or are entered by
a court or courts of competent jurisdiction against the Company or
any Restricted Subsidiary and such judgment or judgments remain
undischarged, unbonded or unstayed for a period of 60 days after
entry, provided that the aggregate of all such judgments exceeds
$2.5 million;
(7) there is a breach by the Company, AETG or any Guarantor of
any provision of the Security Documents;
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(8) written assertion is made by the Company, AETG or any of
the Guarantors, of the unenforceability of their obligations under
the Indenture, the Security Documents, the Notes, or the Guarantees
to which they are a party;
(9) the Company or any Material Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
(c) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(d) makes a general assignment for the benefit of
its creditors,
(e) admits in writing its inability to pay debts as
the same become due; or
(10) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company or any Material
Subsidiary in an involuntary case,
(b) appoints a Custodian of the Company or any
Material Subsidiary or for all or substantially
all of their property,
(c) orders the liquidation of the Company, or any
Material Subsidiary, and the order or decree
remains unstayed and in effect for 60 days.
The Company shall, upon becoming aware that a Default or Event of
Default has occurred, deliver to the Trustee a statement specifying such Default
or Event of Default and what action the Company is taking or proposes to take
with respect thereto.
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Section 6.2. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (9) and (10) of Section 6.1) occurs and is continuing, the Trustee by
written notice to the Company, or the Holders of at least 25% in principal
amount of the then outstanding Notes by written notice to the Company and the
Trustee, may declare the unpaid principal of and any accrued interest on all the
Notes to be due and payable. Upon such declaration the principal and interest
shall be due and payable immediately. If an Event of Default specified in clause
(9) or (10) of Section 6.1 with respect to the Company occurs, all outstanding
Notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. At any time
after a declaration of acceleration, but before a judgment or decree for payment
of the money due has been obtained by the Trustee, the Holders of a majority in
aggregate principal amount of the Notes outstanding, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if (a) the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue interest (including any interest
accrued subsequent to an Event of Default specified in clauses (9) and (10) of
Section 6.1) on all Notes, (iii) the principal of and premium, if any, on any
Notes that have become due otherwise than by such declaration or occurrence of
acceleration and interest thereon at the rate borne by the Notes, and (iv) to
the extent that payment of such interest is lawful, interest upon overdue
interest at the rate borne by the Notes; (b) all Events of Default, other than
the non-payment of principal of and interest on the Notes that have become due
solely by such declaration or occurrence of acceleration, have been cured or
waived; and (c) the rescission would not conflict with any judgment, order or
decree of any court of competent jurisdiction.
Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy (under this Indenture or otherwise) to collect the
payment of principal or interest on the Notes to enforce the performance of any
provision of the Notes, this Indenture or the Security Documents.
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The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
Section 6.4. Waiver of Past Defaults.
Holders of a majority of the aggregate principal amount of the then
outstanding Notes by written notice to the Company and the Trustee may on behalf
of the Holders of all of the Notes (a) waive any existing Default or Event of
Default and its consequences under this Indenture except a continuing Default or
Event of Default in the payment of the principal of, or interest on, any Note or
a Default or an Event of Default with respect to any covenant or provision which
cannot be modified or amended without the consent of the Holder of each
outstanding Note affected, and/or (b) rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree if
all existing Events of Default (except nonpayment of principal or interest that
has become due solely because of the acceleration) have been cured or waived.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.5. Control by Majority.
The Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of other Holders, or that may involve the
Trustee in personal liability.
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Section 6.6. Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture or the
Notes only if:
(a) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
Section 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal and interest on the Note,
on or after the respective due dates expressed in the Note, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of the Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid on the Notes and interest on overdue
principal (and premium, if any) and, to the extent lawful,
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interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.9. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor under the Notes), their creditors or their property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders of the Notes
may be entitled to receive in such proceeding whether in liquidation or under
any plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively;
Third: without duplication, to Holders for any other Obligations
owing to the Holders under the Notes or this Indenture; and
Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.6, or a suit by Holders of more than 10% in principal
amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee.
(1) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would
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exercise or use under the circumstances in the conduct of his or her own
affairs.
(2) Except during the continuance of an Event of Default:
(a) The duties of the Trustee shall be determined solely
by the express provisions of this Indenture, and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and the Security Documents, and no others, and no implied
covenants or obligations shall be read into this Indenture against
the Trustee.
(b) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture and the Security Documents. However, the Trustee
shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture and the
Security Documents.
(3) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) This paragraph does not limit the effect of
paragraph (2) of this Section.
(b) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(c) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(4) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (1), (2) and (3) of this Section.
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(5) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee may refuse
to perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(6) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(7) The Trustee is hereby authorized to act as Collateral
Agent and, in connection therewith, to enter into the Intercreditor Agreement.
Section 7.2. Rights of Trustee.
(1) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture
or the Security Documents, any demand, request,
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direction or notice from the Company shall be sufficient if signed by an Officer
of the Company, on behalf of the Company.
(6) Except with respect to Section 4.1, the Trustee shall have
no duty to inquire as to the performance of the Company's covenants in Article 4
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.1(1), 6.1(2) and 4.1, or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained actual
knowledge.
Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
Section 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision hereof,
it shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.
Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if the
Trustee has knowledge thereof (within the meaning of Section 7.2(6)), the
Trustee shall mail to the Holders a notice of the Default or Event of Default
within 45 days after it occurs.
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Section 7.6. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall mail to the Holders a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
Commencing at the time this Indenture is qualified under the TIA, a
copy of each report at the time of its mailing to the Holders shall be filed
with the Commission and each stock exchange on which the Notes are listed. The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.7. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
parties shall agree in writing from time to time (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust). The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel, except such disbursements,
advances and expenses as may be attributable to its negligence or bad faith.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it without negligence or bad faith on its
part arising out of or in connection with the acceptance or administration of
its duties under this Indenture, except as set forth below. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. In the event that a conflict of interest or
conflicting defenses would arise in connection with the
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representation of the Company and the Trustee by the same counsel, the Trustee
may have separate counsel and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall survive
the satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence or bad
faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal of (and
premium, if any) and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(9) or (10) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
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(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a succes-
sor Trustee.
If the Trustee after written request by any Holder who has been a
Holder for at least six months fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided that all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7. Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 hereof shall continue
for the benefit of the retiring Trustee, and the Company shall pay to any such
replaced or removed Trustee all amounts owed under Section 7.7 upon such
replacement or removal.
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Section 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that shall (a) be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof or of the District of Columbia authorized under
such laws to exercise corporate trustee power, (b) be subject to supervision or
examination by Federal or state or the District of Columbia authority, and (c)
have a combined capital and surplus of at least $100,000,000 as set forth in its
most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss.ss. 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is
subject to TIA ss. 310(b); provided, however, that there shall be excluded from
the operations of TIA ss. 310(b)(1) any indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The
provisions of TIA ss. 311 shall apply to the Company, as obligor on the Notes.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except that
Section 7.7, 8.3 and 8.4 shall survive) when all outstanding Notes theretofore
authenticated and issued have been delivered (other than (i) destroyed, lost or
stolen Notes that
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have been replaced or paid and (ii) Notes for whose payment money has
theretofore been deposited in trust and thereafter repaid to the Company
pursuant to Section 8.3(b) hereof) to the Trustee for cancellation and all sums
payable by the Company hereunder have been paid. In addition, the Company may
(A) if applicable, be discharged from any and all Obligations in respect of the
Notes, other than the obligation to duly and punctually pay the principal of,
and premium, if any, and interest on the Notes, in accordance herewith, or (B)
if applicable, omit to comply with restrictive covenants, and such omission will
not be deemed to be an Event of Default if:
(1) with respect to clauses (A) and (B), the Company irrevocably
deposits in trust with the Trustee or at the option of the Trustee, with a
trustee reasonably satisfactory to the Trustee and the Company under the
terms of an irrevocable trust agreement in form and substance satisfactory
to the Trustee, money or U.S. Government Obligations sufficient (as
certified by a nationally recognized accounting firm designated by the
Company) to pay principal and interest and premium, if any, on the Notes
to maturity or redemption and each installment of interest, if any, on the
due dates thereof on the Notes, as the case may be, and to pay all other
sums payable by it hereunder, and with respect to clause (B) the
Obligations under this Indenture other than with respect to such covenants
and Events of Default which will remain in full force and effect, provided
that (i) the trustee of the irrevocable trust shall have been irrevocably
instructed to pay such money or the proceeds of such U.S. Government
Obligations to the Trustee and (ii) the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of said principal, premium, if any,
and interest with respect to the Notes;
(2) with respect to clause (A), the Company has received from, or
there has been published by, the U.S. Internal Revenue Service a ruling or
there has been a change in laws which in the opinion of independent
counsel, which the Company shall deliver to the Trustee, provides that
holders of the Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit, defeasance and discharge
and will be subject to Federal income tax on the same amount, in the same
manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred and the Notes were
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otherwise paid or redeemed in accordance with the provisions of this
Indenture;
(3) with respect to clause (B), the Company has delivered to the
Trustee an opinion of independent counsel to the effect that the holders
of the Notes will not recognize income, gain or loss for Federal income
tax purposes as a result of such deposit and defeasance and will be
subject to Federal income tax on the same amount, in the same manner and
at the same times as would have been the case if such deposit and
defeasance had not occurred and the Notes were redeemed pursuant to
Article 3 hereof without exercising the option of the Company pursuant to
this Section 8.1; and
(4) the Company delivers to the Trustee an Officers' Certificate
stating that all conditions precedent to satisfaction and discharge of
this Indenture have been complied with, and an Opinion of Counsel to the
same effect.
Then, this Indenture shall cease to be of further effect (except as provided in
this paragraph), and the Trustee, on demand of the Company, shall execute proper
instruments acknowledging confirmation of and discharge under this Indenture and
the release of the Liens created under the Security Documents. However, the
Company's Obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 4.1, 4.6, 7.7, 7.8,
8.3 and 8.4, the Guarantors' Obligations, and the Trustee's and Paying Agent's
obligations in Section 8.3 shall survive until the Notes are no longer
outstanding. Thereafter, only the Company's obligations in Section 7.7 and 8.4
and the Company's, Trustee's and Paying Agent's obligations in Section 8.3 shall
survive.
After such irrevocable deposit has been made pursuant to this
Section 8.1 and satisfaction of the other conditions set forth herein, the
Trustee upon request shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving obligations
specified above.
In order to have money available on a payment date to pay principal,
premium, if any, or interest on the Notes, the U.S. Government Obligations shall
be payable as to principal, premium, if any, or interest at least one Business
Day before such payment date in such amounts as shall provide the necessary
money. U.S. Government Obligations shall not be callable at the issuer's option.
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Section 8.2. Application of Trust Money.
The Trustee, or a trustee satisfactory to the Trustee and the
Company, shall hold in trust, money or U.S. Government Obligations deposited
with it pursuant to Section 8.1. It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal, premium, if any, and
interest on the Notes.
Section 8.3. Repayment to the Company.
(a) The Trustee and the Paying Agent shall promptly pay to the
Company upon written request any excess money or securities (as certified by an
independent public accountant reasonably acceptable to the Trustee) held by them
at any time.
(b) The Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of principal, premium, if
any, or interest that remains unclaimed for two years after the date upon which
such payment shall have become due; provided that the Company shall have either
caused notice of such payment to be mailed to each Holder entitled thereto no
less than 30 days prior to such repayment or within such period shall have
published such notice in a financial newspaper of widespread circulation
published in The City of New York, including, without limitation, The Wall
Street Journal. After payment to the Company, Holders entitled to the money must
look to the Company for payment as general creditor unless an applicable
abandoned property law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
Section 8.4. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.2 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Obligations of the Company and the Guarantors under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.1 until such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance with Section 8.2;
provided that if the Company has made any payment of inter-
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est on or principal of any Notes because of the reinstatement of its
Obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
Section 9.1. Without Consent of Holders.
The Company, the Guarantors and the Trustee may amend or supplement
this Indenture and the Notes without the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(3) to comply with Article 5 and Section 10.12 hereof;
(4) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder or thereunder of any
Holder;
(5) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the
TIA; or
(6) to release any Guarantee of the Notes permitted to be
released under Section 10.7 hereof.
Upon the request of the Company, accompanied by a resolution of the
Board of Directors of the Company authorizing the execution of any such
supplemental indenture or amendment, and upon receipt by the Trustee of the
documents described in Section 9.6 hereof required or requested by the Trustee,
the Trustee shall join with the Company in the execution of any supplemental
indenture or amendment authorized or permitted by the terms of this Indenture
and shall make any further appropriate agreements and stipulations which may be
therein contained,
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but the Trustee shall not be obligated to enter into such supplemental indenture
or amendment that affects its own rights, duties or immunities under this
Indenture or otherwise.
Section 9.2. With Consent of Holders.
Subject to Sections 6.4 and 6.7 hereof, the Company and the Trustee,
as applicable, may amend, or waive any provision of, this Indenture or the
Notes, with the written consent of the Holders of at least a majority of the
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for Notes).
Upon the request of the Company, accompanied by a resolution of the
Board of Directors of the Company authorizing the execution of any such
supplemental indenture or amendment, and upon filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders as aforesaid,
and upon receipt by the Trustee of the documents described in Section 9.6
hereof, the Trustee shall join with the Company in the execution of such
supplemental indenture or amendment unless such supplemental indenture or
amendment affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture or
amendment, but it shall be sufficient if such consent approves the substance
thereof.
After a supplemental indenture or amendment under this Section
becomes effective, the Company shall mail to the Holders of each Note affected
thereby a notice briefly describing the amendment or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture, amendment
or waiver.
Notwithstanding any other provision hereof, without the consent of
each Holder affected, an amendment or waiver under this Section may not (with
respect to any Notes held by a nonconsenting Holder):
(1) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
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(2) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(3) reduce the principal of, or the premium on, or change the
fixed maturity of any Note or alter Article 3 hereof or numbered
paragraphs 5 or 6 of Exhibit A to this Indenture or the price at
which the Company shall offer to purchase such Notes pursuant to
Sections 4.10 or 4.14 hereof;
(4) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on, or redemption
payment with respect to, any Note (other than a Default in the
payment of an amount due as a result of an acceleration if the
Holder rescinds such acceleration pursuant to Section 6.2);
(5) make any Note payable in money other than that stated in
the Notes;
(6) make any change in Section 6.4 or 6.7 hereof or in this
Section 9.2; or
(7) make any change adversely affecting the contractual
ranking of the Obligations.
Section 9.3. Compliance with Trust Indenture Act.
If, at the time of an amendment to this Indenture or the Notes, this
Indenture shall be qualified under the TIA, every amendment to this Indenture or
the Notes shall be set forth in a supplemental indenture that complies with the
TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until a supplemental indenture, an amendment or waiver becomes
effective, a consent to it by a Holder of a Note is a continuing consent by the
Holder and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. A supplemental indenture, amendment or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
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The Company may fix a record date for determining which Holders must
consent to such supplemental indenture, amendment or waiver. If the Company
fixes a record date, the record date shall be fixed at (i) the later of 30 days
prior to the first solicitation of such consent or the date of the most recent
list of Holders furnished to the Trustee prior to such solicitation pursuant to
Section 2.5, or (ii) such other date as the Company shall designate.
Section 9.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about a supplemental
indenture, amendment or waiver on any Note thereafter authenticated. The Company
in exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment or waiver.
Section 9.6. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not adversely affect
the rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive,
if requested, an indemnity reasonably satisfactory to it and to receive and,
subject to Section 7.1, shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that such amendment
or supplemental indenture is authorized or permitted by this Indenture, that it
is not inconsistent herewith, and that it shall be valid and binding upon the
Company in accordance with its terms. The Company may not sign an amendment or
supplemental indenture until the Board of Directors of the Company approves it.
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ARTICLE 10
COLLATERAL AND SECURITY AND GUARANTY
Section 10.1. Collateral Documents.
The due and punctual payment of the principal and premium, if any,
of, and interest on, the Notes when and as the same shall be due and payable,
whether on an interest payment date, at maturity, by acceleration, repurchase,
redemption or otherwise, interest on the overdue principal of and interest (to
the extent permitted by law), if any, on the Notes and performance of all other
Obligations, shall be secured as provided in the Security Documents.
The Company shall, and shall cause each of its Restricted
Subsidiaries to, do or cause to be done all such acts and things as may be
necessary or proper, or as may be required by the provisions of the Security
Documents, to assure and confirm to the Collateral Agent the security interest
in the Collateral contemplated hereby and by the Security Documents, as from
time to time constituted, so as to render the same available for the security
and benefit of this Indenture and of the Notes secured hereby, according to the
intent and purposes herein and therein expressed. The Company shall, and shall
cause each of its Restricted Subsidiaries to, take, upon request of the Trustee
or the Collateral Agent, any and all actions required to cause the Security
Documents to create and maintain, as security for the Obligations, valid and
enforceable, perfected (except as expressly provided herein or therein), Liens
in and on all the Collateral, in favor of the Collateral Agent, superior to and
prior to the rights of all third Persons, and subject to no other Liens, other
than as provided herein and therein.
Section 10.2. Opinions.
The Company shall furnish to the Trustee within three months after
each anniversary of the Closing Date, an Opinion of Counsel, dated as of such
date, stating either that (i) in the opinion of such counsel, all action has
been taken with respect to the recording, registering, filing, re-recording,
re-registering and refiling of all supplemental indentures, financing
statements, continuation statements or other instruments of further assurance as
is necessary to maintain the Liens of the Security Documents and reciting the
details of such action or (ii) in the opinion of such Counsel, no such action is
necessary to maintain such Liens, which Opinion of Counsel also
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shall state what actions it then believes are necessary to maintain the
effectiveness of such liens during the next two years.
Section 10.3. Release of Collateral.
(a) Unless a Default or Event of Default shall have occurred and be
continuing, Collateral shall be released from the Liens created by the Security
Documents from time to time at the sole cost and expense of the Company:
(i) upon payment in full of the Notes and all other Obligations then
due and owing, or
(ii) upon the sale or other disposition of such Collateral pursuant
to an Asset Sale made in accordance with Section 4.10 hereof,
; provided, that the Trustee shall not release any Lien on any Collateral unless
and until it shall have received an Officers' Certificate certifying that all
conditions precedent hereunder have been met and such other documents required
by Section 10.4 hereof. Upon compliance with the above provisions, the Trustee
shall execute, deliver or acknowledge any necessary or proper instruments of
termination, satisfaction or release to evidence the release of any Collateral
permitted to be released pursuant to this Indenture or the Security Documents.
(b) The disposition of Inventory or Accounts in the ordinary course
of business may be made without delivery to the Trustee of certificates required
by TIA ss. 314(d).
(c) The release of any Collateral from the terms of the Security
Documents shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof and of the Security Documents if and to
the extent the Collateral is released pursuant to the terms of this Indenture
and the Security Documents.
Section 10.4. Certificates of the Company.
The Company shall furnish to the Trustee prior to each proposed
release of Collateral other than by reason of transactions referred to in
Section 10.3(b), all documents required by TIA ss. 314(d). The Trustee may, to
the extent permitted by Sections 7.1 and 7.2 hereof, accept as conclusive
evidence of compliance with the foregoing provisions the appropriate
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statements contained in such instruments. Any certificate or opinion required by
TIA ss. 314(d) may be made by an Officer of the Company except in cases where
TIA ss. 314(d) requires that such certificate or opinion be made by an
independent engineer, appraiser or other expert within the meaning of TIA ss.
314(d).
Section 10.5. Authorization of Actions to be Taken by the Trustee Under the
Security Documents.
The Trustee may, in its sole discretion and without the consent of
the Holders, on behalf of the Holders, take all actions it deems necessary or
appropriate in order to (a) enforce any of the terms of the Security Documents
and (b) collect and receive any and all amounts payable in respect of the
Obligations of the Company and the Guarantors hereunder. The Trustee shall have
the power to institute and to maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Collateral by any acts that may be
unlawful or in violation of the Security Documents or this Indenture, and such
suits and proceedings as the Trustee may deem expedient to preserve or protect
its interest and the interests of the Holders in the Collateral (including power
to institute and maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders or the
Trustee).
Section 10.6. Authorization of Receipt of Funds by the Trustee Under the
Security Documents.
The Trustee is authorized to receive any funds for the benefit of
the Holders distributed under the Security Documents, and to make further
distributions of such funds to the Holders according to the provisions of this
Indenture and the Security Documents.
Section 10.7. Guaranty.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, subject to Section 10.9 hereof, each Guarantor,
jointly and severally, hereby unconditionally guarantees (such guarantees,
together with further guarantees granted from time to time pursuant to Section
10.12, being the "Guaranty") to each Holder, the Trustee and the
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Collateral Agent, irrespective of the validity or enforceability of this
Indenture, the Notes, the Security Documents or the Obligations hereunder or
thereunder: (i) the due and punctual payment of the principal and premium, if
any, of, and interest on, the Notes (including, without limitation, interest
after the filing of a petition initiating any proceedings referred to in clause
(9) or (10) of Section 6.1 hereof), whether at maturity or on an interest
payment date, by acceleration, call for redemption or otherwise; (ii) the due
and punctual payment of interest on the overdue principal and premium, if any,
of, and interest on, the Notes, if lawful; (iii) the due and punctual payment
and performance of all other Obligations, all in accordance with the terms set
forth herein and in the Notes and the Security Documents; and (iv) in case of
any extension of time of payment or renewal of any Notes or any of such other
Obligations, the due and punctual payment or performance thereof in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.
Failing payment when due by the Company of any amount so guaranteed
for whatever reason, the Guarantors shall be jointly and severally obligated to
pay the same immediately.
Each Guarantor hereby agrees that (i) its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes, this Indenture, the Security Documents or the
Obligations hereunder or thereunder, the absence of any action to enforce the
same, any waiver or consent by any Holder with respect to any provisions hereof
or thereof, any releases of Collateral, any amendment of the Indenture, the
Notes or Security Documents, any delays in obtaining or realizing upon or
failures to obtain or realize upon Collateral, the recovery of any judgment
against the Company or any of its Subsidiaries, any action to enforce the same,
or any other circumstance that might otherwise constitute a legal or equitable
discharge or defense of a guarantor and (ii) this Guaranty will not be
discharged except by complete performance of the Obligations.
Each Guarantor hereby agrees that it shall not be entitled to and
irrevocably waives (i) diligence, presentment, demand of payment, filing of
claim with a court in the event of insolvency or bankruptcy of the Company, any
Guarantor, any other Subsidiary of the Company or any other
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obligor under the Notes, any right to require a proceeding first against the
Company, any Guarantor, any other Subsidiary of the Company or any other obligor
under this Indenture, the Notes or the Security Documents, protest, notice and
all demands whatsoever, (ii) any right of subrogation, reimbursement,
exoneration, contribution or indemnification in respect of any Obligations
guaranteed hereby and (iii) any claim or other rights that it may now or
hereafter acquire against the Company or any of its Subsidiaries that arise from
the existence or performance of its Obligations under this Guaranty, including,
without limitation, any right to participate in any claim or remedy of a Holder
against the Company or any of its Subsidiaries or any Collateral that a Holder
now has or hereafter acquires, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, by any payment made
hereunder or otherwise, and including, without limitation, the right to take or
receive from the Company or any of its Subsidiaries, directly or indirectly, in
cash or other property, by setoff or in any other manner, payment or security on
account of such claim or other rights.
If any Holder or the Trustee is required by any court or otherwise
to return to the Company, any Guarantor, any other Subsidiary of the Company or
any other obligor under this Indenture, the Notes or the Security Documents,
trustee, liquidator, or other similar official, any amount paid by the Company,
any Guarantor, any other Subsidiary of the Company or any other obligor under
this Indenture, the Notes or the Security Documents to the Trustee or such
Holder, this Guaranty, to the extent theretofore discharged, shall be reinstated
in full force and effect.
Each Guarantor agrees that, as between the Guarantors, on the one
hand, and the Holders and the Trustee, on the other hand, (i) the maturity of
the Obligations guaranteed hereby may be accelerated as provided in Section 6.2
for the purposes of this Guaranty, notwithstanding any stay, injunction or other
prohibition preventing such acceleration as to the Company of the Obligations
guaranteed hereby, and (ii) in the event of any declaration of acceleration of
those Obligations as provided in Section 6.2, those Obligations (whether or not
due and payable) will forthwith become due and payable by each of the Guarantors
for the purpose of this Guaranty.
Section 10.8. Execution and Delivery of Guaranty.
To evidence the Guaranty set forth in Section 10.7, the Company and
each Guarantor hereby agrees that (a) a notation of such Guaranty substantially
as set forth on Exhibit C hereto
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shall be endorsed on each Note authenticated and delivered by the Trustee such
endorsement shall be executed on behalf of each Guarantor by its Chairman of the
Board, President, Chief Financial Officer, Chief Operating Officer, Treasurer,
Secretary or any Vice President and (b) a counterpart signature page to this
Indenture shall be executed on behalf of each Guarantor by its Chairman of the
Board, President or one of its Vice Presidents and attested to by another
officer acknowledging such Guarantor's agreement to be bound by the provisions
hereof and thereof.
Each Guarantor hereby agrees that its Guaranty set forth in Section
10.7 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guaranty.
If an officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates the Notes on which a Guaranty
is endorsed, the Guaranty shall nevertheless be valid.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty set forth in
this Indenture on behalf of the Guarantor.
Section 10.9. Limitation on Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guaranty not constitute a fraudulent transfer or
conveyance for purposes of any Federal or state law. To effectuate the foregoing
intention, the Holders and the Guarantors hereby irrevocably agree that the
obligations of each Guarantor under its Guaranty shall be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor and to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guaranty, result in the Obligations of such Guarantor under
the Guaranty not constituting a fraudulent conveyance or fraudulent transfer
under Federal or state law.
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Section 10.10. Rights under the Guaranty.
(a) No payment by any Guarantor pursuant to the provisions hereof
shall entitle such Guarantor to any payment out of any Collateral or give rise
to any claim of the Guarantors against the Trustee or any Holder.
(b) Each Guarantor waives notice of the issuance, sale and purchase
of the Notes and notice from the Trustee or the Holders from time to time of any
of the Notes of their acceptance and reliance on this Guaranty.
(c) No set-off, counterclaim, reduction or diminution of any
obligation or any defense of any kind or nature (other than performance by the
Guarantors of their obligations hereunder) that any Guarantor may have or assert
against the Trustee or any Holder shall be available hereunder to such
Guarantor.
(d) Each Guarantor shall pay all costs, expenses and fees, including
all reasonable attorneys' fees, that may be incurred by the Trustee in enforcing
or attempting to enforce the Guaranty or protecting the rights of the Trustee or
the Holder, if any, in accordance with this Indenture.
Section 10.11. Primary Obligations.
The Obligations of each Guarantor hereunder shall constitute a
guaranty of payment and not of collection. Each Guarantor agrees that it is
directly liable to each Holder hereunder, that the Obligations of each Guarantor
hereunder are independent of the Obligations of the Company or any other
Guarantor, and that a separate action may be brought against each Guarantor,
whether such action is brought against the Company or any other Guarantor or
whether the Company or any other Guarantor is joined in such action. Each
Guarantor agrees that its liability hereunder shall be immediate and shall not
be contingent upon the exercise or enforcement by the Trustee or the Holders of
whatever remedies they may have against the Company or any other Guarantor, or
the enforcement of any lien or realization upon any security Trustee may at any
time possess. Each Guarantor agrees that any release that may be given by the
Trustee or the Holders to the Company or any other Guarantor shall not release
such Guarantor.
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Section 10.12. Guarantee by Subsidiary.
(a) The Company shall cause each Restricted Subsidiary that is
formed or acquired after the date hereof or that otherwise becomes a Restricted
Subsidiary after the date hereof, in each case concurrently therewith, to (i)
become a Guarantor hereunder and execute and deliver to the Trustee a Guaranty
in the form of Exhibit C attached hereto and a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which such Restricted
Subsidiary shall unconditionally guarantee all of the Company's Obligations as
set forth in Section 10.7 of this Indenture; and (ii) execute a Security
Agreement (substantially in the form of the Security Agreement entered into on
the Closing Date) and other Security Documents necessary or reasonably requested
by the Trustee to grant the Trustee a valid, enforceable, perfected Lien on the
Collateral described therein, subject only to Liens permitted under Section
4.12; and (iii) cause such Restricted Subsidiary to deliver to the Trustee an
Opinion of Counsel, in form reasonably satisfactory to the Trustee, that (i)
such Security Agreement, supplemental indenture and Guaranty have been duly
authorized, executed and delivered by such Restricted Subsidiary and (ii) such
Security Agreement, this Indenture and such Guaranty constitute a legal, valid,
binding and enforceable obligation of such Restricted Subsidiary, subject to
customary exceptions for bankruptcy, fraudulent transfer and equitable
principles.
Each Note issued after the date of execution by any Guarantor of a
Guaranty shall be endorsed with a form of Guaranty that has been executed by
such Guarantor. However, the failure of any Note to have endorsed thereon a
Guaranty executed by such Guarantor shall not affect the validity or
enforceability of such Guaranty against such Guarantor.
Section 10.13. Release of Guarantors.
If all of the Capital Stock of any Guarantor is sold to a Person
(other than the Company or any of its Restricted Subsidiaries) and the Net
Proceeds from such Asset Sale are used in accordance with Section 4.10, then
such Guarantor will be released and discharged from all of its obligations under
its Guarantee of the Notes and this Indenture.
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ARTICLE 11
MISCELLANEOUS
Section 11.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
Section 11.2. Notices.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by
first-class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' addresses:
If to the Company:
Atlantic Express Transportation Corp.
7 North Street
Staten Island, New York 10302
Attention: Chief Executive Officer
Telecopier No.: (718) 442-7000
If to the Trustee:
The Bank of New York
101 Barclay Street -- 21W
New York, New York 10286
Attention: Corporate Trust Administration
Telecopier No.: (212) 815-5917
The Company or the Trustee by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; upon receipt, if deposited in the mail, postage prepaid;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
the next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery. All
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notices and communications to the Trustee shall be deemed to have been duly
given only if actually received by the Trustee.
Any notice or communication to a Holder shall be mailed by
first-class mail, certified or registered, return receipt requested, to his
address shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
If a notice communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.3. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other person shall have the
protection of TIA ss. 312(c).
Section 11.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.5) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.5) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
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Section 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with,
provided that with respect to matters of fact, an Opinion of Counsel may rely
upon an Officers' Certificate or a certificate of a public official.
Section 11.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.7. Legal Holidays.
If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
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Section 11.8. No Recourse Against Others.
No director, officer, employee, incorporator, stockholder or
controlling person of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or any Guarantor under the Notes,
this Indenture or the Registration Rights Agreement or for any claim based on,
in respect of, or by reason of such obligations or their creation. Each Holder
by accepting a Note waives and releases all such liability. The waiver and
release shall be part of the consideration for the issuance of the Notes and the
Guarantees. Notwithstanding the foregoing, nothing in this provision shall be
construed as a waiver or release of any claims under the Federal securities
laws.
Section 11.9. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS OF THE
PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF
THE AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS
ADDRESS SET FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
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Section 11.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 11.11. Successors.
All agreements of the Company and any Guarantors in this Indenture
and the Notes shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successor.
Section 11.12. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.13. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.14. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Indenture as of the date first written above.
ATLANTIC EXPRESS
TRANSPORTATION CORP.
Attest: By: /s/ DOMENIC GATTO
________________________________
Name: DOMENIC GATTO
Title: PRESIDENT AND CHIEF FINANCIAL OFFICER
/s/ NATHAN SCHLENKER
________________________________
Name: NATHAN SCHLENKER
Title: CHIEF FINANCIAL OFFICER
GUARANTORS
AMBOY BUS CO., INC. COURTESY BUS CO., INC.
By: /s/NATHAN SCHLENKER By: /s/ DOMENIC GATTO
________________________________ ________________________________
Name: NATHAN SCHLENKER Name: DOMENIC GATTO
________________________________ ________________________________
Title: CHIEF FINANCIAL OFFICER
Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
________________________________ ________________________________
STATEN ISLAND BUS, INC. K. CORR, INC.
By: /s/ NATHAN SCHLENKER By: /s/ DOMENIC GATTO
________________________________ ________________________________
Name: NATHAN SCHLENKER Name: DOMENIC GATTO
________________________________ ________________________________
Title: CHIEF FINANCIAL OFFICER
Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
________________________________ ________________________________
RAYBERN CAPITAL CORP. RAYBERN EQUITY CORP.
By: /s/ NATHAN SCHLENKER By: /s/ DOMENIC GATTO
________________________________ ________________________________
Name: NATHAN SCHLENKER Name: DOMENIC GATTO
________________________________ ________________________________
<PAGE>
Title: CHIEF FINANCIAL OFFICER
Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
________________________________ ________________________________
METROPOLITAN ESCORT SERVICE, METRO AFFILIATES, INC.
INC.
By: /s/ DOMENIC GATTO
By: /s/ NATHAN SCHLENKER ________________________________
________________________________ Name: DOMENIC GATTO
Name: NATHAN SCHLENKER ________________________________
________________________________ Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
Title: CHIEF FINANCIAL OFFICER
________________________________
________________________________
MERIT TRANSPORTATION CORP. MIDWAY LEASING INC.
By: /s/ NATHAN SCHLENKER By: /s/ DOMENIC GATTO
________________________________ ________________________________
Name: NATHAN SCHLENKER Name: DOMENIC GATTO
________________________________ ________________________________
Title: CHIEF FINANCIAL OFFICER
Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
________________________________ ________________________________
TEMPORARY TRANSIT SERVICE, BROOKFIELD TRANSIT INC.
INC.
By: /s/ DOMENIC GATTO
By: /s/ NATHAN SCHLENKER ________________________________
________________________________ Name: DOMENIC GATTO
Name: NATHAN SCHLENKER ________________________________
________________________________ Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
Title: CHIEF FINANCIAL OFFICER
________________________________
________________________________
ATLANTIC-HUDSON, INC. ATLANTIC PARATRANS, INC.
By: /s/ NATHAN SCHLENKER By: /s/ DOMENIC GATTO
________________________________ ________________________________
Name: NATHAN SCHLENKER Name: DOMENIC GATTO
_______________________________ ________________________________
Title: CHIEF FINANCIAL OFFICER
Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
________________________________ ________________________________
180 JAMAICA CORP. BLOCK 7932, INC.
<PAGE>
By:/s/ NATHAN SCHLENKER By: /s/ DOMENIC GATTO
________________________________ ________________________________
Name: NATHAN SCHLENKER Name: DOMENIC GATTO
________________________________ ________________________________
Title: CHIEF FINANCIAL OFFICER
Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
________________________________ ________________________________
<PAGE>
ATLANTIC EXPRESS COACHWAYS, ATLANTIC-CONN. TRANSIT, INC.
INC.
By: /s/ DOMENIC GATTO
By:/s/ NATHAN SCHLENKER ________________________________
________________________________ Name: DOMENIC GATTO
Name: NATHAN SCHLENKER ________________________________
________________________________ Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
Title: CHIEF FINANCIAL OFFICER
________________________________
________________________________
ATLANTIC EXPRESS OF ATLANTIC EXPRESS OF MISSOURI
PENNSYLVANIA, INC. INC.
By:/s/ NATHAN SCHLENKER By: /s/ DOMENIC GATTO
________________________________ ________________________________
Name: NATHAN SCHLENKER Name: DOMENIC GATTO
________________________________ ________________________________
Title: CHIEF FINANCIAL OFFICER
Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
________________________________ ________________________________
ATLANTIC PARATRANS OF RAYBERN BUS SERVICE, INC.
KENTUCKY INC.
By:/s/ NATHAN SCHLENKER By: /s/ DOMENIC GATTO
________________________________ ________________________________
Name: NATHAN SCHLENKER Name: DOMENIC GATTO
________________________________ ________________________________
Title: CHIEF FINANCIAL OFFICER
Title: PRESIDENT AND CHIEF FINANCIAL
OFFICER
________________________________ ________________________________
G.V.D. LEASING CO., INC.
By:/s/ NATHAN SCHLENKER
________________________________
Name: NATHAN SCHLENKER
________________________________
Title: CHIEF FINANCIAL OFFICER
________________________________
<PAGE> THE BANK OF NEW YORK, as
Trustee
Attest:
By: /s/ STEPHEN J. GIURLANDO
_______________________
Name: STEPHEN J. GIURLANDO
Title: ASSISTANT VICE PRESIDENT
/s/ WALTER N. GITLIN
________________________________
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
<PAGE>
EXHIBIT A
(Face of Security)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST
COMPANY (THE "DEPOSITORY") TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.(1)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE WHICH IS THREE YEARS (OR SUCH
SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE 144(K) AS PERMITTING
RESALES BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT RESTRICTION) AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF SUCH NOTE) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR IN OFFSHORE TRANSACTIONS AND
WITHOUT DIRECTED SELLING EFFORTS WITHIN THE MEANINGS OF OF SUCH TERMS AS DEFINED
IN REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS PURCHASING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE.
- --------
(1) This paragraph should be included only if the Note is issued in global
form.
A-1
<PAGE>
ATLANTIC EXPRESS TRANSPORTATION CORP.
10-3/4% SENIOR SECURED NOTE
DUE 2004
No. $___________
CUSIP NO.
Atlantic Express Transportation Corp., a New York corporation (the
"Company"), as obligor, for value received promises to pay to ______________ or
registered assigns, the principal sum of __________ Dollars on February 1, 2004.
Interest Payment Dates: February 1 and August 1 and on the maturity date. Record
Dates: January 15 and July 15 (whether or not a Business Day).
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated:
ATLANTIC EXPRESS TRANSPORTATION CORP.
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
Trustee's Certificate of Authentication:
This is one of the Notes referred to
in the within-mentioned Indenture:
THE BANK OF NEW YORK, as Trustee
By:______________________________
Authorized Signature
A-2
<PAGE>
(Back of Security)
10-3/4% SENIOR SECURED NOTE
DUE 2004
1. Interest. Atlantic Express Transportation Corp., a New York
corporation (the "Company"), as obligor, promises to pay interest on the
principal amount of this Note at the rate and in the manner specified below.
The Company shall pay, in cash, interest on the principal amount of
this Note, at the rate of 10-3/4% per annum. The Company shall pay interest
semi-annually on February 1 and August 1 of each year, and on the maturity date,
commencing on August 1, 1997, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date").
Interest shall be computed on the basis of a 360-day year consisting
of twelve 30-day months. Interest shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from February 4,
1997. To the extent lawful, the Company shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at the
same rate.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are cancelled after such record date and on or before
such Interest Payment Date. The Holder must surrender this Note to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company, however, may pay
principal and interest by check to a Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee shall act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-registrar without notice to any Holder. Subject to certain exceptions, the
Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
as of February 4, 1997 (the "Indenture") among the Company, the Guarantors named
therein and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (the "TIA") (15 U.S. Code ss.ss. 77aaa-77bbbb) as in
effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA and thereafter as in effect on the date the Indenture is
so qualified. The Notes are subject to all such terms, and Holders are referred
to the Indenture and such act for a statement of such terms. The terms of the
Indenture shall govern any inconsistencies between the Indenture and the Notes.
Terms not otherwise defined herein shall have the meanings assigned in the
Indenture. The Notes are limited to $110,000,000 in aggregate principal amount.
The Obligations under the Indenture, the Notes and the Guarantee
thereof are secured by the Collateral described in the Security and Pledge
Agreement (the "Security Agreement"), dated as of February 4, 1997, among
Atlantic Express Transportation Group Inc., the Company, certain of its
subsidiaries party thereto and The Bank of New York, as Trustee and
A-3
<PAGE>
Secured Party, subject to the provisions of such agreement. Holders are referred
to the Security Agreement for a statement of such terms.
5. Optional Redemption. The Notes are not redeemable at the
Company's option prior to February 1, 2001. Thereafter, the Notes will be
subject to redemption at the option of the Company, in whole or in part, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon, if any, to the applicable redemption
date, if redeemed during the 12-month period beginning on November 15 of the
years indicated below:
Year Percentage
---- ----------
2001....................... 105.375%
2002....................... 102.688%
2003 and thereafter........ 100.000%
Notwithstanding the foregoing, at any time or from time to time
prior to February 1, 2000, the Company may, at its option, redeem up to
one-third of the original principal amount of the Notes, at a redemption price
of 110.75% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the applicable redemption date, with the net cash proceeds of one or
more Public Equity Offerings; provided, that (a) such redemption shall occur
within 90 days of the date of closing of such public offering and (b) at least
$73.3 million aggregate principal amount of Notes remains outstanding
immediately after giving effect to each such redemption.
6. Mandatory Redemption. There shall be no mandatory redemption of
the Notes.
7. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar and the Company need not exchange
or register the transfer (i) of any Note or portion of a Note selected for
redemption or (ii) of any Notes for a period of 15 days before a selection of
Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes, subject to the provisions of the
Indenture with respect to the record dates for the payment of interest.
9. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing Default or Event of Default (except certain payment
defaults) may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for Notes). Without the consent
of any Holders, the Indenture and the Notes may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for assumption of the
Company's obligations to the Holders in the case of a merger or consolidation,
to
A-4
<PAGE>
provide for uncertificated Notes in addition to or in place of certificated
Notes, to make any change that would provide any additional rights or benefits
to the Holders of the Notes, or that does not adversely affect the legal rights
under the Indenture of any Holder, to release any Guarantee of the Notes
permitted to be released under the terms of the Indenture or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.
10. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare by written notice to the Company and the
Trustee all the Notes to be due and payable immediately, except that in the case
of an Event of Default arising from certain events of bankruptcy or insolvency,
all outstanding Notes become due and payable immediately without further action
or notice. Holders may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Company must furnish an
annual compliance certificate to the Trustee.
11. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not Trustee.
12. No Recourse Against Others. No director, officer, employee,
incorporator, stockholder or controlling person of the Company or Guarantor, as
such, shall have any liability for any obligations of the Company or any
Guarantor under the Notes, the Indenture or the Registration Rights Agreement or
for any claim based on, in respect of, or by reason of such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes and the Guarantees. Notwithstanding the foregoing, nothing in this
provision shall be construed as a waiver or release of any claims under the
Federal securities laws.
13. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
14. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
15. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.(1)
- --------
(1) This paragraph should be included only if the Note is issued in global
form.
A-5
<PAGE>
16. Holders' Compliance with Registration Rights Agreement. Each
Holder of a Note, by his acceptance thereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, dated as of February 4, 1997,
among the Company and the parties named on the signature page thereof (the
"Registration Rights Agreement"), including but not limited to the obligations
of the Holders with respect to a registration and the indemnification of the
Company and the Purchasers (as defined therein) to the extent provided therein.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to: Atlantic Express Transportation Corp., 7
North Street, Staten Island, New York 10302, Attention: Chief Executive Officer.
A-6
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
_____________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint______________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
_____________________________________________________________________
Date:____________________
Your Signature:____________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*
- ----------------
* NOTICE: The signature must be guaranteed by an institution
which is a member of one of the following recog-
nized signature guarantee programs:
(1) The Securities Transfer Agent Medallian Pro-
gram (STAMP);
(2) The New York Stock Exchange Medallian Program
(MSP);
(3) The Stock Exchange Medallian Program (SEMP).
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, as the case
may be, state the amount you elect to have purchased (if all, write "ALL"):
$______________
Date:__________________________
Your Signature:_________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*
- --------------
* NOTICE: The signature must be guaranteed by an institution
which is a member of one of the following recog-
nized signature guarantee programs:
(1) The Securities Transfer Agent Medallian Pro-
gram (STAMP);
(2) The New York Stock Exchange Medallian Program
(MSP);
(3) The Stock Exchange Medallian Program (SEMP).
A-8
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES(2)
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of autho-
Amount of decrease in Amount of increase in Global Note following rized signatory of Trust-
Principal Amount of this Principal Amount of this such decrease (or in- ee
Date of Exchange Global Note Global Note crease)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
(2) This should be included only if the Note is issued in global form.
A-9
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: [Series A] [Series B] 10-3/4% Senior Notes due 2004 (the "Notes") of
Atlantic Express Transportation Corp.
This Certificate relates to $______ principal amount of Notes held in *
|_| book-entry or * |_| definitive form by _______________________ (the
"Transferor").
The Transferor, by written order, has requested the Trustee:
|_| to deliver in exchange for its beneficial interest in the Global Note held
by the depository, a Note or Notes in definitive, registered form of
authorized denominations and an aggregate principal amount equal to its
beneficial interest in such Global Note (or the portion thereof indicated
above); or
|_| to exchange or register the transfer of a Note or Notes. In connection
with such request and in respect of each such Note, the Transferor does
hereby certify that Transferor is familiar with the Indenture relating to
the above captioned Notes and, the transfer of this Note does not require
registration under the Securities Act of 1933, as amended (the "Securities
Act") because such Note:
|_| is being acquired for the Transferor's own account, without transfer;
|_| is being transferred pursuant to an effective registration statement;
|_| is being transferred to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act), in reliance on such Rule 144A;
|_| is being transferred pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act;**
|_| is being transferred pursuant to Rule 144 under the Securities Act;** or
|_| is being transferred pursuant to another exemption from the registration
requirements of the Securities Act (explain: _____________________________
____________________________________________________________________________).**
___________________________________
[INSERT NAME OF TRANSFEROR]
By:_______________________________
Date:_____________________
* Check applicable box.
** If this box is checked, this certificate must be accompanied by an
opinion of counsel to the effect that such transfer is in compliance
with the Securities Act.
B-1
<PAGE>
EXHIBIT C
[FORM OF GUARANTY]
GUARANTY
For good and valuable consideration received from the Company by the
undersigned (hereinafter referred to as the "Guarantors," which term
includes any successor or additional Guarantors), the receipt and
sufficiency of which is hereby acknowledged, subject to Section 10.4 of
the Indenture, each Guarantor, jointly and severally, hereby
unconditionally guarantees, irrespective of the validity or enforceability
of the Indenture, the Notes, the Security Documents or the Obligations,
(a) the due and punctual payment of the principal and premium, if any, of
and interest on the Notes (including, without limitation, interest after
the filing of a petition initiating any proceedings referred to in
Sections 6.1(9) or (10) of the Indenture), whether at maturity or on an
interest payment date, by acceleration, call for redemption or otherwise,
(b) the due and punctual payment of interest on the overdue principal and
premium, if any, of and interest, if any, on the Notes, if lawful, (c) the
due and punctual payment and performance of all other Obligations, all in
accordance with the terms set forth in the Indenture, the Notes and the
Security Documents, and (d) in case of any extension of time of payment or
renewal of any Notes or any of such other Obligations, the due and
punctual payment or performance thereof in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise.
No director, officer, employee, incorporator, stockholder or
controlling person of the Guarantor, as such, shall have any liability
under this Guaranty for any obligations of the Guarantor under the Notes,
the Indenture or the Registration Rights Agreement or for any claim based
on, in respect of, or by reason of, such obligations or their creation.
Each Holder of the Notes by accepting a Note waives and releases all such
liability.
AMBOY BUS CO., INC. COURTESY BUS CO., INC.
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
STATEN ISLAND BUS, INC. K. CORR, INC.
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
RAYBERN CAPITAL CORP. RAYBERN EQUITY CORP.
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
METROPOLITAN ESCORT SERVICE, INC. METRO AFFILIATES, INC.
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
C-1
<PAGE>
MERIT TRANSPORTATION CORP. MIDWAY LEASING INC.
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
TEMPORARY TRANSIT SERVICE, INC. BROOKFIELD TRANSIT INC.
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
ATLANTIC-HUDSON, INC. ATLANTIC PARATRANS, INC.
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
180 JAMAICA CORP. BLOCK 7932, INC.
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
ATLANTIC EXPRESS COACHWAYS, INC. ATLANTIC-CONN. TRANSIT, INC.
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
ATLANTIC EXPRESS OF ATLANTIC EXPRESS OF MISSOURI INC.
PENNSYLVANIA, INC.
By: _____________________________
By: _____________________________ Name: ___________________________
Name: ___________________________ Title: __________________________
Title: __________________________
ATLANTIC PARATRANS OF RAYBERN BUS SERVICE, INC.
KENTUCKY INC.
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
G.V.D. LEASING CO., INC.
By: _____________________________
Name: ___________________________
Title: __________________________
C-2
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
310(a)(1)........................................................... 7.10
(a)(2)........................................................... 7.10
(a)(3)........................................................... N.A.
(a)(4)........................................................... N.A.
(a)(5)........................................................... 7.10
(b).............................................................. 7.8; 7.10
(c).............................................................. N.A.
311(a).............................................................. 7.11
(b).............................................................. 7.11
(c).............................................................. N.A.
312(a).............................................................. 2.5
(b).............................................................. 11.3
(c).............................................................. 11.3
313(a).............................................................. 7.6
(b)(1)........................................................... 7.6
(b)(2)........................................................... 7.6
(c).............................................................. 7.6
(d).............................................................. 7.6
314(a).............................................................. 4.3; 4.4
(b).............................................................. N.A
(c)(1)........................................................... 11.4
(c)(2)........................................................... 11.4
(c)(3)........................................................... N.A.
(d).............................................................. N.A.
(e).............................................................. 11.5
(f).............................................................. N.A.
315(a).............................................................. 7.1(2)
(b).............................................................. 7.5
(c).............................................................. 7.1(1)
(d).............................................................. 7.1(3)
(e).............................................................. 6.11
316(a)(last sentence)............................................... 2.9
(a)(1)(A)........................................................ 6.5
(a)(1)(B)........................................................ 6.4
(a)(2)........................................................... N.A.
(b).............................................................. 9.2
(c).............................................................. 9.4
317(a)(1)........................................................... 6.8
(a)(2)........................................................... 6.9
(b).............................................................. 2.4
318(a).............................................................. 11.1
(b).............................................................. N.A.
(c).............................................................. 11.1
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
Exhibit 10.19
FIRST AMENDMENT
TO THE
SECURITY AND PLEDGE AGREEMENT, WITH ADDENDA
-------------------------------------------
First Amendment, dated as of August 14, 1997 (the "Amendment"), to the
Security and Pledge Agreement, dated as of February 4, 1997 (the "Security and
Pledge Agreement"), among Atlantic Express Transportation Group Inc. (together
with its successors and assigns, "AETG") a New York corporation, Atlantic
Express Transportation Corp., a New York corporation and a subsidiary of AETG
(together with its successors and assigns, the "Company"), the subsidiaries of
the Company that are party to the Security and Pledge Agreement (collectively,
together with their permitted successors and assigns, the "Restricted
Subsidiaries"), and The Bank of New York, as the trustee under the Indenture for
the benefit of the holders of the Notes (together with its successors and
assigns, the "Secured Party"). Capitalized terms not defined herein shall have
the respective meaning set forth for such terms in the Security and Pledge
Agreement.
WHEREAS, the parties to Security and Pledge Agreement desire to amend
the Security and Pledge Agreement as set forth below.
NOW, THEREFORE, in consideration of the agreements set forth herein
and for other and good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. The term "Notes" as defined in the Security and Pledge Agreement
is hereby amended and restated in its entirety as follows:
"'Notes' shall mean the 10 3/4% Senior Secured Notes due 2004 of
the Company, in the aggregate principal amount of up to
$150,000,000."
2. The term "Indenture" as defined in the Security and Pledge
Agreement is hereby amended and restated in its entirety as follows:
"'Indenture' shall mean the Indenture, dated February 4, 1997, as
amended from time to time, among the Company, the Restricted
Subsidiaries and the Secured Party."
3. Article II of the Security and Pledge Agreement is hereby
<PAGE>
amended to add the following language following Section 2.3
"2.4 NOTES EQUALLY AND RATABLY SECURED
Each Note will be equally and ratably secured with each other
Note hereunder, regardless of the date of issuance of such Note."
4. Schedules I, II, III and 3.9 shall hereby be amended to include
the information set forth on such corresponding Schedules attached hereto.
5. Except as herein amended, all terms, provisions and conditions of
the Security and Pledge Agreement, all Annexes and Schedules thereto and all
documents executed in connection therewith shall continue in full force and
effect and shall remain enforceable and binding in accordance with their terms.
6. This Amendment may be executed in any number of identical
counterparts, each of which shall for all purposes be deemed an original and all
of which constitute, collectively, one agreement.
7. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAWS).
8. In the event of a conflict between the terms and conditions of
the Security and Pledge Agreement and the terms and conditions of this
Amendment, then the terms and conditions of this Amendment shall prevail.
2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered as of the date first above written.
ATLANTIC EXPRESS TRANSPORTATION ATLANTIC EXPRESS
GROUP INC. TRANSPORATION CORP.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -----------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- ---------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- --------------------
AMBOY BUS CO., INC. COURTESY BUS CO., INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
STATEN ISLAND BUS, INC. K. CORR, INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
RAYBERN CAPITAL CORP. RAYBERN EQUITY CORP.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
METROPOLITAN ESCORT SERVICE, INC. METRO AFFILIATES, INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
<PAGE>
MERIT TRANSPORTATION CORP. MIDWAY LEASING INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
TEMPORARY TRANSIT SERVICE, INC. BROOKFIELD TRANSIT INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
ATLANTIC-HUDSON, INC. ATLANTIC PARATRANS, INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
180 JAMAICA CORP. BLOCK 7932, INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
ATLANTIC EXPRESS COACHWAYS, INC. ATLANTIC-CONN. TRANSIT, INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
<PAGE>
ATLANTIC EXPRESS OF PENNSYLVANIA, ATLANTIC EXPRESS OF MISSOURI
INC. INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
ATLANTIC PARATRANS OF KENTUCKY RAYBERN BUS SERVICE, INC..
INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: PRESIDENT
-------------------- ----------------------
G.V.D. LEASING CO., INC. JERSEY BUS SALES, INC.
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: PRESIDENT Title: VICE PRESIDENT
-------------------- ----------------------
CENTRAL NEW YORK COACH & SERVICES, ATLANTIC EXPRESS OF L.A. INC.
INC
By: /S/ DOMENIC GATTO By: /S/ DOMENIC GATTO
----------------------- -------------------------
Name: DOMENIC GATTO Name: DOMENIC GATTO
--------------------- -----------------------
Title: VICE PRESIDENT Title: PRESIDENT
-------------------- ----------------------
<PAGE>
THE BANK OF NEW YORK, as
Trustee and Secured Party
By: /S/ VAN BROWN
-----------------------
Name: VAN BROWN
---------------------
Title: VICE PRESIDENT
--------------------
<PAGE>
ADDENDUM TO SECURITY AND PLEDGE AGREEMENT
The undersigned, CENTRAL NEW YORK COACH SALES & SERVICE, INC., a New
York corporation:
(i) agrees to all of the provisions of the Security and Pledge
Agreement, dated as of February 4, 1997 (as amended, supplemented or otherwise
modified prior to the date hereof, the "Security Agreement"), made by AETG, the
Company and the Restricted Subsidiaries (each as defined therein), in favor of
The Bank of New York (the "Secured Party") pursuant to the Indenture, dated as
of February 4, 1997 among the Company, the Restricted Subsidiaries and the
Secured Party (the "INDENTURE"), and
(ii) effective on the date hereof becomes a party to the Security
Agreement, as a Restricted Subsidiary, with the same effect as if the
undersigned were an original signatory to the Security Agreement (with the
representations and warranties contained therein) being deemed to be made by the
undersigned Restricted Subsidiary as of the date hereof.
Terms defined in the Security Agreement and the Indenture shall have such
defined meanings when used herein.
By its acceptance hereof, each undersigned Restricted Subsidiary
hereby ratifies and confirms its respective obligations under the Guaranty, as
supplemented hereby.
CENTRAL NEW YORK COACH SALES & SERVICE, INC.
By: /S/ DOMENIC GATTO
----------------------------------------
Name: DOMENIC GATTO
--------------------------------------
Title: VICE PRESIDENT
-------------------------------------
Date: August 14, 1997
<PAGE>
ADDENDUM TO SECURITY AND PLEDGE AGREEMENT
The undersigned, JERSEY BUS SALES, INC., a New Jersey corporation:
(i) agrees to all of the provisions of the Security and Pledge
Agreement, dated as of February 4, 1997 (as amended, supplemented or otherwise
modified prior to the date hereof, the "Security Agreement"), made by AETG, the
Company and the Restricted Subsidiaries (each as defined therein), in favor of
The Bank of New York (the "Secured Party") pursuant to the Indenture, dated as
of February 4, 1997 among the Company, the Restricted Subsidiaries and the
Secured Party (the "INDENTURE"), and
(ii) effective on the date hereof becomes a party to the Security
Agreement, as a Restricted Subsidiary, with the same effect as if the
undersigned were an original signatory to the Security Agreement (with the
representations and warranties contained therein) being deemed to be made by the
undersigned Restricted Subsidiary as of the date hereof.
Terms defined in the Security Agreement and the Indenture shall have such
defined meanings when used herein.
By its acceptance hereof, each undersigned Restricted Subsidiary
hereby ratifies and confirms its respective obligations under the Guaranty, as
supplemented hereby.
JERSEY BUS SALES, INC.
By: /S/ DOMENIC GATTO
----------------------------------------
Name: DOMENIC GATTO
--------------------------------------
Title: VICE PRESIDENT
-------------------------------------
Date: August 14, 1997
<PAGE>
ADDENDUM TO SECURITY AND PLEDGE AGREEMENT
The undersigned, ATLANTIC EXPRESS OF L.A. INC., a California
corporation:
(i) agrees to all of the provisions of the Security and Pledge
Agreement, dated as of February 4, 1997 (as amended, supplemented or otherwise
modified prior to the date hereof, the "Security Agreement"), made by AETG, the
Company and the Restricted Subsidiaries (each as defined therein), in favor of
The Bank of New York (the "Secured Party") pursuant to the Indenture, dated as
of February 4, 1997 among the Company, the Restricted Subsidiaries and the
Secured Party (the "INDENTURE"), and
(ii) effective on the date hereof becomes a party to the Security
Agreement, as a Restricted Subsidiary, with the same effect as if the
undersigned were an original signatory to the Security Agreement (with the
representations and warranties contained therein) being deemed to be made by the
undersigned Restricted Subsidiary as of the date hereof.
Terms defined in the Security Agreement and the Indenture shall have such
defined meanings when used herein.
By its acceptance hereof, each undersigned Restricted Subsidiary
hereby ratifies and confirms its respective obligations under the Guaranty, as
supplemented hereby.
ATLANTIC EXPRESS OF L.A. INC.
By: /S/ DOMENIC GATTO
----------------------------------------
Name: DOMENIC GATTO
--------------------------------------
Title: PRESIDENT
-------------------------------------
Date: August 14, 1997
<PAGE>
Exhibit 10.20
FIRST SUPPLEMENTAL INDENTURE
----------------------------
FIRST SUPPLEMENTAL INDENTURE, dated as of August , 1997, among
Atlantic Express Transportation Corp., a New York corporation (the "Company") ,
the Guarantors named herein and The Bank of New York, a New York banking
corporation, as trustee (the "Trustee").
WHEREAS, the Company has duly issued its 103/4% Senior Secured Notes Due
2004 (the "Notes"), in the aggregate principal amount of $110,000,000 pursuant
to an Indenture among the Company, the Guarantors named therein and the Trustee
dated as of February 4, 1997 (the "Indenture"), and the Notes are outstanding on
the date hereof; and
WHEREAS, Section 9.2 of the Indenture provides that the Company and the
Trustee may amend any provision of the Indenture with the written consent of the
Holders of at least a majority of the principal amount of the then outstanding
Notes and execute a supplemental indenture; and
WHEREAS, the Company solicited, and has received, consents upon the terms
and subject to the conditions set forth in the Consent Solicitation Statement
dated August 5, 1997 and the accompanying consent letter, from Holders
representing at least a majority in aggregate principal amount of its
outstanding Notes to certain amendments described therein to the Indenture and
the related Collateral Agreements and Intercreditor Agreement; and
WHEREAS, Section 10.12 of the Indenture provides, among other things, that
the Company shall cause each Restricted Subsidiary that is formed or acquired
after the date of the Indenture to become a Guarantor thereunder and execute and
deliver a supplemental indenture pursuant to which such Restricted Subsidiaries
shall unconditionally guarantee all of the Company's Obligations as set forth in
Section 10.7 of the Indenture; and
WHEREAS, Section 9.1 of the Indenture provides, among other things, that
the Company, the Guarantors and the Trustee may amend or supplement the
Indenture without the consent of any Holder to comply with Article 10.12 thereof
and execute a supplemental indenture ; and
WHEREAS, it is provided in Section 9.4 of the Indenture that a supplemental
indenture becomes effective in accordance with its terms and thereafter binds
every Holder; and
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 DEFINITIONS.
- -----------------------
Capitalized terms not defined herein shall have the meanings given to such
terms in the Indenture.
<PAGE>
SECTION 2 AMENDMENTS TO THE INDENTURE
- ---------------------------------------
SECTION 2.1 AMENDMENT TO THE EXECUTION AND AUTHENTICATION COVENANT.
The third paragraph of Section 2.2 of the Indenture is hereby amended and
restated to read in its entirety as follows:
"The Trustee shall, upon a Company Order, authenticate for original
issue up to $150,000,000 aggregate principal amount of the Notes. The
aggregate principal amount of Notes outstanding at any time may not
exceed $150,000,000 except as provided in Section 2.7 hereof."
SECTION 2.2 AMENDMENT TO THE "OPTIONAL REDEMPTION" PROVISION.
Section 3.7(b) of the Indenture is hereby amended and restated to read in
its entirety as follows:
"(b) Notwithstanding the foregoing, at any time or from time to time
prior to February 1, 2000, the Company may, at its option, redeem up
to one-third of the original principal amount of the Notes, at a
redemption price of 110.75% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the applicable redemption
date, with the net cash proceeds of one or more Public Equity
Offerings; provided, that (a) such redemption shall occur within 90
days of the date of closing of such public offering and (b) at least
$100.0 million aggregate principal amount of Notes remains outstanding
immediately after giving effect to each such redemption."
SECTION 2.3 AMENDMENT TO THE "LIMITATION ON INCURRENCE OF INDEBTEDNESS"
PROVISION
Section 4.9(b)(iv) of the Indenture is hereby amended and restated to read
in its entirety as follows:
"(iv) (A) Indebtedness arising out of Capital Lease Obligations or
Purchase Money Obligations (collectively, "Purchase Money
Indebtedness") in an aggregate amount not to exceed $10.0 million
outstanding at any time, and (B) a $2.2 million aggregate principal
amount note and mortgage relating to certain real property acquired in
the acquisition of Central New York Coach Sales & Service, Inc.,
Jersey Bus Sales, Inc., and related property (collectively, "Central")
by the Company."
SECTION 2.4 AMENDMENT TO THE LIMITATION ON LIENS.
Section 4.12(a) of the Indenture is hereby amended and restated to read in
its entirety as follows:
"The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly create, incur, assume or suffer to exist
(a) any Lien on any asset (including, without limitation, all real,
tangible or intangible property) of the Company or any Restricted
Subsidiary, whether now owned or hereafter acquired, or on any income
or
2
<PAGE>
profits therefrom, or assign or convey any right to receive income
therefrom, except (i) Liens securing Indebtedness permitted to be
incurred under the Revolving Credit Facility; PROVIDED, that the
Notes are secured by a second priority security interest in the assets
subject to such Liens, (ii) Purchase Money Liens, (iii) Permitted
Liens, and (iv) a $2.2 million aggregate principal amount note and
mortgage relating to certain real property acquired in the acquisition
of Central by the Company or..."
SECTION 2.5 AMENDMENT TO THE LINE OF BUSINESS COVENANT.
Section 4.18 of the Indenture is hereby amended and restated to read in its
entirety as follows:
"The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than (a) the business conducted or
proposed to be conducted by the Company and the Restricted
Subsidiaries on the Closing Date and (b) any transportation business
that is ancillary or complementary to any business described in clause
(a) above. The foregoing restriction will not (i) prohibit the
acquisition or operation of Central by the Company or (ii) prevent the
Company from engaging in the same lines of business conducted or
proposed to be conducted by Central as of the date the acquisition of
Central is consummated (the "Acquisition Date"), provided that such
business is conducted only in territories contiguous with the
territories in which Central conducted or proposed to conduct its
business as of the Acquisition Date."
SECTION 2.6 CONFORMING CHANGES TO THE INDENTURE.
The Indenture is otherwise amended, to the extent necessary, to permit the
issuance of up to $150,000,000 of the Company's 103/4% Senior Secured Notes
due 2004.
SECTION 3 GUARANTEE BY RESTRICTED SUBSIDIARIES
Each of Atlantic Express of L.A. Inc., Central New York Coach Sales &
Service, Inc. and Jersey Bus Sales, Inc. unconditionally guarantees all of the
Company's Obligations as set forth in Section 10.7 of the Indenture in the same
manner and to the same extent as if it had executed the Indenture as one of the
parties thereto defined as the "Guarantors" therein.
SECTION 4 MISCELLANEOUS
SECTION 4.1 GOVERNING LAW
THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE CONSTRUED, INTERPRETED AND THE
RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE
3
<PAGE>
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OR ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OR ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE
AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS ADDRESS SET
FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
SECTION 4.2 CONTINUING AGREEMENT.
Except as herein amended, all terms, provisions and conditions of the
Indenture, all Exhibits thereto and all documents executed in connection
therewith shall continue in full force and effect and shall remain enforceable
and binding in accordance with their terms.
SECTION 4.3 CONFLICTS.
In the event of a conflict between the terms and conditions of the
Indenture and the terms and conditions of this First Supplemental Indenture,
then the terms and conditions of this First Supplemental Indenture shall
prevail.
SECTION 4.4 COUNTERPART ORIGINALS.
The parties may sign any number of copies of this First Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
SECTION 4.5 HEADINGS, ETC.
The Headings of the Sections of this First Supplemental Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
4
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Supplemental Indenture as of the date first written above.
ATLANTIC EXPRESS
TRANSPORTATION CORP.
By: /s/ DOMENIC GATTO
---------------------------------
Name: DOMENIC GATTO
Title: President
Attest:
/s/ NATHAN SCHLENKER
- ----------------------
Name: NATHAN SCHLENKER
Title: Chief Financial Officer
GUARANTORS
AMBOY BUS CO., INC. BROOKFIELD TRANSIT INC.
STATEN ISLAND BUS, INC. ATLANTIC PARATRANS, INC.
RAYBERN CAPITAL CORP. 180 JAMAICA CORP.
METROPOLITAN ESCORT SERVICE, INC. ATLANTIC EXPRESS COACHWAYS, INC.
MERIT TRANSPORTATION CORP. ATLANTIC EXPRESS OF PENNSYLVANIA, INC.
TEMPORARY TRANSIT SERVICE, INC. ATLANTIC PARATRANS OF KENTUCKY INC.
ATLANTIC-HUDSON, INC. RAYBERN BUS SERVICE, INC.
COURTESY BUS CO., INC. G.V.D. LEASING CO., INC.
K. CORR, INC. BLOCK 7932, INC.
RAYBERN EQUITY CORP. ATLANTIC-CONN. TRANSIT, INC.
METRO AFFILIATES, INC. ATLANTIC EXPRESS OF MISSOURI INC.
MIDWAY LEASING INC. ATLANTIC EXPRESS OF L.A. INC.
CENTRAL NEW YORK COACH JERSEY BUS SALES, INC.
SALES & SERVICE, INC.
By: /s/ DOMENIC GATTO
----------------------------------
Name: DOMENIC GATTO
Title: President
5
<PAGE>
THE BANK OF NEW YORK, as Trustee
By: /s/ VAN BROWN
---------------------------------
Name: VAN BROWN
Title: Vice President
6
<PAGE>
Exhibit 21
List of Subsidiaries
1. Atlantic-Conn. Transit, Inc.
2. Atlantic Express of Pennsylvania, Inc.
3. Atlantic Paratrans of Kentucky Inc.
4. Atlantic Express of Missouri Inc.
5. Atlantic Express Coachways, Inc.
6. Amboy Bus Co., Inc.
7. Atlantic Paratrans, Inc.
8. Atlantic-Hudson, Inc.
9. Block 7932, Inc.
10. Brookfield Transit Inc.
11. Courtesy Bus Co., Inc.
12. G.V.D. Leasing Co., Inc.
13. 180 Jamaica Corp.
14. K. Corr, Inc.
15. Merit Transportation Corp.
16. Metro Affiliates, Inc.
17. Metropolitan Escort Service, Inc.
18. Midway Leasing Inc.
19. Raybern Bus Service, Inc.
20. Raybern Capital Corp.
21. Raybern Equity Corp.
22. Staten Island Bus, Inc.
23. Temporary Transit Service, Inc.
24. Atlantic North Casualty Company
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K AT
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 16,818,889
<SECURITIES> 1,030,000
<RECEIVABLES> 1,679,575
<ALLOWANCES> 0
<INVENTORY> 1,969,228
<CURRENT-ASSETS> 56,234,348
<PP&E> 147,804,168
<DEPRECIATION> 72,836,574
<TOTAL-ASSETS> 154,350,976
<CURRENT-LIABILITIES> 12,851,546
<BONDS> 110,628,223
0
0
<COMMON> 250,000
<OTHER-SE> 27,364,197
<TOTAL-LIABILITY-AND-EQUITY> 154,350,976
<SALES> 0
<TOTAL-REVENUES> 166,078,034
<CGS> 0
<TOTAL-COSTS> 158,864,765
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 750,000
<INTEREST-EXPENSE> 8,739,065
<INCOME-PRETAX> (1,211,819)
<INCOME-TAX> (600,936)
<INCOME-CONTINUING> (610,833)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,052,917)
<CHANGES> 0
<NET-INCOME> (1,663,800)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
