<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 1998.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SUPERSHUTTLE INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4141 33-0114512
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
4610 SOUTH 35TH STREET
PHOENIX, ARIZONA 85040
(602) 232-2200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
R. BRIAN WIER
CHIEF EXECUTIVE OFFICER
SUPERSHUTTLE INTERNATIONAL, INC.
4610 SOUTH 35TH STREET
PHOENIX, ARIZONA 85040
(602) 232-2200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING ZIP CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
CHRISTOPHER D. JOHNSON, ESQ. CARLA S. NEWELL, ESQ.
SQUIRE, SANDERS & DEMPSEY L.L.P. GUNDERSON DETTMER STOUGH
TWO RENAISSANCE SQUARE VILLENEUVE FRANKLIN & HACHIGIAN, LLP
40 NORTH CENTRAL AVENUE, SUITE 2700 155 CONSTITUTION DRIVE
PHOENIX, ARIZONA 85004 MENLO PARK, CALIFORNIA 94025
(602) 528-4000 (650) 321-2400
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC: As soon as practicable after
the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SECURITY (2) PRICE (2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value... 3,818,000 $10.00 $38,180,000 $11,264
============================================================================================================================
</TABLE>
(1) Includes 498,000 shares of Common Stock that the Underwriters have the
option to purchase to cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the registration
fee in accordance with Rule 457(a) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 3, 1998
PROSPECTUS
- ----------------
3,320,000 SHARES
[SUPERSHUTTLE LOGO]
COMMON STOCK
Of the 3,320,000 shares of Common Stock offered hereby, 3,000,000 shares
are being sold by SuperShuttle International, Inc. ("SuperShuttle" or the
"Company") and 320,000 shares are being sold by a certain Selling Stockholder.
The Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholder. See "Principal and Selling Stockholders."
Prior to this offering, there has been no public market for the Common
Stock of the Company. It is currently estimated that the initial public offering
price will be between $8.00 and $10.00 per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price. The Company has applied to have the Common Stock approved for
quotation on the Nasdaq National Market under the symbol SHTL.
------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 6.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=======================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDER
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.......................... $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Total(3)........................... $ $ $ $
=======================================================================================================================
</TABLE>
(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $700,000.
(3) The Company and certain Selling Stockholders have granted to the
Underwriters a 30-day option to purchase up to 498,000 additional shares of
Common Stock solely to cover over-allotments, if any. If all such shares are
purchased, the total Price to Public, Underwriting Discount, Proceeds to
Company and proceeds to Selling Stockholders will be $ ,
$ , $ and $ , respectively. See "Underwriting."
-----------------------
The shares of Common Stock are offered by the several Underwriters subject
to prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1998, at the office of the agent of
Hambrecht & Quist LLC in New York, New York.
HAMBRECHT & QUIST PIPER JAFFRAY INC.
, 1998
<PAGE> 3
[DESCRIPTION OF PHOTOGRAPHS TO COME]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
The "SuperShuttle" and "ExecuCar" names are registered trademarks of the
Company. This prospectus also includes trademarks of companies other than the
Company.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, the historical Consolidated Financial Statements and Notes thereto
and the Unaudited Pro Forma Combined Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. The Common Stock offered hereby involves
a high degree of risk. See "Risk Factors."
THE COMPANY
SuperShuttle is a leading provider of nationally-branded, door-to-door
airport shared ride services. SuperShuttle has Company-owned and franchise
operations in 15 cities serving 18 airports with a fleet of approximately 800
vans and, in 1997, provided shared ride services through these operations to
over seven million passengers. In fiscal 1997, the Company's net revenues and
net income were approximately $33.7 million and $1.6 million, respectively. On a
pro forma basis, giving effect to the Company's acquisition of its three largest
franchises in Los Angeles, Orange County and Miami, and related businesses in
southern Florida, net revenues and net income would have been approximately
$75.1 million and $2.4 million, respectively.
The Federal Aviation Administration projects that the number of airline
passengers will increase from approximately 578 million in 1995 to approximately
928 million in 2007. With the number of airline passengers growing, travelers
are increasingly challenged by traffic congestion, limited parking facilities
and expensive parking and taxi rates. The airport ground transportation market
is highly fragmented and consists primarily of a large number of local companies
providing chauffeured vehicle, bus, van, taxi and sedan services. As a result,
the quality, price and consistency of airport ground transportation services
and, in particular, shared ride services, vary significantly by market.
Furthermore, unlike the airline and car rental industries that offer consumers
the choice of a number of nationally-branded service providers, the Company
believes there are few, if any, national providers of shared ride ground
transportation services.
SuperShuttle offers consumers a nationally-branded reliable, safe,
convenient and economical transportation alternative to generally more expensive
airport parking and taxi services and less convenient mass transportation
services. The Company efficiently groups passengers together by neighborhood
thereby allowing customers to share rides to and from the airport. The Company's
shared ride service is offered exclusively under the SuperShuttle brand, using
the Company's distinctive trademarked bright blue and yellow vans, centralized
reservation system, 1-800-BLUE-VAN telephone number and "no more than three
stops" policy.
Since 1994, the Company has invested significant financial and management
resources in developing its proprietary information and management systems with
the goal of expanding its services nationally. The Company believes that these
systems, along with its established relationships with many major airports and
municipalities, provide SuperShuttle with a strong platform to enter new service
areas throughout the United States through both acquisitions and start-ups.
Towards this goal, the Company recently acquired its three largest franchises in
Los Angeles, Orange County and Miami and was awarded a shared ride service
contract by the Port Authority of New York and New Jersey to service the three
major New York City area airports. The Company also provides shuttle services
for large corporations and paratransit services for municipalities, subcontracts
with larger bus operators to arrange charter services and provides executive
sedan services under the ExecuCar brand.
The Company's goal is to become the leading provider of nationally-branded,
door-to-door ground transportation services in the United States by: (i)
increasing SuperShuttle brand recognition; (ii) leveraging its proprietary
integrated operating systems to support growth and nationwide expansion; (iii)
entering new geographic markets through acquisitions and start-ups; (iv)
expanding into other segments of the ground transportation industry; and (v)
providing superior customer service.
The Company is incorporated in Delaware and its principal offices are
located at 4610 South 35th Street, Phoenix, Arizona 85040. The Company's
telephone number is (602) 232-2200.
3
<PAGE> 5
THE OFFERING
Common Stock offered by the Company....... 3,000,000 shares
Common Stock offered by a Selling
Stockholder............................... 320,000 shares
Common Stock to be outstanding after the
offering.................................. 9,573,617 shares(1)
Use of proceeds........................... For the repayment of certain
indebtedness, general corporate
purposes, potential acquisitions
and capital expenditures.
Proposed Nasdaq National Market symbol.... SHTL
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA AND SELECTED OPERATING DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30, SIX MONTHS ENDED MARCH 31,
----------------------------------------- -----------------------------------
1995 1996 1997 1997 1998
------- ------- --------------------- ------- -------------------------
PRO PRO
ACTUAL FORMA(2) ACTUAL FORMA(2)
------ -------- ------ --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Net revenues......................... $28,873 $32,304 $33,667 $75,065 $16,320 $18,225 $39,710
Gross profit......................... 12,142 13,544 13,805 28,798 6,621 7,211 14,810
Income (loss) from operations........ 680 (356) 636 3,473 (68) 457 2,112
Net income(3)........................ 835 40 1,561 2,355 634 2,880 3,447
Net income (loss) to common
stockholders....................... $ 835 $ (51) $ 1,491 $ 2,285 $ 599 $ 2,845 $ 3,412
Net income (loss) per share:
Basic(4)........................... $ 0.48 $ (0.03) $ 0.54 $ 0.39 $ 0.22 $ 1.03 $ 0.59
Diluted(4)......................... $ 0.38 $ (0.03) $ 0.42 $ 0.34 $ 0.17 $ 0.81 $ 0.51
Shares used in calculation of net
income (loss) per share:
Basic(4)........................... 1,748 1,853 2,754 5,799 2,746 2,761 5,806
Diluted(4)......................... 2,175 1,949 3,512 6,663 3,504 3,519 6,670
SELECTED OPERATING DATA:
Company-owned operations(5).......... 3 4 5 8 4 5 8
Franchise operations(5).............. 8 8 8 5 9 8 5
Number of vans(6).................... 582 628 683 683 628 763 763
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1998
-----------------------------------
PRO AS
ACTUAL FORMA(2) ADJUSTED(7)
------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents(8)............................ $ 1,858 $ 3,204 $26,914
Working capital (deficit)............................... (666) (3,666) 20,607
Total assets............................................ 12,456 34,674 58,384
Long-term debt, net of current portion.................. 1,259 1,903 1,766
Series B Convertible Preferred Stock.................... 4,105 4,105 --
Total stockholders' equity.............................. 1,093 16,804 45,319
</TABLE>
- ------------------------------
(1) Based on the number of shares outstanding as of May 31, 1998. Excludes, as
of May 31, 1998, 382,250 shares of Common Stock issuable upon exercise of
options outstanding under the Company's stock option plans and 106,356
shares of Common Stock reserved for issuance upon exercise of certain
warrants. The weighted average exercise price of such stock options was
$6.26 and the exercise price for the warrants was $6.00.
(2) Represents actual operating results and balances for the periods presented
and actual results and balances of each of the Company's Los Angeles, Orange
County and Miami operations which were acquired in March 1998 (the "Acquired
Companies") along with adjustments which give effect to events that are
directly attributable to the Acquired Companies
4
<PAGE> 6
and which are expected to have a continuing impact. This pro forma
information should be read in connection with the Unaudited Pro Forma
Combined Financial Statements included elsewhere in this Prospectus.
(3) Includes approximately $2.1 million and $1.5 million for the actual and pro
forma results for the first six months of fiscal 1998 due to the reversal of
a deferred tax valuation allowance. See Note 11 of Notes to Consolidated
Financial Statements.
(4) See Note 1 of Notes to Consolidated Financial Statements for a description
of the calculation of basic and diluted income per share and Note 10 of
Notes to Unaudited Pro Forma Combined Financial Statements for a description
of the calculation of pro forma basic and diluted net income per share.
(5) Numbers are at period end. The Company's Baltimore operation, a 50% owned
franchise, is included in Company-owned operations.
(6) Includes SuperShuttle shared ride vans for both Company-owned and franchise
operations. Excludes mini-buses, sedans and paratransit vehicles.
(7) Adjusted to reflect (i) the sale of the 3,000,000 shares of Common Stock
offered by the Company hereby at an assumed initial public offering price of
$9.00 per share after deducting underwriting discounts and estimated
offering expenses and the application of the estimated net proceeds
therefrom and (ii) the conversion of Series B Convertible Preferred Stock
into Common Stock. See "Use of Proceeds" and "Capitalization."
(8) Includes $641,000 of restricted cash at March 31, 1998.
------------------------------
All references to the "Company" and "SuperShuttle" mean SuperShuttle
International, Inc. and its subsidiaries, unless the context indicates
otherwise. Except as otherwise noted, all information in this Prospectus assumes
no exercise of the Underwriters' over-allotment option and gives effect to the
conversion of 479,475 shares of Series B Convertible Preferred Stock into
767,160 shares of Common Stock upon completion of this offering. See
"Description of Capital Stock," "Underwriting" and Notes to the Consolidated
Financial Statements.
5
<PAGE> 7
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including those
set forth below and elsewhere in this Prospectus. See "Cautionary Language
Regarding Forward-Looking Statements." The following risk factors should be
considered carefully in addition to the other information in this Prospectus
before purchasing the shares of Common Stock offered hereby.
Absence of Combined Operating History; Need for Regulatory Approvals. In
March 1998, SuperShuttle acquired its three largest franchises located in Los
Angeles, Orange County and Miami, and related operations in southern Florida
(collectively, the "Acquired Companies"). Until their acquisition by the
Company, the Acquired Companies each operated as separate independent entities
subject to separate franchise agreements with the Company. Upon the closing of
these acquisitions, the Company immediately began to integrate the Acquired
Companies; however, there can be no assurance such combination can be
accomplished successfully or on a timely basis. The Company is dependent in part
on the ability of its management team to manage a significantly larger
organization, maintain relationships with the Company's other franchisees and
upgrade the Company's existing and newly acquired businesses to its centralized
reservation and digital dispatch systems. There can be no assurance that the
Company will be able to successfully integrate the operations of the Acquired
Companies or institute the necessary Company-wide systems and procedures to
successfully manage the combined enterprise on a profitable basis. The
historical financial results of the Acquired Companies cover periods when the
Acquired Companies and SuperShuttle were not under common control or management
and, therefore, may not be indicative of the Company's future financial or
operating results. The inability of the Company to successfully integrate the
Acquired Companies or a decline in the revenues or earnings of the Acquired
Companies could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
The Company's acquisition of the Los Angeles and Orange County franchise
operations (the "California Acquired Companies") remains subject to approval by
the California Public Utilities Commission (the "CPUC"). The approval process
may take several months and there can be no assurance that CPUC approval will be
granted. The Company's application for approval has been objected to by one
competing provider of ground transportation services. If the CPUC fails to grant
approval of the acquisition of the California Acquired Companies, the Company
would not be permitted to continue to operate the California Acquired Companies.
In such event, the Company would be forced to restructure the acquisitions, if
possible, to avoid the requirement of CPUC approval or rescind them, either of
which would have a material adverse effect on the Company's pro forma results of
operations for the periods presented in this Prospectus and its business,
financial condition and results of operations for future periods. See
"Business--Regulation."
Risks Related to Expansion Through Acquisition. A key element of the
Company's current expansion strategy is to acquire additional ground
transportation businesses. Future acquisitions by the Company may result in the
use of a significant amount of cash, dilutive issuances of equity securities,
the incurrence of additional debt and higher amortization expenses related to
goodwill and other intangible assets, any of which could have a material adverse
effect upon the Company's business, financial condition and results of
operations. There can be no assurance that the Company will be able to continue
to identify, acquire or profitably manage additional businesses or successfully
integrate acquired businesses, if any, into the Company without substantial
costs, delays or other operational or financial problems. In addition, the
failure of the Company to obtain adequate financing on terms acceptable to the
Company may limit its ability to expand its operations through acquisitions.
Further, acquisitions involve a number of special risks, including difficulties
in the assimilation of the operations and personnel of the acquired company,
short-term adverse effects on the Company's operating results, diversion of
management's attention, failure to retain key acquired personnel, risks
associated with unanticipated events or liabilities, risks of entering markets
in which the Company has limited or
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<PAGE> 8
no prior experience and risks related to the need for regulatory approvals. In
addition, there can be no assurance that the businesses acquired in the future
will achieve anticipated revenues and earnings. Customer dissatisfaction or
performance problems at a single acquired company could also have an adverse
effect on the reputation of the Company and adversely affect the Company's
national sales and marketing initiative, which could, in turn, have a material
adverse effect upon the Company's business, financial condition and results of
operations. See "Business--Growth Strategy."
Fluctuations in Operating Results. The Company's estimates of future
expense levels are based primarily on management's estimates of future demand
including projections for both existing and new operations. Future demand for
new operations, whether acquisitions or start-ups, is difficult to forecast
since the Company has not operated in those markets or managed such operations
in the past. In addition, since expense levels are fixed to a large extent, the
Company may be unable or unwilling to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall. Accordingly, any significant
shortfall in revenues would likely have an immediate material adverse effect on
the Company's business, financial condition and results of operations. Further,
the Company currently intends to substantially increase its operating expenses
to fund increased sales and marketing in new and existing markets and to
continue to develop and upgrade its operating systems. In addition, in the event
the Company acquires additional operations the Company's operating expenses
would likely be substantially increased. To the extent such expenses precede or
are not followed by increased revenues, the Company's operating results could be
materially adversely affected. Further, the Company is required to expense
substantially all costs associated with start-up operations, which could
materially adversely affect the Company's quarterly operating results. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Selected Quarterly Results of Operations."
The Company expects to experience fluctuations in its future quarterly
operating results due to a variety of factors, many of which are outside the
Company's control. Factors that may adversely affect the Company's quarterly
operating results include, but are not limited to: (i) the Company's ability to
retain existing customers, attract new customers at a steady rate and maintain
customer satisfaction; (ii) changes in fuel prices, wages and other operating
expenses; (iii) changes in economic conditions affecting the travel industry;
(iv) the Company's ability to invest in and implement its systems and
infrastructure to support continued growth; (v) potential system failures or
other difficulties encountered in operating the Company's centralized
reservation and digital dispatch systems; (vi) the amount and timing of
operating costs and capital expenditures relating to expansion of the Company's
business, operations and infrastructure; (vii) delays and costs associated with
complying with governmental regulations; (viii) seasonality; (ix) costs and
amortization related to future acquisitions; (x) the amount and timing of
marketing expenditures; and (xi) other unforeseen events affecting the travel
industry. As a result of the foregoing factors, the Company's annual or
quarterly operating results may in some future period be below the expectations
of public market analysts and investors. In such event, the price of the
Company's Common Stock would likely be materially and adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Selected Quarterly Results of Operations."
Seasonality. The Company has experienced and expects to continue to
experience seasonality in its business, reflecting seasonal fluctuations in the
travel industry. Demand for the Company's services is typically lower in the
Company's second fiscal quarter, which ends in March, due to a decline in travel
and tourism during that period. Seasonality in the travel industry is likely to
cause quarterly fluctuations in the Company's operating results and could have a
material adverse effect on the Company's business, financial condition and
results of operations. Since a significant portion of the Company's expenses are
fixed, a decrease in demand has a disproportionate impact on the Company's net
income. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Dependence on Air Travel Industry. The Company derives a significant
portion of its revenues directly or indirectly from the air travel industry, and
thus the Company's future operating results are
7
<PAGE> 9
dependent on the stability of and continued growth in the air travel industry.
The air travel industry, especially leisure travel, which is dependent on
personal discretionary spending levels, is sensitive to changes in economic
conditions and tends to decline during general economic downturns and
recessions. Significant airfare increases could result in reduced air travel and
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, any event that disrupts or reduces air
travel patterns for a continued period of time could have an adverse effect on
the Company's results of operations. For example, certain airports served by the
Company's operations are hubs for major airlines. If any such airline were to
significantly decrease its operations as a result of a work stoppage or other
event for any significant period of time, the Company's business, financial
condition and results of operations could be materially affected. Other events
that could adversely affect the travel industry include political instability,
regional hostilities, fuel price escalation, travel-related accidents, unusual
weather patterns, military conflicts, terrorist incidents or other adverse
occurrences. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Labor Availability and Relations. The operation of the Company is
significantly dependent on the availability of qualified drivers. Historically,
the Company has experienced high turnover with respect to its employee drivers.
There can be no assurance that the Company will be able to maintain an adequate
supply of drivers and other personnel or that the Company's labor expenses will
not increase as a result of a shortage in supply of such workers. The Company
currently has approximately 2,000 employees, approximately 1,000 of whom are
members of various labor unions. The Company is a party to a number of
collective bargaining agreements with these unions which expire at various dates
from November 1998 through May 2002. In addition, certain of these contracts
provide for renegotiation annually. The Company is currently in negotiations
with the unions representing certain of its Orange County and Florida employees
and there can be no assurance that the Company will obtain a satisfactory
resolution to these negotiations. The Company's inability to negotiate
acceptable contracts with existing unions as agreements expire or with new
unions could result in work stoppages by the affected workers and increased
operating costs as a result of higher wages or benefits paid to union members.
While the Company has experienced threats of work stoppages in the past, such
threats have not resulted in any strikes or work stoppages to date. In the event
the Company's employees were to engage in a strike or other work stoppage, the
Company could experience a significant disruption of its operations and higher
ongoing labor costs, which could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, pursuant
to an agreement with one of the Company's shareholders the Company has agreed to
not, directly or indirectly, oppose any attempt by any union to organize or seek
to represent the employees of the Company employed at any new location at which
the Company may conduct business. See "Business--Drivers and Equipment."
Management of Growth. The Company has recently experienced substantial
growth as a result of its acquisitions and start-up operations, which has placed
strains on its management, resources, systems and operations. The Company is
dependent on its ability to manage future growth effectively and to upgrade its
management information systems and other infrastructure. In 1996, the Company
outsourced a significant part of its internal financial and accounting staff and
systems to Arthur Andersen LLP. The Company intends to reintegrate these
financial and accounting functions at some future time. Any such reintegration
will require the Company to purchase and implement new financial and accounting
systems and to hire additional qualified personnel. There can be no assurance
that the Company will be able to implement such new systems successfully or in a
timely manner, hire the necessary personnel to manage such functions or that
such systems and personnel will be adequate to manage any potential future
growth that may occur. The potential future growth of the Company's operations
would likely place an increasing strain on the Company's management, financial,
marketing and other resources. As a result, the Company could experience
difficulties in hiring, training, and managing qualified employees, as well as
problems in upgrading management information and other systems. If the Company's
management is unable to effectively manage any further growth that may occur,
the Company's business, financial condition and results of operations could be
materially
8
<PAGE> 10
adversely affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Fuel Prices and Availability. Fuel costs account for a significant portion
of the Company's operating expenses. Fuel prices are subject to sudden increases
as a result of variations in supply levels and demand. Any sustained increase in
fuel prices could adversely affect the Company's results of operations unless it
were able to increase prices in an amount sufficient to completely offset such
fuel price increases. From time to time, there are efforts at the federal or
state level to increase fuel or highway use taxes, which, if enacted, also could
adversely affect the Company's business, results of operations and financial
condition. The Company's operations, as well as those of its competitors, could
also be affected by any limitation in the supply of fuel or by any imposition of
mandatory allocation or rationing regulations. A severe disruption of fuel
supplies resulting from Organization of Petroleum Exporting Countries (OPEC)
supply changes, political unrest, war or otherwise, would have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, approximately 43% of the Company's vans operate on
alternative fuels such as compressed natural gas and propane, which are not as
widely available as gasoline. Any changes in the cost or supply of these fuels
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Drivers and Equipment--Fuel
Prices and Availability."
Dependence on Airport and Government Contracts. Certain of the Company's
shared ride services and its paratransit services are provided pursuant to
contracts entered into or permits issued by applicable airport or state or local
governmental authorities. The terms of these contracts or permits typically
provide for the termination or revocation thereof by the applicable airport or
state or local authority upon less than 60 days notice. The revocation or early
termination of any of the Company's existing or future permits or operating
contracts could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, payments to the
Company under its paratransit contracts are funded through government subsidy
programs, and, without these subsidies, the state or local authority may be
unwilling to continue to renew these contracts, which would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--SuperShuttle Services" and "--Airport Relations."
Capital Requirements; Availability of Financing. In addition to capital
requirements associated with potential acquisitions, the Company's operations
require significant capital in order to acquire and maintain a fleet of vans and
other vehicles and, to a lesser extent, expand infrastructure to support
internal growth. A significant portion of the Company's capital requirements is
comprised of investment in vans. The Company depends upon third-party financing
to purchase its fleet vehicles and continued availability of financing on
favorable terms is critical to the Company's operations. In addition, certain
events, such as a material increase in damage to vehicles, could reduce the
value of the collateral securing the Company's fleet financing facilities and
cause the acceleration of the repayment of such facilities. Any inability of the
Company to obtain vehicle financing on favorable terms would have a material
adverse effect on the Company's business, financial condition and results of
operations. There can be no assurance that the sources of financing utilized by
the Company or alternative financing will remain or become available to the
Company or that such financing will be available on terms acceptable to the
Company. In addition, as vans age, they require increasing amounts of
maintenance and, therefore, are more expensive to operate. The Company's
inability to acquire, or a material delay in acquiring the financing necessary
to acquire replacement vans as needed, would have a material adverse effect on
the Company's business, financial condition and results of operations due to
higher operating costs associated with operating an aging fleet. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company--Liquidity and Capital Resources" and
"Business--Drivers and Equipment."
Insurance Costs; Risk of Personal Injury Claims. The Company's cost of
maintaining personal injury, property damage and workers' compensation insurance
is significant. There can be no assurance that insurance with unaffiliated
carriers will continue to be available to the Company on
9
<PAGE> 11
economically reasonable terms. In addition, the Company could experience higher
insurance premiums as a result of adverse claims experience or because of
general increases in premiums by insurance carriers for reasons unrelated to the
Company's own claims experience. In 1989 and 1990, as a result of changes in
California's workers' compensation laws, the Company experienced a significant
number of claims resulting in higher premiums and significantly increased
operating costs for the Company's California operations. There can be no
assurance that the Company will not be subject to similar increases in the
future. See "Business--Insurance."
As an operator of motor vehicles, the Company is exposed to claims for
personal injury or death and property damage as a result of accidents. The
Company's automobile liability and general liability insurance policy covers
accidents involving the Company's vehicles, with limits of $1,000,000 per
incident and $5,000,000 overall. The Company makes most of the repairs to its
vehicles and thus does not carry insurance with respect to damage on most of its
vehicles. There can be no assurance that the Company will not be exposed to
uninsured liability at levels in excess of historical levels resulting from
multiple payouts or otherwise, that liabilities in respect of existing or future
claims will not exceed the level of the Company's insurance, that the Company
will have sufficient capital available to pay any uninsured claims or that
insurance with unaffiliated carriers will continue to be available to the
Company on economically reasonable terms. If the Company were to become subject
to claims that were significantly in excess of, or not covered by its existing
insurance, its business, financial condition and results of operations could be
materially adversely affected. See "Business--Insurance."
Dependence on Trademarks. The Company believes that its registered and
common law trademarks, including "SuperShuttle," "ExecuCar" and the blue and
yellow color combination, have significant value and that certain of its
trademarks are instrumental to its ability to create and sustain demand for and
market its services. There can be no assurance that the steps taken by the
Company to protect its proprietary rights will be adequate or that third parties
will not infringe or misappropriate the Company's trademarks. From time to time,
the Company discovers service providers that are infringing upon the Company's
trademarks. A challenge of a third party's services on the basis of trademark
infringement can be expensive and divert management time and resources. If the
Company is unsuccessful in such a challenge, continued operations by that or any
other third party could adversely impact the SuperShuttle name, result in the
shift of consumer preferences away from the Company in such market and generally
have a material adverse effect on the Company's business, results of operations
and financial condition. Further, most of the Company's trademarks are not
registered in foreign jurisdictions, which may impact the Company's ability to
expand internationally. There can be no assurance that the Company's trademarks
do not or will not violate the proprietary rights of others, particularly in
foreign jurisdictions, that they would be upheld if challenged or that the
Company would, in such an event, not be prevented from using its trademarks, any
of which could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company could
incur substantial costs to defend legal actions taken against it relating to the
Company's use of trademarks, which could have a material effect on the Company's
business, financial condition and results of operations. See
"Business--Intellectual Property."
Significant Government Regulation. The Company's operations are subject to
various state and local regulations primarily designed to promote public safety
by ensuring that regulated transportation providers operate safely, legally and
in the public interest. Individual states and certain local governments require
certain approvals and permits to operate common carrier services. The loss of
such licenses and permits by the Company's existing operations or the failure of
the Company's future operations to receive such licenses and permits would have
a material adverse effect upon the Company's business, financial condition and
results of operations. In addition, the CPUC must approve the acquisition of the
Los Angeles and Orange County operations by the Company. The failure of the CPUC
to grant final approval of these acquisitions would force the Company to
restructure the acquisitions, if possible, to avoid the requirement of CPUC
approval or to rescind them, either of which would have a material adverse
effect on the Company's pro forma results of operations for the periods
presented in this Prospectus and its business, financial condition and results
of operations for future periods. The Company's operations are also subject to
extensive safety requirements and
10
<PAGE> 12
requirements imposed by environmental laws, workplace safety and
anti-discrimination laws, including the Americans with Disabilities Act. Safety,
environmental and vehicle accessibility requirements have increased in recent
years, and this trend could continue. The Federal Highway Administration
("FHWA") and state regulatory agencies have broad power to suspend, amend or
revoke the Company's operating authorizations for failure to comply with
statutory requirements, including safety and insurance requirements. Local
regulations applicable to van services focus on the entry of new operators into
the marketplace and the aggregate number of vehicles which will have authority
to operate as well as the fares that can be charged for providing transportation
services. Changes in these regulations may limit the Company's ability to expand
the size of its van fleet. See "Business--Regulation" and "--Intellectual
Property."
Significant Airport Regulation. All airports require ground transportation
providers to obtain some level of authority to operate from curbside or other
central locations. These airports grant such authority to operate by issuing
permits or licenses. Many airports also confer preferential operating authority
to certain carriers. The bidding process for such preferential operating
authority is generally conducted through a formal request for proposal ("RFP")
process. The RFP process for airport ground transportation services typically
involves the submission of bids by transportation providers to provide a
specified service at a particular airport and the winning bidder or bidders are
typically granted the right to provide outbound transportation services from the
airport, from either designated space within the airport or at a specified curb
location. These permits, licenses or contracts to provide such services issued
by or entered into with airport authorities are generally terminable by such
airport authority upon less than 60 days notice. The RFPs generally require that
a service provider meet certain fitness and financial criteria. There can be no
assurance the Company will, in the future, be a successful bidder or that
competitive service providers will not be awarded contracts at certain airports
to the exclusion of the Company. The failure of the Company to be awarded
contracts by additional airports may constrain the expansion of its operations
at certain airports. Furthermore, there can be no assurance that the Company's
existing or future contracts will be renewed or not otherwise terminated or that
airports will not award additional contracts to competitive providers. The
Company also operates at a number of airports that do not provide contracts to
ground transportation providers. Certain of the Company's services are also
regulated at the local municipality level. Certain municipalities or airports
impose significant usage fees applicable to the Company's services and require
the posting of performance bonds securing the Company's obligations. To the
extent the fees the Company is required to pay increase significantly, it could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business--Airport Relations" and "--Regulation."
Reliance on Franchisees; Regulation of Franchises. The Company has
expanded its presence in certain markets through franchises. The Company relies
on its franchisees to provide consistent, quality service in these locations.
While the Company attempts to ensure that the quality of its brand is maintained
by such franchisees, there can be no assurance that such franchises will not
take actions that could damage the reputation of the Company or the SuperShuttle
brand name and adversely affect the ability of the Company to continue to build
the SuperShuttle brand, any of which would have a material adverse effect upon
the Company's business, financial condition and results of operations. The
Company is subject to federal and state laws, rules and regulations governing
the offer and sale of franchises. A number of states have enacted laws that
require detailed disclosure in the offer and sale of franchises and/or the
registration of the franchisor with state administrative agencies. The Company
is also subject to Federal Trade Commission regulations relating to disclosure
requirements in the sale of franchises. Certain states have enacted, and others
may enact, legislation governing certain aspects of the franchise relationship
and limiting the ability of the franchisor to terminate or refuse to renew a
franchise. The law applicable to franchise sales and relationships is rapidly
developing, and the Company is unable to predict the effect on its franchise
system of additional requirements or restrictions that may be enacted or
promulgated or of the complexity of franchise regulation compliance problems
that may be encountered from time to time. See "Business--Franchising
Relationships."
11
<PAGE> 13
Dependence on Operating Systems. The Company depends on its centralized
reservation, dispatch, scheduling and cashiering systems to process
reservations, effectively manage personnel and vehicle resources and produce
financial and managerial reports and otherwise seek to provide a consistently
high level of service to its passengers. The Company licenses the software for
its digital dispatch system from a third party and relies on this third party to
maintain, update and otherwise enhance this software. See "Business--Integrated
Operating Systems."
Potential Exposure to Environmental Liabilities. The Company is regulated
by federal, state and local environmental laws and regulations, including those
dealing with air emissions, water discharges and the storage, handling and
disposal of petroleum and hazardous substances. Additionally, the Company may be
subject to additional regulation with respect to the ownership and operation of
tanks for the storage of petroleum products, such as gasoline, diesel fuel and
motor and waste oils. Presently, the Company has above ground and underground
storage tanks located at certain of its facilities. There can be no assurance
that the Company's current fuel tanks or those acquired in future acquisitions
will not result in discharge of hazardous materials at the Company's facilities.
Although the Company intends to conduct appropriate due diligence with respect
to environmental matters in connection with future acquisitions, there can be no
assurance that the Company will be able to identify or be indemnified for all
potential environmental liabilities relating to any acquired business. In
addition, in April 1998 the Company received a letter from the lessor of its
Texas facility claiming that SuperShuttle contaminated this property and
requesting that it restore the property to the condition it was in before the
contamination occurred. While the Company believes it was not the cause of any
such contamination and intends to vigorously defend any claim to the contrary,
there can be no assurance that the Company will not incur significant costs
defending this claim, be required to pay damages or incur costs related to the
remediation of this property. Such costs could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business--Regulation" and "--Facilities and Environmental Matters."
Substantial Competition. The ground transportation industry is highly
competitive and fragmented with few significant national participants operating
multi-city ground transportation operations. Each local market usually contains
numerous local participants as well as a few companies offering regional and
national service. Ground transportation service companies compete primarily on
the basis of price, quality, convenience, scope of service and dependability.
The Company also competes with service providers offering alternative modes of
transportation, such as buses, taxis, radio cars and rental cars. In addition to
competing for customers the Company also competes for airport and other
contracts and for possible acquisitions. The Company expects competition to
increase as existing competitors expand and additional companies enter the
market. Certain of the Company's existing competitors have, and any new
competitors that enter the industry may have, access to significantly greater
financial resources than the Company. The Company's ability to effectively
identify and consummate acquisitions may be impacted if current and potential
competitors make strategic acquisitions or establish cooperative relationships,
which could result in fewer acquisition opportunities available to the Company
as well as increased costs for remaining acquisition targets. Competitive market
conditions could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Competition."
Year 2000 Compliance. While the Company believes that its internal
computer systems are Year 2000 compliant and does not anticipate that it will
incur significant expenditures to ensure that such systems will not have
problems relating to date coding in the year 2000 and beyond, there can be no
assurance that such systems are fully Year 2000 compliant. In addition, the
failure of systems of third parties on which the Company's systems and
operations rely to be Year 2000 compliant would have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000."
Control by Existing Management and Stockholders. After completion of this
offering, the Company's executive officers and directors, and entities
affiliated with them, will beneficially own
12
<PAGE> 14
approximately 43.3% of the outstanding shares of the Company's Common Stock
(41.8% if the Underwriter's overallotment option is exercised in full). As a
result, these persons, if acting in concert, will continue to be in a position
to effectively control the outcome of all actions requiring stockholder
approval, including the election of the entire Board of Directors. See
"Principal and Selling Stockholders."
Reliance on Key Personnel. The Company's operations are dependent on the
continued efforts of its executive officers and senior management. Furthermore,
the Company will likely be dependent on the senior management of any businesses
acquired in the future. If any of these persons ceases to continue in his or her
present role, or if the Company is unable to attract and retain other qualified
employees, the Company's business, financial condition and results of operation
could be materially adversely affected. Although the Company has entered into
employment agreements with many of its executive officers and key managers,
there can be no assurance that any individual will continue in his or her
present capacity with the Company or operating subsidiary for any particular
period of time. The Company has employment agreements with certain of its
executive officers and key managers which provide for severance benefits
including the payment of between one and two years salary. In addition, in the
event of a change in control, certain of these executives are entitled to the
acceleration of the vesting of their options and have the right to require the
Company to purchase their vested options at a price that is not less than the
equivalent purchase price of the acquiring company effecting the change of
control. These change in control provisions may have the effect of making it
more difficult for a third party to acquire, or discourage a third party from
attempting to acquire, control of the Company. The Company does not intend to
obtain key man life insurance covering any of its executive officers or other
members of senior management. See "Management" and "Certain Transactions."
Anti-Takeover Provision of the Company's Certificate of Incorporation,
Bylaws and Delaware Law. Certain provisions of the Company's Certificate of
Incorporation and Bylaws, as in effect upon the closing of this offering, may
have the effect of making it more difficult for a third party to acquire, or
discouraging a third party from attempting to acquire, control of the Company.
Such provisions could limit the price that certain investors might be willing to
pay in the future for shares of the Company's Common Stock. In addition, the
Company's Board of Directors has the authority to issue up to 5,000,000 shares
of Preferred Stock and to determine the price, rights, preferences, privileges
and restrictions of those shares without any further vote or action by the
stockholders which could discourage takeover bids for the Common Stock. Certain
provisions of Delaware law applicable to the Company could also delay or make
more difficult a merger, tender offer or proxy contest involving the Company,
including Section 203 of the Delaware General Corporation Law. Such provisions
could have the effect of delaying, deferring or preventing a change in control
of the Company, including, without limitation, discouraging a proxy contest or
making more difficult the acquisition of a substantial block of the Company's
Common Stock. These provisions could also limit the price that investors might
be willing to pay in the future for shares of the Company's Common Stock. See
"Description of Capital Stock--Preferred Stock" and "--Anti-Takeover Provisions
of Delaware Law."
No Prior Trading Market for Common Stock; Potential Volatility of Stock
Price. Prior to this offering, there has been no public market for the Common
Stock and there can be no assurance that an active trading market will develop
or be sustained after this offering. The initial public offering price will be
determined through negotiations between the Company and the representatives of
the Underwriters based on several factors and may not be indicative of the
market price of the Common Stock after this offering. The market price of the
shares of Common Stock is likely to be highly volatile and may be significantly
affected by factors such as actual or anticipated fluctuations in the Company's
operating results, new services provided or new contracts entered into by the
Company, its competitors, government or regulatory action, general market
conditions, changes in financial estimates by securities analysts and other
factors, certain of which could be unrelated to, or outside the control of, the
Company. The stock market has from time to time experienced significant price
and volume fluctuations that have often been unrelated to the operating
performance of particular companies.
13
<PAGE> 15
These broad market fluctuations may adversely affect the market price of the
Company's Common Stock. In the past, following periods of volatility in the
market price of a company's securities, securities class action litigation has
been initiated against the issuing company. There can be no assurance that such
litigation will not occur in the future with respect to the Company. Such
litigation could result in substantial costs and a diversion of management's
attention and resources, which could have a material adverse effect on the
Company's business, financial condition and results of operations. Any
settlement or adverse determination in such litigation would also subject the
Company to significant liability, which would have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Underwriting."
Dilution. Purchasers of the Common Stock offered hereby will suffer
immediate and substantial dilution in the net tangible book value of the Common
Stock from the initial public offering price. To the extent outstanding options
to purchase the Company's Common Stock are exercised, there will be further
dilution. See "Dilution."
No Dividends. The Company has not paid dividends on its Common Stock since
its inception and does not expect to pay cash or stock dividends on its Common
Stock in the foreseeable future. Furthermore, the Company's line of credit
contains certain covenants that, among other things, preclude the payment of
cash dividends by the Company. See "Dividend Policy."
Potential Effects of Shares Eligible for Future Sale on Price of Common
Stock. Upon completion of the offering and based on the shares outstanding as
of May 31, 1998, there will be 9,573,617 shares of Common Stock outstanding. Of
these shares, the 3,320,000 shares sold in the offering (assuming no exercise of
the Underwriters' over-allotment option) will be freely tradable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), unless purchased by "affiliates" of the Company, as that
term is defined in Rule 144 of the Securities Act. The remaining shares will be
"restricted securities" as that term is defined under Rule 144 (the "Restricted
Shares"). Of the Restricted Shares, an aggregate of 3,427,765 shares of Common
Stock (including 267,543 shares issuable upon exercise of vested stock options
and warrants to purchase Common Stock), will be eligible for sale in the public
market subject to Rule 144 and Rule 701 under the Securities Act and the
expiration of a contractual lock-up ending 180 days after the date of the
Prospectus, unless an earlier release of the lock-up is consented to, in whole,
or in part, by Hambrecht & Quist LLC. Subject to compliance with the volume
limitations and other requirements of Rule 144, the remaining Restricted Shares
will become eligible for sale under Rule 144 between February and April 1999.
The Company intends to register on a Form S-8 registration statement under the
Securities Act, during the 180-day lock-up period, a total of 1,403,975 shares
of Common Stock which are subject to outstanding options or reserved for
issuance under the Company's stock option plans. As of May 31, 1998, there were
options to purchase 382,250 shares of Common Stock outstanding of which 81,750
were vested and exercisable. See "Shares Eligible for Future Sale."
After the offering, the holders of approximately 4,689,111 shares of Common
Stock are entitled to certain rights with respect to registration of such shares
under the Securities Act. Registration of such shares under the Securities Act
would result in such shares becoming freely tradable without restriction under
the Securities Act (except for shares purchased by affiliates of the Company)
immediately upon the effectiveness of such registration. If the holders, by
exercising their demand registration rights, cause a large number of securities
to be registered and sold in the public market, such sales could have an adverse
effect on the market price for the Common Stock. If the Company were to include
in a Company-initiated registration, any registrable securities pursuant to the
exercise of piggyback registration rights, such sales may have an adverse effect
on the Company's ability to raise needed capital. See "Description of Capital
Stock--Registration Rights."
Cautionary Language Regarding Forward-Looking Statements. This Prospectus
contains certain forward-looking statements, including, without limitation,
statements concerning the Company's operations, future expansion through
acquisitions and start-up operations, economic performance and
14
<PAGE> 16
financial condition, particularly statements relating to the Company's growth
strategy. The words "believe," "intend," "plan," "expect" and "anticipate" and
other similar expressions generally identify forward-looking statements.
Investors are cautioned not to place undue reliance on these forward-looking
statements. These forward-looking statements are based largely on the Company's
current expectations and are subject to a number of risks and uncertainties,
including, without limitation, those identified under in this "Risk Factors"
section and elsewhere in this Prospectus. Other important factors to consider in
evaluating such forward-looking statements include changes in external market
factors, changes in the Company's business or growth strategy or an inability to
execute its strategy due to changes in its industry or the economy generally,
the emergence of new or growing competitors and various competitive factors. In
light of these risks and uncertainties, there can be no assurance that the
matters referred to in the forward-looking statements contained in this
Prospectus will in fact occur according to the Company's plans, if at all.
15
<PAGE> 17
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 3,000,000 shares of
Common Stock offered hereby by the Company at an assumed initial public offering
price of $9.00 per share after deducting underwriting discounts and estimated
expenses of the offering are estimated to be approximately $24,410,000
($27,322,760 if the Underwriters' over-allotment option is exercised in full).
The Company intends to use a portion of the net proceeds to repay approximately
$700,000 of outstanding indebtedness under various vehicle leases with
maturities ranging from September 1998 to February 2000 and interest rates
ranging from 12% to 18%. The remaining proceeds will be used primarily for
general corporate purposes, potential acquisitions and capital expenditures. The
Company has no agreements, arrangements, or understandings with regard to any
acquisition transaction. Pending such uses, the Company intends to invest such
funds in short-term, investment grade, interest-bearing securities. The Company
will not receive any of the proceeds from the sale of shares by the Selling
Stockholder. See "Management's Discussion and Analysis of Financial Conditions
and Results of Operations--Liquidity and Capital Resources" and "Principal and
Selling Stockholders."
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on shares of its
Common Stock. The Company currently intends to retain its earnings for future
growth and, therefore, does not anticipate paying any cash dividends on its
Common Stock in the foreseeable future. The payment of cash dividends in the
future will be at the discretion of the Board of Directors and will depend upon
the Company's future earnings, if any, its capital requirements, financial
condition and other relevant factors. Furthermore, the Company's line of credit
contains certain covenants that, among other things, preclude the payment of
cash dividends by the Company. See "Risk Factors--No Dividends."
16
<PAGE> 18
CAPITALIZATION
The following table sets forth the capitalization of the Company at March
31, 1998 (i) on an actual basis, (ii) on a pro forma basis giving effect to the
acquisition of the Acquired Companies, and (iii) as adjusted to give effect to
the sale of 3,000,000 shares of Common Stock offered by the Company hereby at an
assumed initial public offering price of $9.00 per share after deducting the
underwriting discount and estimated offering expenses and the initial
application of the estimated net proceeds therefrom and to give effect to
conversion of Series B Convertible Preferred Stock into Common Stock. This table
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto and the Unaudited Pro Forma Combined Financial Statements and
Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1998
----------------------------
PRO AS
ACTUAL FORMA ADJUSTED
------- ------- --------
(UNAUDITED, IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt........................... $ 1,634 $ 4,030 $ 3,467
======= ======= =======
Long-term debt, net of current portion...................... $ 1,259 $ 1,903 $ 1,766
------- ------- -------
Series B Convertible Preferred Stock, par value $.01,
479,475 shares authorized; 479,475 shares issued and
outstanding actual and pro forma; no shares issued and
outstanding as adjusted................................... 4,105 4,105 --
Stockholders' equity:
Common Stock, par value $.01, 20,000,000 shares
authorized; 2,760,862 shares issued and outstanding
actual; 5,806,457 shares issued and outstanding pro
forma; and 9,573,617 shares issued and outstanding as
adjusted(1)........................................... 28 58 96
Preferred Stock, par value $.01, 5,000,000 shares
authorized; no shares issued and outstanding.......... -- -- --
Capital in excess of par value......................... 5,868 21,549 50,026
Accumulated deficit.................................... (4,803) (4,803) (4,803)
------- ------- -------
Total stockholders' equity........................ 1,093 16,804 45,319
------- ------- -------
Total capitalization............................ $ 8,091 $26,842 $50,552
======= ======= =======
</TABLE>
- ------------------------------
(1) Excludes 392,250 shares of Common Stock issuable upon exercise of stock
options issued pursuant to the Company's stock option plans, which have a
weighted average exercise price of $6.26 per share, and 1,011,725 shares of
Common Stock reserved for issuance under the Company's Option Plans. See
"Management--1998 Option Plan" and "--1995 Option Plan." Also excludes
106,356 shares of Common Stock issuable upon exercise of outstanding
warrants which are exercisable at a price of $6.00 per share. See
"Description of Capital Stock--Warrants."
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<PAGE> 19
DILUTION
As of March 31, 1998, the Company had a net tangible book value on a pro
forma basis of approximately $6.3 million, or $0.95 per share of Common Stock.
Net tangible book value per share represents the amount of total tangible assets
less total liabilities on a pro forma basis divided by the number of shares of
Common Stock outstanding. Without taking into account any other changes in net
tangible book value after March 31, 1998, other than to give effect to the
conversion of the Series B Preferred Stock into Common Stock, the issuance of
Common Stock to effect the acquisition of the Acquired Companies and the receipt
by the Company of the net proceeds from the sale of 3,000,000 shares of Common
Stock offered by the Company hereby at an assumed initial public offering price
of $9.00 per share, the pro forma net tangible book value of the Company as of
March 31, 1998 would have been approximately $30.7 million, or $3.20 per share.
This represents an immediate increase in net tangible book value of $2.25 per
share to existing stockholders and an immediate dilution in net tangible book
value of $5.80 per share to new investors purchasing shares of Common Stock in
this offering. See "Risk Factors--Dilution." The following table illustrates
this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $9.00
Pro forma net tangible book value per share before the
offering.............................................. $0.95
Increase per share attributable to new investors....... 2.25
-----
Pro forma net tangible book value per share after the offering..... 3.20
-----
Dilution per share to new investors................................ $5.80
=====
</TABLE>
The following table summarizes, on a pro forma basis, as of March 31, 1998,
the differences between existing stockholders and the new investors with respect
to the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid:
<TABLE>
<CAPTION>
AVERAGE PRICE
SHARES PURCHASED TOTAL CONSIDERATION PER SHARE
-------------------- ---------------------- -------------
NUMBER PERCENT AMOUNT PERCENT
--------- ------- ----------- -------
<S> <C> <C> <C> <C> <C>
Existing
stockholders(1)(2)......... 6,573,617 68.7% $20,908,788 43.6% $3.18
New investors(2)............. 3,000,000 31.3 27,000,000 56.4 9.00
--------- ----- ----------- -----
Total.............. 9,573,617 100.0% $47,908,788 100.0%
========= ===== =========== =====
</TABLE>
- ------------------------------
(1) Excludes, as of March 31, 1998, 1,403,975 shares of Common Stock reserved
for issuance pursuant to the Company's option plans, of which options to
purchase 392,250 shares were outstanding at a weighted average exercise
price of $6.26 per share. Also excludes 106,356 shares of Common Stock
issuable upon exercise of warrants outstanding as of March 31, 1998, at an
exercise price of $6.00 per share. See "Management--Option Plans" and
"Description of Capital Stock--Warrants."
(2) Sales by the Selling Stockholders in this offering will reduce the number of
shares held by existing stockholders to 6,253,617 shares, or approximately
65.3% (6,103,617 shares or approximately 63.8% if the Underwriters'
over-allotment option is exercised in full) of the total number of shares of
Common Stock outstanding after this offering and will increase the number of
shares held by new investors to 3,320,000 or approximately 34.7% (3,470,000
shares or approximately 36.2% if the Underwriters' over-allotment option is
exercised in full) of the total number of shares of Common Stock outstanding
after this offering. See "Principal and Selling Stockholders."
18
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data as of and for the fiscal
years ended September 30, 1993, 1994 and 1995 are derived from the Consolidated
Financial Statements of the Company and have been audited by Arthur Andersen
LLP, independent public accountants. The selected consolidated financial data as
of and for the fiscal years ended September 30, 1996 and 1997 are derived from
the Consolidated Financial Statements of the Company included elsewhere in this
Prospectus and have been audited by Deloitte & Touche LLP, independent public
accountants. The selected financial data as of and for the six months ended
March 31, 1998 and March 31, 1997, have been derived from unaudited financial
statements which, in the opinion of management, reflect all adjustments,
including only normal recurring adjustments, that the Company considers
necessary for fair presentation of the consolidated financial positions and
results of operations for these periods. The pro forma selected financial data
has been derived from the Unaudited Pro Forma Combined Financial Statements
included elsewhere in this Prospectus. The following financial information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Company's Consolidated
Financial Statements, including the Notes thereto, and the Company's Unaudited
Pro Forma Combined Financial Statements appearing elsewhere in this Prospectus.
The operating results for the periods presented are not necessarily indicative
of the results to be expected for the full fiscal year or any other period.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED SEPTEMBER 30, ENDED MARCH 31,
---------------------------------------------------------- -------------------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------------------ -------- --------------------
PRO PRO
ACTUAL FORMA(1) ACTUAL FORMA(1)
------ -------- ------ --------
(IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Net revenues(2).................. $43,936 $40,215 $28,873 $32,304 $33,667 $75,065 $ 16,320 $18,225 $39,710
Direct cost of revenues.......... 25,483 23,325 16,731 18,760 19,862 46,267 9,699 11,014 24,900
------- ------- ------- ------- ------- ------- -------- ------- -------
Gross profit..................... 18,453 16,890 12,142 13,544 13,805 28,798 6,621 7,211 14,810
Other operating expenses......... 9,886 9,048 6,973 7,281 7,723 15,160 3,947 3,925 7,310
Selling, general and
administrative expenses........ 8,640 7,624 5,243 7,364 5,446 9,801 2,742 2,829 5,205
Unusual item..................... 1,307 -- (754) (745) -- -- -- -- --
Amortization of goodwill......... -- -- -- -- -- 364 -- -- 183
------- ------- ------- ------- ------- ------- -------- ------- -------
Income (loss) from operations.... (1,380) 218 680 (356) 636 3,473 (68) 457 2,112
Other income (expense)--net...... (484) (372) 162 403 577 (690) 702 238 (356)
------- ------- ------- ------- ------- ------- -------- ------- -------
Income (loss) before income taxes
and extraordinary item......... (1,864) (154) 842 47 1,213 2,783 634 695 1,756
Income tax (provision) benefit... (29) (30) (7) (7) 353 (423) -- 2,087 1,593
Minority interest ............... -- -- -- -- (5) (5) -- 98 98
------- ------- ------- ------- ------- ------- -------- ------- -------
Net income (loss) before
extraordinary item............. (1,893) (184) 835 40 1,561 2,355 634 2,880 3,447
Extraordinary item--gain on debt
refinancing.................... -- 2,110 -- -- -- -- -- -- --
Less preferred stock accretion... -- -- -- (91) (70) (70) (35) (35) (35)
------- ------- ------- ------- ------- ------- -------- ------- -------
Net income (loss) to common
stockholders................... $(1,893) $ 1,926 $ 835 $ (51) $ 1,491 $ 2,285 $ 599 $ 2,845 $ 3,412
======= ======= ======= ======= ======= ======= ======== ======= =======
Net income (loss) per share:
Basic.......................... $ (1.09) $ 1.11 $ 0.48 $ (0.03) $ 0.54 $ 0.39 $ 0.22 $ 1.03 $ 0.59
======= ======= ======= ======= ======= ======= ======== ======= =======
Diluted........................ $ (1.03) $ 0.95 $ 0.38 $ (0.03) $ 0.42 $ 0.34 $ 0.17 $ 0.81 $ 0.51
======= ======= ======= ======= ======= ======= ======== ======= =======
Shares used in calculation of
net income (loss) per share:
Basic(3)....................... 1,738 1,738 1,748 1,853 2,754 5,799 2,746 2,761 5,806
Diluted(3)..................... 1,835 2,028 2,175 1,949 3,512 6,663 3,504 3,519 6,670
</TABLE>
19
<PAGE> 21
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED SEPTEMBER 30, ENDED MARCH 31,
---------------------------------------------------------- -----------------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------------------ -------- ------------------
PRO PRO
ACTUAL FORMA(1) ACTUAL FORMA(1)
SELECTED OPERATING DATA: ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Company-owned operations(4)........ 3 3 3 4 5 8 4 5 8
Franchise operations(4)............ 3 7 8 8 8 5 9 8 5
Number of vans(5).................. 399 524 582 628 683 683 628 763 736
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1998
SEPTEMBER 30, ------------------
----------------------------------------------- PRO
1993 1994 1995 1996 1997 ACTUAL FORMA(1)
------- ------- ------- ------- ------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents(6)................... $ 1,151 $ 1,013 $ 3,156 $ 2,246 $ 1,592 $ 1,858 $ 3,204
Working capital (deficit)...................... (8,944) (7,327) (5,101) (3,098) (2,101) (666) (3,666)
Total assets................................... 5,838 6,454 14,486 12,021 10,650 12,456 34,674
Long-term debt, less current portion........... 942 696 3,236 1,967 1,283 1,259 1,903
Series B Convertible Preferred Stock........... -- -- 3,909 4,000 4,070 4,105 4,105
Total stockholders' (deficit) equity........... (6,697) (4,774) (5,200) (3,384) (1,752) 1,093 16,804
</TABLE>
- ------------------------------
(1) Represents actual operating results and balances for the periods presented
and actual results and balances of each of the Acquired Companies along with
adjustments which give effect to events that are directly attributable to
the Acquired Companies and which are expected to have a continuing impact.
This pro forma information should be read in connection with the Unaudited
Pro Forma Combined Financial Statements included in this Prospectus.
(2) The decline in revenues from 1994 to 1995 is the result of the sale of the
Orange County and Los Angeles operations in June 1994 and September 1994,
respectively.
(3) See Note 1 of Notes to Consolidated Financial Statements for a description
of the calculation of basic and diluted income per share and Note 10 to
Unaudited Pro Forma Combined Financial Statements for a description of the
calculation of pro forma and diluted net income per share.
(4) Numbers are at period end. The Company's Baltimore operation, a 50% owned
franchise, is included in Company-owned operations.
(5) Includes SuperShuttle shared ride vans for both Company-owned and franchise
operations. Excludes mini-buses, sedans and paratransit vehicles.
(6) Includes restricted cash.
20
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Company's Consolidated Financial
Statements and Notes thereto included elsewhere in this Prospectus. In addition
to the historical information contained herein, the discussion in this
Prospectus contains certain forward-looking statements that involve unknown
risks and uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they may appear in this Prospectus. The Company's actual results and
the timing of certain events could differ materially from those discussed
herein. Factors that could cause or contribute to such differences include, but
are not limited to, those discussed in "Risk Factors" as well as those discussed
elsewhere herein. The Company's fiscal year ends on September 30.
OVERVIEW
SuperShuttle was founded in 1985 and has become a leading provider of
nationally-branded, door-to-door shared ride airport ground transportation
services in the United States. Since its inception, the Company has expanded
through opening Company-owned operations and establishing franchise operations.
From 1985 to 1990, the Company focused its efforts on Company-owned operations,
opening operations in five cities during this period. The Company sold its Miami
and two Los Angeles operations in 1990 and 1994, respectively, to three
franchisees. From 1994 to 1997, the Company added five franchise operations.
During this same period, the Company developed its centralized reservation
system, REZ Central, its digital dispatch system ("DDS"), and its integrated
operating systems to support increased passenger volume in existing cities and
the addition of new locations throughout the United States. REZ Central was
implemented in 1995 and the Company recently installed DDS in Phoenix and San
Francisco. The Company is currently installing DDS in Los Angeles and Orange
County and plans to implement DDS in Dallas before the end of fiscal 1998.
The Company has also begun to pursue growth opportunities through
acquisitions of its franchises and other transportation companies and through
start-up operations. Toward this goal, the Company purchased a 50% interest in
its Baltimore franchise in September 1997, completed its purchase of the
Acquired Companies in March 1998 and opened a start-up operation in New York
City in May 1998. The acquisition of the Acquired Companies was accounted for
under the purchase method of accounting. As a result, the pro forma results
discussed below include the historical financial statements of the Company and
each of the Acquired Companies along with adjustments which give effect to
events that are directly attributable therefrom and which are expected to have a
continuing impact. During the periods presented below, the Acquired Companies
were not under common control or management and, therefore, the data presented
may not be comparable to or indicative of post-combination results achieved by
the Company. There can be no assurance that the Company will be able to
successfully integrate the Acquired Companies or that their historical revenues
or earnings will not decline. In addition, the acquisition of the Los Angeles
and Orange County operations (the "California Acquired Companies") remain
subject to approval by the CPUC. If the CPUC fails to grant approval of these
acquisitions, the Company would be forced to restructure the acquisitions, if
possible, to avoid the requirement of CPUC approval, or to rescind them, either
of which would have a material adverse effect on the Company's pro forma results
of operations for the periods presented in this Prospectus and its business,
financial condition and results of operations for future periods. See "Risk
Factors--Absence of Combined Operating History; Need for Regulatory Approvals."
The net revenues and net income for the Company in fiscal 1997 were
approximately $33.7 million and approximately $1.6 million, respectively. On a
pro forma basis, the Company's net revenues and net income in fiscal 1997 would
have been approximately $75.1 million and approximately $2.4 million,
respectively, after giving effect to the Acquisitions as if they had occurred on
October 1, 1996. This represents a 123% increase in net revenues and a 50%
increase in net income. The Company purchased the Acquired Companies in all
stock transactions, resulting in the issuance of shares of Common Stock
21
<PAGE> 23
equal to approximately 46% of the total outstanding equity of the Company after
giving effect to the issuance of such shares.
The Company generates revenues from transportation services provided by its
shared ride businesses and other transportation services, including contracted
paratransit, bus and mini-bus services and its executive sedan services. In
addition, the Company receives revenues from fees paid by its franchise
operations which represented less than 3% of the Company's net revenues for all
periods presented. The Company collects its fares both on a flat rate fare basis
per individual passenger and, to a lesser extent, through contracted fees with
corporations, municipalities and other institutions.
The Company's direct cost of revenues consists of driver salaries and
benefits, fuel costs, airport fees, and vehicle depreciation and maintenance
costs. The Company's other operating expenses consist of personnel, dispatch,
reservations and vehicle insurance costs specific to each of its Company-owned
locations. The Company expects these costs to fluctuate in future periods due to
a number of factors, including an increase in depreciation costs as the Company
expands its fleet.
Selling, general and administrative expenses consist primarily of
compensation and related benefits for the Company's officers and administrative
personnel, marketing and promotional expenses, professional fees and rents. The
Company expects selling, general and administrative expenses to increase in
absolute dollars as the Company expands its operations, increases its marketing
efforts and incurs additional expenses associated with being a public company.
Deferred income tax assets consist primarily of net operating loss
carryforwards and the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis. At September 30, 1997, the Company
had an approximately $2.5 million valuation allowance against its approximately
$2.8 million net deferred income tax assets. During the six months ended March
31, 1998, after considering recent operating results and the expected future
effect of the Acquired Companies, the Company determined that realization of its
deferred income tax assets was considered more likely than not. As a result, the
Company reversed the entire balance of the deferred tax valuation allowance
resulting in an income tax benefit of approximately $2.1 million during the six
months ended March 31, 1998. See Note 11 to Notes to Consolidated Financial
Statements.
The issuance of Common Stock on March 31, 1998, as consideration for the
Acquired Companies, resulted in a change in ownership, as defined under Section
382 of the Internal Revenue Code, as amended. Due to this change in ownership,
the Company is subject to an annual limitation of approximately $700,000 on the
use of the approximately $5.1 million of net operating losses accumulated
through March 31, 1998.
22
<PAGE> 24
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
relationship of certain items from the Company's Consolidated Statement of
Income to net revenues. With respect to pro forma results of operations, see
Unaudited Pro Forma Combined Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES
-------------------------------------------------------
FISCAL YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31,
------------------------------ ----------------------
1995 1996 1997 1997 1998
---- ---- -------------- ---- --------------
PRO PRO
ACTUAL FORMA ACTUAL FORMA
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues............................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Direct cost of revenues.................. 57.9 58.1 59.0 61.6 59.4 60.4 62.7
----- ----- ----- ----- ----- ----- -----
Gross profit............................. 42.1 41.9 41.0 38.4 40.6 39.6 37.3
Other operating expenses................. 24.2 22.5 22.9 20.2 24.2 21.5 18.4
Selling, general and administrative
expenses............................... 18.1 22.8 16.2 13.1 16.8 15.6 13.1
Unusual items............................ (2.6) (2.3) 0.0 0.0 0.0 0.0 0.0
Amortization of goodwill................. 0.0 0.0 0.0 0.5 0.0 0.0 0.5
----- ----- ----- ----- ----- ----- -----
Income (loss) from operations............ 2.4 (1.1) 1.9 4.6 (0.4) 2.5 5.3
Other income (expense)--net.............. 0.5 1.2 1.7 (0.9) 4.3 1.3 (0.9)
----- ----- ----- ----- ----- ----- -----
Income before income taxes............... 2.9 0.1 3.6 3.7 3.9 3.8 4.4
Income tax (provision) benefit........... 0.0 0.0 1.0 (0.6) 0.0 11.5 4.1
Minority interest........................ 0.0 0.0 0.0 0.0 0.0 0.5 0.2
----- ----- ----- ----- ----- ----- -----
Net income............................... 2.9 0.1 4.6 3.1 3.9 15.8 8.7
Less preferred stock accretion........... 0.0 (0.3) (0.2) (0.1) (0.2) (0.2) (0.1)
----- ----- ----- ----- ----- ----- -----
Net income (loss) attributable to common
stockholders........................... 2.9% (0.2)% 4.4% 3.0% 3.7% 15.6% 8.6%
===== ===== ===== ===== ===== ===== =====
</TABLE>
COMPARISON OF SIX MONTHS ENDED MARCH 31, 1997 AND 1998
Net revenues. Net revenues increased 11.7% from approximately $16.3
million in the first six months of fiscal 1997 to approximately $18.2 million in
the first six months of fiscal 1998. The increase in net revenues was primarily
attributable to revenues of the Baltimore franchise operation which were
included in the Company's consolidated net revenues following its acquisition of
a 50% equity interest therein in September of 1997. Net revenues also grew
slightly as a result of an increase in passenger volume at existing operations.
Gross margin. Gross margin decreased from 40.6% in the first six months of
fiscal 1997 to 39.6% in the first six months of fiscal 1998. The decrease was
due primarily to the lower gross margin of the Baltimore franchise operation
resulting from lower vehicle and driver utilization and the payment of drivers
on a salary versus commission. Since the Company began to manage the Baltimore
franchise operation in September 1997, it has taken steps to improve the margins
thereof by increasing the residential customer base and converting the driver
pay from fixed salary to a commission basis.
Other operating expenses. Other operating expenses remained relatively
constant at approximately $3.9 million for the first six months of fiscal 1997
and 1998 as a result of an increase in operating expenses related to the
Baltimore operation which were offset by decreases in other operating expenses
during the first half of fiscal 1997. Other operating expenses decreased as a
percentage of net revenues from 24.2% in the first six months of fiscal 1997 to
21.5% in the first six months of fiscal 1998.
23
<PAGE> 25
The decrease in other operating expenses as a percentage of net revenues was due
primarily to the fact that these expenses increased at a slower rate than net
revenues.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 3.7% from approximately $2.7 million in the
first six months of fiscal 1997 to approximately $2.8 million in the first six
months of fiscal 1998, but decreased as a percentage of net revenues from 16.8%
in the first six months of fiscal 1997 to 15.6% in the first six months of
fiscal 1998. The decrease in selling, general and administrative expenses as a
percentage of net revenues was due primarily to the fact that these expenses
increased at a slower rate than net revenues. The Company expects selling,
general and administrative expenses to increase in absolute dollars as the
Company expands its operations, increases its marketing efforts and incurs
additional expenses associated with being a public company.
Other income (expense)--net. Other income, net decreased from
approximately $702,000 in the first six months of fiscal 1997 to approximately
$237,000 in the first six months of fiscal 1998. This decrease was due primarily
to the recognition of a deferred gain in fiscal 1997 related to the 1994 sale of
the Company's Orange County operation, offset in part by the sale of a radio
frequency and a decrease in interest expense in fiscal 1998. As a result of the
sale of the Orange County operation, the Company recorded a deferred gain of
approximately $989,000 in 1994 that was recognized on the installment method
over five years. During fiscal 1996, approximately $237,000 of the deferred gain
was recognized as other income. During fiscal 1997, the Company determined that
collectibility of the remaining note receivable balance was reasonably assured
and therefore recognized as income the remaining deferred gain balance of
approximately $717,000. See Note 9 of Notes to Consolidated Financial
Statements.
Income tax (provision) benefits. The Company recorded an approximately
$2.1 million income tax benefit during the six months ended March 31, 1998, as a
result of reversing its deferred income tax valuation allowance. The Company did
not record any income tax expense during the six months ended March 31, 1997,
due to the utilization of net operating loss carryforwards. See Note 11 of Notes
to Consolidated Financial Statements.
Minority interest. Minority interest relates to the 50% equity interest in
the Baltimore franchise operation not currently owned by the Company. The
Company recorded approximately $98,000 in losses in the first six months of
fiscal 1998 related to the minority interest.
COMPARISON OF YEARS ENDED SEPTEMBER 30, 1996 AND 1997
Net revenues. Net revenues increased 4.2% from approximately $32.3 million
in fiscal 1996 to approximately $33.7 million in fiscal 1997. The increase in
net revenues was due primarily to growth in passenger volume in van services
and, to a lesser extent, an increase in other transportation services, including
contracted mini-bus and bus services and ExecuCar sedan services.
Gross margin. Gross margin decreased from 41.9% in fiscal 1996 to 41.0% in
fiscal 1997, due primarily to increases in driver related expenses and fuel
costs.
Other operating expenses. Other operating expenses increased 6.1% from
approximately $7.3 million in fiscal 1996 to approximately $7.7 million in
fiscal 1997. The increase was due primarily to increases in costs related to REZ
Central in fiscal 1997, offset in part by reductions in operations personnel.
Other operating expenses as a percentage of net revenues increased slightly from
22.5% in fiscal 1996 to 22.9% in fiscal 1997.
Selling, general and administrative expenses. Selling, general and
administrative expenses decreased 26.0% from approximately $7.4 million in
fiscal 1996 to approximately $5.4 million in fiscal 1997 and decreased as a
percentage of net revenues from 22.8% in fiscal 1996 to 16.2% in fiscal 1997.
The decrease in selling, general and administrative expenses was due primarily
to higher costs in fiscal 1996 associated with the development of the Company's
REZ Central and DDS systems and, to a lesser
24
<PAGE> 26
extent, severance and other related costs pertaining to changes in management
and in the Company's accounting department.
Unusual items. In fiscal 1996, the Company recognized a one-time gain of
approximately $745,000 attributable to the reversal of a portion of a $1.3
million accrual established in fiscal 1993 for certain claims made against the
Company. During fiscal 1996, the accrual was reduced to the amount of the legal
settlements made by the Company during that year. See Note 6 of Notes to
Consolidated Financial Statements.
Other income (expense)--net. Other income, net increased from
approximately $403,000 in fiscal 1996 to approximately $577,000 in fiscal 1997
due primarily to an increase in the recognition of a deferred gain, offset
partially by a decrease in interest and other income. The deferred gain is
associated with the sale of the Orange County operation in June 1994. See Note 9
of Notes to Consolidated Financial Statements.
Income tax (provision) benefit. The Company recorded an income tax benefit
of approximately $353,000 in fiscal 1997, which was primarily due to the
establishment of a deferred tax asset. During fiscal 1997 and fiscal 1996, the
Company did not have any other income tax expense due to utilization of net
operating loss carryforwards.
COMPARISON OF YEARS ENDED SEPTEMBER 30, 1995 AND 1996
Net revenues. Net revenues increased 11.9% from approximately $28.9
million in fiscal 1995 to approximately $32.3 million in fiscal 1996. The
increase was attributable to the addition of the Company's Sacramento start-up
operation in fiscal 1996 and, to a lesser extent, an increase in passenger
volume at existing Company-owned operations.
Gross margin. Gross margin decreased slightly from 42.1% in fiscal 1995 to
41.9% in fiscal 1996.
Other operating expenses. Other operating expenses increased 4.4% from
approximately $7.0 million in fiscal 1995 to approximately $7.3 million in
fiscal 1996, but decreased as a percentage of net revenues from 24.2% in fiscal
1995 to 22.5% in fiscal 1996. The decrease in other operating expenses as a
percentage of net revenues was due primarily to the fact that a significant
portion of these expenses are fixed and, as a result, increased at a slower rate
than net revenues.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 40.5% from approximately $5.2 million in
fiscal 1995 to approximately $7.4 million in fiscal 1996 and increased as a
percentage of net revenues from 18.1% in fiscal 1995 to 22.8% in fiscal 1996.
These increases were due primarily to higher costs in fiscal 1996 associated
with the development of the REZ Central and DDS systems and, to a lesser extent,
severance and other related costs pertaining to changes in management and in the
Company's accounting department.
Other income (expense)--net. Other income, net increased from
approximately $162,000 in fiscal 1995 to approximately $403,000 in fiscal 1996
due primarily to the recognition of a portion of the deferred gain associated
with the sale of the Company's Orange County operation.
Income tax (provision) benefit. The Company recorded income tax provisions
of $7,000 in both fiscal 1995 and 1996 for alternative minimum income taxes. The
Company did not have any other income tax expense during fiscal 1995 and 1996
due to utilization of net operating loss carryforwards.
25
<PAGE> 27
SELECTED QUARTERLY RESULTS OF OPERATIONS
The following table sets forth selected unaudited quarterly consolidated
operating data for the six quarters ended March 31, 1998. This data has been
derived from unaudited financial statements that, in the opinion of management,
include all adjustments (consisting only of normal recurring adjustments)
necessary for the fair presentation of such information when read in conjunction
with the Company's Consolidated Financial Statements and the Notes thereto. The
operating results for any quarter are not necessarily indicative of the
operating results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------
DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1996 1997 1997 1997 1997 1998
-------- -------- -------- --------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Net revenues............................. $ 8,309 $ 8,011 $ 8,395 $ 8,952 $ 9,464 $ 8,761
Direct cost of revenues.................. 4,867 4,831 4,805 5,359 5,566 5,448
------- ------- ------- ------- ------- -------
Gross profit............................. 3,442 3,180 3,590 3,593 3,898 3,313
Other operating expenses................. 2,006 1,940 1,856 1,921 2,024 1,901
Selling, general and administrative
expenses............................... 1,519 1,223 1,257 1,447 1,393 1,436
------- ------- ------- ------- ------- -------
Income (loss) from operations............ (83) 17 477 225 481 (24)
Other income (expense)--net.............. 32 669 166 (290) 37 201
------- ------- ------- ------- ------- -------
Income (loss) before income taxes........ (51) 686 643 (65) 518 177
Income tax (provision) benefit........... -- -- -- 353 90 1,997
Minority interest........................ -- -- -- (5) 28 70
------- ------- ------- ------- ------- -------
Net income (loss)........................ (51) 686 643 283 636 2,244
Less preferred stock accretion........... (17) (18) (17) (18) (17) (18)
------- ------- ------- ------- ------- -------
Net income (loss) to common
stockholders........................... $ (68) $ 668 $ 626 $ 265 $ 619 $ 2,226
======= ======= ======= ======= ======= =======
Net income (loss) per share:
Basic(1)............................... $ (0.02) $ 0.24 $ 0.23 $ 0.10 $ 0.22 $ 0.81
======= ======= ======= ======= ======= =======
Diluted(1)............................. $ (0.02) $ 0.19 $ 0.18 $ 0.08 $ 0.18 $ 0.63
======= ======= ======= ======= ======= =======
Shares used in calculation of net income
(loss) per share:
Basic(1)............................... 2,732 2,761 2,761 2,761 2,761 2,761
Diluted(1)............................. 2,828 3,519 3,519 3,519 3,519 3,519
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES
--------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net revenues............................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Direct cost of revenues.................... 58.6 60.3 57.2 59.9 58.8 62.2
----- ----- ----- ----- ----- -----
Gross profit............................... 41.4 39.7 42.8 40.1 41.2 37.8
Other operating expenses................... 24.1 24.2 22.1 21.4 21.4 21.7
Selling, general and administrative
expenses................................. 18.3 15.3 15.0 16.2 14.7 16.4
----- ----- ----- ----- ----- -----
Income (loss) from operations.............. (1.0) 0.2 5.7 2.5 5.1 (0.3)
Other income (expense)--net................ 0.4 8.4 2.0 (3.2) 0.4 2.3
----- ----- ----- ----- ----- -----
Income (loss) before income taxes.......... (0.6) 8.6 7.7 (0.7) 5.5 2.0
Income tax (provision) benefit............. 0.0 0.0 0.0 3.9 0.9 22.8
Minority interest.......................... 0.0 0.0 0.0 (0.1) 0.3 0.8
----- ----- ----- ----- ----- -----
Net income (loss).......................... (0.6) 8.6 7.7 3.1 6.7 25.6
Less preferred stock accretion............. (0.2) (0.2) (0.2) (0.2) (0.2) (0.2)
----- ----- ----- ----- ----- -----
Net income (loss) to common stockholders... (0.8)% 8.4% 7.5% 2.9% 6.5% 25.4%
===== ===== ===== ===== ===== =====
</TABLE>
- ------------------------------
(1) See Note 1 to Notes to Consolidated Financial Statements for a description
of the calculation of basic and diluted net income per share.
26
<PAGE> 28
The Company has experienced and expects to continue to experience
seasonality in its business, reflecting seasonal fluctuations in the travel
industry. Demand for the Company's services is typically lower in the Company's
second fiscal quarter, which ends in March, due to a decline in travel and
tourism during that period. Seasonality in the travel industry is likely to
cause quarterly fluctuations in the Company's operating results and could have a
material adverse effect on the Company's business, financial condition and
results of operations. Since a significant portion of the Company's expenses are
fixed, a decrease in demand has a disproportionate impact on the Company's net
income.
The Company's estimates of future expense levels are based primarily on
management's estimates of future demand including projections for both existing
and new operations. Future demand for new operations, whether acquisitions or
start-ups, is difficult to forecast since the Company has not operated in those
markets or managed such operations in the past. In addition, since expense
levels are fixed to a large extent, the Company may be unable or unwilling to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Accordingly, any significant shortfall in revenues would likely have
an immediate material adverse effect on the Company's business, financial
condition and results of operations. Further, the Company currently intends to
substantially increase its operating expenses to fund increased sales and
marketing in new and existing markets and to continue to develop and upgrade its
operating systems. In addition, in the event the Company acquires additional
operations, the Company's operating expenses would likely be substantially
increased. To the extent such expenses precede or are not followed by increased
revenues, the Company's operating results could be materially adversely
affected. Further, the Company is required to expense substantially all costs
associated with start-up operations, which could materially adversely affect the
Company's quarterly operating results.
The Company expects to experience fluctuations in its future quarterly
operating results due to a variety of factors, many of which are outside the
Company's control. Factors that may adversely affect the Company's quarterly
operating results include, but are not limited to: (i) the Company's ability to
retain existing customers, attract new customers at a steady rate and maintain
customer satisfaction; (ii) changes in fuel prices, wages and other operating
expenses; (iii) changes in economic conditions affecting the travel industry;
(iv) the Company's ability to invest in and implement its systems and
infrastructure to support continued growth; (v) potential system failures or
other difficulties encountered in operating the Company's centralized
reservation and digital dispatch systems; (vi) the amount and timing of
operating costs and capital expenditures relating to expansion of the Company's
business, operations and infrastructure; (vii) delays and costs associated with
complying with governmental regulations; (viii) seasonality; (ix) costs and
amortization related to future acquisitions; (x) the amount and timing of
marketing expenditures; and (xi) other unforeseen events affecting the travel
industry.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations primarily through
the private placement of equity securities, lease financing and cash flow from
operating activities. As of March 31, 1998, the Company had cash and cash
equivalents of approximately $1.9 million.
Net cash provided by operating activities in fiscal 1995 was approximately
$988,000, consisting primarily of net income, depreciation and amortization and
increases in accounts payable, offset primarily by increases in accounts
receivable and prepaid expenses. Net cash used in operating activities in fiscal
1996 was approximately $363,000, consisting primarily of decreases in accrued
liabilities and in accounts payable, offset in part by net income, depreciation
and amortization and an increase in other receivables. Net cash provided by
operating activities in fiscal 1997 was approximately $968,000, consisting
primarily of net income, depreciation and amortization, offset in part by
decreases in accrued liabilities and a recognition of deferred gain on the sale
of the Orange County operation. Net cash provided by operating activities in the
first six months of fiscal 1998 was $792,000, consisting primarily of net
income, depreciation and amortization, offset in part by various decreases in
27
<PAGE> 29
working capital and a gain on the sale of a radio frequency and the recognition
of an income tax benefit due to the elimination of the valuation allowance in
the amount of $2.1 million.
Net cash used by investing activities in fiscal 1995 was approximately $4.1
million, consisting primarily of purchases of vehicles. Net cash used by
investing activities in fiscal 1996 was approximately $609,000, consisting
primarily of purchases of vehicles, offset in part by collection of notes
receivable in connection with the 1994 sale of the Company's Orange County and
Los Angeles operations. Net cash provided by investing activities in fiscal 1997
and the first six months of fiscal 1998 was approximately $459,000 and $261,000,
respectively, consisting primarily of collection of notes receivable in
connection with the 1994 sale of the Company's Orange County and Los Angeles
operations, which was substantially offset by vehicle purchases.
Net cash provided by financing activities in fiscal 1995 was approximately
$4.9 million, consisting primarily of proceeds from borrowings of long term debt
and net proceeds from the sale of Series B Convertible Preferred Stock, offset
in part by principal payments on long-term debt and capital leases. Net cash
used by financing activities in fiscal 1996 was approximately $149,000,
consisting primarily of principal payments on long-term debt and capital leases,
substantially offset by proceeds from sales of Common Stock and proceeds from
borrowings of long-term debt. Net cash used in financing activities in fiscal
1997 and the first six months of fiscal 1998 were approximately $2.0 million and
$726,000, respectively, and consisted primarily of payments on long-term debt,
offset in part by proceeds from long-term debt.
The Company owns an approximately 15% equity interest in its Washington,
D.C. franchisee, Washington Shuttle, Inc. ("Washington Shuttle"). The Company
has unconditionally guaranteed indebtedness of Washington Shuttle owed to First
Union National Bank of Virginia ("First Union"). As of March 31, 1998,
Washington Shuttle was indebteded to First Union in the aggregate amount of
approximately $986,000.
On September 1, 1997, the Company acquired a 50% equity interest in Shuttle
Express, Inc., a Baltimore-based SuperShuttle franchise. As consideration, the
Company agreed to assume management of daily operations, contribute capital on
an as needed basis in amounts not to exceed an aggregate of $700,000 and assume
the outstanding indebtedness on vehicles of $134,000. In addition, the Company
agreed to pay the minority shareholder consideration of $175,000 in the event
that the Maryland Aviation Administration awards a new contract upon expiration
of the current contract on December 31, 2002. As of March 31, 1998, the Company
has contributed approximately $200,000 in capital to this operation in
accordance with the terms of the agreement.
In March of 1998, the Company entered into a Credit Agreement with Imperial
Bank of Arizona which provides for a $1.2 million revolving line of credit to be
used for acquisitions and working capital. The amounts outstanding under this
credit facility are due on March 16, 1999. The credit facility is secured by the
Company's note receivables, trade receivables and other unsecured assets. The
credit facility requires the Company to meet certain covenants, including
minimum current, net worth and cash flow ratios, as well as a minimum debt to
equity ratio. Loans made under the line bear interest at the bank's prime
lending rate plus one percent (9.5% as of March 31, 1998). As of March 31, 1998,
the Company has no borrowings outstanding under the credit facility.
Since September 30, 1997, the Company has established additional vehicle
and equipment lease lines. The Company established an $800,000 equipment
financing line to finance its digital dispatch systems in Phoenix, San Francisco
and Dallas. This line includes 48 monthly lease payments which bear interest at
approximately 8% per annum. The Company also has numerous financing arrangements
aggregating approximately $2.9 million with lease finance companies to finance
its vehicles. The Company typically finances its vans for 36 months under
financing arrangements which bear interest at annual interest rates which vary
between 8 to 18%. In fiscal 1997 and for the first six months of 1998 the
Company established new van financing arrangements which bear interest at
approximately 9% per annum. Future principal payments are approximately $1.1
million for the remainder of fiscal 1998, approximately $1.3 million in fiscal
1999, and approximately $600,000 in fiscal 2000.
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<PAGE> 30
The Company has approximately $5.1 million net operating loss carryforwards
available for federal income tax purposes. The Company has an annual limitation
for the use of these loss carryforwards of approximately $700,000.
The Company anticipates that capital expenditures for the remainder of
fiscal 1998 and fiscal 1999 will be approximately $2.0 million and approximately
$8.0 million, respectively, relating primarily to the purchase of vehicles and
digital dispatch systems. The Company's capital expenditure and working capital
requirements in the foreseeable future will change depending on the rate of the
Company's expansion, the Company's operating results and other adjustments in
its operating plan as needed in response to competition, acquisition
opportunities or unexpected events. The Company believes that the net proceeds
from this offering, together with available borrowings, its current cash and
cash equivalents and cash flow from operations, will be sufficient to meet its
anticipated cash needs for working capital and capital expenditures through
fiscal 1999. If the Company is unable to meet its liquidity requirements or if
the Company's liquidity requirements increase as a result of acquisitions,
start-up operations or otherwise, the Company may require additional financing.
The sale of additional equity or convertible debt securities could result in
additional dilution to the Company's stockholders. There can be no assurance
that financing will be available in sufficient amounts or on terms acceptable to
the Company, if at all. See "Risk Factors--Capital Requirements; Availability of
Financing" and "Use of Proceeds."
YEAR 2000 COMPLIANCE
The Company believes that its internal computer systems are Year 2000
compliant and does not anticipate that it will incur significant expenditures to
ensure that such systems will not have problems relating to date coding in the
year 2000 and beyond, however, there can be no assurance that such systems are
fully Year 2000 compliant. In addition, the failure of systems of third parties
on which the Company's systems and operations rely to be Year 2000 compliant
would have a material adverse effect on the Company's business, financial
condition and results of operations. See "Risk Factors--Year 2000 Compliance."
29
<PAGE> 31
BUSINESS
GENERAL
SuperShuttle is a leading provider of nationally-branded, door-to-door
airport shared ride services. SuperShuttle has Company-owned and franchise
operations in 15 cities serving 18 airports with a fleet of approximately 800
vans and, in 1997, provided shared ride services through these operations to
over seven million passengers. SuperShuttle offers consumers a reliable, safe,
convenient and economical nationally branded transportation alternative to
generally more expensive airport parking and taxi services and less convenient
mass transportation services. The Company's shared ride service is offered
exclusively under the SuperShuttle brand, using the Company's distinctive
trademarked bright blue and yellow vans, centralized reservation system,
1-800-BLUE-VAN telephone number and "no more than three stops" policy. This
shared ride service operates by picking up passengers from their homes, hotels
or offices within a guaranteed 15 minute pickup window. Through the Company's
centralized reservation and dispatch systems, the Company efficiently groups
passengers together by neighborhood thereby providing consumers with a
convenient and economical airport transportation alternative. From airport
curbside locations, passengers can take SuperShuttle's shared ride service to
their home, office or hotel without an advance reservation.
Since 1994, the Company has invested significant financial and management
resources in developing its proprietary information and management systems with
the goal of expanding its services nationally. The Company believes that these
systems, along with its established relationships with many major airports and
municipalities and its employee training programs, provide SuperShuttle with a
strong platform to enter new service areas throughout the United States through
both acquisition and start-up operations. Toward this goal, in March 1998 the
Company acquired its three largest franchises in Los Angeles, Orange County and
Miami, as well as related operations in southern Florida. The combined annual
revenue for these operations in fiscal 1997 was approximately $41.4 million,
increasing the Company's fiscal 1997 pro forma revenue to approximately $75.1
million. Additionally, the Company and its Long Island franchisee recently were
awarded two of four shared ride service contracts by the Port Authority of New
York and New Jersey to service the borough of Manhattan and Long Island from the
three major New York City area airports. The Company launched its service in May
1998 and expects its Long Island franchise to commence operations in June 1998.
The Company intends to further leverage its ground transportation
expertise, its reputation for customer service and reliability and its
proprietary systems to seek to establish a leadership position in other segments
of the ground transportation market. Currently, the Company provides shuttle
services for large corporations and paratransit services for municipalities and
subcontracts with larger bus operators to arrange charter services. Paratransit
services consist of transportation services for disabled persons typically
provided through contracts with local authorities in accordance with the
Americans with Disabilities Act ("ADA"). The Company also provides executive
sedan service exclusively under the ExecuCar brand in the Phoenix, Los Angeles,
Dallas, Miami and Burbank markets.
INDUSTRY OVERVIEW
The travel industry is large and projected to grow. The Travel Industry
Association of America projects that U.S. travel expenditures will increase from
$453 billion in 1996 to over $600 billion by the year 2000. In addition, the
Federal Aviation Administration projects that the number of airline passengers
will increase from approximately 578 million in 1995 to approximately 928
million in 2007. The total potential market for airport ground transportation
services consists of passengers originating or terminating their travel at U.S.
airports. According to statistics provided to Data Base Products, a data service
company, by the U.S. Department of Transportation, the number of such passengers
in the top 150 U.S. airports based on passenger volume was approximately 713
million for the twelve month period ended June 1997.
30
<PAGE> 32
With the number of airline passengers growing each year, travelers are
increasingly challenged by traffic congestion, limited parking facilities and
expensive parking and taxi rates. Many of these travelers are looking for safe
and economical transportation services to and from the airport. Airport
authorities are also faced with many of the same problems that face travelers as
they seek to accommodate more travelers, improve transportation options and
respond to increasing environmental concerns and regulatory requirements. The
Company believes that the primary reason these problems have not been adequately
addressed is due to the highly fragmented nature of the airport ground
transportation industry, which consists of a large number of local companies
providing a variety of transportation services, including chauffeured vehicles,
buses, vans, taxis and sedan services. As a result, the quality, price and
consistency of airport ground transportation services and, in particular, shared
ride services, vary significantly by market. Furthermore, unlike the airline and
car rental industries which offer consumers the choice of a number of
nationally-branded service providers, the Company believes there are few, if
any, national providers of shared ride ground transportation services.
THE SUPERSHUTTLE SOLUTION
The Company believes it has created the only national brand in shared ride
airport ground transportation, serving the growing needs of travelers and
airports for reliable, safe, convenient and economical airport ground
transportation services. The Company offers consumers door-to-door, shared ride
transportation service, which picks up passengers from their homes, hotels or
offices within a guaranteed 15 minute window. Through the Company's centralized
reservation and dispatch systems, the Company efficiently groups passengers
together by neighborhood, thereby providing consumers with a convenient and
economical airport transportation alternative. From airport curbside locations,
passengers can use SuperShuttle's shared ride service without an advance
reservation. For passengers, this service provides a reliable ground
transportation alternative to generally more expensive airport parking and taxi
services and less convenient mass transportation services. For airports, the
Company offers an experienced, nationally-branded ground transportation
alternative, which addresses passenger traffic, environmental and regulatory
issues and provides high quality customer service.
GROWTH STRATEGY
The Company's goal is to become the leading provider of nationally branded,
door-to-door ground transportation services in the United States. The Company is
seeking to achieve this objective through the following key strategies.
Increase SuperShuttle Brand Recognition. The Company is seeking to
increase SuperShuttle brand recognition on a nationwide basis. The Company is
building its national brand identity through its distinctive trademarked bright
blue and yellow vans, centralized reservation system, 1-800-BLUE-VAN telephone
number and "no more than three stops" policy. The Company believes that its
brand name and consistent nationwide service are important to airline passengers
as they travel from airport to airport. To date, the Company has engaged in
minimal advertising and has relied on its airport curbside presence and
word-of-mouth customer referrals to build brand recognition. Going forward, the
Company plans to employ targeted advertising in electronic and print media,
direct mail campaigns and partnership programs with airlines and travel agencies
to build customer awareness and loyalty.
Leverage Operating Systems. Since 1994, the Company has invested over $2.0
million and significant management time and resources in developing its
proprietary integrated operating systems as a platform to support growth and
nationwide expansion. The Company believes that its centralized reservation
system, REZ Central, its state of the art digital dispatch system ("DDS"), and
its integrated operating systems enable it to improve vehicle and driver
utilization and provide a high level of customer service throughout the
Company's transportation system. The Company's operating systems are highly
scalable and designed to cost-effectively support the addition of new markets.
The Company intends to continue to invest in upgrading and improving its
operating systems.
31
<PAGE> 33
Enter New Geographic Markets. The Company's target markets include the top
60 U.S. airports based on passenger volume. The Company intends to expand its
shared ride services into new geographic markets through acquisitions of leading
regional ground transportation service providers, including SuperShuttle
franchisees or through start-up operations. The Company began to implement its
acquisition strategy in March 1998 with the acquisition of its three largest
franchises in Los Angeles, Orange County and Miami, and related operations in
southern Florida. In addition, the Company and its Long Island franchisee were
recently awarded two of four shared ride service contracts by the Port Authority
of New York and New Jersey to service the borough of Manhattan and Long Island
from the three major New York City area airports. The Company launched its
service in May 1998 and expects its Long Island franchise to commence operations
in June 1998.
Expand Transportation Services. SuperShuttle plans to leverage its ground
transportation expertise, its reputation for service and reliability and its
proprietary operating systems to seek to establish a leadership position in
other segments of the ground transportation industry. The Company's other
transportation services include paratransit and shuttle services for large
corporations and municipalities, charter arrangement services for groups through
subcontracts with bus operators and an executive sedan service. The Company
believes that there are significant opportunities to capitalize on the trend
toward the outsourcing of ancillary transportation services by organizations
such as hotels, car rental companies, corporations, universities and state and
local governments. The Company intends to expand into these additional market
segments primarily through acquiring complementary passenger ground
transportation service providers that can be easily integrated into the
Company's operations and can enhance operating efficiencies within existing
geographic markets.
Provide Superior Customer Service. The Company is committed to providing a
high level of customer service. The Company believes the use of employee drivers
versus independent drivers allows it to better control and improve the quality
of its services through both driver training and customer service programs.
Furthermore, the Company believes its centralized reservation system and trained
customer service representatives enhance its ability to provide consistent
service throughout its operations. The Company's operating systems enable it to
monitor performance, including on-time pickup, provide efficient routing and
also communicate with drivers in the field. The Company believes that the
combination of these factors are critical to its ability to maintain a
consistently high level of customer service and satisfaction and build customer
loyalty.
SUPERSHUTTLE SERVICES
In 1997, the Company, through Company-owned and franchise operations,
provided shared ride services to over seven million passengers, with
approximately 70% traveling to or from homes or offices and approximately 30%
traveling to or from hotels. The Company also provides paratransit, contracted
and executive sedan services.
Blue Van Service. The Company provides shared ride ground transportation
services to, from and between 18 airports. Passengers can reserve SuperShuttle's
services to the airport by calling the Company's centralized reservation system
at 1-800-BLUE-VAN or through local telephone numbers. The customer service agent
inputs the passenger's flight time and location information into the reservation
system and provides the customer with a pick-up time within a 15-minute window
on the scheduled departure date. Although vans seat up to seven people, each van
is routed so that passengers are generally assured no more than three stops per
trip. The Company's DDS allows SuperShuttle drivers who are running behind
schedule to input data into an onboard terminal while enroute to a customer's
residence, which automatically calls to alert the passenger that the van is
within minutes of arriving. In addition, the Company utilizes global positioning
satellite ("GPS") technology which allows dispatchers to locate a passenger's
address and dispatch the nearest van. The DDS is currently operational in the
Company's Phoenix and San Francisco locations. The Company is currently
installing this system in Los Angeles and Orange County and plans to implement
this system in Dallas before the end of fiscal 1998. Passengers seeking a ride
from the airport can find SuperShuttle's designated airport booth or curb-side
location. Passengers have the option of paying with cash or by
32
<PAGE> 34
credit card. The fare for each passenger is a fixed fee which is based upon the
passenger's destination. The Company believes that its fares are generally
priced lower than those charged by taxis or limousine services.
SuperShuttle Locations. SuperShuttle currently operates through locations
in 15 cities serving 18 airports, including 10 of the top 20 U.S. airports based
on passenger volume, according to DOT statistics. SuperShuttle services are
provided through nine Company-owned operations and six SuperShuttle franchises.
Each location has a general manager who is responsible for the local operation
and has an operations center staffed by customer service personnel, fleet
managers and dispatchers. All of the Company's services are operated with a
dedicated fleet of vans and drivers. The Company's franchises are operated under
franchise agreements which grant the franchisees the exclusive right to operate
a SuperShuttle business in a designated geographic area for a stated term,
typically ten years with three five year renewal periods. The following table
sets forth a summary as of May 31, 1998, of SuperShuttle's Company-owned and
franchise operations.
SUPERSHUTTLE LOCATIONS
<TABLE>
<CAPTION>
DATE
LOCATION OPENED VANS
-------- ------ ----
<S> <C> <C>
COMPANY-OWNED
Baltimore(1)........................................ January 1995 37
Dallas/Ft. Worth.................................... July 1987 81
Los Angeles(2)...................................... October 1983 93
Miami(2)............................................ December 1988 90
Orange County(2).................................... June 1994 78
New York............................................ May 1998 40
Phoenix............................................. August 1986 74
Sacramento.......................................... October 1995 29
San Francisco....................................... August 1985 94
---
Total....................................... 616
FRANCHISES
Burbank (San Fernando Valley)....................... September 1993 32
Denver.............................................. May 1996 36
Long Island......................................... June 1998 25
Ontario (San Gabriel Valley)........................ September 1993 34
Philadelphia........................................ April 1994 22
Washington, D.C.(3)................................. February 1997 63
---
Total....................................... 212
</TABLE>
- ------------------------------
(1) The Company owns a 50% equity interest in this operation, operates it
pursuant to a management agreement and has an option to purchase the
remaining 50% equity interest therein.
(2) These operations were acquired in March 1998 and were previously franchises.
(3) The Company owns an approximately 15% equity interest in this operation and
has a right of first refusal with respect to the sale thereof.
Other Transportation Services. The Company currently provides
transportation services for large corporations and municipalities, including
shuttle and paratransit services, charter services for groups through
subcontracts with large bus operators and an executive sedan service. In March
1998, the Company acquired a paratransit business in southern Florida with 1997
revenues of approximately $11.7 million. Paratransit services are provided for
disabled persons pursuant to contracts with local transit authorities in
compliance with the ADA. See "Risk Factors--Dependence on Airport and
33
<PAGE> 35
Government Contracts." The Company's executive sedan service is offered
exclusively under the ExecuCar brand and currently operates in five cities
(Phoenix, Los Angeles, Dallas, Miami and Burbank) through a fleet of
approximately 100 cars owned primarily by independent contractors. ExecuCar is
an exclusive ride sedan service providing individual customers door-to-door
service with a high level of comfort and service similar to a limousine. Fares
for the ExecuCar service are flat rates based on destination and are generally
less expensive than the Company's sedan competitors.
INTEGRATED OPERATING SYSTEMS
The core of the Company's operations is its proprietary integrated
operating systems. Over the past four years, the Company has made a substantial
investment of money and management time in the development of its centralized
reservation, digital dispatch, scheduling and cashiering information systems.
These systems allow the Company to provide a consistently high level of service
to its passengers nationally and helps the Company to differentiate its service
from other passenger ground transportation services. SuperShuttle's technology
utilizes highly integrated, scalable software applications which are designed to
cost-effectively support the Company's expanding operations. The Company's
systems also allow it to gather data to generate detailed management reports and
to assist in marketing decisions. The primary components of the Company's
systems are described below.
National Reservation System. The hub of the Company's operations is REZ
Central, the Company's centralized reservation system. REZ Central utilizes
client/server architecture and proprietary software which allow real time input
into a national network linking the Company's operations. REZ Central is
operated on a 24-hour, year round basis by SuperShuttle's central reservation
department located at the Company's corporate headquarters in Phoenix, Arizona.
The central reservation department receives reservations through the Company's
1-800-BLUE-VAN telephone number as well as through various local numbers. Call
volume has grown since inception to an average of approximately 7,000 calls per
day over the twelve months ended March 31, 1998. As of March 31, 1998, the
central reservation department in Phoenix employed approximately 100 customer
service agents and occupies space in the Company's corporate offices.
REZ Central provides SuperShuttle with a number of competitive advantages,
including the ability to: (i) provide customers with a convenient means of
booking reservations on a SuperShuttle van in most of the cities it serves and
ensure consistency in service; (ii) avoid the expense of installing additional
reservation centers as the Company opens new locations; and (iii) cross-sell
SuperShuttle's services in the other cities in which the Company operates. REZ
Central also provides reporting and control systems which verify all
reservations for complete customer information and are able to track
reservations which allows more accurate and detailed analyses. The Company
believes that in the future it will be able to use this customer information to
assist in the development of its marketing strategies and plans.
Digital Dispatch System. Another key component of the Company's integrated
information systems is the DDS. The DDS is a highly sophisticated dispatching
software program, which provides real time information and communications on van
pick-ups and drop-offs, locations and revenue and passenger information. The DDS
is currently operational in the Company's Phoenix and San Francisco operations
and will be phased in at certain other Company-owned locations. The DDS
interfaces with REZ Central to determine van availability and assist in
scheduling. The DDS utilizes GPS technology to manage van movement and passenger
routing, thereby enabling the Company to increase van and driver utilization and
reduce passenger waiting times. If necessary, dispatchers have the ability to
reroute vans equipped with the DDS while in the field, thereby increasing asset
utilization. The Company licenses the software for the DDS system from a third
party and depends on this third party to maintain, upgrade and otherwise enhance
this software.
Cashiering System. The Company's electronic cashiering system is an
integrated system which automates the processing of payroll and production of
selected financial and managerial reports. Vehicles are equipped with a mobile
data terminal allowing drivers to communicate electronically with
34
<PAGE> 36
the Company's operations center. Drivers are required to input certain items of
information into the data terminal, including passenger information and cash
received. The cashiering system is integrated with the Company's dispatch
system, which enables the Company to verify the accuracy of information and
audit drivers.
Any disruption in the operation of any of these systems, the loss of
employees knowledgeable about such systems or the Company's failure to continue
to effectively update or modify such systems as its business expands could have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Risk Factors--Dependence on Operating Systems."
DRIVERS AND EQUIPMENT
Other key components of the Company's operations include its van drivers
and driver training programs, vehicles and maintenance operations, and quality
assurance programs.
Drivers. As of April 15, 1998, the Company and its franchisees employed
approximately 2,000 van drivers, all of whom are compensated on a straight
commission basis which the Company believes provides a significant incentive for
drivers to increase their productivity. Because the Company's van drivers are
employees versus independent contractors, as is the case with many of the
Company's competitors, the Company is better able to control critical aspects of
its services, including service standards, the physical appearance of drivers
and van cleanliness. Drivers are required to have significant driving
experience, complete a comprehensive one-week training course, pass medical
exams and undergo background checks and routine drug testing. The Company's
training program focuses on customer service standards, defensive driving and
driver safety. The Company primarily uses independent operators for its ExecuCar
service. Each new independent operator agrees to pay an initial fee to the
Company, acquires his or her vehicle and pays all of the maintenance and
operating expenses on the vehicle. Historically, the Company has experienced
high turnover with respect to its employee drivers. There can be no assurance
that the Company will be able to maintain an adequate supply of drivers and
other personnel or that the Company's labor expenses will not increase as a
result of a shortage in supply of such workers. See "Risk Factors--Labor
Availability and Relations."
Vehicles. The Company and its franchises operate a fleet of approximately
800 vans and 30 mini-buses. The Company-owned fleet of vans has an average age
of 2.5 years. Vans typically have a useful operating life of four to five years.
Approximately 43% of the Company's vans operate on alternative fuel sources,
such as compressed natural gas and propane, which produce lower emissions than
gasoline. The Company expects that on average it will replace approximately 20%
of its vans annually. The Company typically leases its vans over a 36-month
period with the option to purchase the vans at the end of the lease term. The
Company's inability to acquire, or a material delay in acquiring the financing
necessary to acquire replacement vans as needed would have a material adverse
effect on the Company's business, results of operations and financial condition
due to higher operating costs associated with operating an aging fleet. See
"Risk Factors--Capital Requirements, Availability of Financing" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity."
Maintenance. The Company believes that maintaining the appearance of its
vans is important to its brand image. Vans are cleaned and exteriors washed
prior to each eight hour shift. Repairs and maintenance of the Company's fleet
are primarily performed at maintenance facilities operated by the Company. Each
of the Company's operating locations has a comprehensive preventative
maintenance program for its equipment to reduce equipment downtime and increase
equipment life. This program includes periodic safety checks when a vehicle
returns to the terminal, regular oil and filter changes, lubrication, cooling
system checks and wheel alignment on average every 4,000 miles, and more
extensive maintenance at specified intervals.
Fuel Prices and Availability. Currently, fuel is purchased under contracts
with a number of providers at prevailing market prices. The Company expects that
the aggregate volume of fuel purchased by the Company as a whole will create
improved negotiating leverage with fuel vendors and
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may result in lower fuel prices. Fuel prices are subject to sudden increases as
a result of variations in supply levels and demand. Any sustained increase in
fuel prices, including the price of alternative fuel sources, could adversely
affect the Company's results of operations. From time to time, there are efforts
at the federal or state level to increase fuel or highway use taxes, which, if
enacted, also could adversely affect the Company's results of operations. See
"Risk Factors--Fuel Prices and Availability."
Safety and Risk Management. The Company is dedicated to safe operations
and complies with the Federal Highway Administration ("FHWA") and comparable
state motor carrier safety rules, including rules concerning safe motor vehicle
equipment, driver qualifications and safe operation of vehicles. The Company
maintains drug and alcohol testing programs for its van drivers in conformity
with applicable regulatory and contractual requirements. The Company actively
monitors accidents and other incidents involving its vehicles, and takes
follow-up steps to reduce the risk of repeat occurrences. The Company has
implemented a number of safety programs designed to promote compliance with
rules and regulations and to reduce accidents and injury claims. These programs
include incentive programs for accident-free driving, driver safety meetings,
distribution of safety bulletins to drivers and participation in national safety
associations. See "Risk Factors--Insurance Costs; Risk of Personal Injury
Claims."
Quality Assurance. SuperShuttle carefully monitors service standards
through quality assurance and customer service programs in order to build
customer loyalty. The Company's quality assurance programs utilize mystery
riders as well as survey cards that are sent to customers and travel service
companies. SuperShuttle's quality assurance program also includes evaluations
performed by an independent consultant to measure the quality of transportation
services and the appearance of drivers and vehicles. A study commissioned by the
Company in June of 1997 indicated that approximately 83% of the respondents
rated the Company's services as "good" or "excellent."
MARKETING AND SALES
The Company's marketing efforts to date have been relatively limited,
focusing primarily on local advertising, such as yellow page and newspaper
advertisements, and partnership programs with airlines and travel agencies. The
Company has relied primarily on its curbside presence, its distinctive trade-
marked bright blue and yellow vans and word-of-mouth customer referrals to build
brand recognition of the "SuperShuttle" name. In the future, the Company has
plans for a national marketing program focused on individual consumers which the
Company believes accounts for approximately 70% of the Company's business. The
Company also intends to employ targeted advertising in electronic and print
media, direct mail campaigns and partnership programs with airlines and travel
agencies to build customer awareness and loyalty.
The Company's sales efforts include direct selling efforts to hotels, tour
wholesalers, corporations and, to a lesser extent, travel agencies, which
comprise approximately 30% of the Company's business. These sales efforts have
been undertaken by local sales forces which are responsible for developing these
relationships with municipalities and businesses. With the expansion of the
Company's operations nationally, the Company expects to leverage its local sales
efforts by developing relationships with national tour wholesalers and national
corporate accounts.
AIRPORT RELATIONS
The Company actively markets its services to airport authorities through
its participation in industry associations, trade shows and local transportation
boards. The Company also works with airport commissioners on a formal and
informal basis to assist them in developing ground transportation management
programs. An integral part of the Company's business expansion plans is its
ongoing participation in the RFP process of airport authorities and other
governmental agencies. All airports require ground transportation providers to
obtain some level of authority to operate from curbside or other central
locations. These airports grant such authority to operate by issuing permits or
licenses generally with three to five year terms. Many airports also confer
preferential operating authority to
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certain carriers. The bidding process for such preferential authority is often
conducted through the formal RFP process. Since its inception in 1985, the
Company has been a successful bidder in nearly all of the RFPs in which it has
participated. The Company believes the number of airports and cities seeking to
regulate the number of ground passenger transportation providers is increasing.
The airport contracts typically give the service provider privileged status for
the provision of outbound transportation services, with either designated space
within the airport or at a specified curb location. The operating contracts
generally require the payment of fees to the airport authorities and the service
provider's compliance with certain criteria, such as the existence of a strong
professional management team and sufficient systems and infrastructure.
There can be no assurance the Company will, in the future, be a successful
bidder or that competitive service providers will not be awarded contracts at
certain airports to the exclusion of the Company. The failure of the Company to
be awarded contracts by additional airports may constrain the expansion of its
operations at certain airports. Furthermore, there can be no assurance that the
Company's existing or future contracts will be renewed or not otherwise
terminated or that airports will not award additional contracts to competitive
providers. Similarly, certain of the Company's services are also regulated at
the local municipality level. Certain municipalities or airports may impose
significant usage fees applicable to the Company's services or require the
posting of significant bonds. To the extent the fees the Company is required to
pay increase significantly, it could have a material adverse effect on the
Company's business, financial condition and results of operations. See "Risk
Factors--Significant Airport Regulations."
COMPETITION
The ground transportation industry is highly competitive and fragmented
with few significant national participants operating multi-city ground
transportation operations. Each local market usually contains numerous local
participants as well as a few companies offering regional and national service.
The Company competes primarily on the basis of price, quality, convenience,
scope of service and dependability. The Company also competes with service
providers offering alternative modes of transportation, such as buses, taxis,
radio cars and rental cars. In addition to competing for customers the Company
also competes for airport and other contracts and for possible acquisitions. The
Company expects competition to increase as existing competitors expand and
additional companies enter the market. Certain of the Company's existing
competitors have, and any new competitors that enter the industry may have,
access to significantly greater financial resources than the Company. The
Company's ability to effectively identify and consummate acquisitions may be
impacted if current and potential competitors make strategic acquisitions or
establish cooperative relationships, which could result in fewer acquisition
opportunities available to the Company as well as increased costs for remaining
acquisition targets. Competitive market conditions could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Risk Factors--Substantial Competition."
REGULATION
The Company's operations are subject to extensive safety requirements and
requirements imposed by environmental, workplace safety and anti-discrimination
laws, including the Americans with Disabilities Act. Safety, environmental and
vehicle accessibility requirements have increased in recent years, and this
trend could continue. The FHWA and state regulatory agencies have broad power to
suspend, amend or revoke the Company's operating authorizations for failure to
comply with statutory requirements, including safety and insurance requirements.
Local regulations applicable to van services focus on the entry of new operators
into the marketplace and the aggregate number of authorized vehicles as well as
the fares that can be charged for providing transportation services. These
regulations may limit the Company's ability to expand the size of its van fleet.
The Company's operations are also subject to various state and local
regulations primarily designed to promote public safety by ensuring that
regulated transportation providers operate safely,
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legally and in the public interest. Each individual state or local government
requires certain approvals and permits to operate common carrier services. In
addition, the California Public Utilities Commission (the "CPUC") must approve
the Company's acquisition of the California Acquired Companies. If the CPUC
fails to grant such approval, the Company would not be permitted to continue to
operate such companies. In such event, the Company would be forced to
restructure the acquisitions, if possible, to avoid the requirement of CPUC
approval or to rescind them, either of which would have a material adverse
effect on the Company's pro forma results of operations for the periods
presented in the Prospectus and its business, financial condition and results of
operations for future periods. See "Risk Factors--Absence of Combined Operating
History; Need for Regulatory Approvals."
INSURANCE
The Company is subject to accident claims as a result of the normal
operation of its fleet of vehicles, which claims and the defense thereof
generally are covered by insurance. The Company purchases automobile liability,
automobile collision and comprehensive damage, general liability, comprehensive
property damage, workers' compensation and other insurance coverages that
management considers adequate for the protection of the Company's assets and
operations, although there can be no assurance that the coverages and limits of
such policies will be adequate. The Company's standard franchise agreement
requires that its franchisees purchase similar types of insurance and name the
Company as a named insured in such insurance policies. A successful claim
against the Company beyond the scope of its or its franchisees' insurance
coverage or in excess of its or its franchisees' limits could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Risk Factors--Insurance Costs; Risk of Personal Injury Claims."
FRANCHISING RELATIONSHIPS
Of the Company's 15 locations, six are owned and operated by franchisees.
In addition, the Company owns a 50% equity interest in its Baltimore operation
and an approximately 15% equity interest in its Washington, D.C. operation and
operates both of these pursuant to management agreements. The Company's
relationship with each franchisee is governed by franchise agreements (the
"Franchise Agreements"), which grant the franchisees the exclusive right to
operate a SuperShuttle business in a particular geographic area. The Franchise
Agreements provide the Company with rights regarding the business and operations
of each franchise and impose restrictions on the transfer of the franchise and
on the transfer of the franchisee's capital stock without the consent of the
Company. In addition, the Franchise Agreements grant SuperShuttle the right of
first refusal with respect to any sale of the franchise operation. Each
franchisee is required to operate its franchise in accordance with certain
standards contained in the SuperShuttle operating manual (the "Operating
Manual"). The Company has the right to monitor the operations of the franchisees
and any default by a franchisee under a Franchise Agreement or the Operating
Manual may give the Company the right to terminate the underlying franchise.
In general, the Franchise Agreements grant the franchisees the exclusive
right to operate a SuperShuttle business in a particular geographic area,
generally defined in terms of service at a particular airport, for a stated
period, typically ten years. The Franchise Agreements generally provide for
three five-year renewal terms. Upon renewal, the terms and conditions of the
Franchise Agreements (other than with respect to royalty fees) may be amended
from those contained in the existing Franchise Agreements. The standard royalty
fee payable to the Company under the Franchise Agreements is $40 per van (or
other vehicle utilizing any of SuperShuttle's trademarks) per week, which amount
is subject to a weekly aggregate minimum and periodic cost of living
adjustments. Franchisees are also required to contribute $10 per van per week to
a marketing fund and to pay a semi-monthly fee equal to ten percent of the total
revenue from each trip processed through SuperShuttle's center reservation
system and directed to the franchisee.
Pursuant to each Franchise Agreement, the franchisee must meet certain
guidelines relating to the number of vehicles maintained and the amount of
advertising and promotion expenditures. In general,
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each Franchise Agreement provides that the franchisee shall not engage in any
other ground transportation business within the franchise territory during the
term of such agreement and for 12 months thereafter. In addition, franchisees
agree not to use the word "SuperShuttle" or any other SuperShuttle trademark
other than in their ground transportation business.
The Company owns a 50% equity interest in its Baltimore operation, Shuttle
Express, Inc. ("Shuttle Express"), which is also subject to a franchise
agreement. Under the terms of a Shareholder Agreement between the Company,
Shuttle Express, and Yellow Holding, Inc. ("Yellow"), the Company has the right
to acquire the remaining 50% ownership interest in Shuttle Express pursuant to a
call option exercisable at any time between September 1, 1997 and June 1, 1999.
In addition, Yellow has the right to put Yellow's interest in Shuttle Express to
the Company pursuant to a put option exercisable between January 1, 1999 and
June 1, 1999. The strike price for the call or put option is equal to 4.5 times
the product of one-half of the earnings before income taxes of Shuttle Express
for the 12-month period ending the calendar month immediately preceding the
exercise of the put or call option, but not less than $1.0 million. The Company
has the right to reject the exercise of Yellow's put option, in which case
Yellow may sell its interest to a third party. Commencing June 1, 1999, the
Company has a right of first refusal with respect to the sale of this operation.
The Company is also subject to federal and state laws, rules and
regulations governing the offer and sale of franchises. A number of states have
enacted laws that require detailed disclosure in the offer and sale of
franchises and/or the registration of the franchisor with state administrative
agencies. The Company is also subject to Federal Trade Commission regulations
relating to disclosure requirements in the sale of franchises. Certain states
have enacted, and others may enact, legislation governing certain aspects of the
franchise relationship and limiting the ability of the franchisor to terminate
or refuse to renew a franchise. The law applicable to franchise sales and
relationships is rapidly developing, and the Company is unable to predict the
effect on its franchise system of additional requirements or restrictions that
may be enacted or promulgated or of the complexity of franchise regulation
compliance problems that may be encountered from time to time. See "Risk
Factors--Reliance on Franchisees; Regulation of Franchises."
FACILITIES AND ENVIRONMENTAL MATTERS
The Company's headquarters are located in Phoenix, Arizona in facilities
leased by the Company under a 10-year lease that expires in October 1999 with
the option to renew the lease for an additional five years. This facility also
houses the Company's central reservation center. The Company also leases its
Company-operated facilities. The terms of such leases vary from a 60 day tenancy
to ten years and expire at various times through February 2003 (inclusive of
lease renewal terms). The Company's facilities consist principally of offices,
garages and maintenance facilities. Some of these are consolidated facilities,
while other facilities have limited operations, which may not include complete
maintenance services. The Company believes that its facilities are adequate for
its current needs. The Company has above ground and underground storage tanks
which are located at certain of its facilities. There can be no assurance that
the Company's current fuel tanks or those acquired in future acquisitions will
not result in discharge of hazardous materials at the Company's facilities.
In addition, in April 1998 the Company received a letter from the lessor of
its Texas facility claiming that SuperShuttle has contaminated this property and
requesting that the Company restore the property to the condition it was in
before the contamination occurred. While the Company believes it was not the
cause of any such contamination and intends to vigorously defend any claim to
the contrary, there can be no assurance that the Company will not incur
significant costs defending this claim, be required to pay damages or incur
costs related to the remediation of this property. Such costs could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Risk Factors--Potential Exposure to Environmental
Liabilities".
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<PAGE> 41
EMPLOYEES AND INDEPENDENT OPERATORS
As of March 31, 1998, the Company had approximately 2,000 full-time
employees (approximately 1,400 of whom were drivers) and approximately 200
part-time employees (approximately 150 of whom were drivers). As of March 31,
1998, the Company also had agreements with approximately 95 independent
contractors for its ExecuCar service. Several different unions represent
approximately 1,000 employees of the Company, of whom approximately 900 are
drivers. The Company is a party to a number of different collective bargaining
agreements which expire at various dates between November 1998 and May 2002. In
addition, certain of these contracts provide for renegotiation annually. The
Company is currently in negotiations with the unions representing certain of its
Orange County and Florida employees and there can be no assurance that the
Company will obtain a satisfactory resolution to these negotiations. The
Company's inability to negotiate acceptable contracts with existing unions as
agreements expire or with new unions could result in work stoppages by the
affected workers and increased operating costs as a result of higher wages or
benefits paid to union members. While the Company has experienced threats of
work stoppages in the past, such threats have not resulted in any strikes or
work stoppages to date. In the event the Company's employees were to engage in a
strike or other work stoppage, the Company could experience a significant
disruption of its operations and higher ongoing labor costs, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the Company has an agreement with one of its
stockholders that it will not, directly or indirectly, oppose any attempt by any
union or collective bargaining group to organize or seek to represent the
employees of the Company employed at any of the Company's new locations. See
"Risk Factors--Labor Availability and Relations."
INTELLECTUAL PROPERTY
The Company uses a number of trademarks, certain of which the Company has
registered with the United States Patent and Trademark Office. The Company
believes that its registered and common law trademarks, including
"SuperShuttle," "ExecuCar" and the blue and yellow color combination, have
significant value and that some of its trademarks are instrumental to its
ability to create and sustain demand for and market its services. There can be
no assurance that the steps taken by the Company to protect its proprietary
rights will be adequate or that third parties will not infringe or
misappropriate the Company's trademarks. The Company believes that there are no
currently pending challenges to the use or registration of any of the Company's
registered trademarks. There can be no assurance, however, that the Company's
trademarks do not or will not violate the proprietary rights of others, that
they would be upheld if challenged or that the Company would, in such an event,
not be prevented from using its trademarks, any of which could have a material
adverse effect on the Company and its business. In addition, the Company could
incur substantial costs to defend legal actions taken against it relating to the
Company's use of trademarks, which could have a material effect on the Company's
results of operations and financial condition.
SuperShuttle has several proprietary software programs that it utilizes
within its system. The cashiering and reservation programs are owned by
SuperShuttle. Through the Company's wholly owned subsidiary, SuperShuttle
Franchise Corporation ("SFC"), the Company acquired from a third party its
digital dispatch system and 1,000 prepaid licenses for use of related
application software, which may be used, resold or distributed by SFC to other
SuperShuttle franchises or locations. The third party may not license the
application software to any other operators in the airport ground transportation
business for a period of ten years, which expires in 2005. The license agreement
for the application software grants SFC a non-exclusive right to use the
software for so long as SFC is the exclusive owner of the digital dispatch
system. The Company is dependent on this third party to maintain, upgrade and
otherwise enhance this software. See "Risk Factors--Dependence on Operating
Systems."
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LEGAL PROCEEDINGS
The Company filed a $1,000,000 civil action in 1994, in the Los Angeles
County Superior Court, Southwest District, against an insurance carrier, Golden
Eagle, which previously provided workers' compensation coverage to the Company
from 1987 through 1991. The Company claims that the insurance company mishandled
and over-reserved the workers' compensation claims which increased the Company's
insurance premiums. The insurance company filed a cross-complaint against the
Company seeking recapture of $652,000, which was previously paid in dividends to
the Company, plus legal fees. In 1997, the Department of Insurance in California
took over the operation of Golden Eagle. All litigation against the insurance
company was stayed and the insurance commissioner enacted a formal procedure for
processing claims. The Company has submitted its claim and has had limited
discussions regarding the resolution of this case.
The Company is also involved in a personal injury action which arises from
an incident on March 24, 1994 in which two persons were alleged to have been
injured by a Company vehicle. The Company and its insurer's legal counsel are
discussing an out-of-court settlement with the plaintiffs. A potential loss of
$1,000,000 exists which could be borne by the Company and two other parties.
Currently, the exposure to the Company is estimated to be within its $100,000
insurance policy limits and, therefore, no loss reserve has been recorded in the
financial statements.
From time to time, the Company also is a party to routine litigation
incidental to its business, primarily involving claims for personal injury or
property damage incurred in the transportation of its passengers. Except as
discussed above, the Company is not aware of any pending or threatened claims
which, if adversely determined, might materially affect the Company's operating
results or financial condition.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Information concerning the Company's current directors and executive
officers of the Company and their ages as of the date hereof are as follows.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Mitchell S. Rouse(1)................... 57 Chairman of the Board
R. Brian Wier.......................... 43 President, Chief Executive Officer; Director
Thomas C. LaVoy........................ 38 Chief Financial Officer and Secretary
Linda Paquin........................... 50 Vice President--Reservations
Dorthina Castillo-Davis................ 43 Vice President--Business Development
Judy Robertson......................... 49 Vice President--Franchising and Administrative
Services
David A. Abel.......................... 51 Director
Stephen Allan.......................... 37 Director
John C. Flanigan(1).................... 53 Director
Gene Hauck............................. 43 Director
Frank R. Kline(2)...................... 47 Director
Anthony M. Lamport(2).................. 62 Director
Mark Levitt............................ 45 Director
Neal C. Nichols(1)(2).................. 64 Director
Tucker Taylor(1)....................... 59 Director
</TABLE>
- ------------------------------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
Mitchell S. Rouse has served as Chairman of the Board of Directors of the
Company since 1985, as President from 1996 to 1997, and as Chief Executive
Officer from 1985 to February 1998. Mr. Rouse is also the Chairman of the Board
and President of Wilmington Cab Company of California, Inc., an affiliate of the
Company ("Wilmington"), an operator of taxi fleets, a position he has held since
1976. Since 1976, Mr. Rouse has also served as President and Chief Executive
Officer of Taxi Systems, Inc. ("Taxi Systems"), a Los Angeles taxi cab service
provider and a subsidiary of Wilmington. Taxi Systems is an operator of taxi
fleets and is therefore a competitor to the Company's operations in Los Angeles.
On May 19, 1994, Taxi Systems filed a voluntary petition under Chapter 11 of the
U.S. Bankruptcy Code in the U.S. Bankruptcy Court, Central District of
California. The court confirmed the plan of reorganization by an order entered
on April 20, 1995. The effective date of the plan of reorganization was August
25, 1995. A final decree was entered on December 9, 1996. Mr. Rouse is the
brother-in-law of Gene Hauck.
R. Brian Wier has served as President and a director of the Company since
1997 and as its Chief Executive Officer since February 1998. Mr. Wier joined the
Company in 1987. Prior to assuming his current position, Mr. Wier served as
Chief Operating Officer from May 1996 to February 1998 and Vice President and
General Manager of the Phoenix operation from March 1995 to May 1996, and prior
to that, held the position of Vice President and General Manager for the
Company's Dallas/Fort Worth ("DFW") and Miami operations from November 1987 to
March 1995. Mr. Wier serves on the board of Airport Ground Transportation
Association ("AGTA"), The Travel Industry Association ("TIA"), and is a past
member of various travel industry boards, including the DFW Tourism Council.
Prior to joining SuperShuttle, Mr. Wier owned and served as President of Wier
Lumber and Builder Door and Trim, a building material supply company and was a
general partner in R. Brian Wier Limited, a real estate development company,
from 1979 to 1987.
Thomas C. LaVoy has served as Chief Financial Officer of the Company since
July 1997 and as Secretary since March 1998. From September 1987 to February
1997, Mr. LaVoy served as Chief
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Financial Officer of Photocomm, Inc., a public company engaged primarily in the
development of solar electric power systems and related products. Mr. LaVoy also
served as a C.P.A. with the firm of KPMG Peat Marwick from 1980 to 1983.
Linda Paquin has served as Vice President of Reservations of the Company
since February 1996 and as Director of Reservations for the Company from March
1995 to February 1996. From 1982 to 1995, Ms. Paquin served as senior manager of
reservation operations at Alaska Airlines.
Dorthina Castillo-Davis has served as Vice President of Business
Development of the Company since 1997. Ms. Castillo-Davis has also served in
other positions with the Company, including General Manager of the Phoenix
operation from 1986 to 1991 and Director of Training from 1996 to 1997. From
1992 to 1994, Ms. Castillo-Davis served as a manager for Malandro Communication,
Inc., a corporate training and development.
Judy Robertson has served as Vice President of Franchising and
Administrative Services of the Company since 1998. From 1993 to 1998, Ms.
Robertson served as Director of Franchising of the Company. From 1990 to 1992,
Ms. Robertson served as Director of Human Resources and Franchising at Penguin's
Place, Inc., a frozen yogurt franchisor.
David A. Abel has been a director of the Company since 1985. Mr. Abel has
served as the President and CEO of ABL, Inc., a California-based business
consulting firm engaged in corporate, real estate and publishing transactions
since 1980. Mr. Abel currently serves on and as the chairman of the board of
directors of Calstart, a non-profit transportation industry organization
promoting environmental goals for clean air and energy efficiency.
Stephen Allan has served as President of Preferred Transportation, Inc.
("PTI") since 1994. SuperShuttle acquired PTI, a former franchise, in March
1998. In connection with the acquisition, Mr. Allan was elected to the Company's
Board of Directors in May 1998. Mr. Allan joined SuperShuttle in 1986 and worked
in the accounting department until 1991, when he assumed the position of General
Manager of SuperShuttle's Los Angeles operation.
John C. Flanigan has been a director of the Company since May 1996. Mr.
Flanigan has been a partner in the Flanigan Law Firm since 1992. From 1985 to
1991, Mr. Flanigan was Vice President for Public Affairs of the Irvine Group, a
residential development company.
Gene Hauck has served as President of Tamarack Transportation, Inc.
("Tamarack") since 1994. SuperShuttle acquired Tamarack, a former franchise, in
March 1998. In connection with the acquisition, Mr. Hauck was elected to the
Company's Board of Directors in May 1998. From 1989 to 1994, Mr. Hauck served as
Director of Marketing and Associate General Manager of Yellow Cab of San Diego,
Inc. Mr. Hauck is on the board of directors of the International Taxi and Livery
Association ("ITLA") and currently serves on the Premium Service Committee of
the ITLA. Mr. Hauck is the brother-in-law of Mitchell S. Rouse.
Frank R. Kline has been a director of the Company since 1987. Mr. Kline has
served as a private equity manager of Kline Hawkes California, L.P./Kline Hawkes
California SBIC, L.P. (collectively, "KHC"), an investment fund, since 1994.
From 1984 to 1994, Mr. Kline served as a private equity manager of Lambda Fund
Management, Inc. ("Lambda"), a venture capital firm and an affiliate of the
Company. Mr. Kline currently serves as a director of four companies in which KHC
has invested, including Sensor Systems, Campus Link Communications, EOS
Corporation and Transoft Technology. Mr. Kline also serves on the Board of
Governors of the National Association of Small Business Investment Companies.
Anthony M. Lamport has been a director of the Company since May 1995. Since
March, 1990, Mr. Lamport served as President of Lambda. Mr. Lamport currently
serves as a director of Prophecy Transportation Software, Inc., a software
company in which Lambda has invested.
Mark Levitt has served as President and Chief Financial Officer of Southern
Shuttle Services, Inc. ("Southern") since 1993. SuperShuttle acquired Southern,
a former franchise, in March 1998. In
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connection with the acquisition, Mr. Levitt was elected to the Company's Board
of Directors in May 1998. Since 1984, Mr. Levitt has also served as Vice
President of LSF. Mr. Levitt serves currently on the Executive Board of the TIA.
Neal C. Nichols has been a director of the Company since May 1996. Mr.
Nichols is the CEO of Transportation General, Inc., a Virginia taxi operation.
Mr. Nichols is a past president of the ITLA and currently serves on the board of
directors for the Executive Committee of the ITLA.
Tucker Taylor has been a director of the Company since 1992. Mr. Taylor
served as a senior executive of Columbia/HCA and Medical Care America, a
national health care provider, from 1991 until February of 1998. From 1982 to
1991, Mr. Taylor was a private investor and a strategic marketing consultant to
several national transportation and healthcare organizations. Mr. Taylor is
currently a director of Cornell Corrections, Inc., a provider of privatized
correctional, detention and pre-release services in the United States.
BOARD OF DIRECTORS
The Company's Board of Directors is comprised of 11 members. Each director
is elected for a period of one year at the Company's annual meeting of
stockholders and serves until his successor is duly elected and qualified.
The Board of Directors has established an Audit Committee which is
comprised of Messrs. Kline, Lamport and Nichols, and a Compensation Committee
which is comprised of Messrs. Rouse, Taylor, Nichols and Flanigan. The Audit
Committee is responsible for reviewing and making recommendations regarding the
Company's employment of independent auditors, the annual audit of the Company's
financial statements and the Company's internal accounting controls, practices
and policies. The Compensation Committee is responsible for making
recommendations to the Board of Directors regarding compensation arrangements
for executive officers of the Company, including annual bonus compensation, and
consults with management of the Company regarding compensation policies and
practices. The Compensation Committee is also responsible for making
recommendations concerning the adoption of any compensation plans in which
management is eligible to participate, including the granting of stock options
or other benefits under such plans.
DIRECTOR COMPENSATION
Members of the Board of Directors who also serve as officers of the Company
do not receive compensation for serving on the Board. Each other Board member
receives a monthly retainer of $200 for serving on the Board, plus a fee of $500
for each Board of Directors' meeting attended. All directors receive
reimbursement for expenses incurred in connection with attendance at meetings of
the Board of Directors or committees thereof.
In addition to cash compensation, the members of the Board of Directors
receive automatic grants each year of options to purchase 1,000 shares of Common
Stock. Such options have an exercise price per share equal to the fair market
value of the Common Stock at the time of grant, as determined by the
Compensation Committee and the Board of Directors. Such options are subject to
12-month vesting and terminate upon the earlier of (i) the fifth anniversary of
the grant date or (ii) the expiration of the 90-day period following the
termination of the director's service with the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors are currently Messrs. Rouse, Taylor, Nichols and Flanigan, all of whom
were appointed to the Compensation Committee in November 1997. Prior to November
1997 and during the fiscal year ended September 30, 1997, Messrs. Rouse, Taylor
and Kline were members of the Compensation Committee. Mr. Rouse is Chairman of
the Board and served as the Company's Chief Executive Officer until February
1998. Neither Mr. Taylor, Mr. Nichols, Mr. Flanigan nor Mr. Kline has at any
time been an officer or
44
<PAGE> 46
employee of the Company or any subsidiary of the Company. Mr. Taylor was
appointed chairman of the Compensation Committee on January 23, 1997.
LIMITATION ON DIRECTORS' LIABILITIES
Pursuant to the provisions of Delaware law, the Company has adopted
provisions in its Certificate of Incorporation which provide that a director of
the Company shall not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty, except for liability in
connection with a breach of duty of loyalty to the Company or its stockholders,
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, for dividend payments, loans to directors and
officers or stock repurchases illegal under Delaware law, for improper
transactions between the director and the Company or for any transaction in
which a director has derived an improper personal benefit. Such limitation of
liability does not affect the availability of equitable remedies such as
injunction relief or recision.
The Company's Bylaws provide that the Company shall indemnify its directors
and executive officers and may indemnify its officers, employees and other
agents to the full extent permitted by law. The Company believes that
indemnification under its Bylaws covers at least negligence and gross negligence
on the part of an indemnified party. The Company's Bylaws also permit the
Company to advance expenses incurred by an indemnified party in connection with
the defense of any action or proceeding arising out of such party's status or
service as a director, officer, employee or other agent of the Company upon an
undertaking by such party to repay such advances if it is ultimately determined
that such party is not entitled to indemnification.
The Company has entered into separate indemnification agreements with each
of its directors and officers which are, in some cases, broader than the
specific indemnification provisions contained under Delaware law. These
agreements require the Company, among other things, to indemnify such director
or officer against expenses (including attorneys' fees), judgments, fines and
settlements (collectively, "Liabilities") paid by such individual in connection
with any action, suit or proceeding arising out of such individual's status or
service as a director or officer of the Company (other than Liabilities arising
from willful misconduct or conduct that is knowingly fraudulent or deliberately
dishonest) and to advance expenses incurred by such individual in connection
with any proceeding against such individual with respect to which such
individual may be entitled to indemnification by the Company. The Company
believes that its Certificate of Incorporation and Bylaw provisions and
indemnification agreements are necessary to attract and retain qualified persons
as directors and officers. The Company also maintains directors' and officers'
liability insurance.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company in which indemnification
will be required or permitted. The Company is not aware of any threatened
litigation or proceeding that might result in a claim for such indemnification.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding annual
compensation for all services rendered to the Company in all capacities during
the fiscal year ended September 30, 1997, by the Chief Executive Officer of the
Company and the other executive officer who earned a salary and bonus in excess
of $100,000 (the "Named Executive Officers"). No other executive officers of the
Company had a total salary and bonus in fiscal 1997 that exceeded $100,000.
45
<PAGE> 47
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ---------------------
FISCAL ----------------------- SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)
--------------------------- ------ ---------- --------- ---------------------
<S> <C> <C> <C> <C>
Mitchell S. Rouse.......................... 1997 $ 25,000 $60,000 1,000
Chairman of the Board(1)
R. Brian Wier.............................. 1997 130,000 50,000 0
President and Chief Executive Officer(2)
</TABLE>
- ------------------------------
(1) Mr. Rouse served as Chief Executive Officer of the Company until February 4,
1998.
(2) Mr. Wier's current annual base salary is $175,000.
OPTION GRANTS
The following table shows certain information regarding stock options
granted to the Named Executive Officers during the fiscal year ended September
30, 1997. No stock appreciation rights were granted to these individuals during
such fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENTAGE POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(4)
OPTIONS IN FISCAL PRICE PER EXPIRATION ----------------------
NAME GRANTED(#)(1) YEAR(2) SHARE(3) DATE 5% 10%
---- ------------- ---------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Mitchell S.
Rouse(5)............ 1,000 3.4% $6.00 7/18/2002 $1,658 $3,663
R. Brian Wier......... -- -- -- -- -- --
</TABLE>
- ------------------------------
(1) Since the end of fiscal 1997, options to purchase 250,000 shares of Common
Stock were granted to certain executive officers. Mr. Wier was granted two
options for 30,000 shares and 120,000 shares, respectively, of Common Stock
on February 10, 1998, at an exercise price of $6.00 per share. Mr. LaVoy,
the Company's Chief Financial Officer, was granted an option for 100,000
shares of Common Stock on February 10, 1998, at an exercise price of $6.00
per share. See "Employment Agreements." Mr. Wier's option for 30,000 shares
vested immediately on the grant date. Mr. Wier's option for 120,000 shares
and Mr. LaVoy's options become exercisable with respect to 25% of the option
shares on each one-year anniversary of the grant date, provided, however,
that those option shares due to vest to Mr. Weir and Mr. LaVoy upon the
one-year anniversary of the grant date will immediately vest upon the
closing of this offering.
(2) Options for a total of 29,500 shares of Common Stock were granted in fiscal
1997.
(3) The exercise price may be paid with: (i) cash or check; (ii) shares of
Common Stock; or (iii) a combination of the above.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the Securities and Exchange Commission. There is no
assurance provided to any executive officer or any other holder of the
Company's securities that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of the Common Stock appreciates over
the option term, no value will be realized from the option grants made to
the Named Executive Officers.
(5) Mr. Rouse's option to purchase 1,000 shares, which was granted under the
1995 Stock Option Plan, becomes exercisable on July 18, 1998.
OPTION EXERCISES AND HOLDINGS
The following table provides certain summary information concerning the
shares of Common Stock represented by outstanding stock options held by each of
the Named Executive Officers as of
46
<PAGE> 48
September 30, 1997. No options were exercised by the Named Executive Officers
during the fiscal year ended September 30, 1997.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SEPTEMBER 30, 1997 (#) SEPTEMBER 30, 1997 ($)(1)
-------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------------- ----------- -------------
<S> <C> <C> <C> <C>
Mitchell S. Rouse.................. 2,000 1,000 -- --
R. Brian Wier...................... 35,000 -- -- --
</TABLE>
- ------------------------------
(1) Based on the fair market value of $6.00 per share as of September 30, 1997,
as determined by the Board of Directors, minus the exercise price of $6.00
per share, multiplied by the number of shares underlying the option.
1998 STOCK OPTION PLAN
The Company's 1998 Stock Option Plan (the "1998 Option Plan") was adopted
by the Board of Directors on February 20, 1998, and approved by the stockholders
of the Company at its annual meeting held on March 19, 1998. The 1998 Option
Plan is effective as of February 4, 1998. As of March 31, 1998, no options have
been granted under the 1998 Option Plan.
The 1998 Option Plan provides for the grant to employees of the Company
(including officers and directors) of "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or of
nonstatutory stock options. The maximum number of shares of Common Stock that
are authorized for issuance under the 1998 Option Plan is 1,000,000, subject to
a proportionate increase or decrease in the event of a stock split, reverse
stock split, stock dividend, or certain other adjustments to the total number of
outstanding shares of the Company's Common Stock. The aggregate fair market
value (determined at the time the incentive stock option is granted) of the
Common Stock with respect to which incentive stock options are exercisable for
the first time by the employee during any calendar year (under all plans of the
Company and its parent and subsidiary corporations) shall not exceed $100,000.
The 1998 Stock Option Plan is administered by the Board of Directors or a
committee of the Board of Directors (the "Administrator"). The Administrator
determines the recipients of options, option terms, exercise price, the number
of shares subject to the option and the exercisability of the options. The
exercise price of all incentive stock options granted under the 1998 Stock
Option Plan must be at least equal to the fair market value of the Common Stock
of the Company on the date of the grant. The exercise price of any incentive
stock option granted to an employee who owns stock representing more than 10% or
more of the voting power of the Company's outstanding capital stock (a "10%
Stockholder") must equal at least 110% of the fair market value of the Common
Stock on the date of the grant. The exercise price of all nonstatutory stock
options cannot be less than 85% of the fair market value of the Common Stock of
the Company on the date of grant. Payment of the exercise price may be made in
cash, delivery of shares of the Company's Common Stock or other consideration
determined by the Administrator. The term of an incentive stock option granted
under the 1998 Stock Option Plan shall be ten (10) years; provided, however,
that the term may not exceed five (5) years for 10% Stockholders. The term of a
nonstatutory stock option shall be eleven (11) years from the date of grant. An
option may not be transferred by the employee other than by will or the laws of
descent or distribution and may be exercised during the lifetime of the
employee, only by the employee, unless otherwise provided in an Option
Agreement. In the event of certain changes of control of the Company, all
outstanding options will be exercisable, in whole or in part, for the remainder
of the option period stated in the option agreement.
47
<PAGE> 49
The Administrator has the authority to amend or terminate the 1998 Stock
Option Plan as long as such action does not affect any outstanding option and
provided that stockholder approval shall be required for an amendment to
increase the number of shares subject to the 1998 Stock Option Plan, or any
change in the designation of the class of persons eligible to be granted
options, or a material increase in benefits accruing to participants under the
1998 Stock Option Plan if the Company is registered under Section 12 of the
Securities Exchange Act of 1934, as amended. If not terminated earlier, the 1998
Stock Option Plan will terminate in 2008.
1995 STOCK OPTION PLAN
The Company's 1995 Stock Option Plan (the "1995 Option Plan") was adopted
by the Board of Directors in April 1996, and approved by the stockholders in May
1996. The 1995 Plan provides for the grant to employees of the Company,
including officers and directors of the Company and franchisee principals,
consultants and other providers of goods and services to the Company
(collectively, "Optionees") of "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, nonqualified stock
options or stock appreciation rights ("SAR"). The maximum number of shares of
Common Stock issuable under the 1995 Option Plan and the Company's 1986 Stock
Option Plan (which terminated in 1995) is 445,900, subject to a proportionate
increase or decrease in the event of a stock split, reverse stock split, stock
dividend, or certain other adjustments to the Company's total number of
outstanding shares of Common Stock. As of May 31, 1998, options to purchase
382,250 shares are outstanding under the 1995 Option Plan and the 1986 Option
Plan and options to purchase 41,925 shares pursuant thereto have been exercised.
The aggregate fair market value (determined at the time the incentive stock
option is granted) of the Common Stock with respect to which incentive stock
options are exercisable for the first time by the employee during any calendar
year (under all plans of the Company and its parent and subsidiary corporations)
shall not exceed $100,000.
The 1995 Stock Option Plan is administered by the Board of Directors or a
committee of the Board of Directors (the "Administrator"). The Administrator
determines the recipients of options, option terms, exercise price, the number
of shares subject to the option and the exercisability of the options. The
exercise price of all stock options granted under the 1995 Stock Option Plan
must be at least equal to the fair market value of the Common Stock of the
Company on the date of the grant. The exercise price of any stock option granted
to an employee who owns stock representing more than 10% of the voting power of
the Company's outstanding capital stock (a "10% Stockholder") must equal at
least 110% of the fair market value of the Common Stock on the date of the
grant. Payment of the exercise price may be made in cash, delivery of shares of
the Company's Common Stock having a fair market value on the exercise date equal
to the option price or a combination of shares of Common Stock valued at the
fair market value on the exercise date and cash. The term of a stock option
granted under the 1995 Stock Option Plan shall not be greater than ten years;
provided, however, that the term may not exceed five years for 10% Stockholders.
Any option granted or to be granted under the 1995 Option Plan may, at the
discretion of the Administrator, include a related SAR. An SAR may be granted
either at the time the related option is granted or at any time thereafter prior
to exercise, termination or cancellation of such related option; provided,
however, that no SAR may be granted in connection with an incentive stock option
which was granted prior to the grant of such SAR. Optionees receiving an SAR may
exercise the SAR by surrendering to the Company the option or any portion
thereof which is then exercisable, and the obligation of the Company in respect
of the option to which the SAR relates (or such portion thereof) will be
discharged by payment of the SAR so exercised.
Upon the exercise of an SAR, the Company shall pay to the Optionee an
amount equal to the difference between (i) 100 percent of the then fair market
value of the shares of Common Stock subject to the option or portion thereof
surrendered by the Optionee, and (ii) the aggregate option exercise price of
such shares. The Optionee may elect to receive such payment in cash or in shares
of Common Stock valued at fair market value, or in any combination thereof;
provided, however, that the Company may, in its discretion, consent to or
disapprove the election of the Optionee to receive cash
48
<PAGE> 50
in full or partial payment of the SAR. An option may not be transferred by the
employee other than by will or the laws of descent or distribution or pursuant
to a qualified domestic relations order and may be exercised during the lifetime
of the employee, only by the employee, unless otherwise provided in an Option
Agreement. If an Optionee ceases employment with or services to the Company,
then the Optionee may exercise any outstanding option for three months following
the date of cessation of such status, but only to the extent of the number of
shares for which the option is exercisable on the date of cessation of such
status. In the event of certain changes of control of the Company, the Optionee
has the right to exercise all outstanding options during the 15 days immediately
prior to the consummation of the change of control, unless the options are
assumed or replaced with comparable options by the successor corporation.
The Administrator has the authority to amend or terminate the 1995 Stock
Option Plan as long as such action does not adversely affect any outstanding
option and provided that stockholder approval shall be required for an amendment
to increase the number of shares subject to the 1995 Stock Option Plan or any
material change in the eligibility requirements for the grant of options. If not
terminated earlier, the 1995 Stock Option Plan will terminate in 2005.
401(k) PLAN
The Company's employees participate in the SuperShuttle International
401(k) Plan, a profit-sharing plan established in January 1997 to serve
employees of SuperShuttle and its subsidiaries. All employees of the Company who
have attained age 21 and have been employed for six months or more are eligible
to participate in the plan. Participants in the 401(k) plan may contribute up to
20% of their total base compensation to the plan, subject to limitations
specified in the Internal Revenue Code of 1986, as amended. Each employee's
interest in contributions of the Company, if any, vests 20% per year of service
with the Company. Contributions by the Company are at the Company's discretion
and no such contributions have been made to date.
EMPLOYMENT AGREEMENTS
Effective March 1, 1998, the Company entered into a three year employment
agreement with Mr. Wier, providing for a base annual salary of $175,000, subject
to annual increases at the discretion of the Board of Directors. The agreement
provides that, in the event of a termination of employment by the Company
without cause or by Mr. Wier for good reason (as defined in the employment
agreement), he will be entitled to receive from the Company an amount equal to
two times either (i) the annual compensation which was payable to the employee
by the Company for the year immediately preceding the termination date, or (ii)
the average of the annual compensation which was payable to the employee by the
Company for the two years preceding the termination date, whichever is greater.
Further, the agreement provides that, in the event of a termination without
cause or disability or for good reason, all of the employee's vested stock
options shall remain exercisable for a period of one year following the
effective date of termination; and for a 24-month period following the
termination date he will continue to receive substantially the same benefits he
received as an employee, and such benefits will be reduced to the extent he
receives comparable benefits from other sources during such 24-month period. In
addition, the employment agreement provides that if Mr. Wier voluntarily
terminates his employment, other than for good reason, he is entitled to a
severance payment equal to the lesser of $60,000 or the remaining base salary
due under the employment agreement. The Company has the discretion to pay the
severance payment due under the employment agreement in a lump sum or over a two
year period. The employment agreement also provides that, in the event the
Company terminates Mr. Wier or he voluntarily leaves following a change in
control, he is entitled to the cash severance benefits described above plus the
acceleration of the vesting of all of the employee's options, which will then be
exercisable for a period of 90 days following the effective date of termination.
In addition, upon a change of control, the options granted to Mr. Wier pursuant
to his employment agreement become fully vested, and Mr. Wier has the right to
require the Company to purchase his vested options at a price that is not less
than the equivalent
49
<PAGE> 51
purchase price of the acquiring company effecting the change of control. Mr.
Wier may not compete with the Company anywhere where the Company is doing
business for a period of two years following the term of the employment
agreement.
The Company has also entered into employment agreements with other of its
executive officers. See "Certain Transactions."
50
<PAGE> 52
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information as of June 2, 1998,
concerning the beneficial ownership of the Company's Common Stock by (i) each
Named Executive Officer of the Company; (ii) each director of the Company; (iii)
all directors and executive officers of the Company as a group; and (iv) each
person (or group of affiliated persons) known by the Company to own beneficially
more than 5% of the Company's outstanding Common Stock. To the knowledge of the
Company, all persons listed below have sole voting and investment power with
respect to their shares, except to the extent that authority is shared by their
respective spouses under applicable law.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR NUMBER OF OWNED AFTER THE
TO THE OFFERING(1) SHARES OFFERING(1)(2)
-------------------- BEING --------------------
NAME AND ADDRESS(3) NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------- --------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
DIRECTORS AND OFFICERS:
Mitchell S. Rouse(4)................... 1,650,033 25.1% -- 1,650,033 17.2%
R. Brian Wier(5)....................... 110,000 1.6% -- 110,000 1.1%
Anthony M. Lamport(6).................. 362,830 5.5% -- 362,830 3.8%
Frank R. Kline(7)...................... 36,432 * -- 36,432 *
Neal Nichols(8)........................ 199,256 3.0% -- 199,256 2.1%
John C. Flanigan(9).................... 20,287 * -- 20,287 *
David Abel(10)......................... 94,731 1.4% -- 94,731 1.0%
Tucker Taylor(10)...................... 72,532 1.1% -- 72,532 *
Stephen Allan.......................... 457,786 7.0% -- 457,786 4.8%
Gene Hauck............................. 731,621 11.1% -- 731,621 7.6%
Mark Levitt............................ 450,801 6.9% -- 450,801 4.7%
All directors and executive officers of
the Company as a group (15
persons)(11)......................... 4,218,809 62.6% -- 4,218,809 43.3%
5% STOCKHOLDERS:
David Koscielak(12).................... 477,785 7.3% -- 477,785 5.0%
Karen Caputo........................... 481,474 7.3% -- 481,474 5.0%
Robert Siedlecki(13)................... 466,128 7.1% -- 466,128 4.9%
Wilmington Cab Co. of California(14)... 900,000 13.7% -- 900,000 9.4%
ULLICO, Inc.(15)....................... 771,988 11.6% 320,000 451,988 4.7%
Entities affiliated with Lambda
Management, L.P.(16)................. 359,830 5.5% -- 359,830 3.8%
</TABLE>
- ------------------------------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those securities and includes
shares of common stock issuable pursuant to the exercise of stock options
or warrants that are immediately exercisable or exercisable within 60 days,
or pursuant to the conversion of a security. Shares of Common Stock subject
to options or warrants that are currently exercisable or exercisable within
60 days are deemed outstanding for calculating the percentage ownership of
the person holding such options or warrants but are not deemed outstanding
for calculating the percentage ownership of any other person. Unless
otherwise indicated, the persons or entities identified in this table have
sole voting and investment power with respect to all shares
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<PAGE> 53
beneficially owned by them. Percentage ownership calculations prior to and
after the offering are based on 6,573,617 shares and 9,573,617 shares,
respectively, of Common Stock outstanding.
(2) In the event that the Underwriters exercise the over-allotment option, up
to an additional 498,000 shares may be sold as follows: 348,000 shares by
the Company, 100,000 shares by Mitchell S. Rouse and 50,000 shares by
Lambda Management, L.P.
(3) The address for all directors and officers of the Company is c/o the
Company, 4610 South 35th Street, Phoenix, Arizona 85040.
(4) Includes 900,000 shares held in the name of Wilmington Cab Co. of
California, Inc, a company controlled by Mr. Rouse, and 3,000 shares
issuable upon exercise of outstanding options exercisable within 60 days of
May 31, 1998. Mr. Rouse has granted to the Underwriters an over-allotment
option to purchase up to 100,000 shares of Common Stock. If the
over-allotment option is exercised in full, the number of shares
beneficially owned by Mr. Rouse will be 1,550,033 shares or 16.2% of shares
outstanding.
(5) Includes 95,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of May 31, 1998.
(6) Includes 3,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of May 31, 1998. Also includes 1,000 shares of
Common Stock and 6,666 shares of Series B Convertible Preferred Stock
convertible into 10,666 shares of Common Stock held in the name of Lambda
CFD '87, L.P., and 134,833 shares of Common Stock and 133,332 shares of
Series B Convertible Preferred Stock convertible into 213,331 shares of
Common Stock held in the name of Lambda III, L.P. Mr. Lamport is a general
partner in each of these Lambda entities and disclaims beneficial ownership
of these shares except to the extent of his proportional interest therein.
Lambda CFD '87, L.P. and Lambda III, L.P. have collectively granted to the
underwriters an over-allotment option to purchase up to 50,000 shares of
Common Stock.
(7) Includes 3,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of May 31, 1998, and 25,000 shares issuable upon
exercise of a warrant held in the name of Kline Living Trust to purchase
such number of shares of Common Stock at a price of $6.00 per share. The
warrant is exercisable at any time until May 1, 2005.
(8) Includes 2,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of May 31, 1998.
(9) Includes 2,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of May 31, 1998, and 5,600 shares held in a
retirement plan for the benefit of Mr. Flanigan.
(10) Includes 3,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of May 31, 1998.
(11) Includes 146,500 shares issuable upon exercise of outstanding options
exercisable within 60 days of May 31, 1998, and 25,000 shares issuable upon
exercise of a warrant. Mr. Rouse and Lambda Management, L.P. have granted
to the Underwriters over-allotment options to purchase up to 100,000 shares
and 50,000 shares, respectively, of Common Stock. If such over-allotment
options are exercised in full, the number of shares beneficially owned by
the directors and executive officers of the Company as a group will be
4,068,809 or 42.5% of shares outstanding.
(12) Includes 20,000 shares of Common Stock held in the name of Orange County
Shuttle Associates, Inc., a company controlled by Mr. Koscielak. The
address for Mr. Koscielak is 2129 West Rosecrans Avenue, Gardena,
California 90249.
(13) The address for Mr. Siedlecki is 5890 Rodman Street, Hollywood, Florida
33023.
(14) The address of Wilmington Cab Co. of California, Inc. ("Wilmington Cab") is
2129 West Rosecrans Avenue, Gardena, California 90249. Mr. Rouse is a
controlling shareholder of Wilmington Cab.
(15) Includes 56,356 shares issuable upon exercise of a warrant to purchase such
number of shares of Common Stock and 339,477 shares of Series B Convertible
Preferred Stock convertible into
52
<PAGE> 54
543,163 shares of Common Stock held in the name of ULLICO, Inc. Also
includes 172,469 shares of Common Stock held in the name of The Union Labor
Life Insurance Company. The warrant is exercisable at a price of $6.00 per
share and is exercisable at any time until May 1, 2010. The address of
ULLICO, Inc. is the same as Union Labor Life Insurance Company. The address
of ULLICO, Inc. is 111 Massachusetts Avenue, N.W., Washington, D.C. 20001.
ULLICO, Inc. is the parent company of The Union Labor Life Insurance
Company. In accordance with the terms of the Certificate of Designation
governing the Series B Convertible Preferred Stock (the "Preferred
Certificate") and a related agreement, ULLICO, Inc. and The Union Labor
Life Insurance Company had the right to designate an aggregate of two
individuals to serve on the Company's Board of Directors. This right will
cease upon the conversion of the Series B Convertible Preferred Stock into
Common Stock.
(16) Includes 1,000 shares of Common Stock and 6,666 shares of Series B
Convertible Preferred Stock convertible into 10,666 shares of Common Stock
held in the name of Lambda CFD '87, L.P., and 133,332 shares of Series B
Convertible Preferred Stock convertible into 213,331 shares of Common Stock
held in the name of Lambda III, L.P. Lambda Management, L.P. is the general
partner of Lambda CFD '87, L.P. and the general partner of Lambda III
Capital Partners, L.P., which in turn is the general partner of Lambda III,
L.P., Lambda CFD '87, L.P. and Lambda III, L.P. have collectively granted
to the underwriters an over-allotment option to purchase up to 50,000
shares of Common Stock. If the over-allotment option is exercised in full
the number of shares beneficially owned by Lambda CFD '87, L.P. and Lambda
III, L.P. will be 309,830 shares or 3.2% of shares outstanding. The address
for Lambda Management, L.P. is 360 Lexington Avenue, 54th Floor, New York,
New York 10168. In accordance with the terms of the Preferred Certificate
and a related agreement, Lambda III, L.P. and Lambda CFD. '87, L.P. had the
right to designate one individual to serve on the Company's Board of
Directors. Currently, Anthony M. Lamport, a general partner of these two
Lambda funds, is a director of the Company and has served as Lambda's
director designee.
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<PAGE> 55
DESCRIPTION OF CAPITAL STOCK
The Company is a Delaware corporation and its affairs are governed by its
Amended and Restated Certificate of Incorporation and Amended and Restated
Bylaws and the Delaware General Corporation Law. The following description of
the Company's capital stock, which is complete in all material respects, is
qualified in its entirety by reference to the provisions of the Company's
Certificate of Incorporation and Bylaws, copies of which have been filed as
exhibits to the Registration Statement of which this Prospectus is a part.
The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, par value $.01 per share, and 5,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). As of the date hereof,
there are 5,806,457 shares of Common Stock issued and outstanding, which are
held of record by 35 stockholders. As of the date hereof, there were 479,475
shares of Series B Convertible Preferred Stock, $.01 par value (the "Series B
Preferred Stock") issued and outstanding, which are held of record by three
stockholders. See "Capitalization."
COMMON STOCK
Holders of shares of Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders and do not have cumulative voting rights.
Subject to the rights of holders of outstanding shares of Preferred Stock, if
any, the holders of Common Stock are entitled to share ratably in dividends, if
any, as may be declared from time to time by the Board of Directors in its
discretion from funds legally available therefor. In the event of liquidation,
dissolution, or winding up of the Company, subject to the rights of outstanding
shares of Preferred Stock, if any, the holders of Common Stock are entitled to
share ratably in all assets available for distribution to the stockholders after
payment of the Company's liabilities. The Common Stock has no preemptive or
other subscription rights, and there are no conversion rights or redemption or
sinking fund provisions with respect to such shares. All of the outstanding
shares of Common Stock are, and the shares of Common Stock offered hereby will
be, upon completion of this offering, fully paid and nonassessable.
PREFERRED STOCK
Shares of Preferred Stock may be issued in one or more series, and the
Board of Directors of the Company has the power to fix for each such series the
rights, preferences, privileges and restrictions thereof, including dividend
rights, conversion rights, voting rights, terms of redemption, liquidation
preferences, and sinking fund terms of shares as the Board of Directors shall
deem appropriate, without any further vote or action by the stockholders of the
Company. Preferred Stock could be issued by the Board of Directors with voting
and conversion rights that could adversely affect the voting power of the
holders of the Common Stock. In addition, because the terms of the Preferred
Stock may be fixed by the Board of Directors of the Company without stockholder
action, the Preferred Stock could be issued quickly with terms calculated to
defeat or delay a proposed takeover of the Company, or to make the removal of
the management of the Company more difficult. Under certain circumstances, this
would have the effect of decreasing the market price of the Common Stock. The
Company has no present plans to issue additional shares of Preferred Stock. See
"Risk Factors--Anti-Takeover Provisions of the Company's Certificate of
Incorporation, Bylaws and Delaware Law."
SERIES B PREFERRED STOCK
The Company currently has outstanding 479,475 shares of Series B Preferred
Stock, which are presently convertible into 767,160 shares of Common Stock. The
holders of the Series B Preferred have agreed to convert their shares of Series
B Preferred into Common Stock immediately prior to the Closing of this offering,
320,000 shares of which are being sold pursuant to this Prospectus.
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ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW
The Company is subject to the provisions of Section 203 of the Delaware
Law. In general, the statute prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date that the person became an interested
stockholder unless (with certain exceptions) the business combination or the
transaction in which the person became an interested stockholder is approved in
a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale or other transaction resulting in a financial benefit to the
stockholder, and an "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years prior, did own) 15% or
more of the corporation's outstanding voting stock. This provision may have the
effect of delaying, deferring or preventing a change in control of the Company
without further action by the stockholders. In addition, upon completion of the
offering, certain provisions of the Company's charter documents, including a
provision eliminating the ability of stockholders to take actions by written
consent, may have the effect of delaying or preventing changes in control or
management of the Company, which could have an adverse effect on the market
price of the Company's Common Stock, The Company's stock option and purchase
plans generally provide for assumption of such plans or substitution of an
equivalent option of a successor corporation or, alternatively, at the
discretion of the Board of Directors, exercise of some or all of the options
stock, including non-vested shares, or acceleration of vesting of shares issued
pursuant to stock grants, upon a change of control or similar event. The Board
of Directors has authority to issue up to 5,000,000 shares of Preferred Stock
and to fix the rights, preferences, privileges and restrictions, including
voting rights, of these shares without any further vote or action by the
stockholders. The rights of the holders of the Common Stock will be subject to,
and may be adversely affected by, the rights of the holders of any Preferred
Stock that may be issued in the future. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company, thereby delaying, deferring or preventing a change in control of the
Company. Furthermore, such Preferred Stock may have other rights, including
economic rights senior to the Common Stock, and, as a result, the issuance of
such Preferred Stock could have a material adverse effect on the market value of
the Common Stock. The Company has no present plan to issue shares of Preferred
Stock. See "Risk Factors--Anti-Takeover Provisions of the Company's Certificate
of Incorporation, Bylaws and Delaware Law," "Management--Employment Agreements"
and "Certain Transactions."
REGISTRATION RIGHTS OF CERTAIN HOLDERS.
The holders of 4,689,111 shares of Common Stock (the "Registrable
Securities"), including 56,356 shares issuable upon exercise of warrants and
447,160 shares issuable upon conversion of the Series B Preferred Stock are
entitled to certain rights with respect to the registration of such shares under
the Securities Act. These rights are provided under the terms of agreements
between the Company and the holders of Registrable Securities. Subject to
certain limitations in the registration rights agreement, the holders of
1,140,000 shares of Common Stock may require, on one occasion, the Company to
register their shares pursuant to a registration statement filed under the
Securities Act of 1933, as amended (the "Act"). Subject to certain limitations
in the agreement providing for registration rights, the holders of 823,516
shares of Common Stock may require, on one occasion, at any time after six
months from the effective date of this Prospectus, that the Company use its best
efforts to register such shares for public resale, provided that the aggregate
offering prices of the shares to be sold is no less than $5,000,000. Likewise,
subject to certain limitations in the registration rights agreements, the
holders of 3,045,595 shares of Common Stock may require, on one occasion at any
time after the Company is eligible to file a registration statement on Form S-3
(which is at least twelve months from the effective date of this Prospectus),
that the Company use its best efforts to register such shares for public resale.
If the Company registers any of its Common Stock either for its own account or
for the account of other security holders, the holders of Registrable Securities
are entitled to include their shares of Common Stock in the registration. A
holder's right to include shares in an underwritten
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<PAGE> 57
registration is subject to the ability of the underwriters to limit the number
of shares included in the offering. All fees, costs and expenses of such
registrations must be borne by the Company and all selling expenses (including
underwriting discounts, selling commissions and stock transfer taxes) relating
to Registrable Securities must be borne by the holders of the securities being
registered. See "Risk Factors--Potential Effects of Shares Eligible for Future
Sale on Price of Common Stock."
WARRANTS
As of April 15, 1998, warrants were outstanding to purchase an aggregate of
106,356 shares of Common Stock at an exercise price of $6.00 per share. Warrants
to purchase 56,356 shares of Common Stock are exercisable at any time until May
1, 2010. Warrants to purchase 50,000 shares of Common Stock are exercisable at
any time until May 1, 2005.
TRANSFER AGENT AND REGISTRAR
Harris Trust Company of California, located at 601 S. Figueroa, 49th Floor,
Los Angeles, CA 90017, has been appointed as the transfer agent and registrar
for the Common Stock.
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CERTAIN TRANSACTIONS
Effective March 31, 1998, pursuant to separate merger and stock purchase
agreements, the Company acquired the outstanding capital stock of its three
largest franchises in Los Angeles, Orange County and Miami: Tamarack
Transportation, Inc. ("Tamarack"), Preferred Transportation, Inc. ("PTI") and
Southern Shuttle Services, Inc. ("Southern"), respectively. In a fourth
transaction, the Company acquired related operations in Southern Florida: AAA
Wheelchair Wagon Services, Inc. ("AAA"), Limousines of South Florida, Inc.
("LSF") (collectively, "AAA-LSF"), Wheelchair Ambulance of Hollywood, Inc. and
A1A Snowbird Leasing, Inc.
Pursuant to the acquisitions described above, and as consideration for
their interests in the Acquired Companies, certain directors and holders of 5%
or more of the outstanding Common Stock received shares of Common Stock as
follows: Mr. Hauck--731,621 shares; Mr. Allan--457,786 shares; Mr.
Koscielak--457,785 shares; Mr. Levitt--450,801 shares; Ms. Caputo--481,474
shares; and Mr. Siedlecki--466,128 shares. Such amounts were determined on the
basis of the evaluation by the Company of the following factors: the financial
and operational history and trends of the Acquired Companies, the experience of
the Acquired Companies' management, the position of the Acquired Companies in
the ground transportation market, and the Acquired Companies' prospects and
financial results. Further, certain of the foregoing individuals received
bonuses from their respective companies prior to the consummation of the
acquisitions as follows: Mr. Hauck--$100,000; Mr. Allan--$75,000; Mr.
Koscielak--$75,000; Mr. Levitt--$100,000; and Mr. Siedlecki--$100,000. Each of
these individuals have been granted registration rights with respect to their
shares of Common Stock. See "Registration Rights."
In connection with these acquisitions, the Company or its subsidiaries
entered into three-year employment agreements, effective March 31, 1998, with
Messrs. Hauck, Allan and Levitt and Ms. Caputo pursuant to which Mr. Hauck will
be employed as President of Tamarack, Mr. Allan as President of PTI, Mr. Levitt
as President of Southern and Ms. Caputo as President of AAA-LSF. Messrs. Hauck,
Allan and Levitt were elected to the Board of Directors of the Company pursuant
to and as a condition of the acquisitions. Messrs. Hauck, Allan and Levitt and
Ms. Caputo are beneficial owners of more than five percent of the Company's
Common Stock. The employment agreements provide for a minimum base annual salary
of $125,000. Further, the agreements for Messrs. Allan, Hauck and Levitt and Ms.
Caputo provide that they will receive an incentive bonus tied to the pre-tax
earnings of PTI, Tamarack, Southern and AAA-LSF, respectively. Mr. Levitt's
agreement also provides that the Company will lease an automobile for his sole
use. In addition, each of Messrs. Allan, Levitt and Hauck have been granted an
option to purchase 10,000 shares of Common Stock at an exercise price equal to
the initial public offering price per share of Common Stock, with one-third of
such options vesting and becoming exercisable upon each one-year anniversary of
the date of his or her employment agreement.
These employment agreements also provide that, in the event of termination
of employment by the Company without cause or by the employee for good reason
(as defined in the employment agreements), the employee will be entitled to
receive from the Company an amount equal to one times the annual base salary in
effect immediately prior to termination and to exercise any vested stock options
for the ninety day period immediately following the date of termination. In
addition, each agreement provides for the continuation of health care benefits
for the one year period following the effective date of termination of
employment or until the employee obtains new employment. The Company has the
discretion to pay the severance payments due under the employment agreements in
a lump sum or over the course of a one year period.
Pursuant to the terms of the agreements, the employees may not compete with
the Company in the relevant market area as defined in each agreement for a
period of three years following the term of the employment agreements. In
addition, the agreements with Mr. Levitt and Ms. Caputo provide that for a
period of five years following the consummation of the relevant acquisitions,
the employee shall
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not enter into any agreement with any party currently doing business with the
respective Acquired Companies, SuperShuttle or any of its affiliates for the
provision of substantially similar services.
In addition, the Company holds notes payable to it by PTI and Tamarack at
March 31, 1998, in the amount of $492,978 and $336,630, respectively, related to
the sale of its Orange County and Los Angeles franchises in 1994. At March 31,
1998, PTI and Tamarack also had capital lease liabilities payable to the Company
in the amount of $146,640 and $228,980, respectively.
Messrs. Allan and Koscielak have personally guaranteed certain indebtedness
of PTI. As of March 31, 1998, the balance of such guaranteed indebtedness was
approximately $1.0 million. Upon the consummation of this offering, the Company
has agreed to use its best efforts to obtain release of personal guarantees and
collateral securing such loans.
Gene Hauck has personally guaranteed certain indebtedness of Tamarack. As
of March 31, 1998, the balance of such guaranteed indebtedness was approximately
$1.0 million. Upon the consummation of this offering, the Company has agreed to
use its best efforts to obtain release of personal guarantees and collateral
securing such loans.
Southern leases its Miami facility from Wheaton, Inc., an entity owned by
Robert Siedlecki, a beneficial owner of more than five percent of the Company's
Common Stock. Lease payments made by Southern to Wheaton, Inc. totalled $120,000
in each of the years ended December 31, 1995, 1996 and 1997. The lease agreement
for this facility expires on December 31, 2001. These facilities are also used
by AAA-LSF.
During 1996, 1997 and 1998, Southern made interest-free advances to certain
stockholders and affiliates, including Mark Levitt. The balances due Southern
were $168,000 and $208,000 at December 31, 1996 and December 31, 1997,
respectively. As of March 31, 1998, the balance of such advances of $270,500 was
forgiven by Southern.
Mr. Levitt, Ms. Caputo and Mr. Siedlecki have personally guaranteed
indebtedness of Southern, AAA, and LSF. As of March 31, 1998, the balance of
such loans with Southern Shuttle of approximately $700,000 were guaranteed by
Mr. Levitt and Mr. Siedlecki. The balance of approximately $1.1 million with LSF
at April 15, 1998 was guaranteed by Mr. Levitt and Ms. Caputo. The balance of
approximately $1.2 million with AAA was guaranteed by Ms. Caputo. Mr. Siedlecki
has provided collateral securing a $100,000 letter of credit for the benefit of
Southern and a $200,000 line of credit for the benefit of LSF. Upon the
consummation of this offering, the Company has agreed to use its best efforts to
obtain the release of the personal guarantees, and the collateral securing such
guarantees.
Biscayne Insurance Co. ("Biscayne"), an entity owned by Mr. Siedlecki and
his spouse, provides commercial automobile insurance coverage to Southern, LSF
and AAA. Southern paid premiums under its Biscayne policy of $469,000 for the
year ended December 31, 1997 and $101,000 for the year ended December 31, 1996.
LSF paid premiums under its Biscayne policy of $35,000 for the year ended
December 31, 1997 and $34,000 for the year ended December 31, 1996. AAA paid
premiums under its Biscayne policy of $130,000 for the year ended December 31,
1997 and $81,000 for the year ended December 31, 1996.
AAA also leases a facility in Hollywood, Florida from Mr. Siedlecki. The
lease for the Hollywood property expires in 2001 and provides for lease payments
of $42,000 per year. Ms. Caputo and Mr. Siedlecki have advanced funds to AAA
over a number of years. Ms. Caputo has loaned AAA a total of $592,000, of which
amount $269,000 was repaid to Ms. Caputo in March 1998. The remaining $324,000
of indebtedness was forgiven by Ms. Caputo in March 1998. Mr. Siedlecki loaned
AAA a total of $128,000, the balance of which was outstanding at March 31, 1998,
and was assumed by the Company in connection with the acquisition of AAA. AAA
also leases two sites in Palm Beach County from Ms. Caputo. The lease
agreements, which expire in 2001, provide for annual lease payments to Ms.
Caputo of $42,000 and $9,000, respectively.
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The Company's interest in its Baltimore operation, Shuttle Express, is
subject to the terms of a shareholders agreement. The agreement grants the
Company the right to acquire the shares of stock in Shuttle Express not owned by
the Company pursuant to a call option exercisable between September 1, 1997 to
June 1, 1999. This agreement also grants Yellow Holding, Inc. ("Yellow"), a
minority shareholder of Shuttle Express, the right to require the Company to
purchase Yellow's interest in Shuttle Express pursuant to a put option
exercisable between January 1, 1999 and June 1, 1999. The strike price for
either the call or put is an aggregate amount not less than $1.0 million. The
payment of any strike price in the event of the exercise of a put or call option
is payable, at the option of the purchaser, as follows: 25% down in cash, with
the balance paid in the form of a promissory note payable in equal monthly
installments over a period of 36 months, fully amortized, at a prime rate of
interest. The Company has the right to reject Yellow's put, in which event
either party may immediately offer for sale all but not less than all of the
authorized, issued and outstanding stock or assets of Shuttle Express for a
period of 12 months, to any bona fide third party purchaser.
The Company owns an approximately 15% equity interest in its Washington,
D.C. franchisee, Washington Shuttle, Inc. ("Washington Shuttle"). The Company
has unconditionally guaranteed indebtedness of Washington Shuttle owed to First
Union National Bank of Virginia ("First Union"). As of March 31, 1998,
Washington Shuttle was indebted to First Union in the aggregate amount of
approximately $986,000.
Mr. Rouse, the Chairman of the Board of the Company, and Wilmington Cab Co.
of California, Inc., a company controlled by Mr. Rouse and shareholder of the
Company, have guaranteed indebtedness of the Company owed to Mesa Holding Co. As
of March 31, 1998, the balance of such indebtedness was $500,000.
In December 1996, the Company sold 952,508 shares of its Common Stock to 17
of its stockholders in a rights offering at a purchase price of $2.00 per share.
The directors, executive officers and beneficial owners of more than five
percent of the Company's Common Stock who participated in that offering are as
follows: Mitchell S. Rouse--195,800 shares; Neal Nichols--72,256 shares; David
A. Abel--15,900 shares; Tucker Taylor--53,700 shares; John F. Flanigan--5,600
shares; Frank R. Kline--2,600 shares; R. Brian Wier--15,000 shares; The Union
Labor Life Insurance Company--172,469 shares; Lambda III, L.P.--51,500; and
Lambda CFD '87, L.P.--1,000.
Effective March 1, 1998, the Company entered into a three year employment
agreement with Thomas C. LaVoy, the Company's Chief Financial Officer, providing
for a base annual salary of $140,000, subject to annual increases at the
discretion of the Board of Directors. The agreement provides that, in the event
of a termination of employment by the Company without cause or by Mr. LaVoy for
good reason (as defined in the employment agreement), he will be entitled to
receive from the Company an amount equal to two times either (i) the annual
compensation which was payable to the employee by the Company for the year
immediately preceding the termination date, or (ii) the average of the annual
compensation which was payable to the employee by the Company for the two years
preceding the termination date, whichever is greater. Further, the agreement
provides that, in the event of a termination without cause or for good reason,
all of the employee's vested stock options shall remain exercisable for a period
of one year following the effective date of termination; and for a 24-month
period following the termination date he will continue to receive substantially
the same benefits he received as an employee, and such benefits will be reduced
to the extent he receives comparable benefits from other sources during such
24-month period. The Company has the discretion to pay the severance payment due
under the employment agreement in a lump sum or over a two year period. The
employment agreement also provides that, in the event the Company terminates Mr.
LaVoy or he voluntarily leaves following a change in control, he is entitled to
the cash severance benefits described above plus the acceleration of the vesting
of all of the employee's options, which will then be exercisable for a period of
ninety (90) days following the effective date of termination. In addition, upon
a change of control, the options granted to Mr. LaVoy pursuant to his employment
agreement will become fully vested, and Mr. LaVoy has the right to require the
Company to purchase his vested options at a price that is not less than the
equivalent purchase price of the acquiring
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company effecting the change of control. Mr. LaVoy may not compete with the
Company anywhere where the Company is doing business for a period of two years
following the term of the employment agreement.
The Company also has an employment agreement with R. Brian Wier, the
Company's Chief Executive Officer. See "Management--Employment Agreements."
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering and based on the shares outstanding as of
May 31, 1998, there will be 9,573,617 shares of Common Stock outstanding. Of
these shares, the 3,320,000 shares sold in the offering (assuming no exercise of
the Underwriters' over-allotment option) will be freely tradable without
restriction or further registration unless purchased by "affiliates" of the
Company as that term is defined in Rule 144 under the Securities Act. The
remaining shares will be "restricted securities" as that term is defined under
Rule 144 (the "Restricted Shares"). Sales of Restricted Shares in the public
market, or the availability of such shares for sale, could adversely affect the
market price of the Common Stock.
Of the Restricted Shares, an aggregate of 3,427,765 shares of Common Stock
(including 267,543 shares issuable upon exercise of vested stock options and
warrants to purchase common stock) will be eligible for sale in the public
market subject to Rule 144 and Rule 701 under the Securities Act and the
expiration of a contractual lock-up ending 180 days after the date of the
Prospectus, unless an earlier release is consented to, in whole or in part, by
Hambrecht & Quist LLC. Subject to compliance with the volume limitations and
other requirements of Rule 144, the remaining Restricted Shares will become
eligible for sale under Rule 144 as follows: (i) 40,000 shares as of February 7,
1999; (ii) 3,045,595 shares as of April 1, 1999; and (iii) 7,800 shares as of
April 4, 1999.
In general, under Rule 144, beginning 90 days after the date of this
Prospectus, a person (or persons whose shares are aggregated) who has
beneficially owned Restricted Shares for at least one year, including persons
who may be deemed to be "affiliates" of the Company, would be entitled to sell
within any three-month period a number of shares that does not exceed the
greater of: (i) one percent of the number of shares of Common Stock then
outstanding (which will equal approximately 95,737 shares immediately after the
offering); or (ii) the average weekly trading volume of the Common Stock as
reported through the Nasdaq National Market during the four calendar weeks
preceding the filing of a Form 144 with respect to such sale. Sales under Rule
144 are also subject to certain manner of sale provisions and notice
requirements and to the availability of current public information about the
Company. Under Rule 144(k), a person who is not deemed to have been an affiliate
of the Company at any time during the 90 days preceding a sale, and who has
beneficially owned the Restricted Shares proposed to be sold for at least two
years (including the holding period of any prior owner except an affiliate), is
entitled to sell such shares without complying with the manner of sale, public
information volume limitation or notice provisions of Rule 144.
Rule 701 permits resales of shares issued pursuant to certain compensatory
benefit plans and contracts and prior to the date the issuer becomes subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), subject to certain limitations on the aggregate offering
price of a transaction and certain other conditions, commencing 90 days after
the issuer becomes subject to the reporting requirements of the Exchange Act, in
reliance upon Rule 144, but without compliance with certain restrictions,
including the holding period requirements, contained in Rule 144. In addition,
the Securities and Exchange Commission has indicated that Rule 701 will apply to
typical stock options granted by an issuer before it becomes subject to the
reporting requirements of the Exchange Act, along with the shares acquired upon
exercise of such options (including exercises after the date of this
Prospectus). Securities issued in reliance on Rule 701 are restricted securities
and, subject to the contractual lock-up restrictions described above, beginning
90 days after the date of this Prospectus, may be sold by persons other than
affiliates subject only to the manner of sale provisions of Rule 144 and by
affiliates under Rule 144 without compliance with its one-year minimum holding
period requirements.
The Company has agreed that it will not issue, sell or grant options to
purchase or otherwise dispose of any shares of its Common Stock or securities
convertible into or exchangeable for its Common Stock, except in connection with
the exercise of options or other rights outstanding on the date of this
Prospectus or pursuant to the Company's stock option plans, for a period of 180
days after the date of this Prospectus, without the prior written consent of
Hambrecht & Quist LLC.
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The Company intends to register on a Form S-8 registration statement under
the Securities Act, during the 180-day lock-up period, a total of 1,403,975
shares of Common Stock which are subject to outstanding options or reserved for
issuance under the Company's stock option plans and stock purchase plan. Such
registration will permit the resale of shares so registered by non-affiliates in
the public market without restriction under the Securities Act.
Prior to the offering, there has been no public market for the Common
Stock, and any sale of substantial amounts of Common Stock in the open market
may adversely affect the market price of the Common Stock offered hereby. In
addition, beginning 180 days after the date of this Prospectus, the holders of
approximately 4,689,111 shares of Common Stock are entitled to certain rights
with respect to registration of such shares under the Securities Act.
Registration of such shares under the Securities Act would result in such shares
under the Securities Act would result in such shares becoming freely tradeable
without restriction under the Securities Act (except for shares purchased by
affiliates of the Company) immediately upon the effectiveness of such
registration. See "Description of Capital Stock--Registration Rights." If such
holders, by exercising their demand registration rights, cause a large number of
securities to be registered and sold in the public market, such sales could have
a adverse effect on the market price for the Common Stock. If the Company were
to include in a Company-initiated registration, any registrable securities
pursuant to the exercise of piggyback registration rights, such sales may have
an adverse effect on the Company's ability to raise needed capital. See "Risk
Factors--Potential Effects of Shares Eligible for Future Sale on Price of Common
Stock."
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UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below through their Representatives, Hambrecht & Quist LLC
and Piper Jaffray Inc., have severally agreed to purchase from the Company the
following respective numbers of shares of Common Stock:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---- ---------
<S> <C>
Hambrecht & Quist LLC.......................................
Piper Jaffray Inc. .........................................
---------
Total....................................................... 3,320,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in the Company's business and the receipt of
certain certificates, opinions and letters from the Company, its counsel and
independent auditors. The nature of the Underwriters' obligations is such that
they are committed to purchase all shares of Common Stock offered hereby if any
of such shares are purchased.
The Underwriters propose to offer the shares of Common Stock directly to
the public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain other
dealers. After the initial public offering of the shares, the offering price and
other selling terms may be changed by the Representatives of the Underwriters.
The Representatives have advised the Company that the Underwriters do not intend
to confirm discretionary sales in excess of 5% of the shares of Common Stock
offered hereby.
The Company has granted to the Underwriters an option, exercisable no later
than 30 days after the date of this Prospectus, to purchase up to 498,000
additional shares of Common Stock at the initial public offering price, less the
underwriting discount, set forth on the cover page of this Prospectus. To the
extent that the Underwriters exercise this option, each of the Underwriters will
have a firm commitment to purchase approximately the same percentage thereof
which the number of shares of Common Stock to be purchased by it shown in the
above table bears to the total number of shares of Common Stock offered hereby.
The Company will be obligated, pursuant to the option, to sell shares to the
Underwriters to the extent the option is exercised. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of shares of Common Stock offered hereby.
The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.
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Certain stockholders of the Company, including the executive officers and
directors, who will own in the aggregate 5,575,537 shares of Common Stock after
the offering, have agreed that they will not, without the prior written consent
of Hambrecht & Quist LLC, offer, sell, or otherwise dispose of any shares of
Common Stock, options or warrants to acquire shares of Common Stock or
securities exchangeable for or convertible into shares of Common Stock owned by
them during the 180-day period following the date of this Prospectus. The
Company has agreed that it will not, without the prior written consent of
Hambrecht & Quist LLC, offer, sell, or otherwise dispose of any shares of Common
Stock, options or warrants or acquire shares of Common Stock or securities
exchangeable for or convertible into shares of Common Stock during the 180-day
period following the date of this Prospectus, except that the Company may issue
shares upon the exercise of options granted prior to the date hereof, and may
grant additional options under its stock option plans, provided, that, without
the prior written consent of Hambrecht & Quist LLC, such additional options
shall not be exercisable during such period.
Prior to the offering, there has been no public market for the Common
Stock. The initial public offering price of the Common Stock will be determined
by negotiation among the Company, the Selling Stockholders and the
Representatives. Among the factors to be considered in determining the initial
public offering price are prevailing market and economic conditions, sales and
earnings of the Company, market valuations of other companies engaged in
activities similar to the Company, estimates of the business potential and
prospects of the Company, the present state of the Company's business
operations, the Company's management and other factors deemed relevant. The
estimated initial public offering price range set forth on the cover of this
preliminary Prospectus is subject to change as a result of market conditions and
other factors.
Certain persons participating in the offering may over allot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market, including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids. A stabilizing bid means the placing of
any bid or effecting of any purchase, for the purpose of pegging, fixing or
maintaining the price of the Common Stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the offering. A penalty bid means an arrangement that permits the Underwriters
to reclaim a selling concession from a syndicate member in connection with the
offering when shares of Common Stock sold by the syndicate member are purchased
in syndicate covering transactions. Such transactions may be effected on the
Nasdaq National Market, in the over-the-counter market, or otherwise. Such
stabilizing, if commenced, may be discontinued at any time.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Squire, Sanders & Dempsey L.L.P., Phoenix, Arizona. Certain legal
matters will be passed upon for the Underwriters by Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP, Menlo Park, California.
EXPERTS
The financial statements as of September 30, 1997 and 1996 and for each of
the years then ended of SuperShuttle International, Inc., the financial
statements as of September 30, 1997 and 1996 and for each of the three years
ended September 30, 1997 of Tamarack Transportation, Inc. dba SuperShuttle Los
Angeles, the financial statements as of December 31, 1997 and 1996 and for each
of the three years ended December 31, 1997 of Preferred Transportation, Inc. dba
SuperShuttle Orange County, the financial statements as of December 31, 1997 and
1996 and for each of the years ended December 31, 1997 of Southern Shuttle
Services, Inc., and the combined financial statements as of December 31, 1997
and 1996 and for each of the years ended December 31, 1997 of AAA Wheelchair
Wagon Services, Inc.
64
<PAGE> 66
and Limousines of South Florida, Inc., included in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein and elsewhere in the registration statement, and have
been so included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The financial statements as of September 30, 1995 and for the year then
ended, included in this prospectus and elsewhere in the registration statement
have been audited by Arthur Andersen LLP, independent public accountants, as
stated in their report with respect thereto, and are included herein in reliance
upon the report of said firm given upon the authority of said firm as experts in
accounting and auditing.
On July 15, 1996, the Company's former auditors resigned and the Company's
Board of Directors decided to retain Deloitte & Touche LLP as its independent
public accountants. The former auditors' report on the Company's financial
statements for the year ended September 30, 1995 did not contain an adverse
opinion or disclaimer of opinion and was not modified as to uncertainty, audit
scope or accounting principles. There were no disagreements with the former
auditors on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure at the time of the change or
with respect to the Company's financial statements for fiscal year 1995, which,
if not resolved to the former auditors' satisfaction, would have caused them to
make reference to the subject matter of the disagreement in connection with
their report. Prior to retaining Deloitte & Touche LLP, the Company had not
consulted with Deloitte & Touche LLP regarding accounting principles.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus constitutes a part of the Registration Statement and
does not contain all of the information set forth therein and in the exhibits
thereto. For further information with respect to the Company and the Common
Stock offered hereby, reference is hereby made to such Registration Statement
and exhibits. Statements contained in this Prospectus as to the contents of any
document are not necessarily complete and in each instance are qualified in
their entirety by reference to the copy of the appropriate document filed with
the Commission. All material elements of such contracts required to be disclosed
in this Prospectus are disclosed. The Registration Statement, including the
exhibits thereto, may be examined without charge at the Commission's public
reference facility at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, copies of any or all part of the
Registration Statement, including such exhibits thereto, may be obtained from
the Commission at its principal office in Washington, D.C., upon payment of the
fees prescribed by the Commission. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy, and information statements
and other information regarding registrants, such as the Company, that file
electronically with the Commission.
The Registration Statement and the reports and other information to be
filed by the Company following the Offering in accordance with the Securities
and Exchange Act of 1934, as amended, can be inspected and copied at the
principal office of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: 7 World Trade Center, New York, NY 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, IL 60601. Copies of
such material may be obtained from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the fees prescribed by the Commission.
65
<PAGE> 67
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUPERSHUTTLE INTERNATIONAL, INC. PRO FORMA
Introduction to Unaudited Pro Forma Combined Financial
Statements............................................. F-2
Unaudited Pro Forma Combined Balance Sheet................ F-3
Unaudited Pro Forma Combined Statements of Income......... F-5
Notes to Unaudited Pro Forma Combined Financial
Statements............................................. F-7
SUPERSHUTTLE INTERNATIONAL, INC.
Independent Auditors' Report.............................. F-8
Report of Independent Public Accountants (predecessor).... F-9
Consolidated Balance Sheets............................... F-10
Consolidated Statements of Income......................... F-12
Consolidated Statements of Stockholders' (Deficit)
Equity................................................. F-13
Consolidated Statements of Cash Flows..................... F-14
Notes to Consolidated Financial Statements................ F-15
ACQUIRED COMPANIES:
PREFERRED TRANSPORTATION, INC. (dba SUPERSHUTTLE ORANGE
COUNTY)
Independent Auditors' Report........................... F-28
Balance Sheets......................................... F-29
Statements of Operations............................... F-30
Statements of Stockholders' Equity..................... F-31
Statements of Cash Flows............................... F-32
Notes to Financial Statements.......................... F-33
TAMARACK TRANSPORTATION, INC. (dba SUPERSHUTTLE LOS
ANGELES)
Independent Auditors' Report........................... F-38
Balance Sheets......................................... F-39
Statements of Operations............................... F-40
Statements of Stockholders' (Deficit) Equity........... F-41
Statements of Cash Flows............................... F-42
Notes to Financial Statements.......................... F-43
SOUTHERN SHUTTLE SERVICES, INC.
Independent Auditors' Report........................... F-47
Balance Sheets......................................... F-48
Statements of Income................................... F-49
Statements of Stockholders' Equity..................... F-50
Statements of Cash Flows............................... F-51
Notes to Financial Statements.......................... F-52
AAA WHEELCHAIR WAGON SERVICES INC. AND LIMOUSINES OF SOUTH
FLORIDA, INC.
Independent Auditors' Report........................... F-57
Combined Balance Sheets................................ F-58
Combined Statements of Income.......................... F-59
Combined Statements of Stockholders' Equity............ F-60
Combined Statements of Cash Flows...................... F-61
Notes to Combined Financial Statements................. F-62
</TABLE>
F-1
<PAGE> 68
SUPERSHUTTLE INTERNATIONAL, INC.
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Financial Statements give effect
to the acquisitions by SuperShuttle International, Inc. ("SuperShuttle") of the
outstanding capital stock of Preferred Transportation, Inc. dba SuperShuttle
Orange County ("Preferred"), Southern Shuttle Services, Inc. ("Southern"),
Tamarack Transportation, Inc. dba SuperShuttle Los Angeles ("Tamarack"), and the
combined companies AAA Wheelchair Wagon Services, Inc. and Limousines of South
Florida ("AAA Wheelchair"), (collectively, the "Acquired Companies"). These
acquisitions were all effective upon the close of business on March 31, 1998 and
have been accounted for using the purchase method of accounting.
The Unaudited Pro Forma Combined Balance Sheet gives effect to the
acquisitions as if they were completed prior to the close of business on March
31, 1998. The Unaudited Pro Forma Combined Statements of Income reflect the
operating results of SuperShuttle and the Acquired Companies as if they had
occurred at the beginning of the earliest period presented, along with
adjustments which give effect to events that are directly attributable to the
Acquired Companies and which are expected to have a continuing impact.
SuperShuttle and Tamarack have September 30 fiscal year ends while the remaining
Acquired Companies have December 31 fiscal year ends. For purposes of preparing
the September 30, 1997 Pro Forma Combined Statements of Income, the operating
results of Preferred, Southern and AAA Wheelchair for the year ended December
31, 1997 were combined with the operating results of SuperShuttle and Tamarack
for the year ended September 30, 1997. The pro forma operating results for March
31, 1997 and 1998 include six months of activity for SuperShuttle and each of
the Acquired Companies.
The Unaudited Pro Forma Combined Balance Sheet and Statements of Income
give effect to anticipated adjustments that are expected to arise as a result of
the acquisitions, such as changes to officers' compensation, elimination of
intercompany balances and activity, goodwill amortization, and the related tax
effect of pro forma adjustments. The pro forma adjustments are based upon
estimates, available information and certain assumptions and may be revised as
additional information becomes available. The pro forma financial data does not
purport to represent what the Company's financial position and results of
operations would actually have been if such transactions in fact had occurred on
those dates or to project the Company's results of operations for any future
period.
These unaudited pro forma statements should be read in conjunction with
other financial statements and notes thereto included elsewhere in this
Prospectus. See "Risk Factors" included elsewhere in this Prospectus.
F-2
<PAGE> 69
SUPERSHUTTLE INTERNATIONAL, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
ACTUAL
--------------------------
ACQUIRED PRO FORMA
COMPANY COMPANIES ADJUSTMENTS PRO FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................... $ 1,217,466 $ 1,345,041 $ -- $ 2,562,507
Restricted cash.............................. 641,118 -- -- 641,118
Trade accounts receivable, net............... 576,431 1,878,553 -- 2,454,984
Current portion of notes receivable.......... 978,859 -- (932,359)(1) 46,500
Prepaid expenses and other................... 1,117,025 438,824 -- 1,555,849
Deferred income tax assets................... 700,000 -- -- 700,000
----------- ----------- ----------- -----------
Total current assets...................... 5,230,899 3,662,418 (932,359) 7,960,958
----------- ----------- ----------- -----------
PROPERTY AND EQUIPMENT -- At cost:
Vehicles..................................... 8,607,507 4,062,845 -- 12,670,352
Equipment.................................... 2,547,417 343,870 -- 2,891,287
Computer software............................ 116,155 -- -- 116,155
Leasehold improvements....................... 743,146 184,706 -- 927,852
----------- ----------- ----------- -----------
Total..................................... 12,014,225 4,591,421 -- 16,605,646
Less accumulated depreciation and
amortization.............................. (8,069,386) -- -- (8,069,386)
----------- ----------- ----------- -----------
Property and equipment -- net............. 3,944,839 4,591,421 -- 8,536,260
NOTES RECEIVABLE -- Net of current portion..... 288,634 -- (239,402)(1) 49,232
DEFERRED TAX ASSETS............................ 1,747,000 -- -- 1,747,000
DEPOSITS AND OTHER ASSETS...................... 1,244,347 667,572 (171,315)(9) 1,740,604
GOODWILL....................................... -- 678,224 13,961,300(9) 14,639,524
----------- ----------- ----------- -----------
TOTAL.......................................... $12,455,719 $ 9,599,635 $12,618,224 $34,673,578
=========== =========== =========== ===========
</TABLE>
See Notes to unaudited pro forma combined financial statements.
F-3
<PAGE> 70
SUPERSHUTTLE INTERNATIONAL, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET -- (CONTINUED)
MARCH 31, 1998
<TABLE>
<CAPTION>
ACTUAL
-------------------------
ACQUIRED PRO FORMA
COMPANY COMPANIES ADJUSTMENTS PRO FORMA
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................... $ 1,423,505 $ 896,255 $ -- $ 2,319,760
Accrued wages, benefits and other.... 1,245,992 1,400,871 -- 2,646,863
Accrued workers' compensation........ 749,028 29,782 -- 778,810
Advertising fund liability........... 611,724 -- -- 611,724
Current portion of long-term debt.... 1,633,917 3,328,862 (932,359)(1) 4,030,420
Other current liabilities............ 232,270 1,007,546 -- 1,239,816
----------- ---------- ----------- -----------
Total current liabilities.... 5,896,436 6,663,316 (932,359) 11,627,393
LONG-TERM DEBT -- Net of current
portion.............................. 1,259,376 883,521 (239,402)(1) 1,903,495
ADVANCES FROM STOCKHOLDER.............. -- 128,000 -- 128,000
OTHER LIABILITIES...................... 102,447 3,455 -- 105,902
----------- ---------- ----------- -----------
Total liabilities.................... 7,258,259 7,678,292 (1,171,761) 13,764,790
----------- ---------- ----------- -----------
SERIES B CONVERTIBLE PREFERRED STOCK... 4,105,005 -- -- 4,105,005
----------- ---------- ----------- -----------
STOCKHOLDERS' EQUITY:
Common stock......................... 27,609 7,620 22,836(9) 58,065
Capital in excess of par value....... 5,868,000 341,453 15,339,419(9) 21,548,872
(Accumulated deficit) retained
earnings.......................... (4,803,154) 1,572,270 (1,572,270)(9) (4,803,154)
----------- ---------- ----------- -----------
Stockholders' equity......... 1,092,455 1,921,343 13,789,985 16,803,783
----------- ---------- ----------- -----------
TOTAL.................................. $12,455,719 $9,599,635 $12,618,224 $34,673,578
=========== ========== =========== ===========
</TABLE>
See Notes to unaudited pro forma combined financial statements.
F-4
<PAGE> 71
SUPERSHUTTLE INTERNATIONAL, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
ACTUAL
--------------------------
ACQUIRED PRO FORMA
COMPANY COMPANIES ADJUSTMENTS PRO FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET REVENUES........................ $18,224,877 $21,719,901 $ (234,645)(2) $39,710,133
DIRECT COST OF REVENUES............. 11,014,851 13,885,165 -- 24,900,016
----------- ----------- ---------- -----------
Gross profit...................... 7,210,026 7,834,736 (234,645) 14,810,117
OTHER OPERATING EXPENSES............ 3,925,926 3,384,546 -- 7,310,472
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES.......................... 2,828,580 3,540,028 1,163,647(2)(3) 5,204,961
AMORTIZATION OF GOODWILL............ -- 48,118 134,876(4) 182,994
----------- ----------- ---------- -----------
INCOME FROM OPERATIONS.............. 455,520 862,044 794,126 2,111,690
----------- ----------- ---------- -----------
OTHER INCOME (EXPENSE):
Gain (loss) on sale of fixed
assets............................ 212,052 (20,259) (200,000)(5) (8,207)
Interest and other income-net....... 210,747 (22,486) (82,908)(6) 105,353
Interest expense.................... (184,773) (351,422) 82,908(6) (453,287)
----------- ----------- ---------- -----------
Other income (expense)-net........ 238,026 (394,167) (200,000) (356,141)
----------- ----------- ---------- -----------
INCOME BEFORE INCOME TAXES.......... 693,546 467,877 594,126 1,755,549
INCOME TAX (PROVISION) BENEFIT...... 2,087,000 (183,210) (310,848)(7) 1,592,942
MINORITY INTEREST................... 98,038 -- -- 98,038
----------- ----------- ---------- -----------
NET INCOME.......................... 2,878,584 284,667 283,278 3,446,529
----------- ----------- ---------- -----------
LESS PREFERRED STOCK ACCRETION...... (35,000) -- -- (35,000)
----------- ----------- ---------- -----------
NET INCOME TO COMMON STOCKHOLDERS... $ 2,843,584 $ 284,667 $ 283,278 $ 3,411,529
=========== =========== ========== ===========
NET INCOME PER SHARE:
Basic............................. $ 0.59(10)
===========
Diluted........................... $ 0.51(10)
===========
</TABLE>
See Notes to unaudited pro forma combined financial statements.
F-5
<PAGE> 72
SUPERSHUTTLE INTERNATIONAL, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
ACTUAL
--------------------------
ACQUIRED PRO FORMA
COMPANY COMPANIES ADJUSTMENTS PRO FORMA
------- --------- ----------- ---------
<S> <C> <C> <C> <C>
NET REVENUES......................... $33,667,000 $41,869,313 $ (471,000)(2) $75,065,313
DIRECT COST OF REVENUES.............. 19,862,000 26,405,324 -- 46,267,324
----------- ----------- ---------- -----------
Gross profit....................... 13,805,000 15,463,989 (471,000) 28,797,989
OTHER OPERATING EXPENSES............. 7,723,000 7,437,042 -- 15,160,042
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES........................... 5,446,000 5,945,915 1,590,960(2)(3) 9,800,955
AMORTIZATION OF GOODWILL............. -- 96,236 267,827(4) 364,063
----------- ----------- ---------- -----------
INCOME FROM OPERATIONS............... 636,000 1,984,796 852,133 3,472,929
----------- ----------- ---------- -----------
OTHER INCOME (EXPENSE):
Recognition of deferred gain....... 717,000 -- (717,000)(8) --
Interest and other income -- net..... 352,000 (20,511) (297,000)(6) 34,489
Interest expense................... (492,000) (579,351) 347,357(6) (723,994)
----------- ----------- ---------- -----------
Other income (expense) -- net........ 577,000 (599,862) (666,643) (689,505)
----------- ----------- ---------- -----------
INCOME BEFORE INCOME TAXES........... 1,213,000 1,384,934 185,490 2,783,424
INCOME TAX (PROVISION) BENEFIT....... 353,000 (556,472) (219,821)(7) (423,293)
MINORITY INTEREST.................... (5,000) -- -- (5,000)
----------- ----------- ---------- -----------
NET INCOME........................... 1,561,000 828,462 (34,331) 2,355,131
LESS PREFERRED STOCK ACCRETION....... (70,000) -- -- (70,000)
----------- ----------- ---------- -----------
NET INCOME TO COMMON STOCKHOLDERS.... $ 1,491,000 $ 828,462 $ (34,331) $ 2,285,131
=========== =========== ========== ===========
NET INCOME PER SHARE:
Basic.............................. $ 0.39(10)
===========
Diluted............................ $ 0.34(10)
===========
</TABLE>
See Notes to unaudited pro forma combined financial statements.
F-6
<PAGE> 73
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(1) Eliminates SuperShuttle's notes receivable from Preferred and Tamarack.
(2) Eliminates franchise fees paid to SuperShuttle by the Acquired Companies.
(3) Primarily represents adjustments to reduce management and officers'
compensation to levels that the stockholders of the Acquired Companies have
agreed to receive subsequent to the acquisitions as well as adjustments to
rent, and other expenses which are expected to be different on a combined
basis.
(4) Adjustment to reflect the amount of goodwill amortization that would be
recognized relating to the goodwill arising as a result of the acquisitions
net of approximately $100,000 annual goodwill amortization included in the
historical operating results of Preferred.
(5) Elimination of the gain recognized on the sale of a radio frequency license
by SuperShuttle to Tamarack.
(6) Eliminates interest income and offsetting interest expense relating to the
SuperShuttle notes receivable from Preferred and Tamarack. See (1) above.
(7) To record the incremental tax expense for federal and state income taxes
arising from the effect of the pro forma adjustments and the impact of the
nondeductible goodwill amortization.
(8) To eliminate the deferred gain arising from the 1994 sale of the Los
Angeles operations to Preferred.
(9) To record the March 31, 1998 purchase of the Acquired Companies.
(10) Net income per share has been computed using the weighted average number of
common shares and common share equivalents outstanding during each period
after considering all stock options granted subsequent to May 31, 1997 as
outstanding for all periods. The retroactive outstanding common shares
applicable to the stock options granted subsequent to May 31, 1997 have
been calculated utilizing the treasury stock method. Stock options and
stock warrants prior to May 31, 1997 have been included in the computations
using the treasury stock method only when their effect would be dilutive.
The treasury stock method has been applied utilizing an estimated initial
public offering price of $9.00 per share as the market price for all
periods.
The calculation of basic pro forma net income per share at March 31, 1998
includes: (i) 2,760,862 basic weighted average common shares outstanding
and (ii) 3,045,595 shares issued to the stockholders of the Acquired
Companies in connection with such acquisitions. Diluted pro forma net
income per share at March 31, 1998 includes (i) and (ii) above as well as
(iii) 96,417 incremental shares calculated under the treasury stock method
relating to stock options granted to employees and consultants, since May
31, 1997, with exercise prices below the estimated offering price and (iv)
767,160 common shares that will be issued to convert the Series B
Convertible Preferred Stock into Common Stock upon completion of the
offering.
F-7
<PAGE> 74
INDEPENDENT AUDITORS' REPORT
Board of Directors
SuperShuttle International, Inc.
Phoenix, Arizona
We have audited the accompanying consolidated balance sheets of
SuperShuttle International, Inc. and subsidiaries (the "Company") as of
September 30, 1996 and 1997, and the related consolidated statements of income,
stockholders' equity, and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The financial statements of the Company for the
year ended September 30, 1995 were audited by other auditors whose report, dated
February 2, 1996, expressed an unqualified opinion on those financial
statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 1996 and 1997 consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of SuperShuttle International, Inc. and subsidiaries as of September
30, 1996 and 1997, and the results of their operations and their cash flows for
the years then ended in conformity with generally accepted accounting
principles.
[/s/ DELOITTE & TOUCHE LLP]
Phoenix, Arizona
December 2, 1997 (March 31, 1998 with respect to
certain information in Note 1)
F-8
<PAGE> 75
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
SuperShuttle International, Inc.:
We have audited the accompanying consolidated balance sheet of SuperShuttle
International, Inc. (a Delaware corporation) and subsidiaries as of September
30, 1995 and the related consolidated statements of operations, stockholders'
deficit, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SuperShuttle International,
Inc. and subsidiaries as of September 30, 1995 and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Phoenix, Arizona
February 2, 1996.
F-9
<PAGE> 76
SUPERSHUTTLE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 1,471,000 $ 890,000 $ 1,217,000
Restricted cash (Note 1).......................... 775,000 702,000 641,000
Trade accounts receivable -- net of allowance for
doubtful accounts of $190,000, $126,000 and
$110,000 in 1996, 1997 and 1998................ 883,000 618,000 576,000
Current portion of notes receivable (Notes 3 and
9)............................................. 1,523,000 1,394,000 979,000
Prepaid expenses and other........................ 541,000 691,000 1,117,000
Deferred income tax assets (Note 4)............... -- 360,000 700,000
----------- ----------- -----------
Total current assets...................... 5,193,000 4,655,000 5,230,000
----------- ----------- -----------
PROPERTY AND EQUIPMENT -- At cost:
Vehicles.......................................... 6,784,000 8,573,000 8,608,000
Equipment......................................... 1,916,000 2,525,000 2,548,000
Computer software................................. 327,000 116,000 116,000
Leasehold improvements............................ 718,000 739,000 743,000
----------- ----------- -----------
Total..................................... 9,745,000 11,953,000 12,015,000
Less accumulated depreciation and amortization.... 5,333,000 7,077,000 8,069,000
----------- ----------- -----------
Property and equipment -- net............. 4,412,000 4,876,000 3,946,000
----------- ----------- -----------
NOTES RECEIVABLE -- Net of current portion (Notes 3
and 9)............................................ 1,978,000 688,000 289,000
----------- ----------- -----------
DEFERRED TAX ASSETS (Note 4)........................ -- -- 1,747,000
----------- ----------- -----------
DEPOSITS AND OTHER ASSETS........................... 438,000 431,000 1,244,000
----------- ----------- -----------
TOTAL............................................... $12,021,000 $10,650,000 $12,456,000
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-10
<PAGE> 77
SUPERSHUTTLE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable.................................. $ 1,914,000 $ 1,463,000 $ 1,423,000
Accrued wages, benefits and other................. 1,727,000 1,321,000 1,246,000
Accrued workers' compensation (Notes 5 and 6)..... 1,210,000 705,000 749,000
Advertising fund liability (Note 1)............... 626,000 664,000 612,000
Current portion of long-term debt (Note 3)........ 2,525,000 2,335,000 1,634,000
Other current liabilities......................... 289,000 268,000 232,000
----------- ----------- -----------
Total current liabilities................. 8,291,000 6,756,000 5,896,000
LONG-TERM DEBT -- Net of current portion (Note 3)... 1,967,000 1,283,000 1,259,000
DEFERRED GAIN (Note 9).............................. 717,000 -- --
OTHER LIABILITIES (Note 6).......................... 430,000 293,000 103,000
----------- ----------- -----------
Total liabilities......................... 11,405,000 8,332,000 7,258,000
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 5 and 6)
SERIES B CONVERTIBLE PREFERRED STOCK -- $.01 par
value -- authorized 479,475 shares; issued and
outstanding, 479,475 shares -- net of unaccreted
issuance costs of $260,000, $190,000 and $155,000
in 1996, 1997 and 1998............................ 4,000,000 4,070,000 4,105,000
----------- ----------- -----------
STOCKHOLDERS' (DEFICIT) EQUITY (Notes 7 and 8):
Preferred Stock -- $.01 par value -- authorized
5,000,000 shares, no shares issued and
outstanding
Common stock, $.01 par value:
Class A authorized, 20,000,000 shares; issued
and outstanding, 2,725,795, 2,760,862 and
2,760,862 shares............................. 27,000 28,000 28,000
Class B authorized, 1,000,000 shares; none
issued.......................................
Capital in excess of par value.................... 5,927,000 5,903,000 5,868,000
Accumulated deficit............................... (9,244,000) (7,683,000) (4,803,000)
----------- ----------- -----------
Total..................................... (3,290,000) (1,752,000) 1,093,000
Notes receivable from stockholders................ (94,000) -- --
----------- ----------- -----------
Stockholders' (deficit) equity............ (3,384,000) (1,752,000) 1,093,000
----------- ----------- -----------
TOTAL............................................... $12,021,000 $10,650,000 $12,456,000
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-11
<PAGE> 78
SUPERSHUTTLE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED SEPTEMBER 30, MARCH 31,
----------------------------------------- --------------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET REVENUES.................................. $28,873,000 $32,304,000 $33,667,000 $16,320,000 $18,225,000
DIRECT COST OF REVENUES....................... 16,731,000 18,760,000 19,862,000 9,699,000 11,014,000
----------- ----------- ----------- ----------- -----------
Gross profit.............................. 12,142,000 13,544,000 13,805,000 6,621,000 7,211,000
OTHER OPERATING EXPENSES...................... 6,973,000 7,281,000 7,723,000 3,947,000 3,925,000
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES.................................... 5,243,000 7,364,000 5,446,000 2,742,000 2,829,000
UNUSUAL INCOME ITEMS (Note 6)................. (754,000) (745,000) -- -- --
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS................. 680,000 (356,000) 636,000 (68,000) 457,000
----------- ----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Recognition of deferred gain (Note 9)....... 35,000 237,000 717,000 717,000
Interest and other income -- net............ 685,000 680,000 352,000 252,000 423,000
Interest expense............................ (558,000) (514,000) (492,000) (267,000) (185,000)
----------- ----------- ----------- ----------- -----------
Other income -- net....................... 162,000 403,000 577,000 702,000 238,000
----------- ----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES.................... 842,000 47,000 1,213,000 634,000 695,000
INCOME TAX (PROVISION) BENEFIT (Note 4)....... (7,000) (7,000) 353,000 -- 2,087,000
MINORITY INTEREST............................. -- -- (5,000) -- 98,000
----------- ----------- ----------- ----------- -----------
NET INCOME.................................... 835,000 40,000 1,561,000 634,000 2,880,000
LESS PREFERRED STOCK ACCRETION................ -- (91,000) (70,000) (35,000) (35,000)
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) TO COMMON STOCKHOLDERS...... $ 835,000 $ (51,000) $ 1,491,000 $ 599,000 $ 2,845,000
=========== =========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE:
Basic....................................... $ 0.48 $ (0.03) $ 0.54 $ 0.22 $ 1 .03
=========== =========== =========== =========== ===========
Diluted..................................... $ 0.38 $ (0.03) $ 0.42 $ 0.17 $ 0.81
=========== =========== =========== =========== ===========
SHARES USED IN CALCULATION OF NET INCOME PER
SHARE:
Basic....................................... 1,748,492 1,852,660 2,753,556 2,746,250 2,760,862
=========== =========== =========== =========== ===========
Diluted..................................... 2,175,304 1,949,077 3,511,649 3,504,343 3,518,955
=========== =========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-12
<PAGE> 79
SUPERSHUTTLE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997 AND
SIX-MONTH PERIOD ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------
CLASS A
------------------- NOTES
NUMBER CAPITAL IN RECEIVABLE STOCKHOLDERS'
OF PAR EXCESS OF ACCUMULATED FROM (DEFICIT)
SHARES VALUE PAR VALUE DEFICIT STOCKHOLDERS EQUITY
--------- ------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 1, 1994........... 1,738,284 $17,000 $4,112,000 $(10,119,000) $(57,000) $(6,047,000)
Notes receivable from
stockholders.................. -- -- -- -- (18,000) (18,000)
Accrued interest on notes
receivable from
stockholders.................. -- -- -- -- (16,000) (16,000)
Principal payments of notes
receivable from
stockholders.................. -- -- -- -- 28,000 28,000
Options exercised into common
stock......................... 35,000 1,000 17,000 -- -- 18,000
Net income....................... -- -- -- 835,000 -- 835,000
--------- ------- ---------- ------------ -------- -----------
BALANCE, SEPTEMBER 30, 1995........ 1,773,284 18,000 4,129,000 (9,284,000) (63,000) (5,200,000)
Issuance of common stock (Note
8)............................ 952,508 9,000 1,889,000 -- (83,000) 1,815,000
Principal payments of notes
receivable from
stockholders.................. -- -- -- -- 52,000 52,000
Preferred stock accretion........ -- -- (91,000) -- -- (91,000)
Net income....................... -- -- -- 40,000-- 40,000
--------- ------- ---------- ------------ -------- -----------
BALANCE, SEPTEMBER 30, 1996........ 2,725,792 27,000 5,927,000 (9,244,000) (94,000) (3,384,000)
Repurchase of common stock (Note
8)............................ (196,039) (2,000) (390,000) -- -- (392,000)
Issuance of common stock (Notes 7
and 8)........................ 231,109 3,000 451,000 -- -- 454,000
Principal payments of notes
receivable from stockholders
and other..................... -- -- (15,000) -- 94,000 79,000
Preferred stock accretion........ -- -- (70,000) -- -- (70,000)
Net income....................... -- -- -- 1,561,000 -- 1,561,000
--------- ------- ---------- ------------ -------- -----------
BALANCE, SEPTEMBER 30, 1997........ 2,760,862 28,000 5,903,000 (7,683,000) -- (1,752,000)
Preferred stock accretion
(unaudited)................... -- -- (35,000) -- -- (35,000)
Net income (unaudited)........... -- -- -- 2,880,000 -- 2,880,000
--------- ------- ---------- ------------ -------- -----------
BALANCE, MARCH 31, 1998
(Unaudited)...................... 2,760,862 $28,000 $5,868,000 $ (4,803,000) $ -- $ 1,093,000
========= ======= ========== ============ ======== ===========
</TABLE>
See notes to consolidated financial statements.
F-13
<PAGE> 80
SUPERSHUTTLE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED SEPTEMBER 30, MARCH 31,
-------------------------------------- -------------------------
1995 1996 1997 1997 1998
---------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................... $ 835,000 $ 40,000 $ 1,561,000 $ 634,000 $ 2,880,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization...................... 1,160,000 1,578,000 1,829,000 899,000 1,048,000
Recognition of deferred gain....................... (35,000) (237,000) (717,000) (717,000) --
Gain on sale of property and equipment............. (2,000) (38,000) (58,000) (24,000) (212,000)
Deferred tax benefit............................... -- -- (360,000) -- (2,087,000)
Changes in operating assets and liabilities:
Restricted cash.................................. (389,000) (211,000) 73,000 -- 60,000
Trade accounts receivable -- net................. (545,000) (247,000) 265,000 104,000 (104,000)
Other receivables................................ -- 794,000 -- (45,000) (94,000)
Prepaid expenses and other....................... (477,000) 204,000 (150,000) (98,000) (38,000)
Other assets..................................... (13,000) (127,000) 7,000 213,000 (407,000)
Accounts payable................................. 685,000 (461,000) (451,000) 71,000 (178,000)
Accrued liabilities.............................. (14,000) (1,690,000) (1,010,000) (990,000) 62,000
Other current liabilities........................ (217,000) 32,000 (21,000) (138,000) (138,000)
---------- ----------- ----------- ----------- -----------
Net cash provided by (used in) operating
activities....................................... 988,000 (363,000) 968,000 (91,000) 792,000
---------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................. (4,357,000) (1,262,000) (1,185,000) (773,000) (606,000)
Proceeds from sale of property and equipment......... 141,000 189,000 225,000 -- --
Collection of notes receivable....................... 106,000 464,000 1,419,000 704,000 867,000
---------- ----------- ----------- ----------- -----------
Net cash (used in) provided by investing
activities....................................... (4,110,000) (609,000) 459,000 (69,000) 261,000
---------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital
leases ............................................ (1,083,000) (3,412,000) (2,889,000) (1,055,000) (1,647,000)
Proceeds from borrowings on long-term debt........... 3,298,000 1,409,000 740,000 348,000 921,000
Net proceeds from issuance of preferred stock........ 2,649,000 -- -- -- --
Proceeds from issuance of common stock............... -- 1,815,000 454,000 454,000 --
Repurchase of common stock........................... -- -- (392,000) (392,000) --
Redemption of preferred stock........................ -- (13,000) -- -- --
Principal and interest collected on stockholders'
notes receivable................................... 12,000 52,000 79,000 32,000 --
---------- ----------- ----------- ----------- -----------
Net cash provided by (used in) financing
activities....................................... 4,876,000 (149,000) (2,008,000) (613,000) (726,000)
---------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS... 1,754,000 (1,121,000) (581,000) (773,000) 327,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD......... 838,000 2,592,000 1,471,000 1,471,000 890,000
---------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD............... $2,592,000 $ 1,471,000 $ 890,000 $ 698,000 $ 1,217,000
========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest........................................... $ 589,000 $ 514,000 $ 492,000 $ 267,000 $ 185,000
========== =========== =========== =========== ===========
Taxes.............................................. $ 17,000 $ 80,000
========== ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Purchase of vans through capital leases.............. $ 1,275,000 $ 643,000 $ 400,000
=========== =========== ===========
Notes receivable from stockholder for purchase of
common stock....................................... $ 18,000 $ 83,000
========== ===========
Preferred stock conversion from Series A to Series
B.................................................. $1,260,000
==========
</TABLE>
See notes to consolidated financial statements.
F-14
<PAGE> 81
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997 AND
SIX-MONTH PERIOD ENDED MARCH 31, 1998 (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- SuperShuttle International, Inc. (the "Company") commenced
operations in October 1985, and is incorporated in the State of Delaware. The
Company operates in one reportable operating segment, as defined in Statement of
Financial Accounting Standards No. 131. The Company, through its subsidiaries,
provides door-to-door passenger ground transportation primarily to and from
airports and has licensed the right to use its name, procedures and methods to
franchisees who will also provide door-to-door ground transportation primarily
to and from airports. During all the periods presented in the accompanying
financial statements, the Company owned 100 percent of the SuperShuttle
transportation operations in San Francisco and Sacramento, California; Phoenix,
Arizona; and Dallas, Texas. On September 1, 1997, the Company acquired a 50
percent interest in Shuttle Express, Inc., the SuperShuttle franchise in
Baltimore, Maryland. In addition, the Company owns an approximately 15 percent
interest and manages the operations of the Company's Washington, D.C. franchise.
On March 31, 1998, the Company acquired three of its franchises in Los
Angeles, Orange County and Miami, and related operations in southern Florida, in
transactions which were accounted for as purchases. See Note 11 -- Note to
Unaudited Consolidated Financial Statements for the Six Month Periods Ended
March 31, 1997 and 1998.
The Company has no individual customer which accounted for more than 10
percent of net revenues.
Providing ground transportation in most cities and states is regulated and
requires approval by governmental agencies.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of SuperShuttle International, Inc. and its subsidiaries,
including SuperShuttle Franchise Corporation. The accounts of Shuttle Express,
Inc. are also included in the consolidated financial statements from September
1, 1997 because the Company has effective control of its operations. All
significant intercompany balances and transactions are eliminated in
consolidation.
CASH AND CASH EQUIVALENTS include all cash and highly liquid investment
securities with original maturities of three months or less.
RESTRICTED CASH -- Through one of its subsidiary companies, SuperShuttle
Franchise Corporation, the Company collects a royalty amount per vehicle per
week from each franchisee to be used for national advertising. These funds are
placed in a restricted cash account to be used solely for this purpose.
Reimbursements to the Company's general cash account for approved advertising
expenditures are made on a monthly basis, at a minimum, or as needed. In
addition, at September 30, 1997, the Company has pledged approximately $25,000
for various purposes.
PROPERTY AND EQUIPMENT are stated at cost. Depreciation and amortization of
property and equipment are provided for on the straight-line method over the
following estimated useful lives:
<TABLE>
<S> <C>
Vehicles......................................... 3 to 4 years
Office equipment................................. 3 to 7 years
Computer software................................ 3 to 5 years
Leasehold improvements........................... Shorter of the useful life or
remaining term of lease
</TABLE>
F-15
<PAGE> 82
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company capitalizes expenditures that materially increase asset lives
and charges ordinary maintenance and repairs to operations as incurred. When
assets are disposed of, the costs and related accumulated depreciation and
amortization are removed from the accounts and any resulting gain or loss is
included in income.
LONG-LIVED ASSETS and certain identifiable intangibles are reviewed for
impairment whenever events or circumstances indicate the carrying amount of an
asset may not be recoverable.
OTHER ASSETS -- The Company capitalizes amounts paid to outside consultants
in obtaining governmental agency approval to operate in new locations. These
costs are amortized over the term of the related license from the respective
governmental agency.
SELF-INSURANCE -- Through January 1, 1995, the Company was self-insured for
the first $50,000 for each incident for coverage of all general liability
accident claims involving vehicles in all Company-owned locations other than
Dallas. As of September 30, 1996 and 1997, the Company had provided for
self-insurance reserves of approximately $224,000 and $128,000, respectively,
for its estimated remaining insurance claims which management, after
consultations with its insurance specialist, believes are adequate.
REVENUES are recognized at the time services are provided.
FRANCHISE FEE INCOME -- The Company generally charges an initial franchise
fee that varies based on a formula utilizing airport passenger volume numbers.
The initial franchise fee is recognized as revenue when received because the
Company has performed most of its preopening obligations and has no substantial
remaining obligations to perform. The Company also is entitled to receive $50
per week for each vehicle owned by the franchisees. Of this $50 per week, $40 is
a weekly royalty fee and $10 is a weekly advertising fund fee. The $10 per week
per vehicle collected by the Company for advertising fund fees are placed in a
restricted cash account. Within six months of the end of the Company's fiscal
year, these restricted funds are to either be expended for approved advertising
or allocated for approved future advertising expenditures. Total franchise fee
income was $757,000, $792,000 and $649,000 in 1995, 1996 and 1997, respectively.
INCOME TAXES are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis and operating loss carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS -- Certain prior year amounts have been reclassified to
conform with the current year and interim period presentation.
NET INCOME PER SHARE has been computed using the weighted average number of
common shares and common share equivalents outstanding during each period after
considering all stock options granted subsequent to May 31, 1997 as outstanding
for all periods. The retroactive outstanding common shares applicable to the
stock options granted subsequent to May 31, 1997 have been calculated utilizing
the treasury stock method. Stock options and stock warrants granted prior to
F-16
<PAGE> 83
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
May 31, 1997 have been included in the computations using the treasury stock
method only when their effect would be dilutive. The treasury stock method has
been applied utilizing an estimated initial public offering price of $9.00 per
share as the market price for all periods.
The calculation of actual income per common share at March 31, 1998
includes: (i) 2,760,862 basic weighted average common shares outstanding, (ii)
96,417 incremental shares calculated under the treasury stock method relating to
stock options granted to employees and consultants, since May 31, 1997, with
exercise prices below the estimated offering price and (iii) 661,676 common
shares relating to the conversion of the Series B Convertible Preferred Stock at
the then effective conversion rate.
2. ACQUISITIONS
On September 1, 1997, the Company acquired 50 percent of the issued and
outstanding shares of Shuttle Express, Inc., a Baltimore-based SuperShuttle
franchise. The operating results of Shuttle Express, Inc. have been included in
the accompanying consolidated financial statements from September 1, 1997
because the Company has effective control of its operations. The acquisition has
been accounted for as a purchase. As consideration for the 50 percent interest
in Shuttle Express, Inc., the Company agreed to assume daily operations
management, contribute capital on an as needed basis not to exceed $700,000 and
assume the outstanding indebtedness on vehicles of $134,000. In addition, the
Company agreed to pay the minority shareholder consideration of $175,000 in the
event that the Maryland Aviation Administration awards a new contract upon
expiration of the current contract on December 31, 2002. As of September 30,
1997, the Company has contributed approximately $105,000 in capital under the
agreement.
The Company has a call option and the minority interest shareholder, Yellow
Holding, Inc. ("Yellow"), has a put option on the shares of stock not owned by
the Company. The Company may exercise its call option at any time after
September 1, 1997 until June 1, 1999. Yellow may exercise its put option during
the period between January 1, 1999 and June 1, 1999. The strike price for either
the call or put is equal to 4.5 times one-half ( 1/2) of the earnings before
interest and taxes of the Company for the 12-month period ending the calendar
month immediately preceding the exercise of the put or call option, but in no
event less than $1,000,000. The payment amount from the exercise of the put or
call option may be paid as follows: 25 percent down in cash, with the balance
paid in the form of a promissory note payable by the Company in equal monthly
installments over a period of thirty-six (36) months, fully amortized, at a
prime rate of interest.
The Company has the right to reject Yellow's put, in which event either
party may immediately offer for sale all but not less than all of the issued and
outstanding stock or assets of the Company, for a period of 12 months, to any
bona fide third party purchaser. Upon receipt of a bona fide offer from a third
party purchaser acceptable to the party obtaining the offer, the other party
shall have the right of first refusal to match the offer or shall not
unreasonably withhold its consent to the sale of its stock to the third party
purchaser. In addition, if the Company rejects the put option of Yellow, then
control of the Board of Directors would shift to Yellow.
F-17
<PAGE> 84
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. LONG-TERM DEBT
Long-term debt consists of the following at September 30, 1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Borrowings from commercial lenders, monthly payments of
principal plus interest at 8% to 18%, maturing through
2000, collateralized by vehicles.......................... $2,289,000 $1,356,000
Borrowings from commercial lenders, monthly payments of
principal plus interest at 12%, maturing through 1999,
collateralized by vehicles in use by Orange County and Los
Angeles franchises........................................ 1,935,000 920,000
Capital lease obligations (Note 5).......................... 164,000 1,186,000
Other....................................................... 104,000 156,000
---------- ----------
Total....................................................... 4,492,000 3,618,000
Less current portion........................................ 2,525,000 2,335,000
---------- ----------
Long-term debt -- net....................................... $1,967,000 $1,283,000
========== ==========
</TABLE>
Subsequent maturities are $2,335,000 in 1998, $1,000,000 in 1999 and
$283,000 in 2000.
Certain of the borrowings from commercial lenders are collateralized by
certain Company-purchased vans, Company sold franchises, proceeds and
receivables generated by the vans and common stock of the Company's
subsidiaries. The outstanding borrowings under these loans were $2,891,000 and
$1,204,000 at September 30, 1996 and 1997, respectively.
OTHER -- During 1995, the Company financed the purchase of $2,160,000 of
vans and simultaneously leased these vans to the Orange County and Los Angeles
franchises. The Company has recorded notes receivable from the buyers and notes
payable to the finance company of approximately $1,935,000 and $920,000 at
September 30, 1996 and 1997, respectively, with identical repayment terms. The
Company remains liable for the loan until repaid.
4. INCOME TAXES
For the years ended September 30 1995, 1996 and 1997, the income tax
(provision) benefit consists of the following:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- ---------
<S> <C> <C> <C>
Current............................................. $(7,000) $(7,000) $ (7,000)
Deferred............................................ -- -- 360,000
------- ------- ---------
Total............................................... $(7,000) $(7,000) $ 353,000
======= ======= =========
</TABLE>
The current income tax provision in each of the years presented consists of
alternative minimum income taxes. The Company did not have any other income tax
expense during the years presented due to utilization of net operating loss
carryforwards. The Company's 1997 deferred income tax benefit of $360,000
results from the establishment of a deferred tax asset through adjustment in the
valuation allowance.
F-18
<PAGE> 85
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of temporary differences which give rise to deferred tax
assets and liabilities as of September 30, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Deferred gain on sale of subsidiary....................... $ 277,000 --
Deferred revenue.......................................... 90,000 $ 32,000
Accrued expenses.......................................... 1,400,000 877,000
Property and equipment.................................... (83,000) (68,000)
Net operating loss carryforwards.......................... 1,742,000 1,984,000
Other..................................................... 34,000 11,000
Valuation allowance....................................... (3,460,000) (2,476,000)
----------- -----------
Total deferred tax assets................................. $ -- $ 360,000
=========== ===========
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon generation of future taxable income during the periods in which
those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon projections of
future taxable income, management believes it is more likely than not that the
Company will realize the benefits of these deductible differences, net of the
valuation allowance.
The decrease in the valuation allowance for fiscal 1997 resulted primarily
from the Company's re-evaluation of the realizability of the remaining net
operating loss ("NOL") carryforwards. The Company has NOL carryforwards for
federal income tax purposes of approximately $5,136,000 at September 30, 1997.
These NOLs begin to expire in the year 2002.
5. COMMITMENTS AND CONTINGENCIES
LEASES -- The Company leases certain facilities, vehicles and computer
equipment under operating leases and vehicles and equipment acquired under
capital leases. These leases expire at various dates through 2002.
The related assets under capital leases are reflected in property and
equipment in the accompanying consolidated balance sheets.
Future minimum lease payments (exclusive of property taxes and insurance)
for capital and operating leases for the years ending September 30 are as
follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
---------- ----------
<S> <C> <C>
1998................................................ $ 539,000 $ 402,000
1999................................................ 595,000 307,000
2000................................................ 200,000 148,000
2001................................................ -- 125,000
2002................................................ -- 111,000
---------- ----------
Total............................................... 1,334,000 $1,093,000
==========
Less amount representing interest................... 148,000
----------
Net present value of minimum lease payments......... $1,186,000
==========
</TABLE>
F-19
<PAGE> 86
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Rent expense was $492,000, $436,000 and $437,000 in 1995, 1996 and 1997,
respectively. Certain of the Company's leases include periodic cost of living
increases and also require the Company to pay its pro rata share of property
taxes and common area expenses.
LITIGATION -- The Company filed a $1,000,000 claim against an insurance
company which previously provided workers' compensation coverage from 1987
through 1991. The Company claims that the insurance company mishandled and
overreserved the Company's workers' compensation claims which increased the
Company's insurance premiums. The insurance company has filed a cross-complaint
in this matter seeking recapture of $652,000, which was paid in dividends to the
Company plus legal fees. The insurance company is in receivership. The Company
intends to vigorously pursue its complaint and defend against the insurance
company's cross-complaint. As of September 30, 1995, the Company had accrued
$652,000 relating to this case. In 1997, the Department of Insurance in
California took over the operation of the insurance company. All litigation
against the insurance company has been stayed and the commissioner has enacted a
formal procedure for processing claims through February 1998. The Company has
submitted its claim and has had limited discussions regarding the resolution of
the case. During 1997, the Company reduced its estimated liability to $500,000;
settlement is anticipated sometime in fiscal 1998.
In 1997, an individual filed a complaint against the Company for an auto
accident in Texas in 1994. The claim amount is estimated to be for up to
$5,000,000. In March 1997, the claimant requested that the Company's insurance
carrier settle for a sum of $500,000, the insurance limits of the policy. The
Company's insurance representative does not believe the claim warrants a
$500,000 settlement, therefore, they have refused to settle the case at the
present time. The Company has not recorded any liability for the claim and
believes it has no liability beyond insurance policy limits.
In addition to the above matters, the Company is subject to various legal
proceedings and claims which arise in the ordinary course of its business.
In the opinion of management, based in part upon the discussions with legal
counsel, the ultimate liability with respect to these actions will not
materially affect the financial position or results of operations of the
Company.
6. OTHER LIABILITIES
During 1995, the Company received a refund of $754,000 for adjusted
workers' compensation premiums from its previous insurance carrier. This amount
has been classified as an unusual item in the fiscal year 1995 financial
statements.
In addition to the workers' compensation matter discussed in Note 5,
another claim was outstanding against the Company which alleged premiums owed
under the Company's workers' compensation insurance policy with a second
insurance carrier. On October 22, 1996, the Court signed a stipulation and order
recognizing the agreed-upon settlement between the two parties and setting a
further status conference on May 1, 2000, at which time the settlement between
the two parties will be completed. Under the settlement agreement, the Company
agreed to pay $750,000, of which $100,000 was paid in November 1996. The Company
must pay the remaining sum of $650,000 in 40 equal monthly installments of
$16,250 beginning on or before December 15, 1996 and ending on March 15, 2000.
If the Company misses any of the 40 equal installments, the insurance carrier
may enter judgment against the Company for the entire amount of the $1,213,000
alleged premium owed, plus interest. The Company had accrued $1,213,000 for this
matter as of September 30, 1995. Effective September 30, 1996, the Company
discounted the future payments using a 10 percent interest rate and reduced the
accrual to $650,000 resulting in the recognition of $563,000 of income in 1996
relating to the change in estimated liability. The Company has made all the
required monthly payments since
F-20
<PAGE> 87
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
November 1996. In addition to the required payments, the Company has prepaid one
month in advance to insure that no payments will be missed to avoid the penalty
judgement in the settlement.
During 1996, the Company reached a settlement with the City of Los Angeles
relating to a disputed business tax assessment on the Company's operations
within the City. The final tax assessment of $68,000 is payable in 12 monthly
installments, without interest. The lawsuit by the City of Los Angeles has not
been dismissed, but has been removed from the civil calendar pending full
payment of the settlement, at which time the lawsuit will then be dismissed. The
Company had accrued $250,000 for this matter as of September 30, 1995. The
reduction in the accrual as a result of the settlement resulted in the
recognition of $182,000 of income in 1996.
7. EMPLOYEE BENEFIT PLANS
The Company has a non-qualified stock option plan (the "1995 Option Plan")
which provides for the granting of options for up to 445,900 shares of its
common stock to selected directors, officers and employees. At September 30,
1997, the Company had 300,142 options available for grant. A summary of stock
option activity related to the 1995 Option Plan is as follows:
<TABLE>
<CAPTION>
NUMBER
NUMBER OF
OF SHARES EXERCISE
SHARES VESTED PRICE
-------- -------- --------------
<S> <C> <C> <C>
Outstanding, October 1, 1994................... 377,999 302,999 $0.50 - $10.00
Granted/vested............................... 172,000 54,271 5.00 - 9.00
Exercised.................................... (35,000) (35,000) .50
Canceled/expired............................. (90,000) (90,000) 0.50 - 6.00
-------- -------- --------------
Outstanding, September 30, 1995................ 424,999 232,270 5.00 - 10.00
Granted/vested............................... 29,000 14,604 5.00 - 6.00
Canceled/expired............................. (200,000) (35,417) 5.00 - 9.00
-------- -------- --------------
Outstanding, September 30, 1996................ 253,999 211,457 5.00 - 10.00
Granted/vested............................... 29,500 10,750 6.00
Exercised.................................... (6,925) (6,925) .50
Canceled/expired............................. (172,741) (152,199) .50 - 6.50
-------- -------- --------------
Outstanding, September 30, 1997................ 103,833 63,083 $6.00 - $10.00
======== ======== ==============
</TABLE>
In management's opinion, all of these options were issued at or above the
estimated fair value at the date of grant.
The Company applies Accounting Principles Board ("APB") No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for its
stock option plan. Accordingly, no compensation expense has been recognized for
its stock-based compensation plan. Had compensation cost for the Company's stock
option plan been determined based upon the fair value at the grant date for
awards under this plan consistent with the methodology prescribed in Statement
of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation, the Company's net income and earnings per share for the years
ended September 30, 1996 and 1997 would have been reduced by approximately
$35,000 and $25,000, respectively, or $.02 and $.01 per share. The fair value of
the options granted during 1996 and 1997 are estimated as $49,000 and $33,000 on
the date of grant using an option-pricing model with the following assumptions:
dividend yield 0 percent, volatility 0 percent and average risk-free interest
rate of 6 percent, assumed forfeiture rate of 0 percent and an average expected
life of four and five years, respectively. The remaining weighted average
contractual life of the options is approximately eight years.
RETIREMENT SAVINGS PLAN -- The Company implemented a 401(k) plan (the
"Plan") during fiscal year 1997 which covers all employees 21 years of age and
over who have completed 6 months of
F-21
<PAGE> 88
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
service. Employees may voluntarily contribute up to 20 percent of pre-tax
earnings to the Plan, subject to the maximum Internal Revenue Service limit. The
Company may contribute additional amounts at its sole discretion. There were no
Company contributions during fiscal year 1997.
8. PREFERRED AND COMMON STOCK
During September 1996, the Company offered for sale up to 1,000,000 shares
of the Company's Class A Common Stock, on a pro rata basis to all of the
Company's stockholders of record of both Class A Common Stock and Series B
Convertible Preferred Stock ("Series B Stock") on September 10, 1996 at a
purchase price of $2.00 per share. During September 1996, a total of 952,508
shares of Class A Common Stock were sold.
The stockholders received the right to rescind, until December 18, 1996,
their purchase of Class A Common Stock. Effective December 18, 1996, the Company
paid approximately $392,000 to four stockholders who elected their right to
rescind the purchase of 196,039 shares of Class A Common Stock in September
1996. The rescinded shares were offered to other stockholders on a pro rata
basis; on December 18, 1996, the Company sold 224,184 shares of Class A Common
Stock for gross proceeds of approximately $450,000.
On June 15, 1995, the Company sold 339,477 shares of Series B Stock for
cash of approximately $2,649,000, net of issuance related expenses of $351,000.
Also, on June 15, 1995, the holders of 82,678 shares of Series A convertible
redeemable preferred stock exchanged their shares for a total of 139,399 shares
of Series B Stock. The Series B Stock is convertible at the option of the holder
at any time into Class A Common Stock at a conversion price of approximately
$6.4025 per share as of September 30, 1997, subject to adjustment under certain
conditions. In addition, the Series B Stock is subject to conversion upon a
public offering and sale of common stock meeting certain offering price
requirements. The Company has reserved 661,676 shares of its common stock for
issuance upon conversion of Series B Stock.
The holders of the Series B Stock may, under certain circumstances, require
the registration of their shares under the Securities Act of 1933. The Series B
Stock is redeemable at the option of the holders upon written receipt from a
majority of the holders at any time after June 15, 2000, at a redemption price
of $8.8371 per share, to be paid in three equal annual installments. Series B
Stock does not accrue dividends. However, the Company is prohibited from paying
a dividend on its common stock without also paying an equivalent dividend on the
Series B Stock.
In connection with the issuance of the Series B Stock discussed above, the
Company issued warrants to purchase a total of 106,356 shares of common stock in
connection with the offering. The warrants are exercisable at a price of $6 per
share. Warrants to purchase 56,356 shares of Common Stock are exercisable at any
time until May 1, 2010. Warrants to purchase 50,000 shares of Common Stock are
exercisable at any time until May 1, 2005. The Company has reserved 106,356
shares of its common stock for issuance upon exercise of these warrants.
9. SALE OF OPERATIONS
The Company sold the net assets of its Orange County operation in June 1994
for a note receivable of $1,309,000 and a 4 percent interest in the acquiring
corporation. Terms of the note are for monthly payments of interest only at a
rate of 8.5 percent through June 1995, thereafter the note is payable in 48
equal monthly installments of $32,000, including principal and interest. The
unpaid balance at September 30, 1996 and 1997 was $922,000 and $628,000,
respectively. All unpaid principal and interest is due May 1999. The buyer
concurrently executed a franchise agreement with the Company for Orange County
including service to and from Los Angeles International Airport. The note is
F-22
<PAGE> 89
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
collateralized by substantially all of the assets of the Orange County
operations, the SuperShuttle franchise and the stock of the buyer. The Company
recorded a deferred gain of $989,000 that was recognized on the installment
method. During fiscal year 1996, approximately $237,000 of the deferred gain was
recognized as other income. During fiscal year 1997, the Company determined that
collectibility of the remaining note receivable balance was reasonably assured
and therefore recognized as income the remaining deferred gain balance of
$717,000.
The Company sold the stock of SuperShuttle Los Angeles in September 1994
for a note receivable of $810,000. Terms of the note are for monthly payments of
interest only at a rate of 8.5 percent through September 1995, thereafter the
note is payable in 48 equal monthly installments of $20,000, including principal
and interest. The unpaid balance at September 30, 1996 and 1997 was $617,000 and
$440,000, respectively. All unpaid principal and interest is due September 1,
1999. The buyer concurrently executed a franchise agreement with the Company for
portions of the Los Angeles area including Los Angeles International Airport.
The note is collateralized by the stock of SuperShuttle Los Angeles, and
substantially all the assets and the SuperShuttle franchise of the buyer.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards ("SFAS") No. 107, Disclosures
About Fair Value of Financial Instruments, requires that the Company disclose
estimated fair values for its financial instruments. Fair value estimates are
made at a specific point in time and are based on relevant market information
and information about the financial instrument; they are subjective in nature
and involve uncertainties, matters of judgement and, therefore, cannot be
determined with precision. These estimates do not reflect any premium or
discount that could result from offering for sale at one time the Company's
entire holdings of a particular instrument. Since the fair value is estimated as
of September 30, 1997, the amounts that will actually be realized or paid in
settlement of the instruments could be significantly different.
For the Company's cash and cash equivalents, the carrying amount is assumed
to be the fair value because of the liquidity of these instruments. The carrying
amount is assumed to be the fair value for accounts receivable, accounts payable
and other accrued expenses because of the short maturity of the portfolios. The
fair value of the Company's notes receivable and long-term debt approximates the
terms in the marketplace under which they could be replaced. Therefore, the fair
value approximates the carrying value of these financial instruments.
11. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX-MONTH
PERIODS ENDED MARCH 31, 1997 AND 1998
ORGANIZATION AND BASIS OF PRESENTATION --The accompanying interim
consolidated financial statements have been prepared by the Company in
accordance with generally accepted accounting principles. Certain disclosures
and information normally included in financial statements have been condensed or
omitted. In the opinion of the management of the Company, these financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation for the interim periods. These
statements should be read in conjunction with the financial statements and notes
thereto for the three years ended September 30, 1997.
a. ACQUISITIONS -- Effective March 31, 1998, the Company acquired all of
the outstanding common stock of Tamarack Transportation, Inc., dba
SuperShuttle Los Angeles ("Tamarack") which is engaged in the business
of providing door-to-door passenger ground transportation in the greater
Los Angeles area, primarily to and from airports. Tamarack was a
SuperShuttle licensee prior to the acquisition. The Company issued
731,621 shares of common stock valued at
F-23
<PAGE> 90
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
approximately $2,941,000 as consideration for the acquisition which is
accounted for as a purchase.
Effective March 31, 1998, the Company acquired all of the outstanding
common stock of Preferred Transportation, Inc. dba SuperShuttle Orange
County ("Preferred") which is engaged in the business of providing
door-to-door passenger ground transportation primarily to and from
airports in the Los Angeles and Orange County areas. Preferred was a
SuperShuttle licensee prior to the acquisition. The Company issued
915,570 shares of common stock valued at approximately $3,680,000 as
consideration for the acquisition which is accounted for as a purchase.
Effective March 31, 1998, the Company acquired all of the outstanding
common stock of Southern Shuttle Services, Inc. ("Southern") which is
engaged in the business of providing door-to-door passenger ground
transportation primarily to and from airports in the Miami, Florida
area. Southern was a SuperShuttle licensee of the Company prior to the
acquisition. The Company issued 978,882 shares of common stock as
consideration for the acquisition which is accounted for as a purchase.
The acquisition agreement includes certain provisions which allow the
purchase transaction to be rescinded by the seller if the Company does
not file a registration statement for an initial public offering with
the Securities and Exchange Commission ("SEC") by June 5, 1998, or if
the SEC does not declare the registration statement effective by July
31, 1998, or if the underwritten initial registration statement does not
close by August 10, 1998 at a minimum offering price of $6.50 per share.
The stock issued to effect the transaction has been valued at
approximately $6,363,000 for purchase accounting purposes.
Effective March 31, 1998, the Company acquired all of the outstanding
common stock of the combined companies AAA Wheelchair Wagon Services,
Inc. and Limousines of South Florida, Inc. which are engaged in the
business of providing door-to-door passenger ground transportation
primarily to handicapped individuals and shuttle services to airport
parking facilities and other locations in the Miami and Ft. Lauderdale,
Florida area. The Company issued 419,522 shares of common stock as
consideration for the acquisition which is accounted for as a purchase.
The acquisition agreement includes certain provisions which allows the
purchase transaction to be rescinded by the seller if the Company does
not file a registration statement for an initial public offering with
the SEC by June 5, 1998, or if the SEC does not declare the registration
statement effective by July 31, 1998, or if the underwritten initial
registration statement does not close by August 10, 1998 at a minimum
offering price of $6.50 per share. The stock issued to effect the
transaction has been valued at approximately $2,726,000.
The purchase price of each respective acquisition was allocated based
upon the estimated fair values of net assets and liabilities acquired at
the date of acquisition. Total consideration comprised of 3,045,595
shares of Company common stock was valued at $15,711,000. This resulted
in an excess of purchase price over net assets acquired of $14,640,000,
which is being amortized on a straight-line basis over 40 years. The
Company is still gathering certain information required to complete the
allocation of the purchase price of the acquisitions. Further
adjustments may arise as a result of the finalization of the ongoing
study.
F-24
<PAGE> 91
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net consideration given, assets acquired and debt and other liabilities
assumed are shown in the table below.
<TABLE>
<S> <C>
Net assets acquired:
Current assets, including $1,345,000 of cash.............. $ 3,662,000
Property and equipment.................................... 4,591,000
Other assets.............................................. 496,000
Goodwill.................................................. 14,640,000
Debt and other liabilities assumed........................ (7,678,000)
-----------
Purchase price.............................................. $15,711,000
===========
</TABLE>
Included in the balance of debt and other liabilities assumed is
$1,172,000 of notes payable and capital lease obligations to the Company,
which will be eliminated in consolidation.
The following unaudited pro forma information for the periods set forth
below give effect to the transactions as if they had occurred at the
beginning of each period and include adjustments which give effect to
events that are directly attributable to the transactions and which are
expected to have continuing impact. The pro forma information is
presented for informational purposes and is not necessarily indicative of
the results of operations that actually would have been achieved had the
acquisitions been consummated as of that time:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------
SEPTEMBER 30, SEPTEMBER 30, MARCH 31,
1996 1997 1998
------------- ------------- ------------------
(SIX-MONTHS ENDED)
<S> <C> <C> <C>
Net revenues..................... $69,511,000 $75,065,000 $39,710,000
Net income attributable to common
shareholders................... 19,000 2,285,000 3,412,000
Earnings per share:
Basic.......................... $ 0.00 $ 0.39 $ 0.59
Diluted........................ $ 0.00 $ 0.34 $ 0.51
</TABLE>
b. STOCK OPTIONS -- A summary of stock option activity related to the 1995
Option Plan is as follows:
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF SHARES EXERCISE
SHARES VESTED PRICE
--------- --------- --------------
<S> <C> <C> <C>
Outstanding, October 1, 1997......... 103,833 63,083 $6.00 - $10.00
Granted/vested..................... 305,000 30,000 6.00
Exercised.......................... -- -- --
Canceled/expired................... (16,583) -- 6.00
-------- ------ --------------
Outstanding, March 31, 1998.......... 392,250 93,083 $6.00 - $10.00
======== ====== ==============
</TABLE>
The 1998 Stock Option Plan (the "1998 Option Plan") was adopted by the
Company's Board of Directors on February 4, 1998. The maximum number of
shares of common stock subject to options that may be outstanding at any
time under the 1998 Option Plan is 1,000,000 shares. As of March 31,
1998, no options have been granted under the 1998 Option Plan.
The Company applies Accounting Principles Board ("APB") No. 25,
Accounting for Stock Issued to Employees, and related interpretations in
accounting for its stock option plans. Accordingly, no compensation
expense has been recognized for its stock-based compensation
F-25
<PAGE> 92
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
plan. Had compensation cost for the Company's stock option plan been
determined based upon the fair value at the grant date for awards under
this plan consistent with the methodology prescribed in Statement of
Financial Accounting Standards ("SFAS") No. 123, Accounting for
Stock-Based Compensation, the Company's net income and earnings per
share for the six month period ended March 31, 1998 would have been
reduced by approximately $240,000 or $.09 per share. The fair value of
the options granted during the six month period ended March 31, 1998 is
estimated as $400,000 on the date of grant using an option-pricing model
with the following assumptions: dividend yield 0 percent, volatility 0
percent, average risk-free interest rate of 6 percent, assumed
forfeiture rate of 0 percent and an average expected life of four and
five years respectively. The remaining weighted average contractual life
of the options is approximately eight years at March 31, 1998.
c. INCOME TAXES -- The components of the (provision) benefit for income
taxes are as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
---------------------
1997 1998
------- ----------
<S> <C> <C>
Current............................................... $(9,000) $ (389,000)
Deferred.............................................. 9,000 2,476,000
------- ----------
Total................................................. $ -- $2,087,000
======= ==========
</TABLE>
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization
of deferred tax assets is dependent upon generation of future taxable
income during the periods in which those temporary differences become
deductible. In the second quarter of 1998, the Company eliminated its
valuation allowance resulting in net deferred tax assets of $2,447,000.
The valuation allowance was eliminated because the Company has been able
to generate favorable operating results on a more consistent basis and
management believes that it was more likely than not that future taxable
income will be sufficient to permit the Company to utilize the entire
accumulated net operating losses, prior to their expiration, to offset
current and future taxable income.
On March 31, 1998, the Company experienced a change in ownership, as
defined, under Section 382 of the Internal Revenue Code. The effect of
this change in ownership is to place an annual limit of approximately
$700,000 on the use of historic net operating losses accumulated through
March 31, 1998. To the extent that this limit exceeds the actual net
operating loss carryforward used in any taxable year, such excess may be
carried forward to the following year.
d. COMMITMENTS AND CONTINGENCIES -- A claim was filed against the Company
in 1997 with respect to a 1994 auto accident in Texas for which the
Company had not recorded any liability as it believed that there would
be no exposure in excess of insurance policy limits. During 1998, the
Company settled the claim with a cost to the Company of approximately
$60,000, which is recorded in selling, general and administrative
expenses for the six months ended March 31, 1998.
In March 1997, the Company entered into an agreement to sell a radio
frequency that it owned to Tamarack for $200,000 contingent upon
Tamarack obtaining FCC approval to use the frequency. Gain on the sale
was not recognized at the time of agreement because the sale was
contingent upon receiving FCC approval. During the second quarter of
1998, FCC approval was obtained and the transaction was completed
resulting in a gain on sale of
F-26
<PAGE> 93
SUPERSHUTTLE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
approximately $212,000 which is included in other income for the six
months ended March 31, 1998.
The Company owns an approximately 15% equity interest in its Washington
D.C. franchisee, Washington Shuttle, Inc. The Company has
unconditionally guaranteed indebtedness of Washington Shuttle, Inc. owed
to First Union National Bank of Virginia with an outstanding balance of
approximately $986,000 at March 31, 1998.
e. LONG-TERM DEBT -- In March 1998, the Company established a secured
revolving line of credit with Imperial Bank of Arizona. The bank line
is for $1.2 million and is secured by the Company's notes receivable
and trade accounts receivable, as well as all other unsecured assets.
The line of credit may be used for acquisitions and working capital.
Loans made under the line of credit shall bear interest at the bank's
prime lending rate plus one percent. The term of the line of credit is
one year and the Company has no borrowings on the line at March 31,
1998. Terms of the line of credit require the Company to maintain
specified net worth and debt coverage ratio.
Since September 30, 1997, the Company has established additional
vehicle and equipment lease lines. The Company established an $800,000
equipment financing line to finance certain capital expenditures. The
finance line includes 48 monthly lease payments which bear interest at
approximately 8 percent per annum.
f. SERIES B CONVERTIBLE PREFERRED STOCK -- In June 1998, the Company
entered into an agreement with the holders of the Series B Convertible
Preferred Stock to convert such stock in connection with the Company's
proposed initial public offering. The parties have agreed to convert
the 479,475 outstanding Series B Convertible Preferred Stock into
767,160 shares of Common Stock.
COMMON STOCK -- In February 1998, the Company's stockholders approved
the amendment and restatement of the Company's Certificate of
Incorporation to, among other things, reclassify the Company's Class A
and Class B Common Stock into Common Stock. At such time, there were
no shares of Class B Common Stock outstanding.
F-27
<PAGE> 94
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Preferred Transportation, Inc.
dba SuperShuttle Orange County
We have audited the accompanying balance sheets of Preferred
Transportation, Inc. dba SuperShuttle Orange County (the "Company") as of
December 31, 1996 and 1997, and the related statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1997 and 1996
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
[/s/ DELOITTE & TOUCHE LLP]
Phoenix, Arizona
March 20, 1998
F-28
<PAGE> 95
PREFERRED TRANSPORTATION, INC.
DBA SUPERSHUTTLE ORANGE COUNTY
BALANCE SHEETS
DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
ASSETS (NOTE 4)
CURRENT ASSETS:
Cash and cash equivalents............................ $ 356,229 $ 57,883 $ 242,293
Accounts receivable, net of allowance for doubtful
accounts of $16,463, $17,819 and $20,123 in 1996,
1997 and 1998..................................... 257,504 229,993 131,755
Prepaid expenses and other current assets............ 101,950 192,006 150,233
---------- ---------- ----------
Total current assets......................... 715,683 479,882 524,281
PROPERTY AND EQUIPMENT -- Net (Notes 3, 5 and 6)....... 1,095,760 995,511 852,620
INTANGIBLE ASSETS -- Net of accumulated amortization of
$233,961, $330,196 and $354,256 in 1996, 1997 and
1998................................................. 816,407 720,172 696,112
OTHER ASSETS (Note 9).................................. 73,220 111,592 139,749
---------- ---------- ----------
TOTAL.................................................. $2,701,070 $2,307,157 $2,212,762
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes payable to SuperShuttle
International, Inc. (Note 4)...................... $ 550,453 $ 392,185 $ 397,339
Current portion of capital lease obligations (Note
5)................................................ 515,864 360,185 368,450
Current portion of other notes payable (Note 6)...... 26,984 27,090 28,350
Accounts payable..................................... 292,709 273,545 211,454
Accrued liabilities and deferred revenue............. 304,113 276,056 525,238
Income taxes payable (Note 7)........................ 20,787 32,912 --
---------- ---------- ----------
Total current liabilities.................... 1,710,910 1,361,973 1,530,831
LONG-TERM LIABILITIES:
Notes payable to SuperShuttle International, Inc.
(Note 4).......................................... 334,973 158,268 95,639
Capital lease obligations (Note 5)................... 285,515 231,166 59,275
Other notes payable (Note 6)......................... 78,600 51,509 43,331
---------- ---------- ----------
Total liabilities............................ 2,409,998 1,802,916 1,729,076
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY:
Common stock -- no par value; 1,000,000 shares
authorized; 5,000 shares issued and outstanding... 5,000 5,000 5,000
Retained earnings.................................... 286,072 499,241 478,686
---------- ---------- ----------
Total stockholders' equity................... 291,072 504,241 483,686
---------- ---------- ----------
TOTAL.................................................. $2,701,070 $2,307,157 $2,212,762
========== ========== ==========
</TABLE>
See notes to financial statements.
F-29
<PAGE> 96
PREFERRED TRANSPORTATION, INC.
DBA SUPERSHUTTLE ORANGE COUNTY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------ -----------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET REVENUES..................... $7,635,847 $8,856,043 $9,240,835 $1,994,389 $2,341,331
DIRECT COST OF REVENUES (Note
8)............................. 4,482,186 4,908,760 5,270,354 1,145,574 1,399,208
---------- ---------- ---------- ---------- ----------
Gross profit.............. 3,153,661 3,947,283 3,970,481 848,815 942,123
OTHER OPERATING EXPENSES......... 1,370,055 1,718,004 1,649,309 379,127 384,134
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (Note
8)............................. 1,421,749 1,816,772 1,817,885 450,357 515,739
---------- ---------- ---------- ---------- ----------
OPERATING INCOME................. 361,857 412,507 503,287 19,331 42,250
---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense............ (174,572) (214,750) (154,761) (43,644) (34,360)
Interest income............. 575 6,571 3,247 949 334
Miscellaneous income
(expenses)................ 25,360 72,361 5,896 1,900 (42,483)
---------- ---------- ---------- ---------- ----------
Other expense -- net...... (148,637) (135,818) (145,618) (40,795) (76,509)
---------- ---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES............... 213,220 276,689 357,669 (21,464) (34,259)
INCOME TAX (PROVISION) BENEFIT
(Note 7)....................... (86,248) (111,704) (144,500) 8,586 13,704
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS)................ $ 126,972 $ 164,985 $ 213,169 $ (12,878) $ (20,555)
========== ========== ========== ========== ==========
</TABLE>
See notes to financial statements.
F-30
<PAGE> 97
PREFERRED TRANSPORTATION, INC.
DBA SUPERSHUTTLE ORANGE COUNTY
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND
THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
---------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
------ ------ -------- --------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995............................ 5,000 $5,000 $ (5,885) $ (885)
Net income........................................ -- -- 126,972 126,972
----- ------ -------- --------
BALANCE, DECEMBER 31, 1995.......................... 5,000 5,000 121,087 126,087
Net income........................................ -- -- 164,985 164,985
----- ------ -------- --------
BALANCE, DECEMBER 31, 1996.......................... 5,000 5,000 286,072 291,072
Net income........................................ -- -- 213,169 213,169
----- ------ -------- --------
BALANCE, DECEMBER 31, 1997.......................... 5,000 5,000 499,241 504,241
Net loss (unaudited).............................. -- -- (20,555) (20,555)
----- ------ -------- --------
BALANCE, MARCH 31, 1998 (unaudited)................. 5,000 $5,000 $478,686 $483,686
===== ====== ======== ========
</TABLE>
See notes to financial statements.
F-31
<PAGE> 98
PREFERRED TRANSPORTATION, INC.
DBA SUPERSHUTTLE ORANGE COUNTY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------- --------------------
1995 1996 1997 1997 1998
---------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income...................................... $ 126,972 $164,985 $213,169 $(12,878) $(20,555)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................ 321,885 626,741 546,757 128,490 146,507
(Gain) loss on disposal of property and equipment.... (12,365) 11,520 (5,896) (1,900) 42,483
Changes in operating assets and liabilities:
Accounts receivable................................ (50,687) (43,472) 27,511 41,786 98,238
Prepaid expenses and other current assets.......... 2,295 (20,426) (90,056) 57,603 41,773
Other assets....................................... (24,787) (6,213) (38,372) (5,754) (28,156)
Accounts payable................................... 22,942 35,457 (19,164) 3,982 (62,091)
Accrued liabilities and deferred revenue........... 21,549 54,427 (28,057) 32,781 249,182
Income taxes payable............................... 101,048 (80,261) 12,125 (20,787) (32,912)
---------- -------- -------- -------- --------
Net cash provided by operating activities........ 508,852 742,758 618,017 223,323 434,469
---------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................... (68,954) (180,109) (12,117) -- (34,143)
Proceeds from disposal of property and equipment....... 26,850 -- 12,011 1,900 12,103
---------- -------- -------- -------- --------
Net cash used in investing activities............ (42,104) (180,109) (106) 1,900 (22,040)
---------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable............................ 63,601 110,910 -- -- --
Principal payments on notes payable.................... (171,041) (327,508) (361,958) (87,970) (64,443)
Principal payments on capital lease obligations........ (135,767) (440,224) (554,299) (123,245) (163,576)
---------- -------- -------- -------- --------
Net cash used in financing activities............ (243,207) (656,822) (916,257) (211,215) (228,019)
---------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..... 223,541 (94,173) (298,346) 14,008 184,410
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............. 226,861 450,402 356,229 356,229 57,883
---------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR................... $ 450,402 $356,229 $ 57,883 $370,237 $242,293
========== ======== ======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid.......................................... $ 174,318 $214,750 $154,761 $ 27,897 $ 34,360
========== ======== ======== ======== ========
Income taxes paid...................................... $ 800 $159,535 $111,588 $ -- $ 11,013
========== ======== ======== ======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Capital lease obligations.............................. $1,213,033 $248,054 $344,271 $ -- $ --
========== ======== ======== ======== ========
</TABLE>
See notes to financial statements.
F-32
<PAGE> 99
PREFERRED TRANSPORTATION, INC.
DBA SUPERSHUTTLE ORANGE COUNTY
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND
THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
1. ORGANIZATION
Preferred Transportation, Inc. dba SuperShuttle Orange County (the
"Company") was incorporated in June 1994 as a California corporation. The
Company is engaged in the business of providing door-to-door passenger ground
transportation to the general public, primarily to and from airports in the Los
Angeles and Orange County areas. Providing ground transportation in most cities
is regulated and requires approval from certain governmental agencies. The
Company uses the SuperShuttle name under a license agreement with SuperShuttle
International, Inc. ("SSI") (Note 8). SSI owns 4 percent of the Company. Revenue
is generated primarily from the general public, and there is no concentration of
sales with any one customer.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS -- The Company considers all highly liquid investments
with original maturities of three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT are stated at cost. Depreciation and amortization
are provided for using the straight-line method over the lesser of the estimated
useful lives of the related assets or the lease terms.
INTANGIBLE ASSETS consists of goodwill resulting from the acquisition of
the business in June 1994 and the original franchise fee paid to SSI (Note 8).
Amortization is provided for using the straight-line method over the estimated
useful lives of the related assets, which has been determined to be 10 years.
LONG-LIVED ASSETS and certain identifiable intangibles are reviewed for
impairment whenever events or circumstances indicate the carrying amount of an
asset may not be recoverable.
DEFERRED REVENUE -- Advance payments received for transportation of
passengers are presented in the financial statements as deferred revenue.
INCOME TAXES -- Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes, and
operating loss and tax credit carryforwards. A valuation allowance is provided
when it is more likely than not that some portion or all of the deferred income
tax assets will not be realized.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. Estimates also affect the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates.
REVENUE RECOGNITION -- Revenues are recognized at the time services are
provided.
F-33
<PAGE> 100
PREFERRED TRANSPORTATION, INC.
DBA SUPERSHUTTLE ORANGE COUNTY
NOTES TO FINANCIAL STATEMENTS -- (Continued)
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1996 and
1997:
<TABLE>
<CAPTION>
USEFUL
LIVES
(YEARS) 1996 1997
------------- ---------- ----------
<S> <C> <C> <C>
Vehicles and improvements................... 3-5 $ 216,386 $ 205,726
Vehicles under capital leases............... 3 1,461,087 1,805,358
Leasehold improvements...................... Life of Lease 67,840 70,528
Office and computer equipment............... 5-7 72,030 78,138
Shop equipment and car wash................. 5-10 89,617 90,155
Dispatch equipment.......................... 7 17,914 18,534
---------- ----------
Total....................................... 1,924,874 2,268,439
Less accumulated depreciation and
amortization (including $434,184 and
$774,216 for vehicles under capital
leases)................................... 829,114 1,272,928
---------- ----------
Property and equipment -- net............... $1,095,760 $ 995,511
========== ==========
</TABLE>
4. NOTES PAYABLE TO SUPERSHUTTLE INTERNATIONAL, INC.
Notes payable to SSI at December 31, 1996 and 1997 consist of the
following:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Notes payable to SSI, collateralized by all the Company's
assets and the stock of the stockholders. Interest is
payable at 8.5% per annum. Payable in monthly installments
of principal and interest of $32,339 with the final
installment due in May 1999............................... $843,884 $515,786
Note payable to SSI. The note is due on demand. Interest is
payable at 8.5% per annum................................. 34,667 34,667
Other note payable to SSI................................... 6,875 --
-------- --------
Total....................................................... 885,426 550,453
Less current maturities..................................... 550,453 392,185
-------- --------
Notes payable to SSI, less current portion.................. $334,973 $158,268
======== ========
</TABLE>
Notes payable to SSI at December 31, 1997 are due as follows:
<TABLE>
<S> <C>
1998...................................................... $392,185
1999...................................................... 158,268
--------
$550,453
========
</TABLE>
F-34
<PAGE> 101
PREFERRED TRANSPORTATION, INC.
DBA SUPERSHUTTLE ORANGE COUNTY
NOTES TO FINANCIAL STATEMENTS -- (Continued)
5. CAPITAL LEASE OBLIGATIONS
The Company leases certain of its vehicles under capital leases which are
payable over three-year terms. Of the total capital lease balance, $285,515 is
payable to SSI. The capital lease obligations are payable as follows at December
31, 1997:
<TABLE>
<S> <C>
1998...................................................... $402,435
1999...................................................... 168,067
2000...................................................... 82,725
--------
Total minimum lease payments.............................. 653,227
Less amount representing interest......................... 61,876
--------
Total..................................................... 591,351
Less current maturities................................... 360,185
--------
Capital lease obligations, less current portion........... $231,166
========
</TABLE>
6. OTHER NOTES PAYABLE
Other notes payable at December 31, 1996 and 1997 consist of the following:
<TABLE>
<CAPTION>
1996 1997
-------- -------
<S> <C> <C>
Note payable to a bank, collateralized by a vehicle. Payable
in monthly installments of principal and interest of
approximately $1,400, with the final installment due in
April 2001. Interest is payable at the prime rate plus 1%
per annum................................................. $ 53,473 $40,891
Note payable to a bank, collateralized by a vehicle. Payable
in monthly installments of principal and interest of
approximately $1,100, with the final installment due in
May 2001. Interest is payable at the prime rate plus 1%
per annum................................................. 42,401 32,801
Note payable, collateralized by a vehicle. Payable in
monthly installments of principal and interest of $470
with the final installment due in November 1998. Interest
is payable at the rate of 11.5% per annum................. 9,710 4,907
-------- -------
Total....................................................... 105,584 78,599
Less current maturities..................................... 26,984 27,090
-------- -------
Other notes payable, less current portion................... $ 78,600 $51,509
======== =======
</TABLE>
Notes payable at December 31, 1997 are due as follows:
<TABLE>
<S> <C>
1998............................................... $27,090
1999............................................... 22,182
2000............................................... 22,182
2001............................................... 7,145
-------
$78,599
=======
</TABLE>
F-35
<PAGE> 102
PREFERRED TRANSPORTATION, INC.
DBA SUPERSHUTTLE ORANGE COUNTY
NOTES TO FINANCIAL STATEMENTS -- (Continued)
7. INCOME TAXES
The components of the Company's provision for income taxes at December 31
consist of the following:
<TABLE>
<CAPTION>
1995 1996 1997
-------- --------- ---------
<S> <C> <C> <C>
Current.......................................... $(98,248) $(118,704) $(146,500)
Deferred......................................... 12,000 7,000 2,000
-------- --------- ---------
Total provision for income taxes................. $(86,248) $(111,704) $(144,500)
======== ========= =========
</TABLE>
The following is a reconciliation, stated as a percentage of pre-tax
income, of the U.S. statutory federal income tax rate to the effective tax rate:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Federal statutory income tax rate........................... 34.0% 34.0% 34.0%
Increase in taxes resulting from:
State taxes, net of federal benefit....................... 6.2% 6.2% 6.2%
Other..................................................... 0.3% 0.2% 0.2%
---- ---- ----
Effective tax rate.......................................... 40.5% 40.4% 40.4%
==== ==== ====
</TABLE>
The tax effects of temporary differences giving rise to deferred tax assets
are as follows:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Deferred tax assets:
Accounts receivable....................................... $ 6,500 $ 7,000
Other..................................................... 16,500 18,000
------- -------
Net deferred tax assets..................................... $23,000 $25,000
======= =======
</TABLE>
8. COMMITMENTS AND CONTINGENCIES
LEASES -- The Company leases office space for its corporate office under a
noncancelable operating lease. The lease expires in March 2003. Rent expense for
the years ended December 31, 1995, 1996 and 1997 totaled $138,062, $136,080 and
$146,964, respectively.
The Company has one operating lease for copier equipment. The lease for the
copier expires in February 2002. Lease payments under this equipment lease
totaled $3,662 and $5,711 for the years ended December 31, 1996 and 1997,
respectively.
As of December 31, 1997, future annual minimum lease payments under these
leases are as follows:
<TABLE>
<S> <C>
1998.............................................. $135,473
1999.............................................. 146,732
2000.............................................. 149,972
2001.............................................. 151,052
2002.............................................. 152,340
Thereafter........................................ 38,192
--------
$773,761
========
</TABLE>
FRANCHISE FEES -- The Company pays franchise fees to SSI for the right to
operate using the SuperShuttle name. The Company pays a fee based on the number
of vehicles it operates on a weekly
F-36
<PAGE> 103
PREFERRED TRANSPORTATION, INC.
DBA SUPERSHUTTLE ORANGE COUNTY
NOTES TO FINANCIAL STATEMENTS -- (Continued)
basis. Franchise fees totaled $158,578, $181,493 and $184,700, and for the years
ended December 31, 1995, 1996 and 1997, respectively.
LITIGATION -- In the normal course of business, the Company occasionally
becomes a party to litigation. Management believes that the ultimate resolution
of these matters will not have a significant impact on the financial position
and results of operations of the Company.
9. OTHER RELATED PARTY
The balance of other assets at December 31, 1997 includes $25,000 of
prepaid expenses paid to a related party during 1997 and a $10,000 loan made to
a stockholder during 1997. The loan is due upon demand.
10. NOTES TO UNAUDITED FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 1997 AND 1998
ORGANIZATION AND BASIS OF PRESENTATION -- The accompanying interim
consolidated financial statements have been prepared by the Company in
accordance with generally accepted accounting principles. Certain disclosures
and information normally included in financial statements have been condensed or
omitted. In the opinion of the management of the Company, these financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation for the interim periods. These
statements should be read in conjunction with the financial statements and notes
thereto for the two years ended December 31, 1997.
Effective March 31, 1998, SSI acquired all of the outstanding common stock
of the Company. SSI issued 915,570 shares of common stock valued at
approximately $3,680,000 as consideration for the acquisition which is accounted
for as a purchase.
Franchise fees paid to SSI totaled $46,421 and $46,300 for the three months
ended March 31, 1997 and 1998, respectively.
Notes payable to SSI were $492,978 at March 31, 1998, and capital lease
obligations payable to SSI were $146,640 at March 31, 1998.
F-37
<PAGE> 104
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
Tamarack Transportation, Inc. dba SuperShuttle Los Angeles
We have audited the accompanying balance sheets of Tamarack Transportation,
Inc. dba SuperShuttle Los Angeles (the "Company") as of September 30, 1996 and
1997 and the related statements of operations, stockholder's equity, and cash
flows for each of the three years in the period ended September 30, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of September 30, 1996 and
1997, and the results of its operations and its cash flows for each of the three
years in the period ended September 30, 1997, in conformity with generally
accepted accounting principles.
[/s/ DELOITTE & TOUCHE LLP]
Los Angeles, California
March 23, 1998
F-38
<PAGE> 105
TAMARACK TRANSPORTATION, INC.
DBA SUPERSHUTTLE LOS ANGELES
BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS (NOTE 4)
CURRENT ASSETS:
Cash and cash equivalents (Note 2)................... $ 595,949 $ 578,107 $ 453,642
Accounts receivable, less allowance for doubtful
accounts of $1,151, $0 and $2,787 in 1996, 1997
and 1998.......................................... 225,930 206,427 202,943
Prepaid expenses and other current assets............ 152,858 167,619 171,232
---------- ---------- ----------
Total current assets......................... 974,737 952,153 827,817
PROPERTY AND EQUIPMENT, Net (Notes 2, 3, 5 and 6)...... 1,480,098 1,401,012 1,084,355
INTANGIBLE ASSETS, Net of accumulated amortization of
$3,474, $5,142 and $5,976 in 1996, 1997 and 1998
(Note 2)............................................. 21,526 19,858 19,024
OTHER ASSETS........................................... 25,491 14,895 7,678
---------- ---------- ----------
TOTAL.................................................. $2,501,852 $2,387,918 $1,938,874
========== ========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of notes payable to SuperShuttle
International, Inc. (Note 4)...................... $ 208,273 $ 210,341 $ 210,341
Current portion of capital lease obligations (Note
5)................................................ 508,275 557,082 557,082
Current portion of notes payable (Note 6)............ 4,747 19,194 19,194
Accounts payable..................................... 180,114 273,365 201,369
Accrued liabilities and deferred revenue (Note 2).... 352,904 449,136 415,631
Income taxes payable (Notes 2 and 7)................. 139,457 -- 48,129
---------- ---------- ----------
Total current liabilities.................... 1,393,770 1,509,118 1,451,746
LONG-TERM LIABILITIES:
Notes payable to SuperShuttle International, Inc.
(Note 4).......................................... 439,543 229,202 126,289
Capital lease obligations (Note 5)................... 499,851 432,618 81,059
Notes payable (Note 6)............................... -- 59,793 50,399
Deferred taxes (Note 7).............................. -- 3,455 3,455
---------- ---------- ----------
Total liabilities............................ 2,333,164 2,234,186 1,712,948
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDER'S EQUITY:
Common stock -- no par value; 100,000 shares
authorized; 5,000 shares issued and outstanding... 4,500 4,500 4,500
Retained earnings.................................... 164,188 149,232 221,426
---------- ---------- ----------
Total stockholder's equity................... 168,688 153,732 225,926
---------- ---------- ----------
TOTAL.................................................. $2,501,852 $2,387,918 $1,938,874
========== ========== ==========
</TABLE>
See notes to financial statements.
F-39
<PAGE> 106
TAMARACK TRANSPORTATION, INC.
DBA SUPERSHUTTLE LOS ANGELES
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED SEPTEMBER 30, MARCH 31,
------------------------------------ -----------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET REVENUES......................... $8,823,017 $8,818,292 $8,633,032 $4,092,301 $4,267,322
DIRECT COST OF REVENUES.............. 5,108,667 4,812,009 5,024,199 2,411,038 2,486,039
---------- ---------- ---------- ---------- ----------
GROSS PROFIT......................... 3,714,350 4,006,283 3,608,833 1,681,263 1,781,283
OTHER OPERATING EXPENSES............. 1,899,921 1,666,004 1,887,689 906,277 880,771
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES........................... 1,704,157 1,847,415 1,560,991 606,120 714,051
---------- ---------- ---------- ---------- ----------
OPERATING INCOME..................... 110,272 492,864 160,153 168,866 186,461
---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (Notes 4 and 6)... (159,982) (175,941) (163,217) (75,576) (68,902)
Interest income.................... 798 2,565 5,280 2,098 2,764
Miscellaneous (expense) income..... 50,507 (25,440) (27,200) -- --
---------- ---------- ---------- ---------- ----------
Total other expense........ (108,677) (198,816) (185,137) (73,478) (66,138)
---------- ---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES....................... 1,595 294,048 (24,984) 95,388 120,323
(BENEFIT) PROVISION FOR INCOME TAXES
(Notes 2 and 7).................... 1,996 118,025 (10,028) 38,155 48,129
---------- ---------- ---------- ---------- ----------
NET (LOSS) INCOME.................... $ (401) $ 176,023 $ (14,956) $ 57,233 $ 72,194
========== ========== ========== ========== ==========
</TABLE>
See notes to financial statements.
F-40
<PAGE> 107
TAMARACK TRANSPORTATION, INC.
DBA SUPERSHUTTLE LOS ANGELES
STATEMENTS OF STOCKHOLDER'S (DEFICIT) EQUITY
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997 AND
SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
(ACCUMULATED
COMMON STOCK DEFICIT)
---------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
------ ------ ------------ --------
<S> <C> <C> <C> <C>
BALANCES, OCTOBER 1, 1994......................... 5,000 $4,500 $(11,434) $ (6,934)
Net loss........................................ -- -- (401) (401)
----- ------ -------- --------
BALANCES, SEPTEMBER 30, 1995...................... 5,000 4,500 (11,835) (7,335)
Net income...................................... -- -- 176,023 176,023
----- ------ -------- --------
BALANCES, SEPTEMBER 30, 1996...................... 5,000 4,500 164,188 168,688
Net loss........................................ -- -- (14,956) (14,956)
----- ------ -------- --------
BALANCES, SEPTEMBER 30, 1997...................... 5,000 4,500 149,232 153,732
Net income (unaudited).......................... -- -- 72,194 72,194
----- ------ -------- --------
BALANCES, MARCH 31, 1998 (Unaudited).............. 5,000 $4,500 $221,426 $225,926
===== ====== ======== ========
</TABLE>
See notes to financial statements.
F-41
<PAGE> 108
TAMARACK TRANSPORTATION, INC.
DBA SUPERSHUTTLE LOS ANGELES
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
--------------------------------- ---------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................... $ (401) $ 176,023 $ (14,956) $ 57,233 $ 72,194
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization................ 465,305 585,031 692,387 227,394 320,968
Provision for deferred taxes................. (5,604) (18,255) 31,542 -- --
Loss (gain) on sale of property and
equipment.................................. (41,975) 25,438 27,200 -- --
Changes in operating assets and liabilities:
Accounts receivable........................ (41,376) (33,462) 19,503 66,502 3,484
Prepaid expenses and other current
assets.................................. 75,282 (63,158) (46,303) (124,055) (3,613)
Other assets............................... (20,000) (2,744) 10,596 8,474 7,217
Accounts payable........................... 37,098 40,652 93,251 660 (71,996)
Accrued liabilities and deferred revenue... 100,267 (81,951) 96,232 (22,061) (33,505)
Income taxes............................... 3,283 131,260 (136,002) (91,328) 48,129
--------- --------- --------- --------- ---------
Net cash provided by operating
activities............................ 571,879 758,834 773,450 122,819 342,878
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............ (202,788) (157,130) (101,518) (7,592) (3,477)
Proceeds from sale of property and equipment... 119,355 105,939 6,479 2,320 --
--------- --------- --------- --------- ---------
Net cash used in investing activities... (83,433) (51,191) (95,039) (5,272) (3,477)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable..................... 84,996
Principal payments on notes payable............ (202,141) (314,518) (219,029) (109,685) (112,307)
Principal payments on capital lease
obligations.................................. (119,534) (342,607) (562,220) (231,414) (351,559)
--------- --------- --------- --------- ---------
Net cash used in financing activities... (321,675) (657,125) (696,253) (341,099) (463,866)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.................................... 166,771 50,518 (17,842) (223,552) (124,465)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..... 378,660 545,431 595,949 595,949 578,107
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR........... $ 545,431 $ 595,949 $ 578,107 $ 372,397 $ 453,642
========= ========= ========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid.................................. $ 146,418 $ 189,403 $ 163,217 $ 75,576 $ 68,902
========= ========= ========= ========= =========
Income taxes paid.............................. $ 26,637 $ 3,360 $ 125,000 $ 125,000 $ 800
========= ========= ========= ========= =========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES -- Capital lease
obligations.................................... $ 946,166 $ 524,101 $ 543,794 $ -- $ --
========= ========= ========= ========= =========
</TABLE>
See notes to financial statements.
F-42
<PAGE> 109
TAMARACK TRANSPORTATION, INC.
DBA SUPERSHUTTLE LOS ANGELES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1995, 1996 AND 1997 AND
SIX MONTHS ENDED MARCH 30, 1998 (UNAUDITED)
1. ORGANIZATION
Tamarack Transportation, Inc. dba SuperShuttle Los Angeles (the "Company")
was incorporated in April 1994 as a California corporation. The Company is
engaged in the business of providing door-to-door passenger ground
transportation in the greater Los Angeles area, primarily to and from airports.
Providing ground transportation in most cities is regulated and requires
approval from certain governmental agencies. The Company uses the SuperShuttle
name under a license agreement with SuperShuttle International, Inc. ("SSI")
(see Note 8). Revenue is generated from the general public, and there is no
concentration of sales with any one customer.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS -- The Company considers all highly liquid
investments with remaining maturities at the time of purchase of three months or
less to be cash equivalents.
PROPERTY AND EQUIPMENT -- Property and equipment are stated at cost.
Depreciation and amortization are provided for using accelerated and
straight-line methods over the lesser of the estimated useful lives of the
related assets or the lease terms.
INTANGIBLE ASSETS -- Intangible assets consist of the original franchise
fee paid to SSI (see Note 8). Amortization is provided for using the
straight-line method over the life of the franchise license, which is 15 years.
DEFERRED REVENUE -- Advance payments received for transportation of
passengers are presented in the financial statements as deferred revenue.
REVENUE RECOGNITION -- Revenues are recognized at the time services are
performed.
INCOME TAXES -- Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes, and
operating loss and tax credit carryforwards. A valuation allowance is provided
when it is more likely than not that some portion or all of the deferred income
tax assets will not be realized.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS -- Certain reclassifications have been made to the prior
year's financial statements to conform to the 1997 presentation.
F-43
<PAGE> 110
TAMARACK TRANSPORTATION, INC.
DBA SUPERSHUTTLE LOS ANGELES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
USEFUL LIVES 1996 1997
------------- ---------- ----------
<S> <C> <C> <C>
Vehicles and improvements.................... 3 - 5 $ 480,928 $ 508,431
Vehicles under capital leases................ 3 1,470,267 2,014,061
Leasehold improvements....................... Life of lease 213,542 215,245
Office and computer equipment................ 5 82,515 90,679
Shop equipment and car wash.................. 5 122,072 125,102
Dispatch equipment........................... 5 52,501 56,226
---------- ----------
2,421,825 3,009,744
Less accumulated depreciation and
amortization (including $517,164 and
$1,021,754 for vehicles under capital
leases).................................... 941,727 1,608,732
---------- ----------
$1,480,098 $1,401,012
========== ==========
</TABLE>
4. NOTES PAYABLE TO SUPERSHUTTLE INTERNATIONAL, INC.
Notes payable to SSI consist of the following:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C> <C>
Note payable to SSI, secured by all of the Company's assets
and the stock of the stockholder. Interest is payable at
8.5% per annum. Payable in monthly installments of
principal and interest of $20,003 with the final
installment due in September 1999......................... $ 647,816 $ 439,543
Less current maturities..................................... 208,273 210,341
---------- ----------
Note payable -- long-term................................... 439,543 229,202
========== ==========
</TABLE>
Notes payable to SSI at September 30, 1997 are due as follows:
<TABLE>
<S> <C>
1998.............................................. $210,341
1999.............................................. 229,202
--------
$439,543
========
</TABLE>
5. CAPITAL LEASE OBLIGATIONS
The Company leases certain of its vehicles from SSI and Felco Commercial
Services under capital leases that are payable over three-year terms. The
capital lease obligations are payable as follows at September 30, 1997:
<TABLE>
<S> <C>
1998............................................. $ 640,508
1999............................................. 336,209
2000............................................. 134,162
----------
Total minimum lease payments..................... 1,110,879
Less amount representing interest................ 121,179
----------
Present value of minimum lease payments.......... 989,700
Less current portion............................. 557,082
----------
$ 432,618
==========
</TABLE>
F-44
<PAGE> 111
TAMARACK TRANSPORTATION, INC.
DBA SUPERSHUTTLE LOS ANGELES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
1996 1997
------ -------
<S> <C> <C>
Note payable, secured by vehicles. Payable in monthly
installments of principal and interest of $2,111 with the
final installment due in May 2001. Interest accrues at
8.75% per annum........................................... -- $78,987
Note payable, secured by equipment. Payable in monthly
installments of principal and interest of $634 with the
final installments due in May 1997. Interest accrued at
18.14% per annum.......................................... $4,747 --
------ -------
4,747 78,987
Less current maturities..................................... 4,747 19,194
------ -------
$ -- $59,793
====== =======
</TABLE>
7. INCOME TAXES
The components of the Company's provision (benefit) for income taxes
consist of the following:
<TABLE>
<CAPTION>
1995 1996 1997
------- -------- --------
<S> <C> <C> <C>
Current:
Federal........................................... $ 5,852 $106,813 $(33,573)
State............................................. 1,749 29,467 (7,997)
------- -------- --------
Total current....................................... 7,601 136,280 (41,570)
------- -------- --------
Deferred:
Federal........................................... (4,318) (16,134) 25,869
State............................................. (1,287) (2,121) 5,673
------- -------- --------
Total deferred...................................... (5,605) (18,255) 31,542
------- -------- --------
Total............................................... $ 1,996 $118,025 $(10,028)
======= ======== ========
</TABLE>
The following is a reconciliation, stated as a percentage of pretax income,
of the statutory federal income tax rate to the effective tax rate:
<TABLE>
<CAPTION>
1995 1996 1997
----- ---- -----
<S> <C> <C> <C>
Federal statutory income tax rate........................... 35.0% 35.0% (35.0)%
Increases (reductions) in taxes resulting from:
State taxes, net of federal benefit....................... 19.1% 6.1% (6.1)%
Other..................................................... 71.0% (1.0)% 1.0%
----- ---- -----
Effective tax rate.......................................... 125.1% 40.1% (40.1)%
===== ==== =====
</TABLE>
F-45
<PAGE> 112
TAMARACK TRANSPORTATION, INC.
DBA SUPERSHUTTLE LOS ANGELES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of temporary differences giving rise to deferred income tax
(liabilities) assets are as follows:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Deferred income tax assets:
Accounts receivable....................................... $ 498 --
Capital leases............................................ 23,825 $(1,128)
State income taxes........................................ 7,983 (2,327)
Property and equipment.................................... (4,220) --
------- -------
Net deferred income tax (liabilities) assets................ $28,086 $(3,455)
======= =======
</TABLE>
8. COMMITMENTS AND CONTINGENCIES
LEASES -- The Company leases office space and equipment for its corporate
office under noncancelable operating leases. As of September 30, 1997, future
annual minimum lease payments under these leases are $73,138.
Rent expense for the years ended September 30, 1995, 1996 and 1997 totaled
$157,121, $163,812 and $163,812, respectively.
LITIGATION -- In the normal course of business, the Company occasionally
becomes a party to litigation. Management believes that the ultimate resolution
of these matters will not have a significant impact on the financial position
and the results of operations of the Company.
FRANCHISE FEES -- The Company pays franchise fees to SSI for the right to
operate using the SuperShuttle name. The Company pays a fee based on the number
of vehicles it operates on a weekly basis. Franchise fees totaled $240,159,
$242,029 and $244,836 in 1995, 1996 and 1997, respectively.
9. NOTES TO UNAUDITED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIODS ENDED
MARCH 31, 1997 AND 1998
ORGANIZATION AND BASIS OF PRESENTATION -- The accompanying interim
consolidated financial statements have been prepared by the Company in
accordance with generally accepted accounting principles. Certain disclosures
and information normally included in financial statements have been condensed or
omitted. In the opinion of the management of the Company, these financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation for the interim periods. These
statements should be read in conjunction with the financial statements and notes
thereto for the three years ended September 30, 1997.
Effective March 31, 1998, SSI acquired all of the outstanding common stock
of the Company. SSI issued 731,621 shares of common stock valued at
approximately $2,941,000 as consideration for the acquisition which is accounted
for as a purchase.
Franchise fees paid to SSI totaled $123,850 and $116,620 for the six months
ended March 31, 1997 and 1998, respectively.
Notes payable to SSI were $336,630 at March 31, 1998 and capital leases
obligations payable to SSI were $228,980 at March 31, 1998.
F-46
<PAGE> 113
INDEPENDENT AUDITORS' REPORT
Board of Directors
Southern Shuttle Services, Inc.
Miami, Florida
We have audited the accompanying balance sheets of Southern Shuttle
Services, Inc. (the "Company") as of December 31, 1996 and 1997, and the related
statements of income, stockholders' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1996 and 1997,
and the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
[/s/ DELOITTE & TOUCHE LLP]
Phoenix, Arizona
March 17, 1998
F-47
<PAGE> 114
SOUTHERN SHUTTLE SERVICES, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 363,369 $ 256,471 $ 147,551
Trade accounts receivable............................ 218,259 130,796 162,858
Advances due from affiliates (Note 7)................ -- 60,000 69,000
Prepaid expenses and other........................... 2,024 48,211 48,359
---------- ---------- ----------
Total current assets......................... 583,652 495,478 427,768
---------- ---------- ----------
PROPERTY AND EQUIPMENT (Note 2):
Vehicles............................................. 2,157,627 2,573,640 2,573,640
Equipment............................................ 366,560 428,761 433,127
Leasehold improvements............................... 339,062 348,703 348,703
---------- ---------- ----------
Total........................................ 2,863,249 3,351,104 3,355,470
Less accumulated depreciation and amortization....... 2,143,414 2,435,691 2,539,367
---------- ---------- ----------
Property and equipment -- net................ 719,835 915,413 816,103
---------- ---------- ----------
PROPERTY HELD FOR SALE (Notes 2 and 7)................. 106,200 106,200
DEFERRED INCOME TAXES (Note 3)......................... 150,000 85,000 65,000
INTANGIBLES AND OTHER ASSETS........................... 368,644 297,124 281,392
---------- ---------- ----------
TOTAL.................................................. $1,822,131 $1,899,215 $1,696,463
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................................... $ 77,531 $ 34,126 $ 40,715
Accrued wages, benefits and other.................... 203,100 224,069 346,577
Current portion of long-term debt (Note 2)........... 421,933 510,041 446,807
Income taxes payable................................. 464,000 528,022 458,722
---------- ---------- ----------
Total current liabilities.................... 1,166,564 1,296,258 1,292,821
LONG-TERM DEBT -- Net of current portion (Note 2)...... 133,298 314,355 245,273
OTHER LIABILITY (Note 4)............................... 380,000 -- --
---------- ---------- ----------
Total liabilities............................ 1,679,862 1,610,613 1,538,094
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 4 and 5)
STOCKHOLDERS' EQUITY (Note 6):
Common stock, $1.00 par value; authorized, 500
shares; issued and outstanding, 100 shares........ 100 100 100
Retained earnings.................................... 310,169 496,502 158,269
---------- ---------- ----------
Total stockholders' equity................... 310,269 496,602 158,369
Advances due from stockholders (Notes 7 and 9)....... (168,000) (208,000) --
---------- ---------- ----------
Stockholders' equity -- net.................. 142,269 288,602 158,369
---------- ---------- ----------
TOTAL.................................................. $1,822,131 $1,899,215 $1,696,463
========== ========== ==========
</TABLE>
See notes to financial statements.
F-48
<PAGE> 115
SOUTHERN SHUTTLE SERVICES, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------ ------------------------
1996 1997 1997 1998
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET REVENUES.............................. $9,486,327 $9,371,629 $2,248,477 $2,452,739
DIRECT COST OF REVENUES (Notes 4 and 7)... 5,466,074 5,403,980 1,310,250 1,436,196
---------- ---------- ---------- ----------
Gross profit......................... 4,020,253 3,967,649 938,227 1,016,543
OTHER OPERATING EXPENSES.................. 1,660,489 1,858,057 492,960 427,191
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Note 7)....................... 1,576,102 1,635,129 378,334 690,694
LITIGATION EXPENSE (Note 4)............... 380,000 -- -- --
---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS............. 403,662 474,463 66,933 (101,342)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest and other income (expense) --
net.................................. 9,050 (7,734) -- 4,433
Interest expense........................ (110,786) (64,596) (23,678) (14,124)
---------- ---------- ---------- ----------
Other expense -- net................. (101,736) (72,330) (23,678) (9,691)
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES......... 301,926 402,133 43,255 (111,033)
PROVISION (BENEFIT) FOR INCOME TAXES (Note
3)...................................... 121,000 161,000 17,000 (43,300)
---------- ---------- ---------- ----------
NET INCOME (LOSS)......................... $ 180,926 $ 241,133 $ 26,255 $ (67,733)
========== ========== ========== ==========
</TABLE>
See notes to financial statements.
F-49
<PAGE> 116
SOUTHERN SHUTTLE SERVICES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1997 AND
THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
---------------
NUMBER
OF PAR RETAINED STOCKHOLDERS'
SHARES VALUE EARNINGS EQUITY
------ ----- --------- -------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996.......................... 100 $100 $ 129,243 $ 129,343
Net income...................................... -- -- 180,926 180,926
--- ---- --------- ---------
BALANCE, DECEMBER 31, 1996........................ 100 100 310,169 310,269
Distribution (Note 7)........................... -- -- (54,800) (54,800)
Net income...................................... 241,133 241,133
--- ---- --------- ---------
BALANCE, DECEMBER 31, 1997........................ 100 100 496,502 496,602
Distribution (Note 9) (unaudited)............... -- -- (270,500) (270,500)
Net income (loss) (unaudited)................... -- -- (67,733) (67,733)
--- ---- --------- ---------
BALANCE, MARCH 31, 1998 (unaudited)............... 100 $100 $ 158,269 $ 158,369
=== ==== ========= =========
</TABLE>
See notes to financial statements.
F-50
<PAGE> 117
SOUTHERN SHUTTLE SERVICES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- ----------------------
1996 1997 1997 1998
---------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)....................................... $ 180,926 $ 241,133 $ 26,255 $ (67,733)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization......................... 602,398 531,267 79,745 119,408
(Gain) loss on sale of property and equipment......... (9,050) 13,558 -- --
Deferred income taxes................................. (150,000) 65,000 -- 20,000
Changes in operating assets and liabilities:
Trade accounts receivable.......................... 19,685 87,463 (50,856) (32,062)
Prepaid expenses and other......................... 25,473 (46,187) (18,775) (148)
Other assets....................................... (10,500) 7,634 -- --
Accounts payable................................... 27,531 (43,405) 1,562 6,589
Accrued liabilities................................ 2,100 21,700 22,956 (122,508)
Income taxes payable............................... 233,913 64,022 (19,478) (69,300)
Other liability.................................... 380,000 -- -- --
---------- --------- --------- ---------
Net cash provided by operating activities........ 1,302,476 942,185 41,409 99,262
---------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to stockholders and affiliates................. (823,000) (225,000) (25,000) (106,500)
Repayment of stockholder advances....................... 655,000 125,000 100,000 35,000
Purchases of property and equipment..................... (75,171) (792,717) (638,064) (4,366)
Proceeds from sale of property and equipment............ 11,075 10,000 -- --
---------- --------- --------- ---------
Net cash used in investing activities............ (232,096) (882,717) (563,064) (75,866)
---------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt.................... (899,251) (741,407) (140,914) (132,316)
Proceeds from borrowings on long-term debt.............. -- 629,841 543,000 --
Distributions paid...................................... -- (54,800)-- --
---------- --------- --------- ---------
Net cash (used in) provided by financing
activities..................................... (899,251) (166,366) 402,086 (132,316)
---------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...... 171,129 (106,898) (119,569) (108,920)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............ 192,240 363,369 363,369 256,471
---------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................. $ 363,369 $ 256,471 $ 243,800 $ 147,551
========== ========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -- Cash
paid during the period for:
Interest................................................ $ 110,786 $ 59,596 $ 23,678 $ 14,124
========== ========= ========= =========
Taxes................................................... $ 54,732 $ 31,978 $ -- $ --
========== ========= ========= =========
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
Forgiveness of advances due from stockholder............ $ 270,500
=========
Other liability converted to note payable............... $ 380,000 $ -- $ --
========= ========= =========
</TABLE>
See notes to financial statements.
F-51
<PAGE> 118
SOUTHERN SHUTTLE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1997 AND
THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- Southern Shuttle Services, Inc. (the "Company"), a Florida
corporation, commenced operations in March 1993 when the Company purchased
certain assets from an airport shuttle operation in Miami, Florida.
The Company is engaged in the business of providing door-to-door passenger
ground transportation to the general public, primarily in Miami, Florida.
Providing ground transportation in most cities is regulated and requires
approval from certain governmental agencies. The Company uses the SuperShuttle
name under a license agreement with SuperShuttle International, Inc. ("SSI")
(Note 4). Revenue is generated primarily from the general public, and there is
no concentration of sales with any one customer.
CASH AND CASH EQUIVALENTS include all cash and highly liquid investment
securities with original maturities of three months or less.
PROPERTY AND EQUIPMENT are stated at cost. Depreciation and amortization of
property and equipment are provided for on the double declining balance method
over the following estimated useful lives:
<TABLE>
<S> <C>
Vehicles.................................................... 3 years
Equipment................................................... 5 to 7 years
Leasehold improvements...................................... Term of lease
</TABLE>
The Company capitalizes expenditures that materially increase asset lives
and charges ordinary maintenance and repairs to operations as incurred. When
assets are disposed of, the costs and related accumulated depreciation and
amortization are removed from the accounts and any resulting gain or loss is
included in income.
PROPERTY HELD FOR SALE is stated at the lower of cost or estimated
realizable value.
INTANGIBLES AND OTHER ASSETS consist of a $100,000 bond required by the
Airport Contract with Dade County Aviation Department (Note 4) and intangible
assets (primarily relating to the Airport Contract) purchased in 1993 when the
Company was formed. Intangible assets are being amortized on the straight-line
basis over eight years.
LONG-LIVED ASSETS and certain identifiable intangibles are reviewed for
impairment whenever events or circumstances indicate the carrying amount of an
asset may not be recoverable.
REVENUES are recognized at the time services are performed.
INCOME TAXES are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures at the date of the financial statements and the
reported
F-52
<PAGE> 119
SOUTHERN SHUTTLE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
2. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Borrowings from commercial lender, monthly payments of
principal plus interest at 7.5% to 9.25%, maturing through
2000, collateralized by vehicles.......................... $446,681 $524,521
Settlement note payable (Note 4), interest imputed at 8.5%,
with monthly principal and interest payments of $16,667
through February 1999..................................... -- 214,063
Borrowings from commercial lender, monthly payments of
principal plus interest at prime plus 1%, maturing through
2011, collateralized by land and building held for sale... -- 85,812
Note payable, repaid during 1997............................ 48,883 --
Borrowings from stockholder, repaid during 1997............. 59,667 --
-------- --------
Total....................................................... 555,231 824,396
Less current portion........................................ 421,933 510,041
-------- --------
Long-term debt -- net....................................... $133,298 $314,355
======== ========
</TABLE>
Annual maturities of long-term debt are $510,041 (1998), $224,478 (1999),
$23,133 (2000), $6,356 (2001), $6,356 (2002) and $54,032 thereafter.
3. INCOME TAXES
For the years ended December 31, the income tax (benefit) provision
consists of the following:
<TABLE>
<CAPTION>
1996 1997
--------- --------
<S> <C> <C>
Current............................................... $ 271,000 $ 96,000
Deferred.............................................. (150,000) 65,000
--------- --------
Total................................................. $ 121,000 $161,000
========= ========
</TABLE>
Deferred income taxes of $150,000 and $85,000 at December 31, 1996 and
1997, respectively, consist of the difference between the tax basis of the
settlement note payable (Note 2) and its financial reporting amount.
The following is a reconciliation, stated as a percentage of pre-tax
income, of the U.S. statutory federal income tax rate to the effective tax rate:
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Federal statutory income tax rate........................... 35.0% 35.0%
Increase in taxes resulting from state taxes -- net of
federal benefit........................................... 5.1% 5.0%
---- ----
Effective tax rate.......................................... 40.1% 40.0%
==== ====
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
LEASES -- The Company leases certain facilities (Note 7) and vehicles under
noncancelable operating leases. These leases expire at various dates through
2001.
F-53
<PAGE> 120
SOUTHERN SHUTTLE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Future minimum lease payments (exclusive of property taxes and insurance)
for operating leases for the years ending December 31 are approximately as
follows:
<TABLE>
<S> <C>
1998.............................................. $180,000
1999.............................................. 169,000
2000.............................................. 140,000
2001.............................................. 120,000
--------
Total............................................. $609,000
========
</TABLE>
Rent expense for facilities was $158,000 and $159,000 in 1996 and 1997,
respectively. Certain of the Company's leases include periodic cost of living
increases and also require the Company to pay its pro rata share of property
taxes and common area expenses.
FRANCHISE FEES -- The Company pays franchise fees to SSI for the right to
operate using the SuperShuttle name. The Company pays a fee based on the number
of vehicles it operates on a weekly basis. Franchise fees totaled $154,000 and
$158,000 in 1996 and 1997, respectively.
AIRPORT CONTRACT -- The Company has an exclusive agreement with the Dade
County Aviation Department ("Dade County") to provide shuttle services to the
Miami International Airport. The term of the contract is for four years expiring
December 31, 1996, with four one year renewal options. The options to extend
service are at the option of Dade County. The agreement includes a revenue
sharing provision with Dade County. Under the provision, the Company is required
to pay a percentage of certain monthly revenues with a guaranteed monthly
minimum payment based upon passenger volume. The Company paid $562,000 and
$557,000 in 1996 and 1997, respectively.
LITIGATION -- In 1993, an individual filed a complaint against the Company
for an auto accident in Florida. During 1996, the Company recorded a $380,000
liability for amounts expected to be paid by the Company in excess of insurance
policy limits. In August 1997, the Company reached a settlement agreement under
which the Company and the Company's insurance carrier each paid $100,000. In
addition, the Company is required to make monthly payments of $16,667 beginning
in September 1997 through February 1999. The future payments were discounted
using an interest rate of 8.5 percent and the discounted amount of approximately
$280,000 was reclassified to a note payable during the year ended December 31,
1997.
The Company is also involved in a personal injury action which arises from
an incident on March 24, 1994 in which two persons were alleged to have been
injured by a Company vehicle. The Company and its insurer's legal counsel are
discussing an out-of-court settlement with the plaintiffs. A potential loss of
$1,000,000 exists which could be borne by the Company and two other parties.
Currently, the exposure to the Company is estimated to be within its $100,000
insurance policy limits and, therefore, no loss reserve has been recorded in the
financial statements.
The Company is subject to various other legal proceedings and claims which
arise in the ordinary course of its business, including one claim where the
plaintiffs are seeking a settlement that could substantially exceed the
Company's insurance coverage limits. In the opinion of management, based in part
upon the discussions with legal counsel, the ultimate liability with respect to
these actions will not materially affect the financial position, liquidity or
results of operations of the Company.
5. EMPLOYEE BENEFIT PLANS
The Company leases all its employees from Vincam Human Resources, Inc.
("Vincam"). Under the agreement, Vincam provides all employee benefits as well
as worker's compensation insurance for the Company. Vincam implemented a 401(k)
plan (the "Plan") during fiscal year 1997 which covers all
F-54
<PAGE> 121
SOUTHERN SHUTTLE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
employees 21 years of age and over who have completed six months of service.
Employees may voluntarily contribute up to 15 percent of pre-tax earnings to the
Plan, subject to the maximum Internal Revenue Service limit. The Company may
contribute additional amounts at its sole discretion. The Company contributed
$9,896 in 1997.
6. EQUITY
Under an agreement made in December 1993, three stockholders were each
granted the option to purchase 133 1/3 shares of common stock for $1 per share.
The options are exercisable and expire in March 2003.
7. RELATED PARTIES
In connection with the formation of the Company in 1993, the Company
borrowed $527,000 from a stockholder at an annual interest rate of 18 percent.
The loan balance at December 31, 1996 was $59,667, which was paid in full during
1997 (Note 2). The Company paid interest of $41,600 and $2,300 for the years
ended December 31, 1996 and 1997, respectively.
During 1996 and 1997, the Company leased certain facilities from a
stockholder at an annual rate of $120,000 (Note 4). The lease expires December
31, 2001.
Directors' fees totaling $72,000 were paid to certain stockholders in 1997.
There were no directors' fees paid during 1996.
During 1997 and a portion of 1996, the Company's vehicle insurance provider
was owned by a certain stockholder and spouse. Insurance premiums paid were
$101,000 and $469,000 for the years ended December 31, 1996 and 1997,
respectively.
In August 1997, the Company acquired land and building for $161,000 from a
partnership controlled by certain stockholders. The land and building were
recorded at the partnership's basis with the amount paid in excess of the
stockholders' basis of $54,800 recorded as a distribution. The land and building
are recorded as property held for sale at December 31, 1997.
During 1996 and 1997, the Company made noninterest bearing advances to
stockholders and affiliates of $823,000 and $225,000, respectively. The balance
of advances due from stockholders and affiliates was $168,000 and $268,000 at
December 31, 1996 and 1997, respectively. These advances are due on demand.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards ("SFAS") No. 107, Disclosures
About Fair Value of Financial Instruments, requires that the Company disclose
estimated fair values for its financial instruments. Fair value estimates are
made at a specific point in time and are based on relevant market information
and information about the financial instrument; they are subjective in nature
and involve uncertainties, matters of judgment and, therefore, cannot be
determined with precision. These estimates do not reflect any premium or
discount that could result from offering for sale at one time the Company's
entire holdings of a particular instrument. Because the fair value is estimated
as of December 31, 1997, the amounts that will actually be realized or paid in
settlement of the instruments could be significantly different.
For the Company's cash and cash equivalents, the carrying amount is assumed
to be the fair value because of the liquidity of these instruments. The carrying
amount is assumed to be the fair value for accounts receivable, accounts payable
and other accrued expenses because of the short maturity of the portfolios. The
fair value of the Company's long-term debt approximates the terms in the
marketplace
F-55
<PAGE> 122
SOUTHERN SHUTTLE SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
under which they could be replaced. Therefore, the fair value approximates the
carrying value of these financial instruments.
9. NOTES TO UNAUDITED FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIODS ENDED
MARCH 31, 1997 AND 1998
ORGANIZATION AND BASIS OF PRESENTATION -- The accompanying interim
consolidated financial statements have been prepared by the Company in
accordance with generally accepted accounting principles. Certain disclosures
and information normally included in financial statements have been condensed or
omitted. In the opinion of the management of the Company, these financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation for the interim periods. These
statements should be read in conjunction with the financial statements and notes
thereto for the two years ended December 31, 1997.
Effective March 31, 1998, SSI acquired all of the outstanding common stock
of the Company. SSI issued 978,882 shares of common stock as consideration for
the acquisition which is accounted for as a purchase. The acquisition agreement
includes certain provisions which allow the purchase transaction to be rescinded
if SSI does not file a registration statement for an initial public offering
with the Securities and Exchange Commission by June 5, 1998, or if the
Securities and Exchange Commission does not declare the registration statement
effective by July 31, 1998 or if the underwritten initial registration statement
does not close by August 10, 1998 at a minimum offering price of $6.50 per
share. The stock issued to effect the transaction is valued at approximately
$6,363,000 for purchase accounting purposes.
In March 1998, the stock options held by three stockholders (Note 6) were
terminated in connection with the sale of the Company.
In March 1998, the Company forgave advances due from stockholders of
$270,500.
Franchise fees paid to SSI totaled $78,800 and $84,000 for the six months
ended March 31, 1997 and 1998, respectively.
F-56
<PAGE> 123
INDEPENDENT AUDITORS' REPORT
Board of Directors
AAA Wheelchair Wagon Services, Inc. and
Limousines of South Florida, Inc.
We have audited the accompanying combined balance sheets of AAA Wheelchair
Wagon Services, Inc. and Limousines of South Florida, Inc. (the "Companies"),
both of which are under common ownership and common management, as of December
31, 1996 and 1997, and the related combined statements of income, stockholder's
equity, and cash flows for the for the years then ended. These combined
financial statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such combined financial statements referred to above
present fairly, in all material respects, the combined financial position of the
Companies as of December 31, 1996 and 1997, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.
[/s/ DELOITTE & TOUCHE LLP]
Phoenix, Arizona
March 17, 1998
F-57
<PAGE> 124
AAA WHEELCHAIR WAGON SERVICES, INC. AND
LIMOUSINES OF SOUTH FLORIDA, INC.
COMBINED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997 AND MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 102,976 $ 544,955 $ 501,555
Trade accounts receivable............................ 901,484 1,592,612 1,380,997
---------- ---------- ----------
Total current assets......................... 1,004,460 2,137,567 1,882,552
---------- ---------- ----------
PROPERTY AND EQUIPMENT (Notes 2 and 4)
Vehicles............................................. 7,019,357 7,263,625 7,263,625
Equipment............................................ 269,725 300,272 305,933
Leasehold improvements............................... 53,596 67,651 67,651
---------- ---------- ----------
Total........................................ 7,342,678 7,631,548 7,637,209
Less accumulated depreciation and amortization....... (3,874,562) (5,411,771) (5,798,867)
---------- ---------- ----------
Property and equipment -- net................ 3,468,116 2,219,777 1,838,342
DEFERRED INCOME TAXES (Note 3)......................... 72,000 -- --
OTHER ASSETS........................................... 2,590 30,640 30,640
---------- ---------- ----------
TOTAL.................................................. $4,547,166 $4,387,984 $3,751,534
========== ========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable..................................... $ 315,931 $ 445,609 $ 442,715
Accrued wages, benefits and other.................... 259,114 568,077 244,336
Income taxes payable (Note 3)........................ 52,000 211,000 324,566
Deferred income taxes (Note 3)....................... -- 40,000 40,000
Advances from affiliates (Note 7).................... -- 35,000 35,000
Lines of credit...................................... 185,000 169,575 169,530
Current portion of long-term debt (Note 2)........... 548,201 514,964 510,503
Current portion of capital lease obligations (Notes 2
and 4)............................................ 813,318 733,962 635,945
---------- ---------- ----------
Total current liabilities.................... 2,173,564 2,718,187 2,402,595
LONG-TERM DEBT -- Net of current portion (Note 2)...... 752,082 304,523 167,577
CAPITAL LEASE OBLIGATIONS -- Net of current portion
(Notes 2 and 4)...................................... 682,679 85,473 --
ADVANCES FROM STOCKHOLDER (Note 7)..................... 768,920 720,764 128,000
---------- ---------- ----------
Total liabilities............................ 4,377,245 3,828,947 2,698,172
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 4 and 6)
STOCKHOLDER'S EQUITY (Notes 9 and 10):
Common stock (Note 9)................................ 20 20 20
Additional paid-in capital........................... 15,480 15,480 339,453
Retained earnings.................................... 154,421 543,537 713,889
---------- ---------- ----------
Total stockholder's equity................... 169,921 559,037 1,053,362
---------- ---------- ----------
TOTAL.................................................. $4,547,166 $4,387,984 $3,751,534
========== ========== ==========
</TABLE>
See notes to combined financial statements.
F-58
<PAGE> 125
AAA WHEELCHAIR WAGON SERVICES, INC. AND LIMOUSINES OF SOUTH FLORIDA, INC.
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------- ------------------------
1996 1997 1997 1998
----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET REVENUES (Note 5)................... $10,623,295 $14,623,817 $3,082,663 $3,912,058
DIRECT COST OF REVENUES (Note 7)........ 7,983,457 10,706,791 2,299,738 2,913,953
----------- ----------- ---------- ----------
Gross profit....................... 2,639,838 3,917,026 782,925 998,105
OTHER OPERATING EXPENSES................ 1,444,539 2,041,987 475,280 233,043
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Note 7)..................... 675,457 1,028,146 232,781 437,041
----------- ----------- ---------- ----------
INCOME FROM OPERATIONS.................. 519,842 846,893 74,864 328,021
INTEREST EXPENSE........................ 235,425 196,777 45,692 44,103
----------- ----------- ---------- ----------
INCOME BEFORE INCOME TAX PROVISION...... 284,417 650,116 29,172 283,918
INCOME TAX PROVISION (Note 3)........... 116,000 261,000 11,000 113,566
----------- ----------- ---------- ----------
NET INCOME.............................. $ 168,417 $ 389,116 $ 18,172 $ 170,352
=========== =========== ========== ==========
</TABLE>
See notes to combined financial statements.
F-59
<PAGE> 126
AAA WHEELCHAIR WAGON SERVICES, INC. AND LIMOUSINES OF SOUTH FLORIDA, INC.
COMBINED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1997, AND
THREE-MONTH PERIOD ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
---------------
NUMBER ADDITIONAL RETAINED
OF PAR PAID-IN EARNINGS STOCKHOLDER'S
SHARES VALUE CAPITAL (DEFICIT) EQUITY
------ ----- ---------- --------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996............... 1,100 $20 $ 15,480 $(13,996) $ 1,504
Net income........................... -- -- -- 168,417 168,417
----- --- -------- -------- ----------
BALANCE, DECEMBER 31, 1996............. 1,100 20 15,480 154,421 169,921
Net income........................... -- -- -- 389,116 389,116
----- --- -------- -------- ----------
BALANCE, DECEMBER 31, 1997............. 1,100 20 15,480 543,537 559,037
Capital contributions -- forgiveness
of advances from stockholder
(unaudited)....................... -- -- 323,973 -- 323,973
Net income (unaudited)............... -- -- -- 170,352 170,352
----- --- -------- -------- ----------
BALANCE, MARCH 31, 1998 (unaudited).... 1,100 $20 $339,453 $713,889 $1,053,362
===== === ======== ======== ==========
</TABLE>
See notes to combined financial statements.
F-60
<PAGE> 127
AAA WHEELCHAIR WAGON SERVICES, INC. AND
LIMOUSINES OF SOUTH FLORIDA, INC.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------------- ----------------------
1996 1997 1997 1998
----------- ----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $ 168,417 $ 389,116 $ 18,172 $ 170,352
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 1,316,157 1,548,378 274,264 387,096
Deferred income taxes.......................... 64,000 112,000 1,000 --
Loss on sale of property and equipment......... -- 5,825 -- --
Changes in operating assets and liabilities:
Trade accounts receivable.................... (397,798) (691,128) 159,485 211,615
Other assets................................. -- (28,050) -- --
Accounts payable............................. 108,779 129,678 (46,681) (2,894)
Accrued wages, benefits and other............ 59,614 308,962 (2,516) (323,741)
Income taxes payable......................... 52,000 159,000 10,000 113,566
----------- ----------- --------- ---------
Net cash provided by operating
activities.............................. 1,371,169 1,933,781 413,724 555,994
----------- ----------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.............. (1,421,245) (147,018) (137,350) (5,661)
Proceeds from sale of property and equipment..... -- 12,100 -- --
----------- ----------- --------- ---------
Net cash used in investing activities..... (1,421,245) (134,918) (137,350) (5,661)
----------- ----------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on lines of credit.................. (15,000) (15,425) (45) (45)
Principal payments on long-term debt and capital
leases......................................... (1,002,127) (1,925,262) (297,973) (324,897)
Proceeds from borrowings on long-term debt....... 1,159,801 596,959 -- --
Net payment on advances from stockholder......... (6,757) (48,156) (21,614) (268,791)
Advances from affiliates -- net.................. -- 35,000 -- --
----------- ----------- --------- ---------
Net cash provided by (used in) financing
activities.............................. 135,917 (1,356,884) (319,632) (593,733)
----------- ----------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS...................................... 85,841 441,979 (43,258) (43,400)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR....... 17,135 102,976 102,976 544,955
----------- ----------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR............. $ 102,976 $ 544,955 $ 59,718 $ 501,555
=========== =========== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the year for:
Interest....................................... $ 235,425 $ 196,777 $ 45,692 $ 79,693
=========== =========== ========= =========
Taxes.......................................... $ (8,700) $ 8,581 $ -- $ --
=========== =========== ========= =========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTMENT
ACTIVITIES:
Acquisition of vehicles through capital leases... $ 1,365,000 $ 171,000 $ 171,000 $ --
=========== =========== ========= =========
Capital contribution -- forgiveness of advances
from stockholder............................... $ 323,973
=========
</TABLE>
See notes to combined financial statements.
F-61
<PAGE> 128
AAA WHEELCHAIR WAGON SERVICES, INC. AND
LIMOUSINES OF SOUTH FLORIDA, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- AAA Wheelchair Wagon Services, Inc. ("AAA") dba County
Transportation, Ambulette of the Palm Beaches, and Wheelchair Ambulance of
Hollywood, Inc., a Florida corporation, commenced operations in September 1984.
AAA provides door-to-door passenger ground transportation to handicapped
individuals. Limousines of South Florida, Inc. ("LOSF"), a Florida corporation,
commenced operations in February 1985. LOSF provides shuttle services to airport
parking facilities and other locations for the city of Fort Lauderdale, in
addition to door-to-door passenger ground transportation. Providing ground
transportation in most cities is regulated and requires approval from certain
governmental agencies.
AAA and LOSF (collectively, the "Companies") have been combined for
financial reporting purposes due to common ownership and common management.
CASH AND CASH EQUIVALENTS include all cash and highly-liquid investment
securities with original maturities of three months or less.
PROPERTY AND EQUIPMENT are stated at cost. Depreciation and amortization of
property and equipment are provided for on the straight line and accelerated
methods over the following estimated useful lives:
<TABLE>
<S> <C>
Vehicles.................................................... 3 to 5 years
Equipment................................................... 5 to 7 years
Leasehold improvements...................................... Term of lease
</TABLE>
The Companies capitalize expenditures that materially increase asset lives
and charge ordinary maintenance and repairs to operations as incurred. When
assets are disposed of, the costs and related accumulated depreciation and
amortization are removed from the accounts and any resulting gain or loss is
included in income.
LONG-LIVED assets are reviewed for impairment whenever events or
circumstances indicate the carrying amount of an asset may not be recoverable.
INCOME TAXES are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis and operating loss carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
REVENUES are recognized at the time of performance of the service. Revenues
from service contracts are recognized as services are provided over the contract
term.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
F-62
<PAGE> 129
AAA WHEELCHAIR WAGON SERVICES, INC. AND
LIMOUSINES OF SOUTH FLORIDA, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
2. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations consist of the following at
December 31:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Borrowings from commercial lender, monthly payments of
principal plus interest at 8.5% to 9.9% maturing through
2000, collateralized by vehicles.......................... $1,300,283 $ 819,487
Capital lease obligations, interest at 9% to 10% (Note 4)... 1,495,997 819,435
---------- ----------
Total....................................................... 2,796,280 1,638,922
Less current portion........................................ 1,361,519 1,248,926
---------- ----------
Long-term debt -- net....................................... $1,434,761 $ 389,996
========== ==========
</TABLE>
Subsequent maturities are $1,248,926 (1998), $361,599 (1999) and $28,397
(2000).
3. INCOME TAXES
For the years ended December 31, the income tax provision consists of the
following:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Current................................................ $ 52,000 $149,000
Deferred............................................... 64,000 112,000
-------- --------
Total.................................................. $116,000 $261,000
======== ========
</TABLE>
Deferred income taxes arise primarily from the tax effects of cash to
accrual adjustments and net operating loss carryforwards. The Companies utilized
the net operating loss carryforwards in full in 1997.
The following is a reconciliation, stated as a percentage of pre-tax income
of the U.S. statutory federal income tax rate to the effective tax rate for the
years ended December 31:
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Federal statutory income tax rate........................... 35.0% 35.0%
Increase in taxes resulting from state taxes -- net of
federal benefit........................................... 5.8 5.1
---- ----
Effective tax rate.......................................... 40.8% 40.1%
==== ====
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
Leases -- The Companies lease certain facilities and vehicles under capital
leases and operating leases. These leases expire at various dates through 1999.
Vehicles include capitalized lease assets of approximately $2,622,000 and
$2,793,000 at December 31, 1996 and 1997, respectively. Accumulated depreciation
on the vehicles was approximately $1,126,000 and $1,974,000 at December 31, 1996
and 1997, respectively.
Future minimum lease payments for vehicle operating leases for the years
ending December 31 are approximately as follows:
<TABLE>
<S> <C>
1998............................................... $46,000
1999............................................... 17,000
-------
Total.............................................. $63,000
=======
</TABLE>
F-63
<PAGE> 130
AAA WHEELCHAIR WAGON SERVICES, INC. AND
LIMOUSINES OF SOUTH FLORIDA, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Rent expense for facilities was $66,000 and $34,000 in 1996 and 1997,
respectively. Certain of the facilities are used rent free. All facilities are
rented from affiliates and no formal lease agreements exist.
The Companies are subject to various legal proceedings and claims which
arise in the ordinary course of its business. In the opinion of management, the
ultimate liability with respect to these actions will not materially affect the
financial position, liquidity or results of operations of the Companies.
5. REVENUES
The Companies' revenues are largely derived from contracts negotiated with
individual governmental organizations and jurisdictions.
LOSF has a contract with Broward County to provide shuttle bus services for
the Fort Lauderdale -- Hollywood International Airport. The current three-year
contract expires in September 2000 and has three one-year extensions which can
be exercised at the option of Broward County. The contract accounted for
approximately 20 percent and 14 percent of the Companies' total revenues in 1996
and 1997, respectively.
AAA has contracted with COMSIS to provide paratransit services in Dade
County. The current contract expires in September 1998. The contract accounted
for approximately 26 percent and 17 percent of the Companies' total revenues in
1996 and 1997, respectively.
AAA has contracted with Palm Beach County to provide "Spectran dial-a-ride"
door-to-door paratransit transportation. The current contract extension expires
in June 1998. The contract accounted for approximately 20 and 21 percent of the
Companies' total revenues in 1996 and 1997, respectively.
In 1996, AAA contracted with Broward County to provide paratransit services
in the County with services beginning in December 1996. The current contract
expires in December 1999 and has two one-year extensions which can be exercised
at the option of Broward County. The contract accounted for approximately 22
percent of the Companies' total revenues in 1997.
AAA has contracted with the State of Florida to provide paratransit
services in the South Florida region. The current contract has no fixed
expiration date. The contract accounted for approximately 26 percent and 14
percent of the Companies' total revenues in 1996 and 1997, respectively.
6. EMPLOYEE BENEFIT PLANS
The Companies lease all their employees from Vincam Human Resources, Inc.
("Vincam"). Under the agreement, Vincam provides all employee benefits as well
as worker's compensation insurance for the Companies. Vincam implemented a
401(k) plan (the "Plan") during fiscal year 1997 which covers all employees 21
years of age and over who have completed six months of service. Employees may
voluntarily contribute up to 15 percent of pre-tax earnings to the Plan, subject
to the maximum Internal Revenue Service limit. The Companies may contribute
additional amounts at their sole discretion. The Companies made no contributions
to the Plan in 1997.
7. RELATED PARTIES
The Companies lease certain facilities from the stockholder. No formal
lease agreements exist and certain of the facilities are used rent free.
Payments of $38,417 and $8,213 were made in 1996 and 1997, respectively.
F-64
<PAGE> 131
AAA WHEELCHAIR WAGON SERVICES, INC. AND
LIMOUSINES OF SOUTH FLORIDA, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Payments totaling $6,757 and $48,516 were paid on amounts due to the
stockholder in 1996 and 1997, respectively.
The Companies' insurance carrier is owned by an affiliate. Insurance
premiums were $165,000 and $115,000 for the years ended December 31, 1996 and
1997, respectively.
The Companies received noninterest-bearing advances from an affiliate of
$60,000 in 1997. The balance unpaid at December 31, 1997 was $35,000 and is due
on demand.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards ("SFAS") No. 107, Disclosures
About Fair Value of Financial Instruments, requires that the Companies disclose
estimated fair values for its financial instruments. Fair value estimates are
made at a specific point in time and are based on relevant market information
and information about the financial instrument; they are subjective in nature
and involve uncertainties, matters of judgment and, therefore, cannot be
determined with precision. These estimates do not reflect any premium or
discount that could result from offering for sale at one time the Companies'
entire holdings of a particular instrument. Because the fair value is estimated
as of December 31, 1997, the amounts that will actually be realized or paid in
settlement of the instruments could be significantly different.
For the Companies' cash and cash equivalents, the carrying amount is
assumed to be the fair value because of the liquidity of these instruments. The
carrying amount is assumed to be the fair value for accounts receivable,
accounts payable and other accrued expenses because of the short maturity of the
portfolios. The fair value of the Companies' long-term debt approximates the
terms in the marketplace under which they could be replaced. Therefore, the fair
value approximates the carrying value of these financial instruments.
9. COMMON STOCK
Common stock included in the combined balance sheets consists of the
following:
<TABLE>
<S> <C>
AAA Wheelchair Wagon Services, Inc., $.01 par
value -- authorized, 1,000 shares; issued and outstanding,
1,000 shares.............................................. $10
Limousines of South Florida, Inc., $.10 par
value -- authorized, 100 shares; issued and outstanding,
100 shares................................................ 10
---
Total....................................................... $20
===
</TABLE>
10. NOTES TO UNAUDITED FINANCIAL STATEMENTS FOR THE THREE-MONTH
PERIODS ENDED MARCH 31, 1997 AND 1998
ORGANIZATION AND BASIS OF PRESENTATION -- The accompanying interim
consolidated financial statements have been prepared by the Company in
accordance with generally accepted accounting principles. Certain disclosures
and information normally included in financial statements have been condensed or
omitted. In the opinion of the management of the Company, these financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation for the interim periods. These
statements should be read in conjunction with the financial statements and notes
thereto for the two years ended December 31, 1997.
Effective March 31, 1998, SSI acquired all of the outstanding common stock
of the combined companies AAA Wheelchair Wagon Services, Inc. and Limousines of
South Florida, Inc. SSI issued
F-65
<PAGE> 132
AAA WHEELCHAIR WAGON SERVICES, INC. AND
LIMOUSINES OF SOUTH FLORIDA, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
419,521 shares of common stock as consideration for the acquisition which is
accounted for as a purchase. The acquisition agreement includes certain
provisions which allow the purchase transaction to be rescinded if SSI does not
file a registration statement for an initial public offering with the Securities
and Exchange Commission by June 5, 1998, or if the Securities and Exchange
Commission does not declare the registration statement effective by July 31,
1998 or if the underwritten initial registration statement does not close by
August 10, 1998 at a minimum offering price of $6.50 per share. The stock issued
to effect the transaction is valued at approximately $2,726,000, for purchase
accounting purposes.
In March 1998, advances to the Company of $323,973 were forgiven by a
stockholder.
F-66
<PAGE> 133
============================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER
OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................... 3
Risk Factors............................... 6
Use of Proceeds............................ 16
Dividend Policy............................ 16
Capitalization............................. 17
Dilution................................... 18
Selected Consolidated Financial Data....... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 21
Business................................... 30
Management................................. 42
Principal and Selling Stockholders......... 51
Description of Capital Stock............... 54
Certain Transactions....................... 57
Shares Eligible for Future Sale............ 61
Underwriting............................... 63
Legal Matters.............................. 64
Experts.................................... 64
Additional Information..................... 65
Index to Financial Statements.............. F-1
</TABLE>
------------------
UNTIL , 1998 (25 CALENDAR DAYS AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
============================================================
============================================================
3,320,000 SHARES
[SUPERSHUTTLE LOGO]
COMMON STOCK
------------------------
PROSPECTUS
------------------------
HAMBRECHT & QUIST
PIPER JAFFRAY INC.
, 1998
============================================================
<PAGE> 134
PART II TO FORM S-1
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated costs and expenses of the
Company in connection with the Offering other than underwriting discounts and
commissions. All amounts are estimates except the SEC registration fee, the NASD
filing fee and the Nasdaq listing fee.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 11,264
NASD Filing Fee............................................. 4,318
Nasdaq Listing Fee.......................................... 81,625
Transfer Agent and Registrar's Fees and Expenses............ 10,000
Legal Fees and Expenses..................................... 250,000
Accounting Fees and Expenses................................ 125,000
Printing and Engraving Expenses............................. 125,000
Miscellaneous............................................... 92,793
--------
Total............................................. $700,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Articles sixth and seventh of the Company's Amended and Restated
Certificate of Incorporation provide as follows:
1. The Corporation shall, to the fullest extent permitted by Section 145 of
the Delaware General Corporation Law, as the same may be amended and
supplemented from time to time, indemnify directors, and may indemnify in the
discretion of the Board of Directors of the Corporation any and all persons whom
it shall have power to indemnify under said section from and against any and all
of the expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaws, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Furthermore, to the extent applicable, the Corporation is authorized to
provide indemnification of agents (as defined in Section 317 of the California
Corporations Code) for breach of duty to the Corporation and its stockholders
through bylaw provisions or through agreements with the agents, or both, in
excess of the indemnification otherwise permitted by Section 317 of the
California Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the California Corporations Code.
2. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except that this Article shall not eliminate or limit a
director's 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 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after approval by the stockholders of this
Article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended from time to time.
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<PAGE> 135
Any repeat or modification of this Article shall not increase the personal
liability of any director of the Corporation for any act or occurrence taking
place prior to such repeal or modification, or otherwise adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification. The provisions of this Article shall not be deemed
to limit or preclude indemnification of a director by the Corporation for any
liability of a director which has not been eliminated by the provisions of this
Article.
Furthermore, to the extent that the Corporation is found to be subject to
the laws of the State of California the liability of directors of the
Corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On a number of different dates since April 15, 1995, the Company granted
options to purchase a total of 474,976 shares of Common Stock to various
employees or consultants of the Company pursuant to the Company's 1995 Stock
Option Plan and 1986 Stock Option Plan. Of those options granted, options to
purchase a total of 127,726 shares have expired. The exercise price for 317,250
of the options that remain exercisable is $6.00 per share. The exercise price
for the remaining 30,000 options is equal to the initial public offering price
per share of Common Stock.
On June 15, 1995, the Company issued 339,477 shares of Series B Preferred
Stock to ULLICO, Inc. ("ULLICO") for $2,999,992. In addition, the Company issued
a warrant to ULLICO to purchase 56,356 shares of its Common Stock at an exercise
price of $6.00 per share. The warrant may be exercised at any time before May 1,
2010.
On June 15, 1995, Lambda III, L.P. and Lambda CFD '87, L.P. (collectively,
"Lambda") exchanged 82,678 shares of the Company's Series A Convertible
Preferred Stock ("Series A Preferred Stock") for 139,998 shares of the Company's
Series B Preferred Stock. Lambda acquired these shares of Series A Preferred
Stock on September 24, 1987, for total consideration of $1,050,010.
On June 15, 1995, the Company issued warrants to purchase 25,000 shares of
its Common Stock at an exercise price of $6.00 per share to the Kline Living
Trust and warrants to purchase 25,000 shares of its Common Stock at an exercise
price of $6.00 per share to Hawkes, Carlton, Sanchez & Co. The warrants may be
exercised at any time before May 1, 2005.
In September 1996, the Company sold 952,508 shares of its Common Stock to
17 of its stockholders in a rights offering at a purchase price of $2.00 per
share, resulting in proceeds to the Company before expenses of approximately
$1,905,016. On December 18, 1996, four purchasers elected to rescind their
purchase of a total of 196,039 shares of the Common Stock in exchange for
approximately $392,079. The Company completed the rights offering by selling
224,184 shares of its Common Stock for a purchase price of $2.00 per share,
yielding gross proceeds to the Company of approximately $448,000.
Unless otherwise noted herein, the issuances of securities in the
transactions described above were deemed to be exempt from registration under
the Securities Act either pursuant to the exemption from registration contained
in Section 3(a)(9) and Section 4(2) thereof, or under the provisions of
Regulation D or Rule 701 promulgated under the Act. Such sales were made solely
to investors who represented that they were accredited investors and to not more
than 35 non-accredited investors, all of whom purchased such securities for
investment and not with a view to the distribution thereof. All sales were made
without any general solicitation or general advertising. Restrictions have been
imposed on the resale of such securities, including the placement of legends
thereon noting such restrictions, and written disclosure of such restrictions
were made prior to issuance of the securities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The Exhibits and Financial Statement Schedules to the Registration
Statement are listed in the Exhibit Index which appears elsewhere in this
Registration Statement and is hereby incorporated herein by reference.
II-2
<PAGE> 136
All other schedules are omitted because of the absence of a condition under
which they are required or because the information is included in the
consolidated financial statements or notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Underwriter pursuant to Rule 424(b)(1) or
(4) or Rule 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to provide to the
Underwriters, at the closing specified in the Underwriting Agreement,
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
Insofar as the Company may be permitted to indemnify directors, officers
and controlling persons of the Company for liabilities arising under the
Securities Act pursuant to the provisions described under Item 14 above or
otherwise, the Company has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted against
the Company by such director, officer, or controlling person in connection with
the securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 137
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix and State of Arizona on .
SUPERSHUTTLE INTERNATIONAL, INC.
a Delaware corporation
By: /s/ R. BRIAN WIER
------------------------------------
R. Brian Wier
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, constitutes and
appoints R. Brian Wier and Thomas C. LaVoy, and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Form S-1 Registration Statement, and to file the same with all exhibits
thereto, and all documents in connection therewith, with the Securities and
Exchange Commission, granting such attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents, or each of them, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ R. BRIAN WIER Director, President and Chief June 3, 1998
- --------------------------------------------- Executive Officer (Principal
R. Brian Wier Executive Officer)
/s/ THOMAS C. LAVOY Chief Financial Officer June 3, 1998
- --------------------------------------------- (Principal Financial Officer)
Thomas C. LaVoy
/s/ MITCHELL S. ROUSE Chairman of the Board June 3, 1998
- ---------------------------------------------
Mitchell S. Rouse
/s/ DAVID A. ABEL Director June 3, 1998
- ---------------------------------------------
David A. Abel
Director June 3, 1998
- ---------------------------------------------
John C. Flanigan
/s/ ANTHONY M. LAMPORT Director June 3, 1998
- ---------------------------------------------
Anthony M. Lamport
/s/ NEAL C. NICHOLS Director June 3, 1998
- ---------------------------------------------
Neal C. Nichols
/s/ FRANK R. KLINE Director June 3, 1998
- ---------------------------------------------
Frank R. Kline
</TABLE>
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<PAGE> 138
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ TUCKER TAYLOR Director June 3, 1998
- ---------------------------------------------
Tucker Taylor
/s/ STEPHEN ALLAN Director June 3, 1998
- ---------------------------------------------
Stephen Allan
/s/ GENE HAUCK Director June 3, 1998
- ---------------------------------------------
Gene Hauck
/s/ MARK LEVITT Director June 3, 1998
- ---------------------------------------------
Mark Levitt
</TABLE>
II-5
<PAGE> 139
EXHIBITS
<TABLE>
<CAPTION>
PAGE NUMBER
EXHIBIT OR METHOD
NUMBER DESCRIPTION OF FILING
- ------- ----------- -----------
<C> <S> <C>
1 Form of Underwriting Agreement. ............................ *
2.1 Amended and Restated Agreement and Plan of Reorganization
and Merger, dated March 31, 1998, by and among the Company,
SuperShuttle Acquisition Co. I, Preferred Transportation,
Inc. ("PTI") and the shareholders of PTI. .................. *
2.2 Amended and Restated Agreement and Plan of Reorganization
and Merger, dated March 31, 1998, by and among the Company,
SuperShuttle Acquisition Co. II, Tamarack Transportation,
Inc. ("Tamarack") and the shareholders of Tamarack. ........ *
2.3 Amended and Restated Stock Purchase Agreement, dated April
30, 1998, by and among the Company, AAA Wheelchair Wagon
Services, Inc., Wheelchair Ambulance of Hollywood,
Limousines of South Florida, Inc., A1A Snowbird Leasing,
Inc. and Karen N. Caputo. .................................. *
2.3a Amendment No. 1 to the Amended and Restated Stock Purchase
Agreement dated April 30, 1998, by and among the Company,
AAA Wheelchair Wagon Services, Inc., Wheelchair Ambulance of
Hollywood, Limousines of South Florida, Inc., A1A Snowbird
Leasing, Inc. and Karen N. Caputo. ......................... *
2.4 Amended and Restated Stock Purchase Agreement, dated April
30, 1998, by and among the Company, Southern Shuttle
Services, Inc., and the shareholders of Southern
Shuttle. ................................................... *
2.4a Amendment No. 1 to the Amended and Restated Stock Purchase
Agreement dated April 30, 1998, by and among the Company,
Southern Shuttle Services, Inc., and the shareholders of
Southern Shuttle.
2.5 Subscription and Stock Purchase Agreement, dated September
1, 1997, by and among the Company, Shuttle Express, Inc. and
Yellow Holding, Inc. ....................................... *
3.1 Amended and Restated Certificate of Incorporation of the
Company. ................................................... *
3.2 Amended and Restated Bylaws of the Company.................. *
4.1 Form of Common Stock Certificate............................ **
4.2 Registration Rights Agreement, dated March 31, 1998, by and
among the Company and Preferred Transportation, Inc. ....... *
4.3 Registration Rights Agreement, dated March 31, 1998, by and
among the Company and Tamarack Transportation, Inc. ........ *
4.4 Registration Rights Agreement, dated March 31, 1998, by and
among the Company, the stockholders of Southern Shuttle
Services, Inc., and the stockholder of AAA Wheelchair Wagon
Services, Inc., Limousines of South Florida, Inc., A1A
Snowbird Leasing, Inc. and Wheelchair Ambulance of
Hollywood, Inc. ............................................ *
4.5 Escrow Agreement, dated March 31, 1998, by and among the
Company, SuperShuttle Acquisition Co. II, Tamarack
Transportation, Inc., Gene Hauck and Robert Splinter. ...... *
4.6 Escrow Agreement, dated March 31, 1998, by and among the
Company, SuperShuttle Acquisition Co. I, Preferred
Transportation, Inc., Steve Allan, Dave Koscielak and Robert
Splinter. .................................................. *
</TABLE>
II-6
<PAGE> 140
<TABLE>
<CAPTION>
PAGE NUMBER
EXHIBIT OR METHOD
NUMBER DESCRIPTION OF FILING
- ------- ----------- -----------
<C> <S> <C>
4.7 Escrow Agreement, dated March 31, 1998, by and among the
Company, Southern Shuttle Services, Inc., AAA Wheelchair
Wagon Services, Inc., Wheelchair Ambulance of Hollywood,
Inc., Limousines of South Florida, Inc., A1A Snowbird
Leasing, Inc., Mark Levitt, Karen Caputo, Robert Siedlecki
and Akerman, Senterfitt & Eidson, P.A. ..................... *
4.7a Amendment No. 1 to the Escrow Agreement dated March 31,
1998, by and among the Company, Southern Shuttle Services,
Inc., AAA Wheelchair Wagon Services, Inc., Wheelchair
Ambulance of Hollywood, Inc., Limousines of South Florida,
Inc., A1A Snowbird Leasing, Inc., Mark Levitt, Karen Caputo,
Robert Siedlecki and Akerman, Senterfitt & Eidson, P.A. .... *
5.1 Opinion of Squire, Sanders & Dempsey L.L.P. ................ *
10.1 SuperShuttle International, Inc., 1995 Stock Option
Plan. ...................................................... *
10.2 SuperShuttle International, Inc., 1998 Stock Option
Plan. ...................................................... *
10.3 Preferred Stock Purchase Agreement, dated June 15, 1995,
between the Company and ULLICO, Inc. ....................... *
10.4 Convertible Preferred Stock Purchase Agreement, dated
September 24, 1987, among the Company, Lambda III L.P., and
Lambda CFD '87 L.P. and Bradford Allen. .................... *
10.5 Preferred Stock Exchange Agreement, dated June 15, 1995, by
and among Lambda III, L.P., Lambda CFD '87, L.P. and the
Company. ................................................... *
10.6 Executive Compensation Agreement, dated March 1, 1998,
between SuperShuttle and R. Brian Wier. .................... *
10.7 Executive Compensation Agreement, dated March 1, 1998,
between SuperShuttle and Thomas C. LaVoy. .................. *
10.8 Employment Agreement, dated March 31, 1998, between the
Company and Steve Allan. ................................... *
10.9 Employment Agreement, dated March 31, 1998, between the
Company and Gene Hauck. .................................... *
10.10 Employment Agreement, dated March 31, 1998, between Southern
Shuttle Services, Inc. and Mark Levitt. .................... *
10.11 Employment Agreement, dated March 31, 1998, between AAA
Wheelchair Wagon Services, Inc. and Limousines of South
Florida, Inc., and Karen Caputo. ........................... *
10.12 Phoenix Sky Harbor International Airport Exclusive Time
Scheduled Van Service, Agreement No. 73527 between the City
of Phoenix and SuperShuttle Arizona, Inc., dated May 31,
1996. ...................................................... *
10.13 Van Service Agreement between County of Sacramento and
SuperShuttle of San Francisco, Inc., dated September 5,
1995. ...................................................... *
10.14 Commercial Ground Transportation Operating Permit from
Airports Commission, City and County of San Francisco,
effective January 15, 1994. ................................ *
10.15 Concession Contract between Maryland Aviation
Administration, Department of Transportation and
SuperShuttle, Inc., dated December 21, 1994. ............... *
10.16 Dallas/Fort Worth International Airport Shared Ride
Operating Authority issued to SuperShuttle DFW, Inc.,
effective October 1, 1995. ................................. *
</TABLE>
II-7
<PAGE> 141
<TABLE>
<CAPTION>
PAGE NUMBER
EXHIBIT OR METHOD
NUMBER DESCRIPTION OF FILING
- ------- ----------- -----------
<C> <S> <C>
10.17 Dallas/Fort Worth International Airport Limousine Operating
Authority issued to SuperShuttle DFW dba ExecuCar, effective
October 1, 1995. ........................................... *
10.18 Concession Contract between The Metropolitan Washington
Airports Authority and Washington Shuttle, Inc., effective
February 1, 1996. .......................................... *
10.19 Permit from Port Authority of New York and New Jersey to
Shuttle Associates, LLC, effective May 1, 1998. ............ *
10.20 Agreement between Broward County and Limousines of South
Florida, Inc., effective July 1, 1997. ..................... *
10.21 Exclusive Demand Ground Transportation Service Franchise
Agreement, dated October 13, 1992, between Dade County and
Miami Shuttle, Inc. dba SuperShuttle. ...................... *
10.22 Commercial Ground Transportation Operating Permit between
Orange County and Preferred Transportation, Inc., effective
July 7, 1997. .............................................. *
10.23 Non-Exclusive License Agreement between the City of Los
Angeles and Preferred Transportation, Inc., dated July 1,
1997. ...................................................... *
10.24 Non-Exclusive License Agreement between the City of Los
Angeles and Tamarack Transportation, Inc., dated October 23,
1995. ...................................................... *
10.25 Dallas Market Center Service Agreement, dated February 1,
1997, between Market Center Management Co., Ltd. and the
Company. ................................................... *
10.26 Agreement for Cast Member Shuttle Services, dated October
30, 1997, between Disneyland and Preferred Transportation,
Inc. ....................................................... *
10.27 Agreement between Broward County and AAA Wheelchair Wagon
Services, Inc. for Paratransit Services, dated October 18,
1996. ...................................................... *
10.28 Restated and Amended Shareholders Agreement among Washington
Shuttle, Inc. and its Shareholders, dated March, 1997. ..... *
10.29 Blue Van Joint Venture Agreement, by and between Tamarack
Transportation, Inc., Preferred Transportation, Inc.,
Arcadia Transit, Inc., and Mini-Bus Systems, Inc., dated
July 21, 1997. ............................................. *
10.30 Current form of SuperShuttle Franchise Corporation License
Agreement. ................................................. **
10.31 Purchase Agreement of Shared Ride Dispatch Systems between
Digital Dispatch Systems, Inc. and SuperShuttle Franchise
Corporation, dated June 28, 1995. .......................... *
10.32 Lease Agreement, dated September 8, 1989, between Donald L.
Mori and SuperShuttle Arizona, Inc. regarding the Company's
Phoenix, Arizona operation. ................................ *
10.33 Loan Agreement, dated August 15, 1994, between Mesa Holding
Co. and the Company. ....................................... *
10.34 Credit Agreement, dated March 17, 1998, between the Company
and Imperial Bank Arizona. ................................. *
10.35 Shareholders Agreement, dated September 1, 1997 by and among
the Company, Shuttle Express, Inc. and Yellow Holding,
Inc. ....................................................... *
11 Statement Regarding Computation of Per Share Earnings....... **
21 List of Subsidiaries of the Company......................... *
23.1 Consent of Deloitte & Touche LLP............................ *
23.2 Consent of Arthur Andersen LLP.............................. *
</TABLE>
II-8
<PAGE> 142
<TABLE>
<CAPTION>
PAGE NUMBER
EXHIBIT OR METHOD
NUMBER DESCRIPTION OF FILING
- ------- ----------- -----------
<C> <S> <C>
23.3 Consent of Squire, Sanders & Dempsey L.L.P. (contained in
Exhibit 5).................................................. *
24 Power of Attorney (contained in signature page)............. *
27 Financial Data Schedule..................................... *
</TABLE>
- ------------------------------
* Filed herewith
** To be filed by amendment
II-9
<PAGE> 1
EXHIBIT 1.1
SUPERSHUTTLE INTERNATIONAL, INC.
3,320,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
July ___, 1998
HAMBRECHT & QUIST LLC
PIPER JAFFRAY INC.
c/o Hambrecht & Quist LLC
One Bush Street
San Francisco, CA 94104
Ladies and Gentlemen:
SuperShuttle International, Inc., a Delaware corporation (herein called
the Company), proposes to issue and sell 3,000,000 shares of its authorized but
unissued Common Stock, $0.01 par value (herein called the Common Stock) and the
stockholders of the Company named in Schedule II hereto (herein collectively
called the Selling Securityholders) propose to sell an aggregate of 320,000
shares of Common Stock of the Company (said 3,320,000 shares of Common Stock
being herein called the Underwritten Stock). The Company and certain Selling
Securityholders propose to grant to the Underwriters (as hereinafter defined) an
option to purchase up to 498,000 additional shares of Common Stock (herein
called the Option Stock and with the Underwritten Stock herein collectively
called the Stock). The Common Stock is more fully described in the Registration
Statement and the Prospectus hereinafter mentioned.
The Company and the Selling Securityholders severally hereby confirm
the agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent and
warrant that you have been authorized by each of the other Underwriters to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities and
Exchange Commission (herein called the Commission) a registration statement on
Form S-1 (No. 33-_____), including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (herein called the
Securities Act) of the Stock. Copies of such registration statement and of each
amendment thereto, if any, including the related preliminary prospectus (meeting
the requirements of Rule 430A of the rules and regulations of the Commission)
heretofore filed by the Company with the Commission have been delivered to you.
The term Registration Statement as used in this agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such
- ----------------------------
1 Plus an option to purchase from the Company and the Selling
Securityholders up to 498,000 additional shares to cover
overallotments.
<PAGE> 2
registration statement (herein called the Effective Date), shall also mean (from
and after the effectiveness of such amendment) such registration statement as so
amended (including any Rule 462(b) registration statement). The term Prospectus
as used in this Agreement shall mean the prospectus relating to the Stock first
filed with the Commission pursuant to Rule 424(b) and Rule 430A (or if no such
filing is required, as included in the Registration Statement) and, in the event
of any supplement or amendment to such prospectus after the Effective Date,
shall also mean (from and after the filing with the Commission of such
supplement or the effectiveness of such amendment) such prospectus as so
supplemented or amended. The term Preliminary Prospectus as used in this
Agreement shall mean each preliminary prospectus included in such registration
statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SECURITYHOLDERS.
(a) The Company and the Selling Securityholders hereby represent and
warrant as follows:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has full corporate power and
authority to own or lease its properties and conduct its business as described
in the Registration Statement and the Prospectus and as being conducted, and is
duly qualified as a foreign corporation and in good standing in all
jurisdictions in which the character of the property owned or leased or the
nature of the business transacted by it makes qualification necessary (except
where the failure to be so qualified would not have a material adverse effect on
the business, properties, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole). The Company owns all of the
shares of capital stock of each subsidiary of the Company and each of the
Company's subsidiaries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has full corporate power and authority to own or lease its
properties and conduct its business as described in the Registration Statement
and the Prospectus and as being conducted, and is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which the character of
the property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so qualified would
not have a material adverse effect on the business, properties, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole).
(ii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been any
materially adverse change in the business, properties, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business,
other than as set forth in the Registration Statement and the Prospectus, and
since such dates, except in the ordinary course of business, neither the Company
nor any of its subsidiaries (i) has entered into any material transaction or
incurred any material liability or obligation, direct or contingent, not
referred to in the Registration Statement and the Prospectus; (ii) has purchased
any of its outstanding capital stock, or declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock; or (iii) has had any
material change in the capital stock, short-term debt or long-term debt of the
Company and its consolidated subsidiaries, taken as a whole, except in each case
as described or specifically contemplated in the Registration Statement and the
Prospectus.
(iii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus relating to the proposed
offering of the Stock nor instituted or, to the best knowledge of the Company,
after due inquiry, threatened instituting proceedings for that purpose. The
Registration Statement and the Prospectus comply, and on the Closing Date (as
hereinafter defined) and any later date on which Option Stock is to be
purchased, the Prospectus will comply, in all material respects, with the
provisions of the Securities Act and the Securities Exchange Act of 1934, as
amended (herein called the Exchange Act) and the rules and regulations of the
Commission thereunder; on the Effective Date, the Registration Statement did not
contain any untrue statement of a material fact and did not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date the Prospectus did
not and, on the Closing Date and any later date on which Option Stock is to be
purchased, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances
2
<PAGE> 3
under which they were made, not misleading; provided, however, that none of the
representations and warranties in this subparagraph (iii) shall apply to
statements in, or omissions from, the Registration Statement or the Prospectus
made in reliance upon and in conformity with information herein or otherwise
furnished in writing to the Company by or on behalf of the Underwriters for use
in the Registration Statement or the Prospectus.
(iv) The Common Stock (including the Stock to be sold by the
Selling Securityholders) outstanding prior to the issuance of the Common Stock
to be sold by the Company has been duly authorized and are validly issued, fully
paid and non-assessable. Except as set forth in the Prospectus and other than
options to purchase ______shares of the Company's Common Stock granted to
employees pursuant to the Company's 1998 Stock Option Plan (herein referred to
as the 1998 Plan) and the 1995 Stock Option Plan (herein referred to as the 1995
Plan) as described in the Prospectus, neither the Company nor any of its
subsidiaries has outstanding any options to purchase, or any preemptive rights
or other rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations. All outstanding shares of capital stock and options and other
rights to acquire capital stock have been issued in compliance with the
registration and qualification provisions of all applicable securities laws (or
applicable exemptions thereof) and were not issued in violation of any
preemptive rights, rights of first refusal and other similar rights. The Stock
to be sold by the Company has been duly authorized, and when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will not
be subject to any preemptive or similar rights. No further approval or authority
of the stockholders or the Board of Directors of the Company will be required
for the transfer and sale of the Stock to be sold by the Selling Securityholders
or the issuance and sale of the Stock as contemplated herein.
(v) The authorized capital stock of the Company conforms as to
legal matters in all material respects to the description thereof contained in
the Prospectus. The form of certificates for the Stock conforms in all material
respects to the corporate law of the jurisdiction of the Company's
incorporation.
(vi) Prior to the Closing Date, the Stock to be sold by the
Selling Securityholders, and the Stock to be issued and sold by the Company will
be authorized for listing by the Nasdaq National Market upon official notice of
issuance.
(vii) The consolidated financial statements of the Company,
together with related notes and schedules as set forth in the Registration
Statement ("Financial Statements"), present fairly the financial position and
the results of operations of the Company and its subsidiaries, taken as a whole,
at the indicated dates and for the indicated periods. The Financial Statements,
schedules and related notes have been prepared in accordance with generally
accepted accounting principles, consistently applied through the period
involved, except as may be otherwise stated therein, and all adjustments
necessary for a fair presentation of results for such periods have been made.
(viii) Neither the Company nor any of its subsidiaries is in
violation or default under any provision of their respective charter documents
or bylaws, as currently in effect, or any indenture, license, mortgage, lease,
franchise, permit, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective properties is bound or may be affected,
except where such violation or default would not have a material adverse effect
on the business, financial condition or results of operations of the Company and
its subsidiaries taken as a whole.
(ix) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and is
a valid and binding agreement on the part of the Company, enforceable in
accordance with its terms, except as rights to indemnity and contribution
hereunder may be limited by applicable laws and except as the enforcement hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally, or by general
equitable principles.
(x) The execution and performance of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of, or violation of, any of the terms or
provisions of, or constitute, either by itself or upon notice or the passage of
time or both, a default under, any indenture, license, mortgage, lease,
franchise, permit, deed of trust or other agreement or instrument to which the
3
<PAGE> 4
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective properties is bound or may be affected,
except where such breach, violation or default would not have a materially
adverse effect on the business, financial condition or results of operations of
the Company and its subsidiaries taken as a whole or violate any of the
provisions of the certificate or articles of incorporation or bylaws, as
applicable, each as amended, of the Company or violate any material order,
judgment, statute, rule or regulation applicable to the Company of any court or
of any regulatory, administrative or governmental body or agency having
jurisdiction over the Company or its properties.
(xi) There are no legal or governmental proceedings pending
or, to the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or its
subsidiaries is subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or any statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required. The
contracts so described in the Prospectus are in full force and effect on the
date hereof except as disclosed therein; and neither the Company nor any of its
subsidiaries nor, to the best of the Company's knowledge any other party, is in
material breach of or default under any of such contracts.
(xii) The Company and its subsidiaries possess all consents,
approvals, orders, certificates, authorizations and permits issued by, and has
made all declarations and filings with, all appropriate federal, state or
foreign governmental and self-regulatory authorities and all courts and other
tribunals, [including but not limited to the California Public Utilities
Commission and all required state agencies in connection with applicable
franchise laws, regulations and requirements] necessary to conduct their
respective businesses and to own, lease, license and use their properties in the
manner described in the Prospectus, except to the extent that the failure to
obtain or file would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, and neither the Company nor its subsidiaries has
received any notice of proceedings related to the revocation or modification of
any such consent, approval, order, certificate, authorization or permit that,
singly or in the aggregate, could reasonably be expected to result in a material
adverse change in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a whole.
(xiii) The Company and each of its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws with
respect to its business as conducted and as proposed to be conducted in the
Registration Statement and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a material
adverse effect on the Company or its subsidiaries, taken as a whole.
(xiv) The Company and each of its subsidiaries is in
substantial compliance with and there are no past or present conditions,
activities, actions or plans which may prevent substantial compliance with, any
current or past law related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling, or the release, emission or
discharge of any hazardous substance or hazardous waste ("Hazardous Substance
Issues") or any regulations, plans, judgments, injunctions or notices
promulgated or approved thereunder which may give rise to any liability of the
Company or its subsidiaries or otherwise form the basis of any ongoing or
threatened claims, actions, demands, suits, proceedings, hearings, studies or
investigations against or relating to the Company or its subsidiaries, the
property owned or leased by the Company or its subsidiaries that are based on or
related to any Hazardous Substance Issues except for such non-compliance which
would not singly or in the aggregate, have a material adverse effect on the
Company or its subsidiaries, taken as a whole. The Company and its subsidiaries
have no knowledge of the possible or actual presence, disposal, release or
threatened release of any hazardous substance or hazardous waste on or under any
adjacent properties to the any property owned or leased currently or in the past
by the Company, any subsidiary or any predecessor except such as would not
singly or in the aggregate, have a material adverse effect on the Company or its
subsidiaries, taken as a whole. For purposes of this Agreement, the terms
"disposal," "release," "hazardous substance" and "hazardous waste" shall have
the definitions assigned thereto under federal, state and local laws applicable
to the Company, its subsidiaries, the Company's or any subsidiary's assets and
the property owned or leased by the Company, including
4
<PAGE> 5
without limitation the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section9601 et seq., as
amended, and any regulations promulgated thereto.
(xv) The Company and each of its subsidiaries has good and
marketable title in fee simple to all real property and good and marketable
title to all personal property that they respectively own free and clear of all
liens, encumbrances and defects except such as are described in the Registration
Statement or the Prospectus or such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company or its subsidiaries; and any real property and
buildings held under lease by the Company or its subsidiaries are held under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company or its subsidiaries.
(xvi) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Stock.
(xvii) The Company and each of its subsidiaries owns or
possesses adequate rights to use, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently employed by
them in connection with the business now operated by them, and, except as
described in the Prospectus, neither the Company nor its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would result in
any material adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Company or its subsidiaries, taken as a
whole.
(xviii) The Company is in compliance with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect
to any "pension plan" (as defined in ERISA) for with the Company would have any
liability; the Company has not incurred and does not expect to incur liability
under (i) Title IV or ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Company would
have any liability that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or failure to
act, that would cause the loss of such qualification.
(xix) The Company is not and, after giving effect to the
offering and sale of the Stock and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(xx) There is no owner of any securities of the Company who
has any right, not effectively satisfied or waived, to require registration of
any shares of capital stock of the Company in connection with the filing of the
Registration Statement or the sale of any shares thereunder. There are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the Company
or to require the Company to include such securities with the Stock registered
pursuant to the Registration Statement, except in each case as described in the
Prospectus.
(xxi) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government of Cuba
or with any person or affiliate located in Cuba.
(xxii) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principals of the United States and to maintain
5
<PAGE> 6
asset accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(xxiii) No material labor dispute with employees of the
Company or any of its subsidiaries or franchises exists or to the knowledge of
the Company is imminent, and, without conducting any independent investigation,
the Company is not aware of any written communication of any existing,
threatened or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that could result in any
material adverse change in the condition, financial or otherwise, the earnings,
the business or operations of the Company and its subsidiaries, taken as a
whole. The employment of each officer and employee of the Company and its
subsidiaries and franchises is terminable at the will of the Company. To its
knowledge, the Company and its subsidiaries and franchises have each complied in
all material respects with all applicable state and federal equal employment
opportunity laws and with other laws related to employment. To the Company's
knowledge, now employee of the Company or any of its subsidiaries or franchises,
nor any consultant or independent contractor with whom the Company or any of its
subsidiaries or franchises has contracted, is in violation of any term of any
employment contract, proprietary information agreement or any other agreement
relating to the right of any such individual to be employed by, or to contract
with, the Company because of the nature of the business to be conducted by the
Company or any of its subsidiaries or franchises; and to the Company's knowledge
the continued employment by the Company and its subsidiaries and franchises of
its present employees, and the performance of the Company's contracts with its
independent contractors, will not result in any such violation. The Company and
its subsidiaries and franchises have not received any notice alleging that any
such violation has occurred. No employee of the Company or any of its
subsidiaries or franchises has been granted the right to continued employment by
the Company or to any other material compensation following termination of
employment with the Company. The Company is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing.
(xxiv) The Company has not offered, or caused the Underwriters
to offer, Stock to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company, or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
(b) Each of the Selling Securityholders hereby represents and
warrants as follows:
(i) Such Selling Securityholder has good and marketable title
to all the shares of Stock to be sold by such Selling Securityholder hereunder,
free and clear of all liens, encumbrances, equities, security interests and
claims whatsoever, with full right and authority to deliver the same hereunder,
subject, in the case of each Selling Securityholder, to the rights of (degree) ,
as Custodian (herein called the Custodian), and that upon the delivery of and
payment for such shares of the Stock hereunder, the several Underwriters will
receive good and marketable title thereto, free and clear of all liens,
encumbrances, equities, security interests and claims whatsoever.
(ii) The Selling Stockholder has duly authorized, executed and
delivered, in the form heretofore furnished to the Underwriters, a Custody
Agreement and Power of Attorney (the "Custody Agreement and Power of Attorney")
appointing _____________ and _____________ as attorneys-in-fact (collectively,
the "Attorneys" and individually, an "Attorney") and appointing _____________ as
Custodian; the Custody Agreement and Power of Attorney constitutes a valid and
binding agreement on the part of the Selling Stockholder, enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles; and each of the Selling Stockholder's Attorneys, acting
alone, is authorized to execute and deliver this Agreement and the certificate
referred to in Section 9(__) hereof on behalf of the Selling Stockholder, to
determine the purchase price to be paid by the several Underwriters to the
Selling Stockholder as provided in Section 3 hereof, to authorize the delivery
of the shares of Stock to be sold by the Selling Stockholder under this
Agreement and to duly endorse (in blank or otherwise) the certificate or
certificates representing such Stock or a stock power or powers with respect
thereto, to accept payment therefor, and otherwise to act on behalf of the
Selling Stockholder in connection with this Agreement.
6
<PAGE> 7
(iii) All consents, approvals, authorizations and orders
required for the execution and delivery by the Selling Stockholder of the
Custody Agreement and Power of Attorney, the execution and delivery by or on
behalf of the Selling Stockholder of this Agreement and the sale and delivery of
the shares of Stock to be sold by the Selling Stockholder under this Agreement
(other than, at the time of the execution hereof (if the Registration Statement
has not yet been declared effective by the issuance of the order of the
Commission declaring the Registration Statement effective and such consents,
approvals, authorizations or orders as may be necessary under state or other
securities or Blue Sky laws) have been obtained and are in full force and
effect; the Selling Stockholder, if other than a natural person, has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization as the type of entity that it purports to be;
and the Selling Stockholder has full legal right, power and authority to enter
into and perform its obligations under this Agreement and such Custody Agreement
and Power of Attorney, and to sell, assign, transfer and deliver the Stock to be
sold by the Selling Stockholder under this Agreement.
(iv) Certificates in negotiable form for the shares of the
Stock to be sold by the Selling Stockholder have been placed in custody under a
Custody Agreement and Power of Attorney for delivery under this Agreement with
the Custodian; the Selling Stockholder specifically agrees that the shares of
the Stock represented by the certificates so held in custody for the Selling
Stockholder are subject to the interests of the several Underwriters and the
Company, that the arrangements made by the Selling Stockholder for such custody,
including the Power of Attorney provided for in such Custody Agreement and Power
of Attorney, are to that extent irrevocable, and that the obligations of the
Selling Stockholder shall not be terminated by any act of the Selling
Stockholder or by operation of law, whether by the death or incapacity of the
Selling Stockholder (or, in the case of a Selling Stockholder that is not an
individual, the dissolution or liquidation of such Selling Stockholder) or the
occurrence of any other event; if any such death, incapacity, dissolution,
liquidation or other such event should occur before the delivery of such shares
of the Stock hereunder, certificates for such shares of the Stock shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death, incapacity, dissolution, liquidation or other event
had not occurred, regardless of whether the Custodian shall have received notice
of such death, incapacity, dissolution, liquidation or other event.
(v) The Selling Stockholder will comply with all agreements
and satisfy all conditions on its part to be complied with or satisfied pursuant
to this Agreement on or prior to the Closing Date and will advise one of its
Attorneys and Hambrecht & Quist LLC prior to the Closing Date if any statement
to be made on behalf of the Selling Stockholder in the certificate contemplated
by Section 9(__) would be inaccurate if made as of the Closing Date.
(vi) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Stock.
(vii) The Selling Stockholder does not have, or has waived
prior to the date hereof, any preemptive right, co-sale right or right of first
refusal or other similar right to purchase any of the Stock that are to be sold
by the Company to the Underwriters pursuant to this Agreement; the Selling
Stockholder does not have, or has waived prior to the date hereof, any
registration right or other similar right to participate in the offering made by
the Prospectus, other than such rights of participation as have been satisfied
by the participation of the Selling Stockholder in the transactions to which
this Agreement relates in accordance with the terms of this Agreement; and the
Selling Stockholder does not own any warrants, options or similar rights to
acquire, and does not have any right or arrangement to acquire, any capital
stock, rights, warrants, options or other securities from the Company, other
than those described in the Registration Statement and the Prospectus and any
document incorporated therein by reference.
(viii) The Selling Stockholder has not distributed and will
not distribute any prospectus or other offering material in connection with the
offering and sale of the Stock.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell shares of the Underwritten Stock to the several
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Underwriters, each Selling Securityholder agrees to sell to the several
Underwriters the number of shares of the Underwritten Stock set forth in
Schedule II under the heading "Underwritten Stock" opposite the name of such
Selling Securityholder, and each of the Underwriters agrees to purchase from the
Company and the Selling Securityholders the respective aggregate number of
shares of Underwritten Stock set forth opposite its name in Schedule I. The
price at which such shares of Underwritten Stock shall be sold by the Company
and the Selling Securityholders and purchased by the several Underwriters shall
be $___ per share. The obligation of each Underwriter to the Company and each of
the Selling Securityholders shall be to purchase from the Company and the
Selling Securityholders that number of shares of the Underwritten Stock which
represents the same proportion of the total number of shares of the Underwritten
Stock to be sold by each of the Company and the Selling Securityholders pursuant
to this Agreement as the number of shares of the Underwritten Stock set forth
opposite the name of such Underwriter in Schedule I hereto represents of the
total number of shares of the Underwritten Stock to be purchased by all
Underwriters pursuant to this Agreement, as adjusted by you in such manner as
you deem advisable to avoid fractional shares. In making this Agreement, each
Underwriter is contracting severally and not jointly; except as provided in
paragraphs (b) and (c) of this Section 3, the agreement of each Underwriter is
to purchase only the respective number of shares of the Underwritten Stock
specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall
fail or refuse (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 8 or 9 hereof) to
purchase and pay for the number of shares of the Stock agreed to be purchased by
such Underwriter or Underwriters, the Company or the Selling Securityholders
shall immediately give notice thereof to you, and the non-defaulting
Underwriters shall have the right within 24 hours after the receipt by you of
such notice to purchase, or procure one or more other Underwriters to purchase,
in such proportions as may be agreed upon between you and such purchasing
Underwriter or Underwriters and upon the terms herein set forth, all or any part
of the shares of the Stock which such defaulting Underwriter or Underwriters
agreed to purchase. If the non-defaulting Underwriters fail so to make such
arrangements with respect to all such shares and portion, the number of shares
of the Stock which each non-defaulting Underwriter is otherwise obligated to
purchase under this Agreement shall be automatically increased on a pro rata
basis to absorb the remaining shares and portion which the defaulting
Underwriter or Underwriters agreed to purchase; provided, however, that the
non-defaulting Underwriters shall not be obligated to purchase the shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase if
the aggregate number of such shares of the Stock exceeds 10% of the total number
of shares of the Stock which all Underwriters agreed to purchase hereunder. If
the total number of shares of the Stock which the defaulting Underwriter or
Underwriters agreed to purchase shall not be purchased or absorbed in accordance
with the two preceding sentences, the Company and the Selling Securityholders
shall have the right, within 24 hours next succeeding the 24-hour period above
referred to, to make arrangements with other underwriters or purchasers
satisfactory to you for purchase of such shares and portion on the terms herein
set forth. In any such case, either you or the Company and the Selling
Securityholders shall have the right to postpone the Closing Date determined as
provided in Section 5 hereof for not more than seven business days after the
date originally fixed as the Closing Date pursuant to said Section 5 in order
that any necessary changes in the Registration Statement, the Prospectus or any
other documents or arrangements may be made. If neither the non-defaulting
Underwriters nor the Company and the Selling Securityholders shall make
arrangements within the 24-hour periods stated above for the purchase of all the
shares of the Stock which the defaulting Underwriter or Underwriters agreed to
purchase hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company or the Selling
Securityholders to any non-defaulting Underwriter and without any liability on
the part of any non-defaulting Underwriter to the Company or the Selling
Securityholders. Nothing in this paragraph (b), and no action taken hereunder,
shall relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and
covenants herein contained, and subject to the terms and conditions herein set
forth, the Company and certain Selling Securityholders grant an option to the
several Underwriters to purchase, severally and not jointly, up to (degree)
shares in the aggregate of the Option Stock from the Company and the Selling
Securityholders set forth on Schedule II at the same price per share as the
Underwriters shall pay for the Underwritten Stock. Said option may be exercised
only to cover over-allotments in the sale of the Underwritten Stock by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the thirtieth day after the date of this Agreement upon
written or telegraphic notice by you to the Company setting forth the aggregate
number of shares of the Option Stock as to which the several Underwriters are
exercising the option. Delivery of certificates for the shares of Option Stock,
and payment therefor, shall be made as provided in Section 5 hereof. The number
of shares of the Option Stock to be purchased by each Underwriter shall be the
same percentage of the total number of shares of the Option Stock to be
purchased by the
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<PAGE> 9
several Underwriters as such Underwriter is purchasing of the Underwritten
Stock, as adjusted by you in such manner as you deem advisable to avoid
fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the
Underwriters of the Stock to be purchased by them shall be as set forth in the
Prospectus. The Underwriters may from time to time change the public offering
price after the closing of the initial public offering and increase or decrease
the concessions and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the
front cover page and in paragraphs ____ under "Underwriting" in the Registration
Statement, any Preliminary Prospectus and the Prospectus relating to the Stock
filed by the Company (insofar as such information relates to the Underwriters)
constitutes the only information furnished by the Underwriters to the Company
for inclusion in the Registration Statement, any Preliminary Prospectus, and the
Prospectus, and you on behalf of the respective Underwriters represent and
warrant to the Company that the statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the
Underwritten Stock and the Option Stock (if the option granted by Section 3(c)
hereof shall have been exercised not later than 7:00 A.M., San Francisco time,
on the date two business days preceding the Closing Date), and payment therefor,
shall be made at the office of (degree) , (degree) , at 7:00 a.m., San Francisco
time, on the fourth business day after the date of this Agreement, or at such
time on such other day, not later than seven full business days after such
fourth business day, as shall be agreed upon in writing by the Company, the
Selling Securityholders and you. The date and hour of such delivery and payment
(which may be postponed as provided in Section 3(b) hereof) are herein called
the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be
exercised after 7:00 a.m., San Francisco time, on the date two business days
preceding the Closing Date, delivery of certificates for the shares of Option
Stock, and payment therefor, shall be made at the office of Squire, Sanders &
Dempsey, LLP, Two Renaissance Square, 40 North Central Avenue, Suite 2700,
Phoenix, Arizona, at 7:00 a.m., San Francisco time, on the third business day
after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be
made to the Company or its order, and payment for the Stock purchased from the
Selling Securityholders shall be made to the Custodian, for the account of the
Selling Securityholders, in each case by one or more certified or official bank
check or checks in same day funds. Such payment shall be made upon delivery of
certificates for the Stock to you for the respective accounts of the several
Underwriters against receipt therefor signed by you. Certificates for the Stock
to be delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least one business day before the
Closing Date, in the case of Underwritten Stock, and at least one business day
prior to the purchase thereof, in the case of the Option Stock. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of Lewco Securities Corporation, 2 Broadway, New
York, New York 10004 on the business day prior to the Closing Date or, in the
case of the Option Stock, by 3:00 p.m., New York time, on the business day
preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholders for shares to be purchased by any Underwriter
whose check shall not have been received by you on the Closing Date or any later
date on which Option Stock is purchased for the account of such Underwriter. Any
such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. Each of the Company and the Selling Securityholders
respectively covenants and agrees as follows:
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(a) The Company will (i) prepare and timely file with the
Commission under Rule 424(b) a Prospectus containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A and (ii) not file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been advised
and furnished with a copy or to which you shall have reasonably objected in
writing or which is not in compliance with the Securities Act or the rules and
regulations of the Commission.
(b) The Company will promptly notify each Underwriter in the
event of (i) the request by the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional information,
(ii) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, (iii) the institution or notice of
intended institution of any action or proceeding for that purpose, (iv) the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Stock for sale in any jurisdiction, or (v) the receipt by
it of notice of the initiation or threatening of any proceeding for such
purpose. The Company will make every reasonable effort to prevent the issuance
of such a stop order and, if such an order shall at any time be issued, to
obtain the withdrawal thereof at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date,
deliver to you a signed copy of the Registration Statement as originally filed
and of each amendment thereto filed prior to the time the Registration Statement
becomes effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any, to the Registration Statement (together with,
in each case, all exhibits thereto unless previously furnished to you) and will
also deliver to you, for distribution to the Underwriters, a sufficient number
of additional conformed copies of each of the foregoing (but without exhibits)
so that one copy of each may be distributed to each Underwriter, (ii) as
promptly as possible deliver to you and send to the several Underwriters, at
such office or offices as you may designate, as many copies of the Prospectus as
you may reasonably request, and (iii) thereafter from time to time during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, likewise send to the Underwriters as many additional
copies of the Prospectus and as many copies of any supplement to the Prospectus
and of any amended prospectus, filed by the Company with the Commission, as you
may reasonably request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any event relating
to or affecting the Company, or of which the Company shall be advised in writing
by you, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of counsel for the Underwriters, to supplement or
amend the Prospectus in order to make the Prospectus not misleading in the light
of the circumstances existing at the time it is delivered to a purchaser of the
Stock, the Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus so that the Prospectus as
so supplemented or amended will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time such
Prospectus is delivered to such purchaser, not misleading. If, after the initial
public offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the
Company will submit to you, for your information, a copy of any post-effective
amendment to the Registration Statement and any supplement to the Prospectus or
any amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you,
in the qualification of the Stock for offer and sale under the securities or
blue sky laws of such jurisdictions as you may designate and, during the period
in which a prospectus is required by law to be delivered by an Underwriter or
dealer, in keeping such qualifications in good standing under said securities or
blue sky laws; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction
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in which it is not so qualified. The Company will, from time to time, prepare
and file such statements, reports, and other documents as are or may be required
to continue such qualifications in effect for so long a period as you may
reasonably request for distribution of the Stock.
(g) During a period of five years commencing with the date
hereof, the Company will furnish to you, and to each Underwriter who may so
request in writing, copies of all periodic and special reports furnished to
stockholders of the Company and of all information, documents and reports filed
with the Commission.
(h) Not later than the 45th day following the end of the
fiscal quarter first occurring after the first anniversary of the Effective
Date, the Company will make generally available to its security holders an
earnings statement in accordance with Section 11(a) of the Securities Act and
Rule 158 thereunder.
(i) The Company and the Selling Securityholders jointly and
severally agree to pay all costs and expenses incident to the performance of
their obligations under this Agreement, including all costs and expenses
incident to (i) the preparation, printing and filing with the Commission and the
National Association of Securities Dealers, Inc. ("NASD") of the Registration
Statement, any Preliminary Prospectus and the Prospectus, (ii) the furnishing to
the Underwriters of copies of any Preliminary Prospectus and of the several
documents required by paragraph (c) of this Section 6 to be so furnished, (iii)
the printing of this Agreement and related documents delivered to the
Underwriters, (iv) the preparation, printing and filing of all supplements and
amendments to the Prospectus referred to in paragraph (d) of this Section 6, (v)
the furnishing to you and the Underwriters of the reports and information
referred to in paragraph (g) of this Section 6 and (vi) the printing and
issuance of stock certificates, including the transfer agent's fees. The Selling
Securityholders will pay any transfer taxes incident to the transfer to the
Underwriters of the shares the Stock being sold by the Selling Securityholders.
(j) The Company and the Selling Securityholders jointly and
severally agree to reimburse you, for the account of the several Underwriters,
for blue sky fees and related disbursements (including counsel fees and
disbursements and cost of printing memoranda for the Underwriters) paid by or
for the account of the Underwriters or their counsel in qualifying the Stock
under state securities or blue sky laws and in the review of the offering by the
NASD.
(k) The provisions of paragraphs (i) and (j) of this Section
are intended to relieve the Underwriters from the payment of the expenses and
costs which the Company and the Selling Securityholders hereby agree to pay and
shall not affect any agreement which the Company and the Selling Securityholders
may make, or may have made, for the sharing of any such expenses and costs.
(l) The Company and each of the Selling Securityholders hereby
agrees that, without the prior written consent of Hambrecht & Quist LLC on
behalf of the Underwriters, the Company or such Selling Securityholder, as the
case may be, will not, for a period of 180 days following the commencement of
the public offering of the Stock by the Underwriters, directly or indirectly,
(i) sell, offer, contract to sell, make any short sale, pledge, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of any
shares of Common Stock or any securities convertible into or exchangeable or
exercisable for or any rights to purchase or acquire Common Stock or (ii) enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to the Stock to be sold to the Underwriters pursuant to this
Agreement.
(m) If at any time during the 25-day period after the
Registration Statement becomes effective any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price for the Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
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(n) The Company is familiar with the Investment Company Act of
1940, as amended, and has in the past conducted its affairs, and will in the
future conduct its affairs, in such a manner to ensure that the Company was not
and will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of this Section
7, the Company and the Selling Securityholders jointly and severally agree to
indemnify and hold harmless each Underwriter and each person (including each
partner or officer thereof) who controls any Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Securities Act, the Securities Exchange
Act of 1934, as amended (herein called the Exchange Act), or the common law or
otherwise, and the Company and the Selling Securityholders jointly and severally
agree to reimburse each such Underwriter and controlling person for any legal or
other expenses (including, except as otherwise hereinafter provided, reasonable
fees and disbursements of counsel) incurred by the respective indemnified
parties in connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that (1) the indemnity agreements of the Company
and the Selling Securityholders contained in this paragraph (a) shall not apply
to any such losses, claims, damages, liabilities or expenses if such statement
or omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company by
or on behalf of any Underwriter for use in any Preliminary Prospectus or the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, (2) the indemnity agreement contained in this paragraph (a)
with respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Stock which is the subject thereof (or to
the benefit of any person controlling such Underwriter) if at or prior to the
written confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof, and (3) each Selling
Securityholder shall only be liable under this paragraph with respect to (A)
information pertaining to such Selling Securityholder furnished by or on behalf
of such Selling Securityholder expressly for use in any Preliminary Prospectus
or the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto or (B) facts that would constitute a breach of any
representation or warranty of such Selling Securityholder set forth in Section
2(b) hereof. The indemnity agreements of the Company and the Selling
Securityholders contained in this paragraph (a) and the representations and
warranties of the Company and the Selling Securityholders contained in Section 2
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its officers who signs the Registration Statement
on his own behalf or pursuant to a power of attorney, each of its directors,
each other Underwriter and each person (including each partner or officer
thereof) who controls the Company or any such other Underwriter within the
meaning of Section 15 of the Securities Act, and the Selling Securityholders
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act, or the common law or otherwise and
to reimburse each of them for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in
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each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus (as amended or as supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, if such statement
or omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company by
or on behalf of such indemnifying Underwriter for use in the Registration
Statement or the Prospectus or any such amendment thereof or supplement thereto.
The indemnity agreement of each Underwriter contained in this paragraph (b)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs
(a) and (b) of this Section 7 agrees that, upon the service of a summons or
other initial legal process upon it in any action or suit instituted against it
or upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party shall be entitled at its own
expense to participate in the defense of any action, suit or proceeding against,
or investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (herein called the Notice of Defense) to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after receipt of
the Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will not be
liable under paragraphs (a) through (c) of this Section 7 for any legal or other
expenses subsequently incurred by the indemnified party or parties in connection
with the defense of the action, suit, investigation, inquiry or proceeding,
except that (A) the indemnifying party or parties shall bear the legal and other
expenses incurred in connection with the conduct of the defense as referred to
in clause (i) of the proviso to the preceding sentence and (B) the indemnifying
party or parties shall bear such other expenses as it or they have authorized to
be incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of
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<PAGE> 14
the Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of each indemnifying party in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, or actions in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Securityholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Stock
received by the Company and the Selling Securityholders and the total
underwriting discount received by the Underwriters, as set forth in the table on
the cover page of the Prospectus, bear to the aggregate public offering price of
the Stock. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Stock purchased by such
Underwriter. 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 Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
(e) Neither the Company nor the Selling Securityholders will,
without the prior written consent of each Underwriter, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not such Underwriter or any person who controls such Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of such
Underwriter and each such controlling person from all liability arising out of
such claim, action, suit or proceeding.
(f) The liability of each Selling Securityholder under the
indemnity and reimbursement agreements contained in the provisions of this
Section 7 and Section 11 hereof shall be limited to an amount equal to the
initial public offering price of the stock sold by such Selling Securityholder
to the Underwriters. The Company and the Selling Securityholders may agree, as
among themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which they each
shall be responsible.
8. TERMINATION. This Agreement may be terminated by you at any
time prior to the Closing Date by giving written notice to the Company and the
Selling Securityholders if after the date of this Agreement trading in the
Common Stock shall have been suspended, or if there shall have occurred (i) the
engagement in hostilities or an escalation of major hostilities by the United
States or the declaration of war or a national emergency by the United States on
or after the date hereof, (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change in economic or
political conditions in the financial markets of the United States would, in the
Underwriters' reasonable judgment, make the offering or delivery of the Stock
impracticable, (iii) suspension of trading in securities generally or a material
adverse decline in value of securities generally on the New York Stock Exchange,
the American Stock Exchange, or The Nasdaq Stock Market, or limitations on
prices (other than limitations on hours or numbers of days
14
<PAGE> 15
of trading) for securities on either such exchange or system, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of, or commencement of any proceeding or
investigation by, any court, legislative body, agency or other governmental
authority which in the Underwriters' reasonable opinion materially and adversely
affects or will materially or adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by either federal or New York
State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which in
the Underwriters' reasonable opinion has a material adverse effect on the
securities markets in the United States. If this Agreement shall be terminated
pursuant to this Section 8, there shall be no liability of the Company or the
Selling Securityholders to the Underwriters and no liability of the Underwriters
to the Company or the Selling Securityholders; provided, however, that in the
event of any such termination the Company and the Selling Securityholders agree
to indemnify and hold harmless the Underwriters from all costs or expenses
incident to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company and by the Selling Securityholders of all their
respective obligations to be performed hereunder at or prior to the Closing Date
or any later date on which Option Stock is to be purchased, as the case may be,
and to the following further conditions:
(a) The Registration Statement shall have become effective;
and no stop order suspending the effectiveness thereof shall have been issued
and no proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock
hereunder and the validity and form of the certificates representing the Stock,
all corporate proceedings and other legal matters incident to the foregoing, and
the form of the Registration Statement and of the Prospectus (except as to the
financial statements contained therein), shall have been approved at or prior to
the Closing Date by Gunderson Dettmer Stough Villeneuve Franklin & Hachigian,
LLP, counsel for the Underwriters.
(c) You shall have received from Squire, Sanders & Dempsey
LLP, counsel for the Company and the Selling Securityholders, from __________,
regulatory counsel for the Company, from __________, franchise counsel for the
Company, from __________, labor counsel for the Company, opinions, addressed to
the Underwriters and dated the Closing Date, covering the matters set forth in
Annex A, Annex B, Annex C and Annex D hereto, respectively, and if Option Stock
is purchased at any date after the Closing Date, additional opinions from each
such counsel, addressed to the Underwriters and dated such later date,
confirming that the statements expressed as of the Closing Date in such opinions
remain valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date,
the statements made in the Registration Statement and the Prospectus were true
and correct and neither the Registration Statement nor the Prospectus omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, respectively, not misleading, (ii) since the
Effective Date, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus which has not been set forth in such a
supplement or amendment, (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the business, properties, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole, whether or not arising from transactions in the ordinary course of
business, and, since such dates, except in the ordinary course of business,
neither the Company nor any of its subsidiaries has entered into any material
transaction not referred to in the Registration Statement in the form in which
it originally became effective and the Prospectus contained therein, (iv)
neither the Company nor any of its subsidiaries has any material contingent
obligations which are not disclosed in the Registration Statement and the
Prospectus, (v) there are not any pending or known threatened legal proceedings
to which the Company or any of its subsidiaries is a party or of which property
of the Company or any of its subsidiaries is the subject which are material and
which are not disclosed in the Registration Statement and the Prospectus, (vi)
there are not any franchises, contracts, leases or other documents which are
required to be filed as exhibits to the Registration Statement which have not
been filed as required, (vii) the representations and warranties of the Company
herein are true and correct in all material respects as of the Closing Date or
any later date on which Option Stock is to be purchased, as the case may be, and
(viii) there has not
15
<PAGE> 16
been any material change in the market for securities in general or in
political, financial or economic conditions from those reasonably foreseeable as
to render it impracticable in your reasonable judgment to make a public offering
of the Stock, or a material adverse change in market levels for securities in
general (or those of companies in particular) or financial or economic
conditions which render it inadvisable to proceed.
(e) You shall have received on the Closing Date and on any
later date on which Option Stock is purchased a certificate, dated the Closing
Date or such later date, as the case may be, and signed by the President and the
Chief Financial Officer of the Company, stating that the respective signers of
said certificate have carefully examined the Registration Statement in the form
in which it originally became effective and the Prospectus contained therein and
any supplements or amendments thereto, and that the statements included in
clauses (i) through (vii) of paragraph (d) of this Section 9 are true and
correct.
(f) You shall have received from each of Deloitte & Touche LLP
and Arthur Anderson LLP, a letter or letters, addressed to the Underwriters and
dated the Closing Date and any later date on which Option Stock is purchased,
confirming that they are independent public accountants with respect to the
Company within the meaning of the Securities Act and the applicable published
rules and regulations thereunder and based upon the procedures described in
their letter delivered to you concurrently with the execution of this Agreement
(herein called the Original Letter), but carried out to a date not more than
three business days prior to the Closing Date or such later date on which Option
Stock is purchased (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing Date
or such later date, as the case may be, and (ii) setting forth any revisions and
additions to the statements and conclusions set forth in the Original Letter
which are necessary to reflect any changes in the facts described in the
Original Letter since the date of the Original Letter or to reflect the
availability of more recent financial statements, data or information. The
letters shall not disclose any change, or any development involving a
prospective change, in or affecting the business or properties of the Company or
any of its subsidiaries which, in your sole judgment, makes it impractical or
inadvisable to proceed with the public offering of the Stock or the purchase of
the Option Stock as contemplated by the Prospectus.
(g) You shall have received from Deloitte & Touche LLP a
letter stating that their review of the Company's system of internal accounting
controls, to the extent they deemed necessary in establishing the scope of their
examination of the Company's financial statements as at March 31, 1998, did not
disclose any weakness in internal controls that they considered to be material
weaknesses.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Stock to be issued and sold
by the Company shall have been duly authorized for listing by the Nasdaq
National Market upon official notice of issuance.
(j) On or prior to the Closing Date, you shall have received
from stockholders agreements, in form reasonably satisfactory to Hambrecht &
Quist LLC, stating that without the prior written consent of Hambrecht & Quist
LLC on behalf of the Underwriters, such person or entity will not, for a period
of 180 days following the commencement of the public offering of the Stock by
the Underwriters, directly or indirectly, (i) sell, offer, contract to sell,
make any short sale, pledge, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for or any rights to purchase or
acquire Common Stock or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences or ownership of
Common Stock, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP, counsel for the Underwriters, shall be satisfied that they
comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Selling Securityholders. Any such termination shall
16
<PAGE> 17
be without liability of the Company or the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders; provided, however, that (i) in the event of such
termination, the Company and the Selling Securityholders agree to indemnify and
hold harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all costs and expenses referred to in paragraphs
(i) and (j) of Section 6 hereof, and (ii) if this Agreement is terminated by you
because of any refusal, inability or failure on the part of the Company or the
Selling Securityholders to perform any agreement herein, to fulfill any of the
conditions herein, or to comply with any provision hereof other than by reason
of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. The obligation of the Company and the Selling Securityholders
to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall not
be fulfilled, this Agreement may be terminated by the Company and the Selling
Securityholders by giving notice to you. Any such termination shall be without
liability of the Company and the Selling Securityholders to the Underwriters and
without liability of the Underwriters to the Company or the Selling
Securityholders; provided, however, that in the event of any such termination
the Company and the Selling Securityholders jointly and severally agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement (and subject, in the case of a
Selling Securityholder, to the provisions of paragraph (f) of Section 7), the
Company and the Selling Securityholders hereby jointly and severally agree to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of the Company, the Selling Securityholders and the several
Underwriters and, with respect to the provisions of Section 7 hereof, the
several parties (in addition to the Company, the Selling Securityholders and the
several Underwriters) indemnified under the provisions of said Section 7, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Hambrecht & Quist LLC, One Bush Street,
San Francisco, California 94104, Attention:______________; and if to the
Company, shall be mailed, telegraphed or delivered to it at its office,
___________, Attention: __________; and if to the Selling Securityholders, shall
be mailed, telegraphed or delivered to the Selling Securityholders in care of
___________ at ___________. All notices given by telegraph shall be promptly
confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any
17
<PAGE> 18
Underwriter or controlling person thereof, or by or on behalf of the Company or
the Selling Securityholders or their respective directors or officers, and (c)
delivery and payment for the Stock under this Agreement; provided, however, that
if this Agreement is terminated prior to the Closing Date, the provisions of
paragraphs (l), (m) and (n) of Section 6 hereof shall be of no further force or
effect.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California.
18
<PAGE> 19
Please sign and return to the Company and to the Selling
Securityholders in care of the Company the enclosed duplicates of this letter,
whereupon this letter will become a binding agreement among the Company, the
Selling Securityholders and the several Underwriters in accordance with its
terms.
Very truly yours,
SUPERSHUTTLE INTERNATIONAL, INC.
By
--------------------------------------
Brian Wier
President and Chief Executive Officer
SELLING SECURITYHOLDERS:
[List Names]
By
--------------------------------------
[Attorney-in-Fact]
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
HAMBRECHT & QUIST LLC
PIPER JAFFRAY INC.
By Hambrecht & Quist LLC
By
-----------------------------------
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
<PAGE> 20
SCHEDULE I
UNDERWRITERS
NUMBER OF SHARES
UNDERWRITERS TO BE PURCHASED
Hambrecht & Quist LLC.........................................
Piper Jaffray Inc.............................................
----------------
Total.........................................................
S-1
<PAGE> 21
SCHEDULE II
SELLING SECURITYHOLDERS
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF UNDERWRITTEN STOCK NUMBER OF SHARES OF OPTION
OF SELLING SECURITYHOLDERS TO BE SOLD SHARES TO BE SOLD
- -------------------------- ---------- -----------------
<S> <C> <C>
-----------------
Total.........................
</TABLE>
S-2
<PAGE> 22
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF _____________
COUNSEL FOR THE COMPANY
AND THE SELLING SECURITYHOLDERS
(i) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified as a foreign corporation
and in good standing in each state of the United States of America in which its
ownership or leasing of property requires such qualification (except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company [and its subsidiaries, taken as a whole), and has full corporate power
and authority to own or lease its properties and conduct its business as
described in the Registration Statement; all the issued and outstanding capital
stock of each of the subsidiaries of the Company has been duly authorized and
validly issued and is fully paid and nonassessable, and is owned by the Company
free and clear of all liens, encumbrances and security interests, and to the
best of such counsel's knowledge, no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in such
subsidiaries are outstanding;
(ii) the authorized capital stock of the Company consists of [ (degree)
shares of (degree) Stock, of which there are outstanding (degree) shares, and]
(degree) shares of Common Stock, $ (degree) par value, of which there are
outstanding (degree) shares (including the Underwritten Stock plus the number of
shares of Option Stock issued on the date hereof) [and such additional number of
shares, if any, as may have been issued after (degree) and prior to the Closing
Date, pursuant to (degree) ]; proper corporate proceedings have been taken
validly to authorize such authorized capital stock; all of the outstanding
shares of such capital stock (including the Underwritten Stock and the shares of
Option Stock issued, if any) have been duly and validly issued and are fully
paid and nonassessable; any Option Stock purchased after the Closing Date, when
issued and delivered to and paid for by the Underwriters as provided in the
Underwriting Agreement, will have been duly and validly issued and be fully paid
and nonassessable; and no preemptive rights of, or rights of refusal in favor
of, stockholders exist with respect to the Stock, or the issue and sale thereof,
pursuant to the Certificate of Incorporation or Bylaws of the Company and, to
the knowledge of such counsel, there are no contractual preemptive rights that
have not been waived, rights of first refusal or rights of co-sale which exist
with respect to the Stock being sold by the Selling Securityholders or the issue
and sale of the Stock;
(iii) the Registration Statement has become effective under the
Securities Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus is in effect and no proceedings for that
purpose have been instituted or are pending or contemplated by the Commission;
(iv) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained therein,
as to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and with the rules
and regulations of the Commission thereunder;
(v) such counsel have no reason to believe that the Registration
Statement (except as to the financial statements and schedules and other
financial data contained or incorporated by reference therein, as to which such
counsel need not express any opinion or belief) at the Effective Date contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus (except as to the financial statements and
schedules and other financial data contained or incorporated by reference
therein, as to which such counsel need not express any opinion or belief) as of
its date or at the Closing Date (or any later date on which Option Stock is
purchased), contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(vi) the information required to be set forth in the Registration
Statement in answer to Items 9, 10 (insofar as it relates to such counsel) and
11(c) of Form S-1 is to the best of such counsel's knowledge accurately and
A-1
<PAGE> 23
adequately set forth therein in all material respects or no response is required
with respect to such Items, and, the description of the Company's stock option
plan[s] and the options granted and which may be granted thereunder [and the
options granted otherwise than under such plan[s] set forth in the Prospectus
accurately and fairly presents the information required to be shown with respect
to said plan[s] and options to the extent required by the Securities Act and the
rules and regulations of the Commission thereunder;
(vii) such counsel do not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion of
such counsel are of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement, which are not described and filed as required;
(viii) the Underwriting Agreement has been duly authorized, executed
and delivered by the Company;
(ix) the Underwriting Agreement has been duly executed and delivered by
or on behalf of the Selling Securityholders and the Custody Agreement between
the Selling Securityholders and (degree) , as Custodian, and the Power of
Attorney referred to in such Custody Agreement have been duly executed and
delivered by the several Selling Securityholders;
(x) the issue and sale by the Company of the shares of Stock sold by
the Company as contemplated by the Underwriting Agreement will not conflict
with, or result in a breach of, the Certificate of Incorporation or Bylaws of
the Company or any of its subsidiaries or any agreement or instrument known to
such counsel to which the Company or any of its subsidiaries is a party or any
applicable law or regulation, or so far as is known to such counsel, any order,
writ, injunction or decree, of any jurisdiction, court or governmental
instrumentality;
(xi) all holders of securities of the Company having rights to the
registration of shares of Common Stock, or other securities, because of the
filing of the Registration Statement by the Company have waived such rights or
such rights have expired by reason of lapse of time following notification of
the Company's intent to file the Registration Statement;
(xii) good and marketable title to the shares of Stock sold by the
Selling Securityholders under the Underwriting Agreement, free and clear of all
liens, encumbrances, equities, security interests and claims, has been
transferred to the Underwriters who have severally purchased such shares of
Stock under the Underwriting Agreement, assuming for the purpose of this opinion
that the Underwriters purchased the same in good faith without notice of any
adverse claims; and
(xiii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated in the Underwriting Agreement, except such as have been obtained
under the Securities Act and such as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the Stock by
the Underwriters; and
(xiv) the Stock sold by the Selling Securityholders and the Stock
issued and sold by the Company will been duly authorized for listing by Nasdaq
National Market upon official notice of issuance.
- --------------------------------------------------------------------------------
Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States or of the State of (degree) , upon
opinions of local counsel satisfactory in form and scope to counsel for the
Underwriters. Copies of any opinions so relied upon shall be delivered to the
Representative[s] and to counsel for the Underwriters and the foregoing opinion
shall also state that counsel knows of no reason the Underwriters are not
entitled to rely upon the opinions of such local counsel.
A-2
<PAGE> 24
ANNEX B
MATTERS TO BE COVERED IN THE OPINION OF ___________
REGULATORY COUNSEL FOR THE COMPANY
Such counsel are familiar with the laws, rules and regulations
applicable to the Company in its business and the manner of its compliance
thereof and have read the Registration Statement and the Prospectus, including
particularly the portions of the Registration Statement and the Prospectus
referring to regulatory matters including [compliance with state and federal
regulations relating to...("Regulatory Requirements")] and:
(i) such counsel have no reason to believe that the Registration
Statement or the Prospectus (A) contains any untrue statement of a material fact
with respect to Regulatory Requirements of the Company, or the manner of its use
thereof, or any allegation on the part of any person that the Company is in
violation of the Regulatory Requirements or (B) omits to state any material fact
relating to the Regulatory Requirements of the Company, or any allegation of
which such counsel have knowledge, that is required to be stated in the
Registration Statement or the Prospectus or is necessary to make the statements
therein not misleading;
(ii) to the best of such counsel's knowledge there are no legal or
governmental proceedings pending relating to the [Regulatory Requirements of the
Company, and to the best of such counsel's knowledge no such proceedings are
threatened or contemplated by governmental authorities or others;
(iii) such counsel do not know of any contracts or other documents,
relating to governmental regulation affecting the Company of a character
required to be filed as an exhibit to the Registration Statement or required to
be described in the Registration Statement or the Prospectus that are not filed
or described as required; and
(iv) to the best of such counsel's knowledge, the Company is not
infringing or otherwise violating any [Regulatory Requirements], and to the best
of such counsel's knowledge there are no infringements by others of any of the
Company's [Regulatory Requirements] which in the judgment of such counsel could
affect materially the use thereof by the Company.
A-3
<PAGE> 25
ANNEX C
MATTERS TO BE COVERED IN THE OPINION OF ___________
FRANCHISE COUNSEL FOR THE COMPANY
Such counsel are familiar with the license agreements and other
agreements or contracts used by the Company with respect to the Company's
franchise arrangements with its operations in [ ] and have read the Registration
Statement and the Prospectus, including particularly the portions of the
Registration Statement and the Prospectus referring to [applicable federal or
state franchise law] and:
(i) The statements in the Registration Statement and the Prospectus
under the caption[s] ["____________" and "_____________,"] to the best of such
counsel's knowledge and belief, are accurate and complete statements or
summaries of the matters therein set forth and nothing has come to such
counsel's attention that causes such counsel to believe that the above-described
portions of the Registration Statement and the Prospectus contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;]
(ii) to the best of such counsel's knowledge there are no legal or
governmental proceedings pending relating to compliance by the Company with
applicable federal or state franchise law and to the best of such counsel's
knowledge no such proceedings are threatened or contemplated by governmental
authorities or others;
(iii) such counsel do not know of any contracts or other documents,
relating to applicable federal or state franchise law affecting the Company of a
character required to be filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or the Prospectus that
are not filed or described as required; and
(iv) to the best of such counsel's knowledge, the Company is not
infringing or otherwise violating any applicable federal or state franchise law.
A-4
<PAGE> 26
ANNEX D
MATTERS TO BE COVERED IN THE OPINION OF ___________
LABOR COUNSEL FOR THE COMPANY
A-5
<PAGE> 1
EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AMONG
SUPERSHUTTLE INTERNATIONAL, INC.,
SUPERSHUTTLE ACQUISITION COMPANY I,
PREFERRED TRANSPORTATION, INC.
AND
THE SHAREHOLDERS LISTED ON SCHEDULE 1
MARCH 31, 1998
<PAGE> 2
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
ARTICLE 1
THE MERGER............................................................. 1
1.1 The Merger, Incidental Transactions.............................. 1
1.2 Effect of the Merger............................................. 2
1.3 Consummation of the Merger....................................... 2
1.4 Articles of Incorporation and Bylaws; Directors and Officers..... 3
1.5 Conversion of Securities......................................... 3
1.6 No Fractional Shares............................................. 3
1.7 Exchange for Merger Consideration................................ 4
1.8 Closing of PTI Transfer Books.................................... 4
1.9 Dissenter's Rights............................................... 4
1.10 Lost, Stolen or Destroyed Certificates........................... 5
1.11 Taking of Necessary Action; Further Action....................... 5
1.12 Escrow........................................................... 5
1.13 Effective Date; Closing.......................................... 5
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SUPERSHUTTLE
AND MERGER SUB......................................................... 5
2.1 Organization and Qualification................................... 5
2.2 Authority Relative to This Agreement............................. 6
2.3 Capitalization................................................... 6
2.4 Financial Statements............................................. 7
2.5 Subsidiaries; Merger Sub......................................... 7
2.6 Absence of Undisclosed Liabilities............................... 7
2.7 No Material Adverse Changes...................................... 7
2.8 Absence of Certain Developments.................................. 7
2.9 Title to and Condition of Properties............................. 8
2.10 Environmental Matters............................................ 8
2.11 Accounts Receivable.............................................. 9
2.12 Tax Matters...................................................... 9
2.13 Contracts and Commitments........................................ 9
2.14 Restrictions on Business Activities.............................. 10
2.15 Intellectual Property Rights..................................... 10
2.16 Litigation....................................................... 11
2.17 Brokers' Fees.................................................... 11
2.18 Compliance With Laws; Permits; Certain Operations................ 11
2.19 Disclosure....................................................... 12
ii
<PAGE> 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PTI AND THE
SHAREHOLDERS........................................................... 12
3.1 Organization and Qualification................................... 12
3.2 Authority Relative to This Agreement............................. 12
3.3 Capitalization................................................... 13
3.4 Financial Statements............................................. 13
3.5 Subsidiaries..................................................... 13
3.6 Absence of Undisclosed Liabilities............................... 14
3.7 No Material Adverse Changes...................................... 14
3.8 Absence of Certain Developments.................................. 14
3.9 Title to and Condition of Properties............................. 15
3.10 Environmental Matters............................................ 16
3.11 Accounts Receivable.............................................. 17
3.12 Tax Matters...................................................... 17
3.13 Contracts and Commitments........................................ 18
3.14 Restrictions on Business Activities.............................. 19
3.15 Intellectual Property Rights..................................... 19
3.16 Litigation....................................................... 19
3.17 Brokers' Fees.................................................... 20
3.18 Employment....................................................... 20
3.19 Employee Benefit Plans........................................... 20
3.20 Insurance........................................................ 21
3.21 Insider Transactions............................................. 21
3.22 Compliance With Laws; Permits; Certain Operations................ 22
3.23 Disclosure....................................................... 22
3.24 Minute Books..................................................... 22
ARTICLE 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDERS........................................................... 22
4.1 Organization, Standing and Authority of Shareholders............. 22
4.2 Execution and Delivery; No Conflicts............................. 23
4.3 Consents and Approvals........................................... 23
4.4 Brokers.......................................................... 23
4.5 Securities Laws Compliance....................................... 23
4.6 Shareholder Experience and Investment Representations............ 24
ARTICLE 5
CONDUCT PENDING AND SUBSEQUENT TO THE MERGER........................... 24
5.1 Conduct of Business Pending the Merger........................... 24
5.2 Conduct Subsequent to the Merger................................. 26
ARTICLE 6
ADDITIONAL AGREEMENTS.................................................. 27
6.1 Shareholders' Meeting............................................ 27
iii
<PAGE> 4
6.2 Expenses......................................................... 27
6.3 No Negotiations.................................................. 27
6.4 Notification of Certain Matters.................................. 28
6.5 Access to Information; Confidentiality........................... 28
6.6 Consents; Approvals.............................................. 28
6.7 Supplements to Disclosure Schedules.............................. 28
6.8 Non-Solicitation of Employees.................................... 29
6.9 Election of Directors............................................ 29
6.10 Confidential Information and Covenant Not To Compete............. 29
ARTICLE 7
CONDITIONS............................................................. 31
7.1 Conditions to Obligations of Each Party to Effect the Merger..... 31
7.2 Additional Conditions to Obligations of SuperShuttle and Merger
Sub.............................................................. 32
7.3 Additional Conditions to Obligation of PTI....................... 33
7.4 Conditions Subsequent to the Merger.............................. 34
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER...................................... 34
8.1 Termination...................................................... 34
8.2 Effect of Termination............................................ 35
8.3 Amendment........................................................ 35
8.4 Waiver........................................................... 35
ARTICLE 9
GENERAL PROVISIONS..................................................... 35
9.1 Survival of Representations and Warranties....................... 35
9.2 Public Announcements............................................. 36
9.3 Notices.......................................................... 36
9.4 Interpretation................................................... 37
9.5 Schedules and Exhibits........................................... 37
9.6 Severability..................................................... 37
9.7 Jurisdiction; Venue; Service of Process.......................... 37
9.8 Waiver of Jury Trial............................................. 37
9.9 Miscellaneous.................................................... 38
SIGNATURE PAGE .............................................................. 39
iv
<PAGE> 5
INDEX OF EXHIBITS AND SCHEDULES
Exhibit "A" Articles of Incorporation of the Surviving Corporation
Exhibit "B" Bylaws of the Surviving Corporation
Exhibit "C" Designated Officers and Directors of the Surviving Corporation
Exhibit "D" Employment Agreement
Exhibit "E" Registration Rights Agreement
Exhibit "F" Escrow Agreement
Exhibit "1.1" Agreement and Plan of Merger
Schedule "1" PTI Shareholders and Common Stock Ownership
Schedule "1.1" List of Assets and Method of Transfer
v
<PAGE> 6
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
This AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
(the "Agreement") is made as of March 31, 1998 by and among SUPERSHUTTLE
INTERNATIONAL, INC., a Delaware corporation ("SuperShuttle"); SUPERSHUTTLE
ACQUISITION COMPANY I, an Arizona corporation and a wholly owned subsidiary of
SuperShuttle ("Merger Sub"); PREFERRED TRANSPORTATION, INC., a California
corporation ("PTI"); and those PTI shareholders listed on Schedule "1" hereto
(collectively, the "Shareholders" and, individually, a "Shareholder").
RECITALS
A. SuperShuttle and PTI are parties to a letter agreement dated March 2,
1998 (the "Letter of Intent"), which contemplates the acquisition by
SuperShuttle of all of the outstanding capital stock of PTI.
B. SuperShuttle has caused the formation of Merger Sub for the purpose of
effecting the acquisition through a reverse triangular merger with and into PTI.
C. The Shareholders currently and collectively own all of the issued and
outstanding shares of capital stock of PTI, with each Shareholder owning the
number of shares set forth opposite such Shareholder's name on Schedule 1.
D. The Shareholders are joined herein for purposes of affirming the
representations and warranties made in Article 3, and to otherwise be bound
hereto for the obligations of PTI for which they are jointly and severally
liable.
E. The parties have determined that it is in their respective interests to
merge Merger Sub with and into PTI (the "Merger") and to undertake such other
actions described herein, all on the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, the parties agree as follows:
ARTICLE 1
THE MERGER
The respective boards of directors of SuperShuttle, Merger Sub and PTI
have, by resolutions duly adopted, approved the following provisions of this
Article 1 as the plan/agreement of merger required by Section 1108 of the
California Corporations Code, as amended (the "California Law") and Section
10-1107 of the Arizona Business Corporation Act, as amended (the "Arizona Law")
(collectively, the "Merger Statutes"), in connection with the Merger:
1.1 The Merger, Incidental Transactions. At the Effective Time (as defined
in Section
1
<PAGE> 7
1.3), in accordance with this Agreement, the Agreement and Plan of Merger
attached hereto as Exhibit "1.1" and the Merger Statutes, Merger Sub shall be
merged with and into PTI. The separate corporate existence of Merger Sub (except
as such existence may be continued by operation of law) shall cease, and PTI
shall continue as the surviving corporation. The parties shall use their
reasonable best efforts to undertake a corporate name change for the Surviving
Corporation with the California Secretary of State to "SuperShuttle Orange
County, Inc." when expedient to do so considering the California Public
Utilities Commission (the "PUC") process, among other factors. PTI, in its
capacity as the corporation surviving the Merger, sometimes is referred to
herein as the "Surviving Corporation."
As an incident to the Merger transactions and as a predicate and
condition to them, certain assets are required to be transferred into PTI or
other accommodations made in order to effect the purpose of allowing the
Surviving Corporation to operate the business of PTI as presently conducted. In
this regard, the assets described on Schedule 1.1 attached hereto and
incorporated by reference herein shall be transferred in the manner contemplated
by Schedule 1.1 immediately prior to the Effective Time. It is acknowledged by
the parties hereto that any and all radio frequencies, real estate interests,
permits, and similar assets necessary to the conduct of the business of PTI
immediately prior to the Effective Time shall be and become the property of the
Surviving Corporation effective upon the Merger through the processes described
on Schedule 1.1 without any further form of consideration or payment owing to
PTI or any of the Shareholders. The transactions contemplated by Schedule 1.1
are a fundamental part of this Agreement and the consummation of those
transactions is a condition to the effectiveness of the Merger.
1.2 Effect of the Merger. At the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, immunities and franchises of each of
Merger Sub and PTI (collectively, the "Constituent Corporations"); all property,
real, personal and mixed, and all debts, liabilities and duties due on whatever
account, and all and every other interest of or belonging to or due to each of
the Constituent Corporations shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed; and the
Surviving Corporation shall be responsible and liable for liabilities and
obligations of each of the Constituent Corporations, in each case in accordance
with the Merger Statutes.
1.3 Consummation of the Merger. As soon as is practicable after the
satisfaction or waiver of the conditions set forth in Sections 7.1, 7.2 and 7.3
of Article 7, the parties hereto shall cause the Agreement and Articles of
Merger to be delivered to the Arizona Corporation Commission of the State of
Arizona and the Agreement and officers' certificates of each Constituent
Corporation to be delivered to the Secretary of State of the State of
California, in such form as required by and executed in accordance with the
Arizona Law and the California Law, respectively. The Merger shall be effective
at such time as such documents are duly filed with (i) the Arizona Corporation
Commission of the State of Arizona, and (ii) the Secretary of State of the State
of California, which filings shall be made reasonably simultaneously. The date
and time when the Merger shall become effective is referred to as the "Effective
Time." It is contemplated that the conditions to consummation of the Merger will
be satisfied, if at all, on or before March 31, 1998, and that the Effective
Time shall be as soon as practicable following the satisfaction of the
conditions set forth in Sections 7.1, 7.2 and 7.3 of Article 7 hereof on or
2
<PAGE> 8
before March 31, 1998.
1.4 Articles of Incorporation and Bylaws; Directors and Officers. The
Articles of Incorporation and the Bylaws of the Surviving Corporation shall be
restated in the forms of Exhibits "A" and "B" hereto and incorporated herein.
The persons identified on Exhibit "C" shall be the directors and officers of the
Surviving Corporation at the Effective Time.
1.5 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, PTI or the holders of
any of the following securities:
(a) Each share of Common Stock, no par value, of PTI (the "PTI
Common Stock") issued and outstanding immediately prior to the Effective
Time, other than shares owned by SuperShuttle which shall be converted
into shares of the Surviving Corporation, shall, by virtue of the Merger
and without any action on the part of the holders thereof, automatically
be canceled and extinguished and the total number of outstanding shares of
PTI Common Stock shall be converted into and become a right to receive
915,570 shares of Common Stock, $0.01 par value per share, of SuperShuttle
(the "SuperShuttle Common Stock") (the "Exchange Ratio"), payable to the
Shareholders pro rata to their PTI Common Stock ownership as reflected on
Schedule 1. The aggregate number of shares of SuperShuttle Common Stock to
be issued in order to give effect to this provision will represent
approximately fourteen percent (14%) of the total number of outstanding
shares of SuperShuttle Common Stock when issued.
(b) Each share of PTI Common Stock issued and outstanding
immediately prior to the Effective Time and held in the treasury of PTI
shall automatically be canceled and extinguished and no payment shall be
made with respect thereto.
(c) Each share of Common Stock, par value $0.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall
automatically be converted into and become one validly issued, fully paid
and nonassessable share of Common Stock, no par value per share, of the
Surviving Corporation. Each stock certificate of Merger Sub evidencing
ownership of any such shares shall continue to evidence ownership of such
shares of capital stock of the Surviving Corporation.
(d) The Exchange Ratio shall be adjusted to reflect fully the effect
of any stock split, reverse split, stock dividend (including any dividend
or distribution of securities convertible into SuperShuttle Common Stock
or PTI Common Stock), reorganization, recapitalization or other like
change with respect to SuperShuttle Common Stock or PTI Common Stock
occurring after the date hereof and prior to the Effective Time, but shall
not be adjusted for the exercise or conversion of any outstanding
SuperShuttle securities convertible into SuperShuttle Common Stock.
1.6 No Fractional Shares. No fractional shares of SuperShuttle Common
Stock shall be issued. Fractional shares of such stock shall be rounded to the
nearest whole share.
3
<PAGE> 9
1.7 Exchange for Merger Consideration. At the Effective Time, each of the
Shareholders shall surrender the certificate or certificates representing shares
of PTI Common Stock to SuperShuttle. Promptly following surrender, SuperShuttle
shall issue the SuperShuttle Common Stock payable to the Shareholders pursuant
to Section 1.5. The certificates of PTI Common Stock surrendered to SuperShuttle
shall be duly endorsed and otherwise in proper form for transfer as SuperShuttle
may require. SuperShuttle shall not be obligated to deliver the consideration to
which any Shareholder is entitled as a result of the Merger until such
Shareholder surrenders his or her certificate or certificates representing the
shares of PTI Common Stock to be exchanged. After the Effective Time, each
outstanding certificate or certificates that represented shares of PTI Common
Stock as of the Effective Time shall be deemed for all corporate purposes to
evidence only the right of the holder thereof to receive such person's share of
the consideration calculated pursuant to Section 1.5 in exchange therefor. No
interest shall be paid or accrued on any consideration payable upon the
surrender of the certificates.
1.8 Closing of PTI Transfer Books. At the Effective Time, the stock
transfer books of PTI shall be closed and no transfer of shares of PTI Common
Stock issued and outstanding immediately prior to the Effective Time shall
thereafter be made (except as provided for or contemplated in Section 1.5
above).
1.9 Dissenter's Rights. Subject to Section 7.2(e):
(a) Any shares of capital stock of PTI held by a holder who has
exercised dissenters' rights for such shares in accordance with Chapter 13
of the California Corporations Code and who, as of the Effective Time, has
not effectively withdrawn or lost (through failure to perfect or
otherwise) such dissenters' rights ("Dissenting Shares"), shall not be
converted into or represent a right to receive SuperShuttle Common Stock
pursuant to Section 1.5 but the holder thereof shall only be entitled to
such rights as are granted by applicable corporate law.
(b) Notwithstanding the provisions of subsection (a), if any holder
of Dissenting Shares shall effectively withdraw or lose his dissenters'
rights, then, as of the later of the Effective Time or the occurrence of
such event, such holder's shares shall automatically be converted into and
represent only the right to receive the Merger consideration set forth in
Section 1.5, without interest thereon, upon surrender of the certificate
or certificates representing such Dissenting Shares.
(c) PTI shall give SuperShuttle (i) prompt notice of any written
demands received by PTI to require PTI to purchase shares of capital stock
of PTI, withdrawals of such demands, and any other instruments served
pursuant to Chapter 13 of the California Corporations Code (Dissenters'
Rights) and received by PTI and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. PTI shall not,
except with the prior written consent of SuperShuttle, voluntarily make
any payment with respect to any such demands or offer to settle or settle
any such demands.
4
<PAGE> 10
1.10 Lost, Stolen or Destroyed Certificates. In the event any certificates
representing shares of PTI Common Stock shall have been lost, stolen or
destroyed, SuperShuttle shall issue in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of SuperShuttle Common Stock as required pursuant to
Sections 1.5 and 1.6; provided, however, that SuperShuttle may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificates to deliver an indemnity
agreement in such form as SuperShuttle may reasonably direct as indemnity
against any claim that may be made against SuperShuttle with respect to the
certificates alleged to have been lost, stolen or destroyed.
1.11 Taking of Necessary Action; Further Action. SuperShuttle and Merger
Sub, on the one hand, and PTI on the other hand, shall use reasonable best
efforts to take all such actions (including, without limitation, actions to
cause the satisfaction of the conditions of the other to effect the Merger) as
may be necessary or appropriate in order to effectuate the Merger as promptly as
possible. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full possession of all the rights, privileges,
immunities and franchises of the Constituent Corporations, or fully subject the
Surviving Corporation to all liabilities and obligations of the Constituent
Corporations, the officers and directors of the Surviving Corporation are fully
authorized in the name of the Constituent Corporations or otherwise to take, and
shall take, all such lawful and necessary actions.
1.12 Escrow. Concurrent with the filing of the Articles, officers'
certificates and Agreement of Merger as set forth in Section 1.3 above, the
parties shall deliver the stock certificates of SuperShuttle and PTI to be
exchanged to an escrow agent (the "Escrow Agent") to hold in escrow pending the
Closing (as defined in Section 1.13), subject to the terms of the Escrow
Agreement, a copy of which is attached hereto as Exhibit "F."
1.13 Effective Date; Closing. The Effective Date of this Agreement shall
be March 31, 1998. The Closing of the transactions contemplated by this
Agreement shall occur upon the satisfaction of the conditions set forth in
Article 7 of this Agreement, all of which conditions shall be satisfied on or
before the Closing Date or such other date as required by the applicable
conditions, and the escrow is broken.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SUPERSHUTTLE
AND MERGER SUB
SuperShuttle and Merger Sub hereby represent and warrant to PTI as of the
date hereof, and again at the Effective Time (subject to any changes permitted
or contemplated hereby), each of the following, except to the extent set forth
in the disclosure schedule that has been delivered to PTI hereunder (the
"SuperShuttle Disclosure Schedule"):
2.1 Organization and Qualification. Each of SuperShuttle and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and the State of Arizona, respectively, and has
the requisite corporate power and
5
<PAGE> 11
authority to own and operate its properties and to carry on its business as now
conducted in every jurisdiction where the failure to do so would have a material
adverse effect on its business, properties or ability to conduct the business
currently conducted by it. The copies of the Certificate of Incorporation,
Articles of Incorporation and Bylaws of SuperShuttle and Merger Sub previously
furnished to PTI are correct and complete and reflect all amendments thereto.
2.2 Authority Relative to This Agreement. Each of SuperShuttle and Merger
Sub has the requisite corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder. The execution and delivery of this
Agreement by SuperShuttle and Merger Sub and the consummation by SuperShuttle
and Merger Sub of the transactions contemplated hereby have been duly authorized
by SuperShuttle and Merger Sub, and no other corporate proceedings on the part
of SuperShuttle or Merger Sub are necessary to authorize this Agreement and such
transactions. This Agreement has been duly executed and delivered by
SuperShuttle and Merger Sub and, assuming the due authorization, execution and
delivery by PTI, constitutes a valid and binding obligation of each, enforceable
in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization or other similar laws relating
to the enforcement of creditors' rights generally and by general principles of
equity. Except as set forth in the SuperShuttle Disclosure Schedule, neither
SuperShuttle nor Merger Sub is subject to, or obligated under, any provision of
(a) its Articles or Certificate of Incorporation or Bylaws, (b) any material
agreement, arrangement or understanding, (c) any material license, franchise or
permit, or (d) any law, regulation, order, judgment or decree, which would be
breached or violated, or in respect of which a right of termination or
acceleration would arise or any encumbrance on any of its or any of its
subsidiaries' assets would be created, by its execution, delivery and
performance of this Agreement and the consummation by it of the transactions
contemplated hereby. Except for such filings to be made pursuant to the Merger
Statutes in order to effect the Merger, no authorization, consent or approval
of, or filing with, any public body, court or authority is necessary on the part
of SuperShuttle or Merger Sub for the consummation by SuperShuttle and Merger
Sub of the transactions contemplated by this Agreement.
2.3 Capitalization. The authorized equity capitalization of SuperShuttle
consists of 20,000,000 shares of SuperShuttle Common Stock and 5,000,000 shares
of Preferred Stock, $0.01 par value per share ("SuperShuttle Preferred Stock").
As of March 31, 1998, 2,760,860 shares of SuperShuttle Common Stock and 479,475
shares of SuperShuttle Preferred Stock are issued and outstanding, all of which
shares are validly issued, fully paid and nonassessable. As of the date hereof,
1,000 shares of Common Stock, $0.01 par value per share, of Merger Sub ("Merger
Sub Common Stock") were issued and outstanding, all of which shares are validly
issued, fully paid and nonassessable and owned by SuperShuttle.
There are no obligations, contingent or otherwise, of SuperShuttle or any
of its subsidiaries to repurchase, redeem or otherwise acquire any shares of
SuperShuttle Common Stock or the capital stock of any subsidiary or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity. All of the outstanding
shares of capital stock of each of SuperShuttle's subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and, except as
disclosed in the SuperShuttle Disclosure Schedule, all such shares are owned by
SuperShuttle free and clear of
6
<PAGE> 12
all security interests, liens, claims, pledges, agreements, limitations in
SuperShuttle's voting rights, charges or other encumbrances of any nature
whatsoever.
2.4 Financial Statements. SuperShuttle has delivered a balance sheet dated
as of January 31, 1998, and other financial statements for the years ended
September 30, 1997 and September 30, 1996 to PTI (collectively, the
"SuperShuttle Financial Statements.") The SuperShuttle Financial Statements were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved and present fairly the
consolidated financial position, results of operations, and cash flows of
SuperShuttle and its consolidated subsidiaries as of the dates and for the
periods indicated therein, subject, in the case of unaudited interim statements,
to normal year-end accounting adjustments and the absence of complete footnote
disclosure.
2.5 Subsidiaries; Merger Sub. Except as set forth in the SuperShuttle
Disclosure Schedule, SuperShuttle does not have any subsidiaries and does not
otherwise own any stock, partnership interest, joint venture interest, or any
other security issued by or equity interest in any other corporation,
organization or entity. For purposes hereof, the term "subsidiary" means any
corporation of which securities having a majority of the ordinary voting power
in electing directors are owned directly or indirectly by a party. Merger Sub is
not subject to any liabilities, obligations or claims, whether absolute or
contingent, liquidated or unliquidated. Merger Sub was formed solely for the
purpose of consummating the transactions contemplated by this Agreement and has
not engaged in any business or other activities for any other purpose. Unless
the context requires otherwise, the term "SuperShuttle" shall hereafter refer to
SuperShuttle and/or its Subsidiaries.
2.6 Absence of Undisclosed Liabilities. SuperShuttle has no obligations or
liabilities (whether accrued, absolute, contingent, liquidated, unliquidated or
otherwise, whether due or to become due and regardless of when asserted), except
(a) obligations under contracts or commitments described in Section 2.6 of the
SuperShuttle Disclosure Schedule; (b) liabilities reflected on the balance sheet
of SuperShuttle as of January 31, 1998 (the "January 31, 1998 SuperShuttle
Balance Sheet") included in the SuperShuttle Financial Statements; (c)
liabilities which have arisen in the ordinary course of business after December
31, 1997 (none of which is an uninsured liability for breach of contract, breach
of warranty, tort, infringement, claim or lawsuit); and (d) liabilities which
are not material in scope or amount.
2.7 No Material Adverse Changes. Except as set forth in the SuperShuttle
Disclosure Schedule, since December 31, 1997, there has not been any material
adverse change in the assets, financial condition or operating results of
SuperShuttle, other than the effect of the businesses acquired since that date.
2.8 Absence of Certain Developments. Except as set forth in the
SuperShuttle Disclosure Schedule or except as contemplated in this Agreement,
since December 31, 1997, SuperShuttle has not:
(a) changed its accounting methods or practices (including any
change in depreciation or amortization policies or rates) or revalued any
of its assets;
7
<PAGE> 13
(b) borrowed any amount under existing lines of credit or otherwise
or incurred or become subject to any indebtedness, except as reasonably
necessary for the ordinary operation of SuperShuttle's business and in a
manner and in amounts that are in keeping with the historical practice of
SuperShuttle;
(c) discharged or satisfied any lien or encumbrance or paid any
liability, other than current liabilities and related liens (or current
installments due on intermediate or long-term liabilities) paid or
satisfied in the ordinary course of business;
(d) materially changed the pricing or royalties set or charged by
SuperShuttle to its customers or licensees or agreed to any material
change in the pricing or royalties set or charged by persons who have
licensed Intellectual Property Rights (as described in Section 2.15) to
SuperShuttle; or
(e) suffered any material theft, damage, destruction or loss of or
to any property or properties owned or used by it, whether or not covered
by insurance.
2.9 Title to and Condition of Properties. SuperShuttle owns good and
marketable title to the properties and assets reflected on the December 31, 1997
SuperShuttle Balance Sheet or acquired since the date thereof, free and clear of
all liens and encumbrances, except for (A) liens for current taxes not yet due
and payable, (B) liens described in Section 2.6 of the SuperShuttle Disclosure
Schedule, (C) the properties subject to the leases set forth in Section 2.9 of
the SuperShuttle Disclosure Schedule, and (D) assets disposed of since December
31, 1997, in the ordinary course of business.
2.10 Environmental Matters. Except as set forth in the SuperShuttle
Disclosure Schedule, SuperShuttle (i) has obtained all applicable permits,
licenses and other authorizations (a list of which is set forth in the
SuperShuttle Disclosure Schedule) which are required under federal, state or
local laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes by SuperShuttle (or its agents); (ii) is in compliance with
all terms and conditions of any required permits, licenses and authorizations,
and with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder; (iii) is not
aware of nor has it received notice of any event, condition, circumstance,
activity, practice, incident, action or plan which is reasonably likely to
interfere with or prevent continued compliance with or which would give rise to
any common law or statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, based on or resulting from SuperShuttle's (or any
agent's) manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, or release into
the environment, of any pollutant, contaminant, or hazardous or toxic material
or waste; (iv) has taken all actions necessary under applicable requirements of
such federal, state or local laws, rules or regulations to register any products
or materials
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required to be registered by SuperShuttle (or its agents) thereunder; and (v)
has neither disposed of nor handled any hazardous substance.
2.11 Accounts Receivable. SuperShuttle's notes and accounts receivable
recorded on the January 31, 1998 SuperShuttle Balance Sheet arose in the
ordinary course of business and are carried at values determined in accordance
with generally accepted accounting principles consistently applied.
2.12 Tax Matters. Except as set forth in the SuperShuttle Disclosure
Schedule, SuperShuttle has filed all federal, foreign, state, county and local
income, excise, property, sales and other tax returns which are required to be
filed by it for all periods prior to the Effective Time, and all such returns
are true and correct; all taxes due and payable by SuperShuttle (whether or not
shown on any tax return) for all periods prior to the Effective Time have been
paid; SuperShuttle's reserves and provisions for taxes on the balance sheets
included in the SuperShuttle Financial Statements are sufficient for all accrued
and unpaid taxes as of the dates of such balance sheets; SuperShuttle has paid
all taxes due and payable by it or which it is obligated to withhold from
amounts owing to any employee, creditor, or third party; SuperShuttle has not
waived any statute of limitations in respect of taxes or agreed to any extension
of time with respect to a tax assessment or deficiency; to the best knowledge of
SuperShuttle, the assessment of any additional taxes relating to SuperShuttle
for periods for which returns have been filed is not expected; and SuperShuttle
has not received notice of any unresolved questions or claims concerning the tax
liability of SuperShuttle. SuperShuttle has not filed any consent agreement
under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a "subsection (f) asset" as defined in Section
341(f)(4) of the Code) owned by SuperShuttle. SuperShuttle (i) is not and has
not been a member of an affiliated group filing a consolidated federal income
tax return (other than an affiliated group the common parent of which was
SuperShuttle) and (ii) does not have any liability for taxes of any person
(other than SuperShuttle) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law) as a transferee or successor
by contract or otherwise. SuperShuttle is not a party to a tax sharing or
allocation agreement nor does SuperShuttle owe any amount under any such
agreement. SuperShuttle is not obligated to make any payments and is not a party
to any agreement that under certain circumstances could obligate it to make any
payments that, either in whole or in part, would be nondeductible under Sections
280G or 162 of the Code. SuperShuttle has not been a "United States real
property holding corporation" (within the meaning of Section 897(c)(2) of the
Code) at any time within the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
2.13 Contracts and Commitments.
(a) Except as set forth in the SuperShuttle Disclosure Schedule,
SuperShuttle is not a party to any agreement, contract, plan or guaranty
as set forth herein that is material to the conduct of its business as a
whole. The condition of materiality underlies each of the following items:
(i) collective bargaining agreement or contract with any labor union; (ii)
bonus, pension, profit sharing, retirement, or other form of deferred
compensation plan; (iii) medical insurance or similar plan or practice,
whether formal or informal; (iv) contract for the employment of any
officer, employee, or other person
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<PAGE> 15
on a full-time or consulting basis or relative to severance pay or
change-in-control benefits for any such person; (v) agreement or indenture
relating to the borrowing of money in excess of $100,000 or to mortgaging,
pledging or otherwise placing a lien on any assets of SuperShuttle which
has a fair market value in excess of $100,000 in the aggregate; (vi)
guaranty of any obligation for borrowed money or otherwise, other than
endorsements made for collection; (vii) lease or agreement under which it
is lessor of, or permits any third party to hold or operate, any property,
real or personal; (viii) contract or group of related contracts with the
same party for the purchase of products or services, under which the
undelivered balance of such products and services has a purchase price in
excess of $100,000; (ix) contract or group of related contracts with the
same party for the sale of products or services under which the
undelivered balance of such products or services has a sales price in
excess of $100,000; (x) other contract or group of related contracts with
the same party continuing over a period of more than twelve (12) months
from the date or dates thereof or involving more than $100,000; (xi)
material contract relating to the distribution of SuperShuttle's products;
(xii) franchise agreement; or (xiii) other agreement material to
SuperShuttle's business or not entered into in the ordinary course of
business.
(b) Except as specifically disclosed in the SuperShuttle Disclosure
Schedule: (i) SuperShuttle's relations with customers and suppliers are
current and good; (ii) since the date of the December 31, 1997
SuperShuttle Balance Sheet, no significant customer or supplier has
indicated that it will stop or materially decrease the rate of business
done with SuperShuttle, except for changes in the ordinary course of
SuperShuttle's business; (iii) SuperShuttle has performed all material
obligations required to be performed by it in connection with the
contracts or commitments described herein and SuperShuttle has not been
advised of or received any claim of default under any such contract or
commitment; (iv) SuperShuttle has no present expectation or intention of
not fully performing any obligation pursuant to any contract or
commitment; and (v) SuperShuttle has no knowledge of any breach or
anticipated breach by any other party to any contract or commitment.
2.14 Restrictions on Business Activities. Except as set forth in the
SuperShuttle Disclosure Schedule, there is no agreement (noncompete or
otherwise), commitment, judgment, injunction, order or decree to which
SuperShuttle is a party or otherwise binding on SuperShuttle which has or
reasonably could be expected to have the effect of prohibiting or impairing any
business practice of SuperShuttle.
2.15 Intellectual Property Rights.
(a) The SuperShuttle Disclosure Schedule lists all of SuperShuttle's
federal, state and foreign registrations of trademarks, service marks and
other marks, trade names or other trade rights, and all pending
applications for any such registrations, all other trademarks and other
marks, trade names and other trade rights, or in which SuperShuttle has
any interest whatsoever, and all other trade secrets and other
intellectual property rights, whether or not registered, created or used
by or on behalf of SuperShuttle, in each case relating to its business
(collectively, "Intellectual Property Rights"). The
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<PAGE> 16
Intellectual Property Rights listed in the SuperShuttle Disclosure
Schedule are all those used by SuperShuttle in connection with its
business.
(b) No person has a right to receive a royalty or similar payment in
respect of any Intellectual Property Rights. SuperShuttle has no licenses
granted, sold or otherwise transferred by or to it or other agreements to
which it is a party, relating in whole or in part to any of the
Intellectual Property Rights, except as set forth in the SuperShuttle
Disclosure Schedule.
(c) SuperShuttle owns and has the sole right to use each of the
Intellectual Property Rights. None of the Intellectual Property Rights is
involved in any pending or threatened litigation. SuperShuttle has not
received any notice of invalidity or infringement of any rights of others
with respect to such Intellectual Property Rights. SuperShuttle has taken
all reasonable and prudent steps to protect the Intellectual Property
Rights from infringement by any other firm, corporation, association or
person. SuperShuttle's use of the Intellectual Property Rights is not
infringing upon or otherwise violating the rights of any third party in or
to such Intellectual Property Rights, nor has such infringement been
alleged by any third party. All of the Intellectual Property Rights are
valid and enforceable rights of SuperShuttle and will not cease to be
valid and in full force and effect by reason of the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated by this Agreement.
2.16 Litigation. Except as set forth in the SuperShuttle Disclosure
Schedule or the SuperShuttle Financial Statements, there are no actions, suits,
proceedings, orders or investigations pending or, to the knowledge of
SuperShuttle, threatened against SuperShuttle, at law or in equity, or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, and there is no
basis known to SuperShuttle for any of the foregoing. Except as set forth in the
SuperShuttle Disclosure Schedule, SuperShuttle has not received any opinion or
legal advice to the effect that SuperShuttle is exposed from a legal standpoint
to any material liability. No governmental entity has at any time challenged or
questioned the legal right of SuperShuttle to offer or provide any of its
services in the present manner or style thereof.
2.17 Brokers' Fees. SuperShuttle is not liable for any brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement.
2.18 Compliance With Laws; Permits; Certain Operations. SuperShuttle and
its officers, directors, agents and employees have complied in all material
respects with all applicable laws and regulations of foreign, federal, state and
local governments and all agencies thereof which affect the business or any
owned or leased properties of SuperShuttle and to which SuperShuttle may be
subject, and no claims have been filed against SuperShuttle alleging a violation
of any such law or regulation, except as set forth in the SuperShuttle
Disclosure Schedule. Without limiting the generality of the foregoing,
SuperShuttle has not violated, or received a notice or charge asserting any
violation of, the Occupational Safety and Health Act of 1970, or any other state
or federal acts (including rules and regulations thereunder) regulating
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<PAGE> 17
or otherwise affecting employee health and safety. SuperShuttle has not given or
agreed to give any money, gift or similar benefit (other than incidental gifts
of articles of nominal value) to any actual or potential customer, governmental
employee or any other person in a position to assist or hinder SuperShuttle in
connection with any actual or proposed transaction. SuperShuttle holds all
material permits, licenses, certificates and other authorizations of foreign,
federal, state and local governmental agencies required for the conduct of its
business.
2.19 Disclosure. Neither this Agreement nor any of the schedules or
exhibits hereto contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading, and there is
no fact which has not been disclosed to PTI that materially affects adversely or
could reasonably be anticipated to materially affect adversely the assets,
financial condition or operating results, customer, employee or supplier
relations, business condition or prospects, or financing arrangements of
SuperShuttle.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PTI AND THE SHAREHOLDERS
PTI and the Shareholders hereby represent and warrant to SuperShuttle and
Merger Sub as of the date hereof, and again at the Effective Time (subject to
any changes permitted or contemplated hereby), each of the following, all of
which are made jointly and severally by PTI and the Shareholders who agree to be
bound to and liable for the representations and warranties set forth below and
all other obligations of PTI under this Agreement. Each of the following
representations and warranties are qualified to the extent set forth in the
disclosure schedule that has been delivered to SuperShuttle simultaneously with
the execution and delivery of this Agreement (the "PTI Disclosure Schedule").
The PTI Disclosure Schedule describes exceptions to each applicable
representation below by section numbers corresponding to the section number of
the applicable qualified representation.
3.1 Organization and Qualification. PTI is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
and has the requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted in every jurisdiction
where the failure to do so would have a material adverse effect on its business,
properties or ability to conduct the business currently conducted by it. The
copies of the Articles of Incorporation and Bylaws of PTI previously furnished
to SuperShuttle are correct and complete and reflect all amendments thereto.
3.2 Authority Relative to This Agreement. PTI has the requisite corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by PTI and
the consummation by PTI of the transactions contemplated hereby have been duly
authorized by PTI, and no other corporate proceedings on the part of PTI are
necessary to authorize this Agreement and such transactions (other than the
approval of the Shareholders). This Agreement has been duly executed and
delivered by PTI and, assuming the due authorization and delivery thereof by
SuperShuttle and Merger Sub, constitutes a valid and binding obligation of PTI,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization
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<PAGE> 18
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity. Except as set forth in the PTI Disclosure
Schedule, PTI is not subject to, or obligated under, any provision of (a) its
Articles of Incorporation or Bylaws, (b) any material agreement, arrangement or
understanding, (c) any material license, franchise or permit, or (d) any law,
regulation, order, judgment or decree, which would be breached or violated, or
in respect of which a right of termination or acceleration would arise or any
encumbrance on any of its or its subsidiaries' assets would be created, by PTI's
execution, delivery and performance of this Agreement and the consummation by it
of the transactions contemplated hereby. Except for such filings to be made
pursuant to the Merger Statutes in order to effect the Merger, no authorization,
consent or approval of, or filing with, any public body, court or authority is
necessary on the part of PTI for the consummation by PTI of the transactions
contemplated by this Agreement.
3.3 Capitalization. The authorized equity capitalization of PTI consists
of 1,000,000 shares of Common Stock. As of the date hereof, 5,000 shares of
Common Stock are issued and outstanding, all of which shares are validly issued,
fully paid and nonassessable. All of the issued and outstanding shares of Common
Stock of PTI are owned by the Shareholders. Except as set forth in Section 3.3
of the PTI Disclosure Schedule, there are no options, warrants, conversion
privileges or other rights, agreements, arrangements or commitments obligating
PTI to issue or sell any shares of capital stock or securities or obligations of
any kind convertible into or exchangeable for any shares of capital stock
thereof or of any other corporation, nor are there any stock appreciation,
phantom stock or similar rights outstanding based upon the book value or any
other attribute of PTI. No holders of outstanding shares of PTI Common Stock are
entitled to any preemptive or other similar rights. There are no obligations,
contingent or otherwise, of PTI to repurchase, redeem or otherwise acquire any
shares of PTI or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any entity other than guarantees of
bank obligations of subsidiaries entered into in the ordinary course of
business. Upon consummation of the Merger, SuperShuttle will own, directly or
indirectly, the entire equity interest in PTI, and there will be no options,
warrants, conversion privileges or other rights, agreements, arrangements or
commitments obligating PTI to issue or sell any shares of capital stock of PTI
or any other corporation.
3.4 Financial Statements. The consolidated financial statements of PTI for
the fiscal years ended December 31, 1995, 1996 and 1997, and for the interim
period ended February 28, 1998, (the "PTI Financial Statements") have been
delivered to SuperShuttle and were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved and present fairly and accurately the consolidated financial
position, results of operations, and cash flows of PTI as of the dates and for
the periods indicated therein, subject, in the case of unaudited interim
statements, to normal year-end accounting adjustments.
3.5 Subsidiaries. Except as set forth in the PTI Disclosure Schedule, PTI
does not have any Subsidiaries and does not otherwise own any stock, partnership
interest, joint venture interest, or any other security issued by or equity
interest in any other corporation, organization or entity.
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<PAGE> 19
3.6 Absence of Undisclosed Liabilities. PTI has no obligations or
liabilities (whether accrued, absolute, contingent, liquidated, unliquidated or
otherwise, whether due or to become due and regardless of when asserted), except
(a) obligations under contracts or commitments described in Section 3.6 of the
PTI Disclosure Schedule; (b) liabilities reflected on the balance sheet of PTI
as of February 28, 1998 (the "February 28, 1998 PTI Balance Sheet") included in
the PTI Financial Statements; (c) liabilities which have arisen in the ordinary
course of business after December 31, 1997 (none of which is an uninsured
liability for breach of contract, breach of warranty, tort, infringement, claim
or lawsuit); and (d) liabilities which are not material in scope or amount.
3.7 No Material Adverse Changes. Except as set forth in the PTI Disclosure
Schedule, since December 31, 1997, there has not been any material adverse
change in the assets, financial condition or operating results of PTI, taken as
a whole.
3.8 Absence of Certain Developments. Except as set forth in the PTI
Disclosure Schedule or except as contemplated in this Agreement, since December
31, 1997, PTI has not:
(a) changed its accounting methods or practices (including any
change in depreciation or amortization policies or rates) or revalued any
of its assets;
(b) redeemed or purchased, directly or indirectly, any shares of its
capital stock, or declared or paid any dividends or distributions with
respect to any shares of its capital stock;
(c) issued or sold any equity securities of it, securities
convertible into or exchangeable for equity securities of it, warrants,
options or other rights to acquire equity securities of it, or bonds or
other securities of it;
(d) borrowed any amount under existing lines of credit or otherwise
or incurred or become subject to any indebtedness, except as reasonably
necessary for the ordinary operation of PTI's business and in a manner and
in amounts that are in keeping with the historical practice of PTI;
(e) discharged or satisfied any lien or encumbrance or paid any
liability, other than current liabilities and related liens (or current
installments due on intermediate or long-term liabilities) paid or
satisfied in the ordinary course of business;
(f) mortgaged, pledged or subjected to any lien, charge or other
encumbrance, any assets of PTI with a fair market value in excess of
$25,000 in the aggregate, except liens for current property taxes not yet
due and payable;
(g) sold, assigned or transferred (including, without limitation,
transfers to any employees, shareholders or affiliates of PTI) any
tangible assets, except in the ordinary course of business;
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(h) sold, assigned or transferred (including, without limitation,
transfers to any employees, shareholders or affiliates of PTI) any
patents, trademarks, trade names, copyrights, trade secrets or other
intangible assets, or disclosed any proprietary or confidential
information, to any person other than SuperShuttle or Merger Sub, except
in the ordinary course of business;
(i) materially changed the pricing or royalties set or charged by
PTI to its customers or licensees or agreed to any material change in the
pricing or royalties set or charged by persons who have licensed
Intellectual Property Rights (as described in Section 3.15) to PTI;
(j) canceled, waived or compromised any right, claim or debt, other
than the write-off or compromise of any account receivable in the ordinary
course of business and consistent with past practice;
(k) suffered any material theft, damage, destruction or loss of or
to any property or properties owned or used by it, whether or not covered
by insurance;
(l) increased the annualized level of compensation of or granted any
extraordinary bonuses, benefits or other forms of direct or indirect
compensation to any employee, officer, director or consultant, or
terminated, amended or otherwise modified any plans for the benefit of
employees, except in the ordinary course of business and consistent with
historical adjustments to such compensation and benefits;
(m) made any capital expenditures or commitments therefor, that
aggregate in excess of $25,000;
(n) made any loans or advances to, or guarantees for the benefit of,
any persons (other than advances to sales personnel in the ordinary course
of business);
(o) engaged or agreed to engage in any extraordinary transactions or
distributions, or, except in the ordinary course of business, entered into
any contract, written or oral, that involves consideration or performance
by PTI of a value exceeding $25,000 or a term exceeding twelve (12)
months; or
(p) taken any other action or entered into any other transaction
other than in the ordinary course of business and in accordance with past
custom and practice, or entered into any transaction with any Insider (as
defined in Section 3.21).
3.9 Title to and Condition of Properties.
(a) PTI owns good and marketable title to the properties and assets
reflected on the December 31, 1997 PTI Balance Sheet or acquired since the
date thereof, free and clear of all liens and encumbrances, except for (A)
liens for current taxes not yet due and payable, (B) liens described in
Section 3.6 of the PTI Disclosure Schedule, (C) the
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properties subject to the leases set forth in Section 3.9(a) of the PTI
Disclosure Schedule, and (D) assets disposed of since December 31, 1997,
in the ordinary course of business.
(b) (i) PTI does not own any real estate; (ii) the properties
subject to the real property leases described in Section 3.9(b) of the PTI
Disclosure Schedule constitute all of the real estate used or occupied by
PTI (the "PTI Real Estate"), and (iii) PTI Real Estate has access,
sufficient for the conduct of PTI's business, to public roads and to all
utilities, including electricity, sanitary and storm sewer, potable water,
natural gas and other utilities, used in the operations of PTI.
(c) The real property leases described in Section 3.9(c) of the PTI
Disclosure Schedule are in full force and effect, and PTI has a valid and
existing leasehold interest under each such lease for the term set forth
therein. PTI has delivered to SuperShuttle complete and accurate copies of
each of the leases and none of such leases has been modified in any
respect, except to the extent that such modifications are disclosed by the
copies delivered to SuperShuttle. PTI is not in default, and no
circumstances exist which could result in such default, under any of such
leases, nor, to the knowledge of PTI, is any other party to any of such
leases in default.
(d) All of the buildings, machinery, equipment and other tangible
assets necessary for the conduct of PTI's business are in good condition
and repair, ordinary wear and tear excepted, and are usable in the
ordinary course of business. A complete list of all items of machinery and
equipment used in the business of PTI is included as Section 3.9(d) of the
PTI Disclosure Schedule. PTI owns or leases under valid leases, all
buildings, machinery, equipment and other tangible assets necessary for
the conduct of its business. PTI has delivered to SuperShuttle complete
and accurate copies of all equipment leases and such leases are listed in
the PTI Disclosure Schedule. None of such equipment leases has been
modified in any respect, except to the extent that such modifications are
disclosed by the copies delivered to SuperShuttle. PTI is not in default,
and no circumstances exist which could result in such default, under any
of such equipment leases, nor, to the knowledge of PTI, is any other party
to any of such equipment leases in default.
(e) PTI is not in any material respect in violation of any
applicable zoning ordinance or other law, regulation or requirement
relating to the operation of any properties used in the operation of its
business, and PTI has not received any notice of any such violation, or of
the existence of any condemnation proceeding with respect to any
properties owned or leased by PTI.
3.10 Environmental Matters. Except as set forth in the PTI Disclosure
Schedule, PTI (i) has obtained all applicable permits, licenses and other
authorizations (a list of which is set forth in the PTI Disclosure Schedule)
which are required under federal, state or local laws relating to pollution or
protection of the environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, or hazardous or
toxic materials or wastes into ambient air, surface water, ground water, or land
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or
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handling of pollutants, contaminants or hazardous or toxic materials or wastes
by PTI (or its agents); (ii) is in compliance with all terms and conditions of
any required permits, licenses and authorizations, and with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in such laws or in any
regulation, code, plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder; (iii) is not aware of nor has it
received notice of any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding, based on or resulting from PTI's (or any agent's) manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, or release into the environment, of any
pollutant, contaminant, or hazardous or toxic material or waste; and (iv) has
taken all actions necessary under applicable requirements of such federal, state
or local laws, rules or regulations to register any products or materials
required to be registered by PTI (or its agents) thereunder; and (v) has neither
disposed of nor handled any hazardous substance.
3.11 Accounts Receivable. PTI's notes and accounts receivable recorded on
the February 28, 1998 PTI Balance Sheet and those arising since the date thereof
are valid and collectible in accordance with their terms, subject to no valid
counterclaims or setoffs, other than to the extent of the reserves set forth on
the books and records of PTI or as disclosed in the PTI Disclosure Schedule. All
such accounts receivable of PTI arose in the ordinary course of business and are
carried at values determined in accordance with generally accepted accounting
principles consistently applied.
3.12 Tax Matters. Except as set forth in the PTI Disclosure Schedule, PTI
has filed all federal, foreign, state, county and local income, excise,
property, sales and other tax returns which are required to be filed by it for
all periods prior to the Effective Time, and all such returns are true and
correct; all taxes due and payable by PTI (whether or not shown on any tax
return) for all periods prior to the Effective Time have been paid; PTI's
reserves and provisions for taxes on the balance sheets included in the PTI
Financial Statements are sufficient for all accrued and unpaid taxes as of the
dates of such balance sheets; PTI has paid all taxes due and payable by it or
which it is obligated to withhold from amounts owing to any employee, creditor,
or third party; PTI has not waived any statute of limitations in respect of
taxes or agreed to any extension of time with respect to a tax assessment or
deficiency; to the best knowledge of PTI, the assessment of any additional taxes
relating to PTI for periods for which returns have been filed is not expected;
and PTI has not received notice of any unresolved questions or claims concerning
the tax liability of PTI. PTI has not filed any consent agreement under Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a "subsection (f) asset" as defined in Section 341(f)(4) of the
Code) owned by PTI. PTI (i) is not and has not been a member of an affiliated
group filing a consolidated federal income tax return (other than an affiliated
group the common parent of which was PTI) and (ii) does not have any liability
for taxes of any person (other than PTI) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor by contract or otherwise. PTI is not a party to a tax
sharing or allocation agreement nor does PTI owe any amount under any such
agreement. PTI is not obligated to make any payments and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments
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that, either in whole or in part, would be nondeductible under Sections 280G or
162 of the Code. PTI has not been a "United States real property holding
corporation" (within the meaning of Section 897(c)(2) of the Code) at any time
within the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
3.13 Contracts and Commitments.
(a) Except as set forth in the PTI Disclosure Schedule, PTI is not a
party to any: (i) collective bargaining agreement or contract with any
labor union; (ii) bonus, pension, profit sharing, retirement, or other
form of deferred compensation plan; (iii) medical insurance or similar
plan or practice, whether formal or informal; (iv) contract for the
employment of any officer, employee, or other person on a full-time or
consulting basis or relative to severance pay or change-in-control
benefits for any such person; (v) agreement or indenture relating to the
borrowing of money in excess of $25,000 or to mortgaging, pledging or
otherwise placing a lien on any assets of PTI which has a fair market
value in excess of $25,000 in the aggregate; (vi) guaranty of any
obligation for borrowed money or otherwise, other than endorsements made
for collection; (vii) lease or agreement under which it is lessor of, or
permits any third party to hold or operate, any property, real or
personal; (viii) contract or group of related contracts with the same
party for the purchase of products or services, under which the
undelivered balance of such products and services has a purchase price in
excess of $25,000; (ix) contract or group of related contracts with the
same party for the sale of products or services under which the
undelivered balance of such products or services has a sales price in
excess of $25,000; (x) other contract or group of related contracts with
the same party continuing over a period of more than twelve (12) months
from the date or dates thereof or involving more than $25,000; (xi)
material contract relating to the distribution of PTI's products; (xii)
franchise agreement; or (xiii) other agreement material to PTI's business
or not entered into in the ordinary course of business.
(b) PTI has attached to the PTI Disclosure Schedule or otherwise
furnished to SuperShuttle a true and correct copy of each written contract
or commitment, and a written description of each oral contract or
commitment, referred to in this Section 3.13, together with all
amendments, waivers or other changes thereto.
(c) Except as specifically disclosed in the PTI Disclosure Schedule:
(i) PTI's relations with customers and suppliers are current and good;
(ii) since the date of the December 31, 1997 PTI Balance Sheet, no
significant customer or supplier has indicated that it will stop or
materially decrease the rate of business done with PTI, except for changes
in the ordinary course of PTI's business; (iii) PTI has performed all
material obligations required to be performed by it in connection with the
contracts or commitments described herein and PTI has not been advised of
or received any claim of default under any such contract or commitment;
(iv) PTI has no present expectation or intention of not fully performing
any obligation pursuant to any contract or commitment; and (v) PTI has no
knowledge of any breach or anticipated breach by any other party to any
contract or commitment.
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3.14 Restrictions on Business Activities. Except as set forth in the PTI
Disclosure Schedule, there is no agreement (noncompete or otherwise),
commitment, judgment, injunction, order or decree to which PTI is a party or
otherwise binding on PTI which has or reasonably could be expected to have the
effect of prohibiting or impairing any business practice of PTI.
3.15 Intellectual Property Rights.
(a) The PTI Disclosure Schedule lists all of PTI's federal, state
and foreign registrations of trademarks, service marks and other marks,
trade names or other trade rights, and all pending applications for any
such registrations, all other trademarks and other marks, trade names and
other trade rights, or in which PTI has any interest whatsoever, and all
other trade secrets and other intellectual property rights, whether or not
registered, created or used by or on behalf of PTI, in each case relating
to its business (collectively, "Intellectual Property Rights"). The
Intellectual Property Rights listed in the PTI Disclosure Schedule are all
those used by PTI in connection with its business.
(b) No person has a right to receive a royalty or similar payment in
respect of any Intellectual Property Rights. PTI has no licenses granted,
sold or otherwise transferred by or to it or other agreements to which it
is a party, relating in whole or in part to any of the Intellectual
Property Rights, except as set forth in the PTI Disclosure Schedule.
(c) PTI owns and has the sole right to use each of the Intellectual
Property Rights. None of the Intellectual Property Rights is involved in
any pending or threatened litigation. PTI has not received any notice of
invalidity or infringement of any rights of others with respect to such
Intellectual Property Rights. PTI has taken all reasonable and prudent
steps to protect the Intellectual Property Rights from infringement by any
other firm, corporation, association or person. PTI's use of the
Intellectual Property Rights is not infringing upon or otherwise violating
the rights of any third party in or to such Intellectual Property Rights,
nor has such infringement been alleged by any third party. All of the
Intellectual Property Rights are valid and enforceable rights of PTI and
will not cease to be valid and in full force and effect by reason of the
execution, delivery and performance of this Agreement or the consummation
of the transactions contemplated by this Agreement.
3.16 Litigation. Except as set forth in the PTI Disclosure Schedule, there
are no actions, suits, proceedings, orders or investigations pending or, to the
knowledge of PTI, threatened against PTI, at law or in equity, or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, and there is no
basis known to PTI for any of the foregoing. Except as set forth in the PTI
Disclosure Schedule, PTI has not received any opinion or legal advice to the
effect that PTI is exposed from a legal standpoint to any material liability. No
governmental entity has at any time challenged or questioned the legal right of
PTI to offer or provide any of its services in the present manner or style
thereof.
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3.17 Brokers' Fees. PTI is not liable for any brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement.
3.18 Employment. Except as set forth in the PTI Disclosure Schedule: (i)
no key executive employee of PTI and no group of PTI's other employees has any
plans to terminate his, her or its employment; (ii) PTI has no material labor
relations problems pending; and (iii) its labor relations are satisfactory in
all material respects. PTI has complied in all material respects with all laws
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity and collective bargaining, and has paid all
social security and other similar taxes.
3.19 Employee Benefit Plans.
(a) With respect to the employees and former employees of PTI,
except as set forth in the PTI Disclosure Schedule, PTI does not presently
maintain, contribute to or have any liability (including current or
potential multi-employer plan withdrawal liability under ERISA) under any
(i) nonqualified deferred compensation or retirement plan or arrangement
which is an "employee pension benefit plan" as such term is defined in
Section 3(2) of ERISA, (ii) defined contribution retirement plan or
arrangement designed to satisfy the requirements of Section 401(a) of the
Code, which is an employee pension benefit plan, (iii) defined benefit
pension plan or arrangement designed to satisfy the requirements of
Section 401(a) of the Code, which is an employee pension benefit plan,
(iv) "multi-employer plan" as such term is defined in Section 3(37) of
ERISA, (v) unfunded or funded medical, health or life insurance plan or
arrangement for present or future retirees or present or future terminated
employees which is an "employee welfare benefit plan" as such term is
defined in Section 3(1) of ERISA, except as required by Section 4980B of
the Code or Sections 601 through 609 of ERISA, or (vi) any other employee
welfare benefit plan.
(b) With respect to each of the employee benefit plans listed in the
PTI Disclosure Schedule, PTI has furnished to SuperShuttle true and
complete copies of (i) the plan documents (including any related trust
agreements), (ii) the most recent determination letter received from the
Internal Revenue Service, (iii) the latest actuarial valuation, (iv) the
latest financial statement, (v) the last Form 5500 Annual Report, and (vi)
all related trust agreements, insurance contracts or other funding
agreements which implement such employee benefit plan. Neither PTI nor any
of its directors, officers, employees or any other "fiduciary," as such
term is defined in Section 3(21) of ERISA, has any liability for failure
to comply with ERISA or the Code for any action or failure to act in
connection with the administration or investment of such plans.
(c) With respect to each plan listed in the PTI Disclosure Schedule:
(i) PTI has performed in all material respects all obligations required to
be performed by it under each such plan and each such plan has been
established and maintained in all material respects in accordance with its
terms and in compliance with all applicable laws, statutes, rules, and
regulations, including but not limited to the Code and ERISA; (ii) there
are no actions, suits or claims pending or, to the knowledge of PTI,
threatened (other than
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routine claims for benefits) against any such plan; (iii) each such plan
can be amended or terminated after the Effective Time in accordance with
its terms, without liability to PTI; and (iv) there are no inquiries or
proceedings pending or, to the knowledge of PTI, threatened by the
Internal Revenue Service or the Department of Labor with respect to any
such plan.
(d) With respect to the insurance contracts or funding agreements
which implement any of the employee benefit plans listed in the PTI
Disclosure Schedule, such insurance contracts or funding agreements are
fully insured or the reserves under such contracts are sufficient to pay
claims incurred.
(e) Each plan listed in the PTI Disclosure Schedule that is intended
to be qualified under Section 401(a) of the Code has been determined by
the Internal Revenue Service to so qualify and each trust created
thereunder has been determined by the Internal Revenue Service to be
exempt from tax under Section 501(a) of the Code and, to the knowledge of
PTI, nothing has occurred since the date of the most recent determination
that would be reasonably likely to cause any such plan or trust to fail to
qualify under Section 401(a) of the Code.
3.20 Insurance. The PTI Disclosure Schedule lists and briefly describes
each insurance policy and fidelity bond currently maintained by PTI as well as
each such policy and bond maintained by it for the five years prior to the date
of this Agreement, with respect to its properties, assets, employees and
officers and directors and sets forth the date of expiration of each insurance
policy. All insurance policies listed as currently maintained are in full force
and effect and PTI is not in default with respect to its obligations under any
of such insurance policies. All premiums have been paid and there is no
retroactive premium adjustment obligation of any kind or character. There is no
claim of PTI pending under any of such policies or bonds as to which coverage
has been questioned, denied or disputed by the underwriters of such policies or
bonds. PTI has no knowledge of any threatened termination of, or material
premium increase with respect to, any such policies. To its knowledge, the
insurance coverage of PTI is customary for corporations of similar size engaged
in similar lines of businesses.
3.21 Insider Transactions. Except as set forth herein or in the PTI
Disclosure Schedule, no officer, director or shareholder of PTI or any member of
the immediate family of any such officer, director or shareholder, or any entity
in which any of such persons owns any beneficial interest (other than a
publicly-held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 5% of the stock of
which is beneficially owned by any of such persons) (collectively "Insiders"),
has any agreement with PTI or any interest in any property, real, personal or
mixed, tangible or intangible, used in or pertaining to the business of PTI nor
has had any such agreement or interest for the five years prior to the date of
this Agreement. For purposes of the preceding sentence, the members of the
immediate family of an officer, director or shareholder shall consist of the
spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and
daughters-in-law, and brothers- and sisters-in-law of such officer, director or
shareholder. A list of all payments made to or for the
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benefit of any Insiders during the prior five years is included within Section
3.21 of the PTI Disclosure Schedule.
3.22 Compliance With Laws; Permits; Certain Operations. PTI and its
officers, directors, agents and employees have complied in all material respects
with all applicable laws and regulations of foreign, federal, state and local
governments and all agencies thereof which affect the business or any owned or
leased properties of PTI and to which PTI may be subject, and no claims have
been filed against PTI alleging a violation of any such law or regulation,
except as set forth in the PTI Disclosure Schedule. Without limiting the
generality of the foregoing, PTI has not violated, or received a notice or
charge asserting any violation of, the Occupational Safety and Health Act of
1970, or any other state or federal acts (including rules and regulations
thereunder) regulating or otherwise affecting employee health and safety. PTI
has not given or agreed to give any money, gift or similar benefit (other than
incidental gifts of articles of nominal value) to any actual or potential
customer, supplier, governmental employee or any other person in a position to
assist or hinder PTI in connection with any actual or proposed transaction. PTI
holds all permits, licenses, certificates and other authorizations of foreign,
federal, state and local governmental agencies required for the conduct of its
business, including specifically the permits, licenses, certificates and other
authorizations described in Section 3.22 of the PTI Disclosure Schedule.
3.23 Disclosure. Neither this Agreement nor any of the schedules or
exhibits hereto contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading, and there is
no fact which has not been disclosed to SuperShuttle that materially affects
adversely or could reasonably be anticipated to materially affect adversely the
assets, financial condition or operating results, customer, employee or supplier
relations, business condition or prospects, or financing arrangements of PTI.
3.24 Minute Books. The minute books of PTI shall be made available to
counsel for SuperShuttle and those delivered shall be the only minute books of
PTI and shall contain an accurate summary of all meetings of directors (or
committees thereof) and shareholders or actions by written consent since the
time of incorporation of PTI.
ARTICLE 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each of the Shareholders hereby represents and warrants to SuperShuttle
and Merger Sub as of the date hereof, and again at the Effective Time, with
respect to itself each of the following:
4.1 Organization, Standing and Authority of Shareholders. The Shareholder
has all requisite power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby.
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4.2 Execution and Delivery; No Conflicts.
(a) This Agreement has been duly executed and delivered by
Shareholder and the agreements of Shareholder contained herein constitute
the valid and binding obligations of the Shareholder, enforceable against
Shareholder in accordance with their terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium, other laws
affecting generally the enforcement of creditors' rights, or by public
policy related to the availability of equitable remedies.
(b) The execution, delivery and performance of this Agreement by
Shareholder and the consummation of the transactions contemplated hereby
(i) have been duly and validly authorized by all necessary action on the
part of the Shareholder; and (ii) are not prohibited by, do not violate
any provision of, and will not result in the breach of, or accelerate or
permit the acceleration of the performance required by the terms of any
applicable law, rule, regulation, judgment, decree, order or other
requirement of the United States or any state of the United States, or any
court, authority, department, commission, board, bureau, agency or
instrumentality of either thereof, in a manner which would have a material
adverse affect on the ability of the Shareholder to enter into and
consummate this Agreement, or any material contract, indenture, agreement
or commitment to which Shareholder is a party or is bound in a manner
which would have a material adverse affect on Shareholder.
4.3 Consents and Approvals. The execution, delivery and performance by
Shareholder of this Agreement and the consummation by Shareholder of the
transactions contemplated hereby do not require Shareholder to obtain any
consent, approval or action of, or make any filing with or give any notice to,
any corporation, person or firm or any public, governmental or judicial
authority except: (a) such as have been duly obtained or made, as the case may
be, and are in full force and effect on the date hereof; and (b) those which the
failure to obtain would have no material adverse affect on the transactions
contemplated hereby.
4.4 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Shareholder directly
with the other parties hereto, without the intervention of any person on behalf
of Shareholder in such manner as to give rise to any claim by any person against
the Company, PTI or Shareholders for a finder's fee, brokerage commission or
similar payment.
4.5 Securities Laws Compliance. The securities to be acquired by
Shareholders under the terms of this Agreement will be acquired for
Shareholder's own account for the purpose of investment and not with the present
intention of public resale or public distribution of all or any part of the
securities. Each Shareholder agrees that he/she will refrain from transferring
or otherwise disposing of any of the securities, or any interest therein, in
such manner as to violate the Securities Act of 1933 (the "Securities Act"), as
amended, or of any applicable state securities law regulating the disposition
thereof. Shareholder agrees that the certificates representing the securities
shall bear legends to the effect that such securities have not been registered
under the Securities Act or any applicable state securities laws and that no
interest
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therein may be transferred or otherwise disposed of in violation of the
provisions thereof or of the rules and regulations issued thereunder.
4.6 Shareholder Experience and Investment Representations.
(a) The Shareholder is able to bear the economic risk of an
investment in the securities acquired by it pursuant to this Agreement and
can afford to sustain a total loss on such investment.
(b) The Shareholder is an experienced and sophisticated investor and
has such knowledge and experience in financial and business matters that
it is capable of evaluating the risks and merits of acquiring the
SuperShuttle securities. The Shareholder has not been formed or organized
for the specific purpose of acquiring the securities. The Shareholder has
had, during the course of this transaction and prior to its acquisition of
the SuperShuttle securities, the opportunity to ask questions of, and
receive answers from, SuperShuttle and its management concerning
SuperShuttle and the terms and conditions of this Agreement. The
Shareholder hereby acknowledges that it or its representatives has
received all such information as it considers necessary for evaluating the
risks and merits of acquiring the securities and for verifying the
accuracy of any information furnished to it or to which it had access. The
Shareholder represents and warrants that the nature and amount of the
securities it is purchasing is consistent with its investment objectives,
abilities and resources.
(c) The Shareholder, by reason of its business or financial
experience and the business or financial experience of its professional
advisors (who are unaffiliated with and who are not compensated by the
Company or any affiliate or selling agent of the Company, directly or
indirectly), has the capacity to protect its own interest in connection
with the purchase of the securities. The Shareholder has consulted with
counsel of its own choosing in making an informed decision with respect to
the Merger consideration and the terms of this Agreement.
(d) The Shareholder is an "accredited investor" as defined in and
for purposes of Rule 501 and Regulation D promulgated by the Securities
and Exchange Commission ("SEC") under the Securities Act.
ARTICLE 5
CONDUCT PENDING AND SUBSEQUENT TO THE MERGER
5.1 Conduct of Business Pending the Merger. PTI covenants and agrees that,
prior to the Effective Time, unless SuperShuttle shall otherwise agree in
writing or as otherwise expressly contemplated or permitted by this Agreement:
(a) PTI (i) shall conduct its business only in the ordinary course,
on an arm's length basis and in accordance with all applicable laws, rules
and regulations and past custom and practice; (ii) shall maintain its
facilities in good operating condition, ordinary wear and tear excepted;
and (iii) shall use its reasonable best efforts to preserve intact
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its business organization and goodwill, keep available the services of its
officers and employees as a group and maintain satisfactory relationships
with suppliers, distributors, customers and others having business
relationships with it;
(b) PTI (i) shall confer on a regular basis and upon demand with
representatives of SuperShuttle and report operational matters and the
general status of ongoing operations; (ii) shall notify SuperShuttle of
any emergency or other change in the normal course of its business or in
the operation of its properties and of any governmental or third party
complaints, investigations or hearings (or communications indicating that
the same may be contemplated); and (iii) shall not take any action which
would render, or which reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue at, or at
any time prior to, the Effective Time;
(c) PTI shall not, directly or indirectly, do or permit to occur any
of the following: (i) amend or propose to amend its Articles of
Incorporation or Bylaws; (ii) issue, sell, pledge, dispose of or encumber
(A) any additional shares of, or any options, warrants, conversion
privileges or rights of any kind to acquire any shares of, any of its
capital stock (other than pursuant to the exercise of previously granted
options) or (B) any of its assets, except in the ordinary course of
business consistent with past practices; (iii) split, combine or
reclassify any of its outstanding shares, or declare, set aside or pay any
dividend or other distribution payable in cash, stock, property or
otherwise with respect to any shares of its capital stock; (iv) redeem,
purchase or acquire or offer to acquire any shares of its capital stock;
(v) acquire (by merger, exchange, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or material assets thereof or any
interest therein; (vi) incur any indebtedness for borrowed money or issue
any debt securities (other than in the ordinary course of business and in
amounts consistent with past practices); (vii) make any loans (except for
advances to sales personnel in the ordinary course of business and
consistent with past practice); (viii) enter into any Insider
transactions; or (ix) enter into or propose to enter into, or modify or
propose to modify, any agreement, arrangement or understanding with
respect to any of the matters set forth in this Section 5.1(c);
(d) PTI shall not, directly or indirectly, enter into or modify any
contract, agreement or understanding, written or oral, that involves
consideration or performance of PTI, as the case may be, of a value
exceeding $25,000 or a term exceeding twelve months, except in the
ordinary course of business and consistent with past practice;
(e) PTI shall not enter into or modify any employment, severance or
similar agreements or arrangements with, or grant any bonuses, salary
increases, or severance or termination pay to, any officers, directors,
employees or consultants other than in the ordinary course of business and
consistent with past practice;
(f) PTI shall not adopt or amend in any material respect any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation,
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employment or other benefit plan, trust, fund or group arrangement for the
benefit or welfare of any officers, directors or employees; and
(g) PTI shall not allow its current insurance policies to be
canceled or terminated or any of the coverage thereunder to lapse, unless
simultaneous with such termination, cancellation or lapse, replacement
policies providing coverage equal to or greater than the coverage under
the canceled, terminated or lapsed policies for substantially similar
premiums are in full force and effect.
5.2 Conduct Subsequent to the Merger.
(a) SuperShuttle agrees and covenants to use its best efforts to
consummate an initial public offering of SuperShuttle Common Stock within
a reasonable period of time, which shall not exceed 130 days from the date
of this Agreement. If SuperShuttle does not consummate an initial public
offering of SuperShuttle Common Stock within such period, the Shareholders
shall have the right to repurchase, at fair market value, all of the
shares of PTI Common Stock transferred to SuperShuttle. PTI will be
responsible for payment of its own and its Shareholders' fees and expenses
in connection with the exercise of such repurchase right. Each of
SuperShuttle and PTI agree that if the Shareholders exercise the
repurchase right referenced above, the exchange of PTI's SuperShuttle
Common Stock for PTI Common Stock will occur with no liability on the part
of SuperShuttle as to the condition of PTI during the time SuperShuttle
was in possession of the PTI Common Stock.
(b) Until the earlier of (a) an underwritten public offering by
SuperShuttle of its common stock pursuant to an effective registration
statement under the Securities Act, or (b) 60 days after July 31, 1998,
SuperShuttle shall (i) not cause the Surviving Corporation to make any
material changes in its business, operations, facilities or personnel
unless such change is approved by the holders of a majority of the stock
issued pursuant to Section 1.5(a), (ii) shall use its best efforts to
preserve intact the business organization and goodwill of the Surviving
Corporation, (iii) will not cause the Surviving Corporation to take any of
the actions described in Section 5.1(c) and (iv) shall devote reasonable
financial and personnel resources to the Surviving Corporation.
(c) Each of SuperShuttle and PTI covenant and agree that
SuperShuttle shall have the right (for thirty (30) days following the
applicable target date) to repurchase, at fair market value, all of the
SuperShuttle Common Stock to be transferred to PTI in connection with the
Merger, if either of the conditions in Section 7.4 are not satisfied.
Supershuttle will be responsible for payment of its own fees and expenses
in connection with the exercise of such repurchase right.
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(d) The parties intend to effect the Merger as a tax-free
reorganization. SuperShuttle undertakes to do all things reasonably
necessary to effect the transaction in a tax-free manner as requested by
PTI, provided such actions do not affect the underlying economics of the
transaction for SuperShuttle. However, SuperShuttle shall not be
responsible for any set of circumstances that affect the tax-free nature
of the transaction.
(e) SuperShuttle agrees to undertake to remove the Shareholders as
personal guarantors of any and all loans and leases of the Surviving
Corporation and to replace the Shareholders as the guarantors of such
obligations, provided that there has been no personal wrongdoing or
misrepresentation on the part of the Shareholders in connection with such
obligations. This assumption of personal guarantees will take effect upon
the later of (a) an underwritten public offering by SuperShuttle of its
common stock pursuant to an effective registration statement under the
Securities Act or (b) 60 days after July 31, 1998. Unless and until such
personal guarantees of Shareholders have been removed, SuperShuttle agrees
to indemnify, defend and hold harmless the Shareholders from and against
any and all claims, damages and expenses arising from or related to such
personal guarantees.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Shareholders' Meeting. PTI shall promptly after the date hereof, take
all action necessary in accordance with California Law and its Articles of
Incorporation and Bylaws to convene a meeting of the Shareholders to consider
the Merger (the "PTI Shareholders Meeting") (or solicit the written consent of
the Shareholders to the Merger). PTI shall consult SuperShuttle as to the date
of the PTI Shareholders Meeting (or the date written consents are expected to be
requested) and shall not postpone or adjourn (other than for the absence of a
quorum) the PTI Shareholders Meeting without the consent of SuperShuttle. PTI
shall use its reasonable best efforts to secure the vote (or consent) of the
Shareholders required by California Law to effect the Merger. PTI has received
irrevocable consents from the Shareholders executing this Agreement to approve
the Merger and by their signatures below the Shareholders agree to all acts and
things necessary to effect the Merger on the terms hereof.
6.2 Expenses. Each of SuperShuttle, the Shareholders and PTI shall bear
their own legal and accounting fees and other expenses relating to this
transaction. In addition, PTI will bear the expenses associated with the conduct
of the required accounting audit of its books and records relating to this
transaction.
6.3 No Negotiations. Until March 31, 1998, or such later date as the
parties may mutually agree, PTI and the Shareholders agree that neither they nor
PTI's directors, officers, employees or agents (i) shall solicit, negotiate or
accept any offers for the sale of PTI or any substantial portion thereof
(whether by merger or sale of stock or assets or otherwise) or provide any
non-public information with respect thereto, or (ii) shall solicit, negotiate,
or accept any offers for the acquisition of any material business. PTI shall
promptly notify SuperShuttle if it (or to its knowledge any of the other
enumerated persons or any Shareholder) is approached by any person interested in
acquiring the assets or capital stock of PTI.
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6.4 Notification of Certain Matters. SuperShuttle and PTI shall give
prompt notice to each other of (i) the occurrence or failure to occur of any
event, which occurrence or failure would be likely to cause any representation
or warranty on its part contained in this Agreement to be untrue or inaccurate
at, or at any time prior to, the Effective Time, and (ii) any material failure
of such party, or any officer, director, shareholder, employee or agent thereof,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder.
6.5 Access to Information; Confidentiality.
(a) Until March 31, 1998, or the Effective Time each of SuperShuttle
and Merger Sub shall have the opportunity to make a complete review of the
books, records, business and affairs of PTI. Such review may be conducted
at any and all reasonable times by such persons as SuperShuttle
designates. To facilitate such review, PTI shall provide to SuperShuttle
and its agents complete access to all of its records and documents, shall
provide the other party with personal, bank and professional references,
and shall use reasonable efforts to make available for consultation
customers, employees, suppliers and distribution channels.
(b) Each of SuperShuttle, Merger Sub and PTI agrees that all
non-public information provided to the other enumerated parties will be
treated as confidential, and if this Agreement is terminated, will return
to such other parties all confidential documents (and all copies thereof)
in its possession, or will certify to the other parties that all such
documents not returned have been destroyed. Further, regardless of whether
this Agreement is terminated, each party shall continue to hold all
confidential information of the other in strictest confidence in
accordance with the Letter of Intent entered into by SuperShuttle and PTI
on March 2, 1998.
6.6 Consents; Approvals. SuperShuttle, Merger Sub and PTI shall each use
their reasonable best efforts to obtain all consents, waivers, approvals,
authorizations or orders, and each such party shall make all filings required in
connection with the authorization, execution and delivery of this Agreement by
such party and the consummation by them of the transactions contemplated hereby.
Each of SuperShuttle, Merger Sub and PTI shall furnish all information required
to be included for any application or filing to be made pursuant to the rules
and regulations of any applicable governmental body in connection with the
transactions contemplated by this Agreement.
6.7 Supplements to Disclosure Schedules. From time to time prior to the
Effective Time, SuperShuttle and PTI will each promptly supplement or amend
their respective Disclosure Schedules with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in any such Disclosure Schedule
or which is necessary to correct any information in any such Disclosure Schedule
which has been rendered inaccurate thereby. No supplement or amendment to any
such Disclosure Schedule shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Sections 7.2 or 7.3 of this
Agreement, as the case may be, except as otherwise provided in Sections 7.2(a)
and 7.3(a).
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6.8 Non-Solicitation of Employees. For a period of one year from the date
hereof, no party shall solicit, negotiate with or hire any employee of the other
party.
6.9 Election of Directors. SuperShuttle shall promptly after the date
hereof take all action necessary in accordance with Delaware Law and its
Certificate of Incorporation and Bylaws to (i) increase, effective as of the
Effective Time, the number of directors serving on the SuperShuttle Board of
Directors to accommodate the election of one (1) designee of PTI and (ii) elect,
effective as of the Effective Time, the one designee of PTI to SuperShuttle's
Board of Directors.
6.10 Confidential Information and Covenant Not To Compete. Each of the
Shareholders hereby covenants and agrees as follows:
(a) that until the later of a period of three years following the
consummation of the Merger transactions or following the termination of
the employment agreement referenced in Section 7.1(d), the Shareholder
shall not use or disclose, directly or indirectly, for any reason
whatsoever or in any way any confidential information or trade secrets of
PTI, SuperShuttle or Merger Sub, including by way of example, names or
descriptions of customers, financial statements, product or service
pricing or other information, contract proposals and bidding information,
and any other information of a proprietary or confidential character;
(b) that until the later of a period of three years following the
consummation of the Merger transactions or following the termination of
the employment agreement referenced in Section 7.1(d), the Shareholder
shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer,
director or in any other capacity whatsoever, engage or participate in any
businesses in competition in any manner whatsoever with the business of
PTI, SuperShuttle or any affiliate of either of them as such business is
presently conducted in either Orange, Los Angeles, Riverside or San Diego
counties or any county contiguous thereto (the "Applicable Counties"). Not
limiting the generality of the foregoing, the business of PTI and
SuperShuttle shall be deemed to consist of the transportation, over land,
of passengers for hire, including, by way of example, transportation to
and from airports, ports or stations of embarkation for travel, but
excluding the operation of taxis. Notwithstanding the above, the business
of Dave Koscielak as it is conducted upon the date of signature of this
Agreement is excluded from the restrictions contained in this paragraph
6.10(b) but not with respect to any business relating to shared ride
airport vans;
(c) that until the later of a period of three years following the
consummation of the Merger transactions or following the termination of
the employment agreement referenced in Section 7.1(d), the Shareholder
shall not solicit or negotiate any contract or agreement that constitutes
or would constitute engaging in competition with the business of PTI or
SuperShuttle in the Applicable Counties; and
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<PAGE> 35
(d) each of the Shareholders by execution of this Agreement grants
to PTI a fully paid irrevocable license to use any and all rights and
interests in the business concept employed by PTI to the extent that they
have any interest therein, and in any name under which such businesses may
have been conducted, and agree not to undertake to conduct business
employing any such name at any place at which SuperShuttle or any of its
affiliates conduct business. To the extent that any business concept
employed by a Shareholder would involve the conduct of any form of shared
ride transportation business, the license granted to Supershuttle shall be
deemed exclusive to SuperShuttle.
In connection with the limitation protections afforded to SuperShuttle by
the covenants set forth above in this Section 6.10, the Shareholders recognize
that SuperShuttle has a need for the covenants and that need is based upon the
following:
(i) SuperShuttle's expenditure of substantial time, money and effort
in developing its business and the valuable list of customers and
information about the requirements and needs associated with the business,
including the business of PTI being acquired through the Merger;
(ii) Shareholder through the course of his or her relationship with
PTI has been or may have been entrusted with or exposed to certain trade
secrets and other confidential information, the confidentiality of which
is critical to the ongoing business of SuperShuttle, including the
business to be acquired through the Merger of PTI into Merger Sub;
(iii) SuperShuttle provides and will provide services throughout the
Applicable Counties; and
(iv) SuperShuttle would suffer great loss and irreparable harm if
the Shareholders were to violate the foregoing covenants.
The Shareholders hereby specifically acknowledge and agree that the
temporal, geographical and other restrictions contained in this Section 6.10 are
reasonable and necessary to protect the business and prospects of PTI and
SuperShuttle and that the enforcement of the provisions of this Section 6.10
will not work an undue hardship on the Shareholders. Shareholders further agree
that in the event that either the temporal, geographical or any other
restrictions, or a portion thereof, set forth in this Section 6.10 is determined
to be overly restrictive and nonenforceable, the covenants set forth shall be
reduced and modified to those which are reasonable and enforceable under the
circumstances to the fullest extent permitted under applicable law in the
judgment of the applicable court. The Shareholders acknowledge and agree that
SuperShuttle does not have an adequate remedy at law for the breach or
threatened breach of the covenants contained in this Section 6.10 and the
Shareholders therefore specifically agree that SuperShuttle may, in addition to
any other remedies which may be available hereunder or as a matter of law or in
equity, file a suit in equity to enjoin the Shareholder from the breach or
threatened breach.
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<PAGE> 36
If the provisions of this Section 6.10 are held to be invalid or
unenforceable as against public policy, the remaining provisions of this
Agreement shall not be affected thereby.
ARTICLE 7
CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) this Agreement and the Merger with respect to PTI, and the
issuance of the SuperShuttle Common Stock, shall have been approved and/or
adopted, as required by applicable law and the parties'
Certificate/Articles of Incorporation and Bylaws, by the requisite vote of
the Shareholders and/or the boards of directors of SuperShuttle and PTI;
(b) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be
pending; and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal;
(c) no party hereto shall have terminated this Agreement as
permitted herein;
(d) SuperShuttle and Steve Allan shall have entered into an
Employment Agreement substantially in the form attached hereto as Exhibit
"D";
(e) SuperShuttle agrees to grant the Shareholders piggyback and
demand registration rights pursuant to the terms of the registration
rights agreement, a form of which is attached hereto as Exhibit "E";
(f) the Registration Rights Agreement and the Escrow Agreement shall
be executed and delivered by the parties on or before April 22, 1998; and
(g) all associated documents that are referenced in this Agreement,
including, but not limited to, the Employment Agreement, the Registration
Rights Agreement, the Disclosure Schedules referenced in Article 2 and
Article 3, Schedule 1.1, and the Opinion Letter referenced in Section 7.2
(k) that are not in final form when this Agreement is signed, shall be
completed in form and substance satisfactory to the parties as soon as
possible thereafter but no later than April 22, 1998.
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7.2 Additional Conditions to Obligations of SuperShuttle and Merger Sub.
The obligations of SuperShuttle and Merger Sub to effect the Merger are also
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) the representations and warranties of PTI and the Shareholders
in this Agreement shall be true and correct in all material respects as of
the Effective Time as if made at and as of the Effective Time (subject to
any changes permitted or contemplated hereby and except for the updating
or correction of the disclosures in the PTI Disclosure Schedule which do
not reflect any change that is reasonably likely to have a material
adverse effect on the assets, liabilities, business, results of
operations, financial condition or prospects of PTI); and PTI shall in all
material respects have performed each obligation and agreement and
complied with each covenant to be performed and complied with by it
hereunder at or prior to the Effective Time;
(b) PTI and the Shareholders shall have furnished to SuperShuttle a
certificate in which PTI shall certify that the conditions set forth in
Section 7.2(a) have been fulfilled;
(c) PTI shall have furnished to SuperShuttle (i) a copy of the text
of the resolutions by which the corporate action on the part of PTI
necessary to approve this Agreement and the Merger were taken and (ii)
certificates executed on behalf of PTI certifying to SuperShuttle that
such copy is a true, correct and complete copy of such resolutions and
that such resolutions were duly adopted and have not been amended or
rescinded;
(d) PTI shall have furnished to SuperShuttle (i) a balance sheet
dated a date not more than thirty days prior to the Effective Time (the
"Current Balance Sheet") and (ii) an income statement for the period from
January 1, 1998, to the date of the Current Balance Sheet;
(e) no Shareholder shall have exercised dissenter's rights;
(f) there shall have been no material adverse change in the
business, assets, properties, financial condition or operating results of
PTI;
(g) PTI shall have obtained each consent and approval necessary in
order that the Merger and the transactions contemplated herein not
constitute a breach or violation of, or result in a right of termination
or acceleration or any encumbrance on any of PTI's assets pursuant to the
provisions of any material agreement, arrangement or understanding or any
material license, franchise or permit;
(h) there shall have been no damage, destruction or loss of or to
any property or properties owned or used by PTI, whether or not covered by
insurance, which in the aggregate has had or is reasonably likely to have
a material adverse effect on PTI;
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<PAGE> 38
(i) there shall not have been instituted, pending or threatened any
action or proceeding (or any investigation or other inquiry that might
result in such an action or proceeding) by any governmental authority or
administrative agency before any governmental authority, administrative
agency or court of competent jurisdiction, nor shall there be in effect
any judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, in either case,
seeking to prohibit or limit SuperShuttle from exercising the material
rights and privileges pertaining to its ownership of the Surviving
Corporation or the ownership or operation by SuperShuttle or any of its
subsidiaries of all or a material portion of the business or assets of
SuperShuttle or any of its subsidiaries, or seeking to compel SuperShuttle
or any of its subsidiaries to dispose of or hold separate all or any
material portion of the business or assets of SuperShuttle or any of its
subsidiaries, as a result of the Merger or the transactions contemplated
by this Agreement;
(j) SuperShuttle shall have otherwise been reasonably satisfied with
all of its due diligence;
(k) SuperShuttle shall have received an opinion of counsel of PTI in
form and substance reasonably acceptable to SuperShuttle; and
(l) All of the transactions contemplated by Schedule 1.1 shall have
been consummated or shall be simultaneously consummated with the Effective
Time in a manner reasonably acceptable to SuperShuttle and as contemplated
by Schedule 1.1.
Notwithstanding the failure of any condition in this Section 7.2, SuperShuttle
may conditionally waive the failed condition and consummate the transaction, but
shall be entitled to pursue adequate and appropriate reimbursement for all
costs, damages and liabilities in connection with the failed condition and may
withhold such of the Merger consideration as SuperShuttle deems reasonably
appropriate to assure payment of the costs, damages and liabilities associated
with the failed condition.
7.3 Additional Conditions to Obligation of PTI. The obligation of PTI to
effect the Merger is also subject to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) the representations and warranties of SuperShuttle and Merger
Sub set forth in Article 2 shall be true and correct in all material
respects as of the Effective Time as if made at and as of the Effective
Time (subject to any changes permitted or contemplated hereby and except
for the updating or correction of the disclosures in the SuperShuttle
Disclosure Schedule which do not reflect any change that is reasonably
likely to have a material adverse effect on the assets, liabilities,
business, results of operations, financial condition or prospects of
SuperShuttle and its subsidiaries, taken as a whole) and each of
SuperShuttle and Merger Sub shall in all material respects have performed
each obligation and agreement and complied with each covenant to be
performed and complied with by it hereunder at or prior to the Effective
Time;
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<PAGE> 39
(b) SuperShuttle shall have furnished to PTI a certificate in which
SuperShuttle and Merger Sub shall certify that the conditions set forth in
Section 7.3(a) have been fulfilled;
(c) SuperShuttle shall have furnished to PTI (i) a copy of the text
of the resolutions by which the corporate actions on the part of
SuperShuttle and Merger Sub necessary to approve this Agreement and the
Merger were taken and (ii) certificates executed on behalf of SuperShuttle
and Merger Sub by their respective corporate secretaries or one of their
respective assistant corporate secretaries certifying to PTI, in each
case, that such copy is a true, correct and complete copy of such
resolutions and that such resolutions were duly adopted and have not been
amended or rescinded;
(d) SuperShuttle shall have obtained each consent and approval
necessary in order that the Merger and the transactions contemplated
herein not constitute a breach or violation of, or result in a right of
termination or acceleration or any encumbrance on any of SuperShuttle's
assets pursuant to the provisions of any material agreement, arrangement
or understanding or any material license, franchise or permit; and
(e) all corporate action necessary by SuperShuttle to elect, as of
the Effective Time and as contemplated by Section 6.9 hereof, the one
designee of PTI to SuperShuttle's Board of Directors, shall have been duly
and validly taken.
7.4 Conditions Subsequent to the Merger. The following are conditions
subsequent to the Merger. In the event that these conditions are not satisfied,
SuperShuttle shall, at its discretion, have the right to exercise the repurchase
right set forth at Section 5.2(c).
(a) the obtaining, by July 31, 1998, of all consents necessary by
reason of any change of control provisions in any license, permit or third
party contract material to the business of PTI; and
(b) the approval of the PUC of the change of control of PTI by July
31, 1998 in a manner reasonably acceptable to SuperShuttle.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time:
(a) by mutual written consent of a duly authorized officer of
SuperShuttle and PTI;
(b) by either party if the other party breaches any of its material
representations, warranties or covenants contained herein and, if such
breach is curable, such breach is not cured on or prior to 10 days after
notice;
34
<PAGE> 40
(c) by either SuperShuttle or PTI if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger;
(d) by either SuperShuttle or PTI if the Merger shall not have been
consummated on or before March 31, 1998, or such later date as may be
mutually agreed upon by the parties;
(e) by SuperShuttle, if the conditions set forth in Section 7.2
hereof shall have not been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by PTI on or before March
31, 1998; or
(f) by PTI, if the conditions set forth in Section 7.3 hereof shall
not have been complied with or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its nature
cannot be cured or eliminated) by SuperShuttle and/or Merger Sub on or
before March 31, 1998;
provided, however, that no party shall have the right to terminate this
Agreement unilaterally if the event giving rise to such right shall be primarily
attributable to such party or to any affiliated party.
8.2 Effect of Termination. In the event of termination of this Agreement
as provided in Section 8.1, this Agreement shall become void and there shall be
no liability or further obligation hereunder on the part of SuperShuttle, Merger
Sub, PTI or their respective shareholders, officers or directors, except as set
forth in Sections 6.2, 6.5(b), or 6.8 hereof.
8.3 Amendment. This Agreement may not be amended except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto.
8.4 Waiver. At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of any other party hereto or (b) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations, in each case only
to the extent such obligations, agreements and conditions are intended for its
benefit.
ARTICLE 9
GENERAL PROVISIONS
9.1 Survival of Representations and Warranties. All representations and
warranties made by SuperShuttle, Merger Sub, PTI and the Shareholders in this
Agreement shall terminate as of the Effective Time or upon termination of this
Agreement as provided in Section 8.1, as the case may be.
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<PAGE> 41
9.2 Public Announcements. SuperShuttle and PTI shall consult with each
other upon an agreed form of press release, and before issuing any such press
release or otherwise making any public statements with respect to the Merger or
this Agreement. Neither SuperShuttle nor PTI shall issue any such press release
or make any such public statement without the prior consent of the other party,
which shall not be unreasonably withheld.
9.3 Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by telecopier,
or by registered or certified mail (postage prepaid and return receipt
requested) to the parties at the following addresses (or if such other address
for a party as shall be specified by it by like notice):
If to SuperShuttle or
Merger Sub: SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
FAX: (602) 243-6446
Attn: R. Brian Wier
With a copy to: Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004-4441
FAX: (602) 253-8129
Attn: Christopher D. Johnson, Esq.
If to PTI or the Shareholders: Preferred Transportation, Inc.
dba SuperShuttle Orange County
1430 South Anaheim
Anaheim, California 92805
FAX: _______________
Attn: Steve Allan
With a copy to: Petillon & Hansen
1260 Union Bank Tower
21515 Hawthorne Boulevard
Torrance, CA 90503
PH: 310-543-0500
FAX: 310-543-0550
Attn: Raymond Seto
All such notices and other communications shall be deemed to have been
duly given: (i) when delivered by hand, if personally delivered; (ii) three
business days after being deposited in the mail, postage prepaid, if delivered
by mail; and (iii) when receipt is acknowledged, if telecopied.
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9.4 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the exhibits and attachments hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires. The rule of construction that an agreement is construed in
favor of the nondrafting party shall not apply to this Agreement. This Agreement
shall be deemed to have been mutually drafted by the parties.
9.5 Schedules and Exhibits. All schedules and exhibits attached hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as set forth in full herein. Information set forth in any section to the
SuperShuttle Disclosure Schedule or the PTI Disclosure Schedule is deemed to be
set forth in all other sections of such Disclosure Schedule. Disclosure of any
fact or item in any schedule or exhibit hereto referenced by a particular
paragraph or section in this Agreement shall, should the existence of the fact
or item or its contents be relevant to any other paragraph or section, be deemed
to be disclosed with respect to that other paragraph or schedule whether or not
a specific cross reference appears. Disclosure of any fact or item in any
schedule or exhibit hereto shall not necessarily mean that such item or fact
individually is material to a party.
9.6 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the court shall modify the
Agreement or, in the absence thereof, the parties shall negotiate in good faith
to modify this Agreement to preserve each party's anticipated benefits under
this Agreement.
9.7 Jurisdiction; Venue; Service of Process. The parties expressly agree
that any controversy, dispute, litigation or claim arising out of the subject
matter of this Agreement and the transactions contemplated hereby shall be
brought or commenced only in a federal or state court located in Maricopa
County, Arizona. The parties agree to be subject to the personal jurisdiction of
the federal and/or state courts situated in Maricopa County, Arizona and agree
that a claim of forum non-conveniens shall not be a defense to an action
initiated in such venues. The parties agree to the service of process of any
such courts in any such action or proceeding by registered or certified mail,
postage prepaid, return receipt requested, to the addresses listed in this
Agreement and agree that such service shall become effective thirty (30) days
after such mailing.
9.8 Waiver of Jury Trial. EACH OF SUPERSHUTTLE, MERGER SUB AND PTI HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
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9.9 Miscellaneous. This Agreement (together with all other documents and
instruments referred to herein): (a) constitutes the entire agreement, and
supersedes all other prior agreements, representations, warranties and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof; (b) is not intended to confer upon any other person any
rights or remedies hereunder; (c) shall not be assigned by any party, except
that Merger Sub may assign all or any portion of its rights under this Agreement
to any wholly owned subsidiary of SuperShuttle, but no such assignment shall
relieve SuperShuttle of its obligations hereunder; and (d) shall be governed in
all respects, including validity, interpretation and effect, by the internal
laws of the State of Arizona, without giving effect to the principles of
conflict of laws thereof; provided, however, that the Merger shall be governed
by the Arizona Law and California Law, as appropriate. Each certificate,
agreement or other document making reference to the Agreement and Plan of
Reorganization among SuperShuttle International, Inc., SuperShuttle Acquisition
Co. I, Preferred Transportation, Inc. ("PTI") and the shareholders of PTI, dated
as of March 31, 1998, shall be deemed to refer to this Amended and Restated
Agreement and Plan of Reorganization and Merger. This Agreement may be executed
in two or more counterparts, which together shall constitute a single agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 44
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
SIGNATURE PAGE
IN WITNESS WHEREOF, SuperShuttle, Merger Sub, PTI and the Shareholders
have caused this Agreement to be executed on the date first written above by
their respective officers thereunder duly authorized.
SUPERSHUTTLE INTERNATIONAL
INC., a Delaware corporation
By /s/ Thomas C. LaVoy
---------------------------------------
Thomas LaVoy, Secretary and CFO
SUPERSHUTTLE ACQUISITION CO. I,
an Arizona corporation
By /s/ Thomas C. LaVoy
---------------------------------------
Secretary
---------------------------------------
PREFERRED TRANSPORTATION, INC.,
a California corporation
By /s/ Steve Allan
---------------------------------------
Steve Allan, President
SHAREHOLDERS OF PTI
/s/ Steve Allan
------------------------------------------
/s/ Thomas C. LaVoy
------------------------------------------
Orange County Shuttle Associates, Inc.
By
------------------------------------------
------------------------------------------
39
<PAGE> 1
Exhibit 2.2
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AMONG
SUPERSHUTTLE INTERNATIONAL, INC.,
SUPERSHUTTLE ACQUISITION COMPANY II,
TAMARACK TRANSPORTATION, INC.
AND
THE SHAREHOLDERS LISTED ON SCHEDULE 1
MARCH 31, 1998
<PAGE> 2
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
ARTICLE 1
THE MERGER.......................................................... 1
1.1 The Merger, Incidental Transactions............................ 1
1.2 Effect of the Merger........................................... 2
1.3 Consummation of the Merger..................................... 2
1.4 Articles of Incorporation and Bylaws; Directors and Officers... 3
1.5 Conversion of Securities....................................... 3
1.6 No Fractional Shares........................................... 3
1.7 Exchange for Merger Consideration.............................. 4
1.8 Closing of Tamarack Transfer Books............................. 4
1.9 Dissenter's Rights............................................. 4
1.10 Lost, Stolen or Destroyed Certificates......................... 5
1.11 Taking of Necessary Action; Further Action..................... 5
1.12 Escrow......................................................... 5
1.13 Effective Date; Closing........................................ 5
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SUPERSHUTTLE
AND MERGER SUB...................................................... 5
2.1 Organization and Qualification................................. 5
2.2 Authority Relative to This Agreement........................... 6
2.3 Capitalization................................................. 6
2.4 Financial Statements........................................... 7
2.5 Subsidiaries; Merger Sub....................................... 7
2.6 Absence of Undisclosed Liabilities............................. 7
2.7 No Material Adverse Changes.................................... 7
2.8 Absence of Certain Developments................................ 7
2.9 Title to and Condition of Properties........................... 8
2.10 Environmental Matters.......................................... 8
2.11 Accounts Receivable............................................ 9
2.12 Tax Matters.................................................... 9
2.13 Contracts and Commitments...................................... 9
2.14 Restrictions on Business Activities............................ 10
2.15 Intellectual Property Rights................................... 10
2.16 Litigation..................................................... 11
2.17 Brokers' Fees.................................................. 11
2.18 Compliance With Laws; Permits; Certain Operations.............. 11
2.19 Disclosure..................................................... 12
ii
<PAGE> 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TAMARACK
AND THE SHAREHOLDERS..................................................... 12
3.1 Organization and Qualification...................................... 12
3.2 Authority Relative to This Agreement................................ 12
3.3 Capitalization...................................................... 13
3.4 Financial Statements................................................ 13
3.5 Subsidiaries........................................................ 14
3.6 Absence of Undisclosed Liabilities.................................. 14
3.7 No Material Adverse Changes......................................... 14
3.8 Absence of Certain Developments..................................... 14
3.9 Title to and Condition of Properties................................ 16
3.10 Environmental Matters............................................... 17
3.11 Accounts Receivable................................................. 17
3.12 Tax Matters......................................................... 17
3.13 Contracts and Commitments........................................... 18
3.14 Restrictions on Business Activities................................. 19
3.15 Intellectual Property Rights........................................ 19
3.16 Litigation.......................................................... 20
3.17 Brokers' Fees....................................................... 20
3.18 Employment.......................................................... 20
3.19 Employee Benefit Plans.............................................. 20
3.20 Insurance........................................................... 21
3.21 Insider Transactions................................................ 22
3.22 Compliance With Laws; Permits; Certain Operations................... 22
3.23 Disclosure.......................................................... 22
3.24 Minute Books........................................................ 22
ARTICLE 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS................ 23
4.1 Organization, Standing and Authority of Shareholders................. 23
4.2 Execution and Delivery; No Conflicts................................. 23
4.3 Consents and Approvals............................................... 23
4.4 Brokers.............................................................. 23
4.5 Securities Laws Compliance........................................... 24
4.6 Shareholder Experience and Investment Representations................ 24
ARTICLE 5
CONDUCT PENDING AND SUBSEQUENT TO THE MERGER............................. 25
5.1 Conduct of Business Pending the Merger............................... 25
5.2 Conduct Subsequent to the Merger..................................... 26
iii
<PAGE> 4
ARTICLE 6
ADDITIONAL AGREEMENTS.................................................... 27
6.1 Shareholders' Meeting............................................... 27
6.2 Expenses............................................................ 28
6.3 No Negotiations..................................................... 28
6.4 Notification of Certain Matters..................................... 28
6.5 Access to Information; Confidentiality.............................. 28
6.6 Consents; Approvals................................................. 28
6.7 Supplements to Disclosure Schedules................................. 29
6.8 Non-Solicitation of Employees....................................... 29
6.9 Election of Directors............................................... 29
6.10 Confidential Information and Covenant Not To Compete................ 29
ARTICLE 7
CONDITIONS............................................................... 31
7.1 Conditions to Obligations of Each Party to Effect the Merger......... 31
7.2 Additional Conditions to Obligations of SuperShuttle and Merger Sub.. 32
7.3 Additional Conditions to Obligations of Tamarack..................... 33
7.4 Conditions Subsequent to the Merger.................................. 34
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER........................................ 35
8.1 Termination.......................................................... 35
8.2 Effect of Termination................................................ 35
8.3 Amendment............................................................ 35
8.4 Waiver............................................................... 36
ARTICLE 9
GENERAL PROVISIONS....................................................... 36
9.1 Survival of Representations and Warranties.......................... 36
9.2 Public Announcements................................................ 36
9.3 Notices............................................................. 36
9.4 Interpretation...................................................... 37
9.5 Schedules and Exhibits.............................................. 37
9.6 Severability........................................................ 37
9.7 Jurisdiction; Venue; Service of Process............................. 37
9.8 Waiver of Jury Trial................................................ 38
9.9 Miscellaneous....................................................... 38
SIGNATURE PAGE........................................................... 39
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INDEX OF EXHIBITS AND SCHEDULES
Exhibit "A" Articles of Incorporation of the Surviving Corporation
Exhibit "B" Bylaws of the Surviving Corporation
Exhibit "C" Designated Officers and Directors of the Surviving Corporation
Exhibit "D" Employment Agreement
Exhibit "E" Registration Rights Agreement
Exhibit "F" Escrow Agreement
Exhibit "1.1" Agreement and Plan of Merger
Schedule "1" Tamarack Shareholders and Common Stock Ownership
Schedule "1.1" List of Assets and Method of Transfer
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
This AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION AND
MERGER (the "Agreement") is made as of March 31, 1998 by and among SUPERSHUTTLE
INTERNATIONAL, INC., a Delaware corporation ("SuperShuttle"); SUPERSHUTTLE
ACQUISITION COMPANY II, an Arizona corporation and a wholly owned subsidiary of
SuperShuttle ("Merger Sub"); TAMARACK TRANSPORTATION, INC., a California
corporation ("Tamarack"); and those Tamarack shareholders listed on Schedule "1"
hereto (collectively, the "Shareholders" and, individually, a "Shareholder").
RECITALS
A. SuperShuttle and Tamarack are parties to a letter agreement dated
March 2, 1998 (the "Letter of Intent"), which contemplates the acquisition by
SuperShuttle of all of the outstanding capital stock of Tamarack.
B. SuperShuttle has caused the formation of Merger Sub for the purpose
of effecting the acquisition through a reverse triangular merger with and into
Tamarack.
C. The Shareholders currently and collectively own all of the issued
and outstanding shares of capital stock of Tamarack, with each Shareholder
owning the number of shares set forth opposite such Shareholder's name on
Schedule 1.
D. The Shareholders are joined herein for purposes of affirming the
representations and warranties made in Article 3, and to otherwise be bound
hereto for the obligations of Tamarack for which they are jointly and severally
liable.
E. The parties have determined that it is in their respective interests
to merge Merger Sub with and into Tamarack (the "Merger") and to undertake such
other actions described herein, all on the terms and subject to the conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, the parties agree as follows:
ARTICLE 1
THE MERGER
The respective boards of directors of SuperShuttle, Merger Sub and
Tamarack have, by resolutions duly adopted, approved the following provisions of
this Article 1 as the plan/agreement of merger required by Section 1108 of the
California Corporations Code, as amended (the "California Law") and Section
10-1107 of the Arizona Business Corporation Act, as amended (the "Arizona Law")
(collectively, the "Merger Statutes"), in connection with the Merger:
1.1 The Merger, Incidental Transactions. At the Effective Time (as
defined in Section
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1.3), in accordance with this Agreement, the Agreement and Plan of Merger
attached hereto as Exhibit "1.1" and the Merger Statutes, Merger Sub shall be
merged with and into Tamarack. The separate corporate existence of Merger Sub
(except as such existence may be continued by operation of law) shall cease, and
Tamarack shall continue as the surviving corporation. Tamarack, in its capacity
as the corporation surviving the Merger, sometimes is referred to herein as the
"Surviving Corporation." The parties shall use their reasonable best efforts to
undertake a corporate name change for the Surviving Corporation with the
California Secretary of State to "SuperShuttle Los Angeles, Inc." when expedient
to do so considering the California Public Utilities Commission (the "PUC")
process, among other factors.
As an incident to the Merger transactions and as a predicate
and condition to them, certain assets are required to be transferred into
Tamarack or other accommodations made in order to effect the purpose of allowing
the Surviving Corporation to operate the business of Tamarack as presently
conducted. In this regard, the assets described on Schedule 1.1 attached hereto
and incorporated by reference herein shall be transferred in the manner
contemplated by Schedule 1.1 immediately prior to the Effective Time. It is
acknowledged by the parties hereto that any and all radio frequencies, real
estate interests, permits, and similar assets necessary to the conduct of the
business of Tamarack immediately prior to the Effective Time shall be and become
the property of the Surviving Corporation effective upon the Merger through the
processes described on Schedule 1.1 without any further form of consideration or
payment owing to Tamarack or any of the Shareholders. The transactions
contemplated by Schedule 1.1 are a fundamental part of this Agreement and the
consummation of those transactions is a condition to the effectiveness of the
Merger.
1.2 Effect of the Merger. At the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, immunities and franchises
of each of Merger Sub and Tamarack (collectively, the "Constituent
Corporations"); all property, real, personal and mixed, and all debts,
liabilities and duties due on whatever account, and all and every other interest
of or belonging to or due to each of the Constituent Corporations shall be taken
and deemed to be transferred to and vested in the Surviving Corporation without
further act or deed; and the Surviving Corporation shall be responsible and
liable for liabilities and obligations of each of the Constituent Corporations,
in each case in accordance with the Merger Statutes.
1.3 Consummation of the Merger. As soon as is practicable after the
satisfaction or waiver of the conditions set forth in Sections 7.1, 7.2 and 7.3
of Article 7, the parties hereto shall cause the Agreement and Articles of
Merger to be delivered to the Arizona Corporation Commission of the State of
Arizona and the Agreement and officers' certificates of each Constituent
Corporation to be delivered to the Secretary of State of the State of
California, in such form as required by and executed in accordance with the
Arizona Law and the California Law, respectively. The Merger shall be effective
at such time as such documents are duly filed with (i) the Arizona Corporation
Commission of the State of Arizona, and (ii) the Secretary of State of the State
of California, which filings shall be made reasonably simultaneously. The date
and time when the Merger shall become effective is referred to as the "Effective
Time." It is contemplated that the conditions to consummation of the Merger will
be satisfied, if at all, on or before March 31, 1998, and that the Effective
Time shall be as soon as practicable following the satisfaction of the
conditions set forth in Sections 7.1, 7.2 and 7.3 of Article 7 hereof on or
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before March 31, 1998.
1.4 Articles of Incorporation and Bylaws; Directors and Officers. The
Articles of Incorporation and the Bylaws of the Surviving Corporation shall be
restated in the forms of Exhibits "A" and "B" hereto and incorporated herein.
The persons identified on Exhibit "C" shall be the directors and officers of the
Surviving Corporation at the Effective Time.
1.5 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, Tamarack or the holders
of any of the following securities:
(a) Each share of Common Stock, no par value, of Tamarack (the
"Tamarack Common Stock") issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any
action on the part of the holders thereof, automatically be canceled
and extinguished and the total number of outstanding shares of Tamarack
Common Stock shall be converted into and become a right to receive
731,621 shares of Common Stock, $0.01 par value per share, of
SuperShuttle (the "SuperShuttle Common Stock") (the "Exchange Ratio"),
payable to the Shareholders pro rata to their Tamarack Common Stock
ownership as reflected on Schedule 1. The aggregate number of shares of
SuperShuttle Common Stock to be issued in order to give effect to this
provision will represent approximately eleven percent (11%) of the
total number of outstanding shares of SuperShuttle Common Stock when
issued.
(b) Each share of Tamarack Common Stock issued and outstanding
immediately prior to the Effective Time and held in the treasury of
Tamarack shall automatically be canceled and extinguished and no
payment shall be made with respect thereto.
(c) Each share of Common Stock, par value $0.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective
Time shall automatically be converted into and become one validly
issued, fully paid and nonassessable share of Common Stock, no par
value per share, of the Surviving Corporation. Each stock certificate
of Merger Sub evidencing ownership of any such shares shall continue to
evidence ownership of such shares of capital stock of the Surviving
Corporation.
(d) The Exchange Ratio shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into SuperShuttle
Common Stock or Tamarack Common Stock), reorganization,
recapitalization or other like change with respect to SuperShuttle
Common Stock or Tamarack Common Stock occurring after the date hereof
and prior to the Effective Time, but shall not be adjusted for the
exercise or conversion of any outstanding SuperShuttle securities
convertible into SuperShuttle Common Stock.
1.6 No Fractional Shares. No fractional shares of SuperShuttle Common
Stock shall be issued. Fractional shares of such stock shall be rounded to the
nearest whole share.
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1.7 Exchange for Merger Consideration. At the Effective Time, each of the
Shareholders shall surrender the certificate or certificates representing shares
of Tamarack Common Stock to SuperShuttle. Promptly following surrender,
SuperShuttle shall issue the SuperShuttle Common Stock payable to the
Shareholders pursuant to Section 1.5. The certificates of Tamarack Common Stock
surrendered to SuperShuttle shall be duly endorsed and otherwise in proper form
for transfer as SuperShuttle may require. SuperShuttle shall not be obligated to
deliver the consideration to which any Shareholder is entitled as a result of
the Merger until such Shareholder surrenders his or her certificate or
certificates representing the shares of Tamarack Common Stock to be exchanged.
After the Effective Time, each outstanding certificate or certificates that
represented shares of Tamarack Common Stock as of the Effective Time shall be
deemed for all corporate purposes to evidence only the right of the holder
thereof to receive such person's share of the consideration calculated pursuant
to Section 1.5 in exchange therefor. No interest shall be paid or accrued on any
consideration payable upon the surrender of the certificates.
1.8 Closing of Tamarack Transfer Books. At the Effective Time, the
stock transfer books of Tamarack shall be closed and no transfer of shares of
Tamarack Common Stock issued and outstanding immediately prior to the Effective
Time shall thereafter be made (except as provided for or contemplated in Section
1.5 above).
1.9 Dissenter's Rights. Subject to Section 7.2(e):
(a) Any shares of capital stock of Tamarack held by a holder
who has exercised dissenters' rights for such shares in accordance with
Chapter 13 of the California Corporations Code and who, as of the
Effective Time, has not effectively withdrawn or lost (through failure
to perfect or otherwise) such dissenters' rights ("Dissenting Shares"),
shall not be converted into or represent a right to receive
SuperShuttle Common Stock pursuant to Section 1.5 but the holder
thereof shall only be entitled to such rights as are granted by
applicable corporate law.
(b) Notwithstanding the provisions of subsection (a), if any
holder of Dissenting Shares shall effectively withdraw or lose his
dissenters' rights, then, as of the later of the Effective Time or the
occurrence of such event, such holder's shares shall automatically be
converted into and represent only the right to receive the Merger
consideration set forth in Section 1.5, without interest thereon, upon
surrender of the certificate or certificates representing such
Dissenting Shares.
(c) Tamarack shall give SuperShuttle (i) prompt notice of any
written demands received by Tamarack to require Tamarack to purchase
shares of capital stock of Tamarack, withdrawals of such demands, and
any other instruments served pursuant to Chapter 13 of the California
Corporations Code and received by Tamarack and (ii) the opportunity to
participate in all negotiations and proceedings with respect to such
demands. Tamarack shall not, except with the prior written consent of
SuperShuttle, voluntarily make any payment with respect to any such
demands or offer to settle or settle any such demands.
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1.10 Lost, Stolen or Destroyed Certificates. In the event any
certificates representing shares of Tamarack Common Stock shall have been lost,
stolen or destroyed, SuperShuttle shall issue in exchange for such lost, stolen
or destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of SuperShuttle Common Stock as required pursuant to
Sections 1.5 and 1.6; provided, however, that SuperShuttle may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificates to deliver an indemnity
agreement in such form as SuperShuttle may reasonably direct as indemnity
against any claim that may be made against SuperShuttle with respect to the
certificates alleged to have been lost, stolen or destroyed.
1.11 Taking of Necessary Action; Further Action. SuperShuttle and
Merger Sub, on the one hand, and Tamarack on the other hand, shall use
reasonable best efforts to take all such actions (including, without limitation,
actions to cause the satisfaction of the conditions of the other to effect the
Merger) as may be necessary or appropriate in order to effectuate the Merger as
promptly as possible. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full possession of all the rights,
privileges, immunities and franchises of the Constituent Corporations, or fully
subject the Surviving Corporation to all liabilities and obligations of the
Constituent Corporations, the officers and directors of the Surviving
Corporation are fully authorized in the name of the Constituent Corporations or
otherwise to take, and shall take, all such lawful and necessary actions.
1.12 Escrow. Concurrent with the filing of the Articles, officers'
certificates and Agreement of Merger as set forth in Section 1.3 above, the
parties shall deliver the stock certificates of SuperShuttle and Tamarack to be
exchanged to an escrow agent (the "Escrow Agent") to hold in escrow pending the
Closing (as defined in Section 1.13), subject to the terms of the Escrow
Agreement, a copy of which is attached hereto as Exhibit "F."
1.13 Effective Date; Closing. The Effective Date of this Agreement
shall be March 31, 1998. The Closing of the transactions contemplated by this
Agreement shall occur upon the satisfaction of the conditions set forth in
Article 7 of this Agreement, all of which conditions shall be satisfied on or
before the Closing Date or such other date as required by the applicable
conditions, and the escrow is broken.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SUPERSHUTTLE
AND MERGER SUB
SuperShuttle and Merger Sub hereby represent and warrant to Tamarack as
of the date hereof, and again at the Effective Time (subject to any changes
permitted or contemplated hereby), each of the following, except to the extent
set forth in the disclosure schedule that has been delivered to Tamarack
hereunder (the "SuperShuttle Disclosure Schedule"):
2.1 Organization and Qualification. Each of SuperShuttle and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and the State of Arizona, respectively, and has
the requisite corporate power and
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authority to own and operate its properties and to carry on its business as now
conducted in every jurisdiction where the failure to do so would have a material
adverse effect on its business, properties or ability to conduct the business
currently conducted by it. The copies of the Certificate of Incorporation,
Articles of Incorporation and Bylaws of SuperShuttle and Merger Sub previously
furnished to Tamarack are correct and complete and reflect all amendments
thereto.
2.2 Authority Relative to This Agreement. Each of SuperShuttle and
Merger Sub has the requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement by SuperShuttle and Merger Sub and the consummation by
SuperShuttle and Merger Sub of the transactions contemplated hereby have been
duly authorized by SuperShuttle and Merger Sub, and no other corporate
proceedings on the part of SuperShuttle or Merger Sub are necessary to authorize
this Agreement and such transactions. This Agreement has been duly executed and
delivered by SuperShuttle and Merger Sub and, assuming the due authorization,
execution and delivery by Tamarack, constitutes a valid and binding obligation
of each, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or other
similar laws relating to the enforcement of creditors' rights generally and by
general principles of equity. Except as set forth in the SuperShuttle Disclosure
Schedule, neither SuperShuttle nor Merger Sub is subject to, or obligated under,
any provision of (a) its Articles or Certificate of Incorporation or Bylaws, (b)
any material agreement, arrangement or understanding, (c) any material license,
franchise or permit, or (d) any law, regulation, order, judgment or decree,
which would be breached or violated, or in respect of which a right of
termination or acceleration would arise or any encumbrance on any of its or any
of its subsidiaries' assets would be created, by its execution, delivery and
performance of this Agreement and the consummation by it of the transactions
contemplated hereby. Except for such filings to be made pursuant to the Merger
Statutes in order to effect the Merger, no authorization, consent or approval
of, or filing with, any public body, court or authority is necessary on the part
of SuperShuttle or Merger Sub for the consummation by SuperShuttle and Merger
Sub of the transactions contemplated by this Agreement.
2.3 Capitalization. The authorized equity capitalization of
SuperShuttle consists of 20,000,000 shares of SuperShuttle Common Stock and
5,000,000 shares of Preferred Stock, $0.01 par value per share ("SuperShuttle
Preferred Stock"). As of March 31, 1998, 2,760,860 shares of SuperShuttle Common
Stock and 479,475 shares of SuperShuttle Preferred Stock are issued and
outstanding, all of which shares are validly issued, fully paid and
nonassessable. As of the date hereof, 1,000 shares of Common Stock, $0.01 par
value per share, of Merger Sub ("Merger Sub Common Stock") were issued and
outstanding, all of which shares are validly issued, fully paid and
nonassessable and owned by SuperShuttle.
There are no obligations, contingent or otherwise, of SuperShuttle or
any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of
SuperShuttle Common Stock or the capital stock of any subsidiary or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity. All of the outstanding
shares of capital stock of each of SuperShuttle's subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and, except as
disclosed in the
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SuperShuttle Disclosure Schedule, all such shares are owned by SuperShuttle free
and clear of all security interests, liens, claims, pledges, agreements,
limitations in SuperShuttle's voting rights, charges or other encumbrances of
any nature whatsoever.
2.4 Financial Statements. SuperShuttle has delivered a balance sheet
dated as of January 31, 1998, and other financial statements for the years ended
September 30, 1997 and September 30, 1996 to Tamarack (collectively, the
"SuperShuttle Financial Statements.") The SuperShuttle Financial Statements were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved and present fairly the
consolidated financial position, results of operations, and cash flows of
SuperShuttle and its consolidated subsidiaries as of the dates and for the
periods indicated therein, subject, in the case of unaudited interim statements,
to normal year-end accounting adjustments and the absence of complete footnote
disclosure.
2.5 Subsidiaries; Merger Sub. Except as set forth in the SuperShuttle
Disclosure Schedule, SuperShuttle does not have any subsidiaries and does not
otherwise own any stock, partnership interest, joint venture interest, or any
other security issued by or equity interest in any other corporation,
organization or entity. For purposes hereof, the term "subsidiary" means any
corporation of which securities having a majority of the ordinary voting power
in electing directors are owned directly or indirectly by a party. Merger Sub is
not subject to any liabilities, obligations or claims, whether absolute or
contingent, liquidated or unliquidated. Merger Sub was formed solely for the
purpose of consummating the transactions contemplated by this Agreement and has
not engaged in any business or other activities for any other purpose. Unless
the context requires otherwise, the term "SuperShuttle" shall hereafter refer to
SuperShuttle and/or its Subsidiaries.
2.6 Absence of Undisclosed Liabilities. SuperShuttle has no obligations
or liabilities (whether accrued, absolute, contingent, liquidated, unliquidated
or otherwise, whether due or to become due and regardless of when asserted),
except (a) obligations under contracts or commitments described in Section 2.6
of the SuperShuttle Disclosure Schedule; (b) liabilities reflected on the
balance sheet of SuperShuttle as of January 31, 1998 (the "January 31, 1998
SuperShuttle Balance Sheet") included in the SuperShuttle Financial Statements;
(c) liabilities which have arisen in the ordinary course of business after
December 31, 1997 (none of which is an uninsured liability for breach of
contract, breach of warranty, tort, infringement, claim or lawsuit); and (d)
liabilities which are not material in scope or amount.
2.7 No Material Adverse Changes. Except as set forth in the
SuperShuttle Disclosure Schedule, since December 31, 1997, there has not been
any material adverse change in the assets, financial condition or operating
results of SuperShuttle, other than the effect of the businesses acquired since
that date.
2.8 Absence of Certain Developments. Except as set forth in the
SuperShuttle Disclosure Schedule or except as contemplated in this Agreement,
since December 31, 1997, SuperShuttle has not:
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(a) changed its accounting methods or practices (including any
change in depreciation or amortization policies or rates) or revalued
any of its assets;
(b) borrowed any amount under existing lines of credit or
otherwise or incurred or become subject to any indebtedness, except as
reasonably necessary for the ordinary operation of SuperShuttle's
business and in a manner and in amounts that are in keeping with the
historical practice of SuperShuttle;
(c) discharged or satisfied any lien or encumbrance or paid
any liability, other than current liabilities and related liens (or
current installments due on intermediate or long-term liabilities) paid
or satisfied in the ordinary course of business;
(d) materially changed the pricing or royalties set or charged
by SuperShuttle to its customers or licensees or agreed to any material
change in the pricing or royalties set or charged by persons who have
licensed Intellectual Property Rights (as described in Section 2.15) to
SuperShuttle; or
(e) suffered any material theft, damage, destruction or loss
of or to any property or properties owned or used by it, whether or not
covered by insurance.
2.9 Title to and Condition of Properties. SuperShuttle owns good and
marketable title to the properties and assets reflected on the December 31, 1997
SuperShuttle Balance Sheet or acquired since the date thereof, free and clear of
all liens and encumbrances, except for (A) liens for current taxes not yet due
and payable, (B) liens described in Section 2.6 of the SuperShuttle Disclosure
Schedule, (C) the properties subject to the leases set forth in Section 2.9 of
the SuperShuttle Disclosure Schedule, and (D) assets disposed of since December
31, 1997, in the ordinary course of business.
2.10 Environmental Matters. Except as set forth in the SuperShuttle
Disclosure Schedule, SuperShuttle (i) has obtained all applicable permits,
licenses and other authorizations (a list of which is set forth in the
SuperShuttle Disclosure Schedule) which are required under federal, state or
local laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes by SuperShuttle (or its agents); (ii) is in compliance with
all terms and conditions of any required permits, licenses and authorizations,
and with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder; (iii) is not
aware of nor has it received notice of any event, condition, circumstance,
activity, practice, incident, action or plan which is reasonably likely to
interfere with or prevent continued compliance with or which would give rise to
any common law or statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, based on or resulting from SuperShuttle's (or any
agent's) manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the
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emission, discharge, or release into the environment, of any pollutant,
contaminant, or hazardous or toxic material or waste; (iv) has taken all actions
necessary under applicable requirements of such federal, state or local laws,
rules or regulations to register any products or materials required to be
registered by SuperShuttle (or its agents) thereunder; and (v) has neither
disposed of nor handled any hazardous substance.
2.11 Accounts Receivable. SuperShuttle's notes and accounts receivable
recorded on the January 31, 1998 SuperShuttle Balance Sheet arose in the
ordinary course of business and are carried at values determined in accordance
with generally accepted accounting principles consistently applied.
2.12 Tax Matters. Except as set forth in the SuperShuttle Disclosure
Schedule, SuperShuttle has filed all federal, foreign, state, county and local
income, excise, property, sales and other tax returns which are required to be
filed by it for all periods prior to the Effective Time, and all such returns
are true and correct; all taxes due and payable by SuperShuttle (whether or not
shown on any tax return) for all periods prior to the Effective Time have been
paid; SuperShuttle's reserves and provisions for taxes on the balance sheets
included in the SuperShuttle Financial Statements are sufficient for all accrued
and unpaid taxes as of the dates of such balance sheets; SuperShuttle has paid
all taxes due and payable by it or which it is obligated to withhold from
amounts owing to any employee, creditor, or third party; SuperShuttle has not
waived any statute of limitations in respect of taxes or agreed to any extension
of time with respect to a tax assessment or deficiency; to the best knowledge of
SuperShuttle, the assessment of any additional taxes relating to SuperShuttle
for periods for which returns have been filed is not expected; and SuperShuttle
has not received notice of any unresolved questions or claims concerning the tax
liability of SuperShuttle. SuperShuttle has not filed any consent agreement
under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a "subsection (f) asset" as defined in Section
341(f)(4) of the Code) owned by SuperShuttle. SuperShuttle (i) is not and has
not been a member of an affiliated group filing a consolidated federal income
tax return (other than an affiliated group the common parent of which was
SuperShuttle) and (ii) does not have any liability for taxes of any person
(other than SuperShuttle) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law) as a transferee or successor
by contract or otherwise. SuperShuttle is not a party to a tax sharing or
allocation agreement nor does SuperShuttle owe any amount under any such
agreement. SuperShuttle is not obligated to make any payments and is not a party
to any agreement that under certain circumstances could obligate it to make any
payments that, either in whole or in part, would be nondeductible under Sections
280G or 162 of the Code. SuperShuttle has not been a "United States real
property holding corporation" (within the meaning of Section 897(c)(2) of the
Code) at any time within the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
2.13 Contracts and Commitments.
(a) Except as set forth in the SuperShuttle Disclosure
Schedule, SuperShuttle is not a party to any agreement, contract, plan
or guaranty as set forth herein that is material to the conduct of its
business as a whole. The condition of materiality underlies each of the
following items: (i) collective bargaining agreement or contract with
any
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labor union; (ii) bonus, pension, profit sharing, retirement, or other
form of deferred compensation plan; (iii) medical insurance or similar
plan or practice, whether formal or informal; (iv) contract for the
employment of any officer, employee, or other person on a full-time or
consulting basis or relative to severance pay or change-in-control
benefits for any such person; (v) agreement or indenture relating to
the borrowing of money in excess of $100,000 or to mortgaging, pledging
or otherwise placing a lien on any assets of SuperShuttle which has a
fair market value in excess of $100,000 in the aggregate; (vi) guaranty
of any obligation for borrowed money or otherwise, other than
endorsements made for collection; (vii) lease or agreement under which
it is lessor of, or permits any third party to hold or operate, any
property, real or personal; (viii) contract or group of related
contracts with the same party for the purchase of products or services,
under which the undelivered balance of such products and services has a
purchase price in excess of $100,000; (ix) contract or group of related
contracts with the same party for the sale of products or services
under which the undelivered balance of such products or services has a
sales price in excess of $100,000; (x) other contract or group of
related contracts with the same party continuing over a period of more
than twelve (12) months from the date or dates thereof or involving
more than $100,000; (xi) material contract relating to the distribution
of SuperShuttle's products; (xii) franchise agreement; or (xiii) other
agreement material to SuperShuttle's business or not entered into in
the ordinary course of business.
(b) Except as specifically disclosed in the SuperShuttle
Disclosure Schedule: (i) SuperShuttle's relations with customers and
suppliers are current and good; (ii) since the date of the December 31,
1997 SuperShuttle Balance Sheet, no significant customer or supplier
has indicated that it will stop or materially decrease the rate of
business done with SuperShuttle, except for changes in the ordinary
course of SuperShuttle's business; (iii) SuperShuttle has performed all
material obligations required to be performed by it in connection with
the contracts or commitments described herein and SuperShuttle has not
been advised of or received any claim of default under any such
contract or commitment; (iv) SuperShuttle has no present expectation or
intention of not fully performing any obligation pursuant to any
contract or commitment; and (v) SuperShuttle has no knowledge of any
breach or anticipated breach by any other party to any contract or
commitment.
2.14 Restrictions on Business Activities. Except as set forth in the
SuperShuttle Disclosure Schedule, there is no agreement (noncompete or
otherwise), commitment, judgment, injunction, order or decree to which
SuperShuttle is a party or otherwise binding on SuperShuttle which has or
reasonably could be expected to have the effect of prohibiting or impairing any
business practice of SuperShuttle.
2.15 Intellectual Property Rights.
(a) The SuperShuttle Disclosure Schedule lists all of
SuperShuttle's federal, state and foreign registrations of trademarks,
service marks and other marks, trade names or other trade rights, and
all pending applications for any such registrations, all other
trademarks and other marks, trade names and other trade rights, or in
which SuperShuttle
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has any interest whatsoever, and all other trade secrets and other
intellectual property rights, whether or not registered, created or
used by or on behalf of SuperShuttle, in each case relating to its
business (collectively, "Intellectual Property Rights"). The
Intellectual Property Rights listed in the SuperShuttle Disclosure
Schedule are all those used by SuperShuttle in connection with its
business.
(b) No person has a right to receive a royalty or similar
payment in respect of any Intellectual Property Rights. SuperShuttle
has no licenses granted, sold or otherwise transferred by or to it or
other agreements to which it is a party, relating in whole or in part
to any of the Intellectual Property Rights, except as set forth in the
SuperShuttle Disclosure Schedule.
(c) SuperShuttle owns and has the sole right to use each of
the Intellectual Property Rights. None of the Intellectual Property
Rights is involved in any pending or threatened litigation.
SuperShuttle has not received any notice of invalidity or infringement
of any rights of others with respect to such Intellectual Property
Rights. SuperShuttle has taken all reasonable and prudent steps to
protect the Intellectual Property Rights from infringement by any other
firm, corporation, association or person. SuperShuttle's use of the
Intellectual Property Rights is not infringing upon or otherwise
violating the rights of any third party in or to such Intellectual
Property Rights, nor has such infringement been alleged by any third
party. All of the Intellectual Property Rights are valid and
enforceable rights of SuperShuttle and will not cease to be valid and
in full force and effect by reason of the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated by this Agreement.
2.16 Litigation. Except as set forth in the SuperShuttle Disclosure
Schedule or the SuperShuttle Financial Statements, there are no actions, suits,
proceedings, orders or investigations pending or, to the knowledge of
SuperShuttle, threatened against SuperShuttle, at law or in equity, or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, and there is no
basis known to SuperShuttle for any of the foregoing. Except as set forth in the
SuperShuttle Disclosure Schedule, SuperShuttle has not received any opinion or
legal advice to the effect that SuperShuttle is exposed from a legal standpoint
to any material liability. No governmental entity has at any time challenged or
questioned the legal right of SuperShuttle to offer or provide any of its
services in the present manner or style thereof.
2.17 Brokers' Fees. SuperShuttle is not liable for any brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement.
2.18 Compliance With Laws; Permits; Certain Operations. SuperShuttle
and its officers, directors, agents and employees have complied in all material
respects with all applicable laws and regulations of foreign, federal, state and
local governments and all agencies thereof which affect the business or any
owned or leased properties of SuperShuttle and to which SuperShuttle may be
subject, and no claims have been filed against SuperShuttle alleging a violation
of any such law or regulation, except as set forth in the SuperShuttle
Disclosure
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Schedule. Without limiting the generality of the foregoing, SuperShuttle has not
violated, or received a notice or charge asserting any violation of, the
Occupational Safety and Health Act of 1970, or any other state or federal acts
(including rules and regulations thereunder) regulating or otherwise affecting
employee health and safety. SuperShuttle has not given or agreed to give any
money, gift or similar benefit (other than incidental gifts of articles of
nominal value) to any actual or potential customer, governmental employee or any
other person in a position to assist or hinder SuperShuttle in connection with
any actual or proposed transaction. SuperShuttle holds all material permits,
licenses, certificates and other authorizations of foreign, federal, state and
local governmental agencies required for the conduct of its business.
2.19 Disclosure. Neither this Agreement nor any of the schedules or
exhibits hereto contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading, and there is
no fact which has not been disclosed to Tamarack that materially affects
adversely or could reasonably be anticipated to materially affect adversely the
assets, financial condition or operating results, customer, employee or supplier
relations, business condition or prospects, or financing arrangements of
SuperShuttle.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TAMARACK
AND THE SHAREHOLDERS
Tamarack and the Shareholders hereby represent and warrant to
SuperShuttle and Merger Sub as of the date hereof, and again at the Effective
Time (subject to any changes permitted or contemplated hereby), each of the
following, all of which are made jointly and severally by Tamarack and the
Shareholders who agree to be bound to and liable for the representations and
warranties set forth below and all other obligations of Tamarack under this
Agreement. Each of the following representations and warranties are qualified to
the extent set forth in the disclosure schedule that has been delivered to
SuperShuttle simultaneously with the execution and delivery of this Agreement
(the "Tamarack Disclosure Schedule"). The Tamarack Disclosure Schedule describes
exceptions to each applicable representation below by section numbers
corresponding to the section number of the applicable qualified representation.
3.1 Organization and Qualification. Tamarack is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and has the requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted in every
jurisdiction where the failure to do so would have a material adverse effect on
its business, properties or ability to conduct the business currently conducted
by it. The copies of the Articles of Incorporation and Bylaws of Tamarack
previously furnished to SuperShuttle are correct and complete and reflect all
amendments thereto.
3.2 Authority Relative to This Agreement. Tamarack has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Tamarack
and the consummation by Tamarack of the transactions contemplated hereby have
been duly authorized by Tamarack, and no other corporate proceedings on the part
of Tamarack are necessary to authorize this Agreement and
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such transactions (other than the approval of the Shareholders). This Agreement
has been duly executed and delivered by Tamarack and, assuming the due
authorization and delivery thereof by SuperShuttle and Merger Sub, constitutes a
valid and binding obligation of Tamarack, enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws relating to the enforcement of
creditors' rights generally and by general principles of equity. Except as set
forth in the Tamarack Disclosure Schedule, Tamarack is not subject to, or
obligated under, any provision of (a) its Articles of Incorporation or Bylaws,
(b) any material agreement, arrangement or understanding, (c) any material
license, franchise or permit, or (d) any law, regulation, order, judgment or
decree, which would be breached or violated, or in respect of which a right of
termination or acceleration would arise or any encumbrance on any of its or its
subsidiaries' assets would be created, by Tamarack's execution, delivery and
performance of this Agreement and the consummation by it of the transactions
contemplated hereby. Except for such filings to be made pursuant to the Merger
Statutes in order to effect the Merger, no authorization, consent or approval
of, or filing with, any public body, court or authority is necessary on the part
of Tamarack for the consummation by Tamarack of the transactions contemplated by
this Agreement.
3.3 Capitalization. The authorized equity capitalization of Tamarack
consists of 100,000 shares of Common Stock. As of the date hereof, 5,000 shares
of Common Stock are issued and outstanding, all of which shares are validly
issued, fully paid and nonassessable. All of the issued and outstanding shares
of Common Stock of Tamarack are owned by the Shareholders. Except as set forth
in Section 3.3 of the Tamarack Disclosure Schedule, there are no options,
warrants, conversion privileges or other rights, agreements, arrangements or
commitments obligating Tamarack to issue or sell any shares of capital stock or
securities or obligations of any kind convertible into or exchangeable for any
shares of capital stock thereof or of any other corporation, nor are there any
stock appreciation, phantom stock or similar rights outstanding based upon the
book value or any other attribute of Tamarack. No holders of outstanding shares
of Tamarack Common Stock are entitled to any preemptive or other similar rights.
There are no obligations, contingent or otherwise, of Tamarack to repurchase,
redeem or otherwise acquire any shares of Tamarack or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any entity other than guarantees of bank obligations of subsidiaries entered
into in the ordinary course of business. Upon consummation of the Merger,
SuperShuttle will own, directly or indirectly, the entire equity interest in
Tamarack, and there will be no options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments obligating Tamarack to issue or
sell any shares of capital stock of Tamarack or any other corporation.
3.4 Financial Statements. The consolidated financial statements of
Tamarack for the fiscal years ended December 31, 1995, 1996 and 1997, and for
the interim period ended February 28, 1998, (the "Tamarack Financial
Statements") have been delivered to SuperShuttle and were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved and present fairly and accurately the
consolidated financial position, results of operations, and cash flows of
Tamarack as of the dates and for the periods indicated therein, subject, in the
case of unaudited interim statements, to normal year-end accounting adjustments.
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3.5 Subsidiaries. Except as set forth in the Tamarack Disclosure
Schedule, Tamarack does not have any Subsidiaries and does not otherwise own any
stock, partnership interest, joint venture interest, or any other security
issued by or equity interest in any other corporation, organization or entity.
3.6 Absence of Undisclosed Liabilities. Tamarack has no obligations or
liabilities (whether accrued, absolute, contingent, liquidated, unliquidated or
otherwise, whether due or to become due and regardless of when asserted), except
(a) obligations under contracts or commitments described in Section 3.6 of the
Tamarack Disclosure Schedule; (b) liabilities reflected on the balance sheet of
Tamarack as of February 28, 1998 (the "February 28, 1998 Tamarack Balance
Sheet") included in the Tamarack Financial Statements; (c) liabilities which
have arisen in the ordinary course of business after December 31, 1997 (none of
which is an uninsured liability for breach of contract, breach of warranty,
tort, infringement, claim or lawsuit); and (d) liabilities which are not
material in scope or amount.
3.7 No Material Adverse Changes. Except as set forth in the Tamarack
Disclosure Schedule, since December 31, 1997, there has not been any material
adverse change in the assets, financial condition or operating results of
Tamarack, taken as a whole.
3.8 Absence of Certain Developments. Except as set forth in the
Tamarack Disclosure Schedule or except as contemplated in this Agreement, since
December 31, 1997, Tamarack has not:
(a) changed its accounting methods or practices (including any
change in depreciation or amortization policies or rates) or revalued
any of its assets;
(b) redeemed or purchased, directly or indirectly, any shares
of its capital stock, or declared or paid any dividends or
distributions with respect to any shares of its capital stock;
(c) issued or sold any equity securities of it, securities
convertible into or exchangeable for equity securities of it, warrants,
options or other rights to acquire equity securities of it, or bonds or
other securities of it;
(d) borrowed any amount under existing lines of credit or
otherwise or incurred or become subject to any indebtedness, except as
reasonably necessary for the ordinary operation of Tamarack's business
and in a manner and in amounts that are in keeping with the historical
practice of Tamarack;
(e) discharged or satisfied any lien or encumbrance or paid
any liability, other than current liabilities and related liens (or
current installments due on intermediate or long-term liabilities) paid
or satisfied in the ordinary course of business;
(f) mortgaged, pledged or subjected to any lien, charge or
other encumbrance, any assets of Tamarack with a fair market value in
excess of $25,000 in the aggregate, except liens for current property
taxes not yet due and payable;
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(g) sold, assigned or transferred (including, without
limitation, transfers to any employees, shareholders or affiliates of
Tamarack) any tangible assets, except in the ordinary course of
business;
(h) sold, assigned or transferred (including, without
limitation, transfers to any employees, shareholders or affiliates of
Tamarack) any patents, trademarks, trade names, copyrights, trade
secrets or other intangible assets, or disclosed any proprietary or
confidential information, to any person other than SuperShuttle or
Merger Sub, except in the ordinary course of business;
(i) materially changed the pricing or royalties set or charged
by Tamarack to its customers or licensees or agreed to any material
change in the pricing or royalties set or charged by persons who have
licensed Intellectual Property Rights (as described in Section 3.15) to
Tamarack;
(j) canceled, waived or compromised any right, claim or debt,
other than the write-off or compromise of any account receivable in the
ordinary course of business and consistent with past practice;
(k) suffered any material theft, damage, destruction or loss
of or to any property or properties owned or used by it, whether or not
covered by insurance;
(l) increased the annualized level of compensation of or
granted any extraordinary bonuses, benefits or other forms of direct or
indirect compensation to any employee, officer, director or consultant,
or terminated, amended or otherwise modified any plans for the benefit
of employees, except in the ordinary course of business and consistent
with historical adjustments to such compensation and benefits;
(m) made any capital expenditures or commitments therefor,
that aggregate in excess of $25,000;
(n) made any loans or advances to, or guarantees for the
benefit of, any persons (other than advances to sales personnel in the
ordinary course of business);
(o) engaged or agreed to engage in any extraordinary
transactions or distributions, or, except in the ordinary course of
business, entered into any contract, written or oral, that involves
consideration or performance by Tamarack of a value exceeding $25,000
or a term exceeding twelve (12) months; or
(p) taken any other action or entered into any other
transaction other than in the ordinary course of business and in
accordance with past custom and practice, or entered into any
transaction with any Insider (as defined in Section 3.21).
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3.9 Title to and Condition of Properties.
(a) Tamarack owns good and marketable title to the properties
and assets reflected on the December 31, 1997 Tamarack Balance Sheet or
acquired since the date thereof, free and clear of all liens and
encumbrances, except for (A) liens for current taxes not yet due and
payable, (B) liens described in Section 3.6 of the Tamarack Disclosure
Schedule, (C) the properties subject to the leases set forth in Section
3.9(a) of the Tamarack Disclosure Schedule, and (D) assets disposed of
since December 31, 1997, in the ordinary course of business.
(b) (i) Tamarack does not own any real estate; (ii) the
properties subject to the real property leases described in Section
3.9(b) of the Tamarack Disclosure Schedule constitute all of the real
estate used or occupied by Tamarack (the "Tamarack Real Estate"), and
(iii) Tamarack Real Estate has access, sufficient for the conduct of
Tamarack's business, to public roads and to all utilities, including
electricity, sanitary and storm sewer, potable water, natural gas and
other utilities, used in the operations of Tamarack.
(c) The real property leases described in Section 3.9(c) of
the Tamarack Disclosure Schedule are in full force and effect, and
Tamarack has a valid and existing leasehold interest under each such
lease for the term set forth therein. Tamarack has delivered to
SuperShuttle complete and accurate copies of each of the leases and
none of such leases has been modified in any respect, except to the
extent that such modifications are disclosed by the copies delivered to
SuperShuttle. Tamarack is not in default, and no circumstances exist
which could result in such default, under any of such leases, nor, to
the knowledge of Tamarack, is any other party to any of such leases in
default.
(d) All of the buildings, machinery, equipment and other
tangible assets necessary for the conduct of Tamarack's business are in
good condition and repair, ordinary wear and tear excepted, and are
usable in the ordinary course of business. A complete list of all items
of machinery and equipment used in the business of Tamarack is included
as Section 3.9(d) of the Tamarack Disclosure Schedule. Tamarack owns or
leases under valid leases, all buildings, machinery, equipment and
other tangible assets necessary for the conduct of its business.
Tamarack has delivered to SuperShuttle complete and accurate copies of
all equipment leases and such leases are listed in the Tamarack
Disclosure Schedule. None of such equipment leases has been modified in
any respect, except to the extent that such modifications are disclosed
by the copies delivered to SuperShuttle. Tamarack is not in default,
and no circumstances exist which could result in such default, under
any of such equipment leases, nor, to the knowledge of Tamarack, is any
other party to any of such equipment leases in default.
(e) Tamarack is not in any material respect in violation of
any applicable zoning ordinance or other law, regulation or requirement
relating to the operation of any properties used in the operation of
its business, and Tamarack has not received any notice of any such
violation, or of the existence of any condemnation proceeding with
respect to any properties owned or leased by Tamarack.
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3.10 Environmental Matters. Except as set forth in the Tamarack
Disclosure Schedule, Tamarack (i) has obtained all applicable permits, licenses
and other authorizations (a list of which is set forth in the Tamarack
Disclosure Schedule) which are required under federal, state or local laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by Tamarack (or its agents); (ii) is in compliance with all terms and conditions
of any required permits, licenses and authorizations, and with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in such laws or in any
regulation, code, plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder; (iii) is not aware of nor has it
received notice of any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding, based on or resulting from Tamarack's (or any agent's) manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, or release into the environment, of any
pollutant, contaminant, or hazardous or toxic material or waste; (iv) has taken
all actions necessary under applicable requirements of such federal, state or
local laws, rules or regulations to register any products or materials required
to be registered by Tamarack (or its agents) thereunder; and (v) has neither
disposed of nor handled any hazardous substance.
3.11 Accounts Receivable. Tamarack's notes and accounts receivable
recorded on the February 28, 1998 Tamarack Balance Sheet and those arising since
the date thereof are valid and collectible in accordance with their terms,
subject to no valid counterclaims or setoffs, other than to the extent of the
reserves set forth on the books and records of Tamarack or as disclosed in the
Tamarack Disclosure Schedule. All such accounts receivable of Tamarack arose in
the ordinary course of business and are carried at values determined in
accordance with generally accepted accounting principles consistently applied.
3.12 Tax Matters. Except as set forth in the Tamarack Disclosure
Schedule, Tamarack has filed all federal, foreign, state, county and local
income, excise, property, sales and other tax returns which are required to be
filed by it for all periods prior to the Effective Time, and all such returns
are true and correct; all taxes due and payable by Tamarack (whether or not
shown on any tax return) for all periods prior to the Effective Time have been
paid; Tamarack's reserves and provisions for taxes on the balance sheets
included in the Tamarack Financial Statements are sufficient for all accrued and
unpaid taxes as of the dates of such balance sheets; Tamarack has paid all taxes
due and payable by it or which it is obligated to withhold from amounts owing to
any employee, creditor, or third party; Tamarack has not waived any statute of
limitations in respect of taxes or agreed to any extension of time with respect
to a tax assessment or deficiency; to the best knowledge of Tamarack, the
assessment of any additional taxes relating to Tamarack for periods for which
returns have been filed is not expected; and Tamarack has not received notice of
any unresolved questions or claims concerning the tax liability of Tamarack.
Tamarack has not filed any consent agreement under Section 341(f) of
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the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a "subsection (f) asset" as defined in Section 341(f)(4) of the
Code) owned by Tamarack. Tamarack (i) is not and has not been a member of an
affiliated group filing a consolidated federal income tax return (other than an
affiliated group the common parent of which was Tamarack) and (ii) does not have
any liability for taxes of any person (other than Tamarack) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law) as a transferee or successor by contract or otherwise. Tamarack is not a
party to a tax sharing or allocation agreement nor does Tamarack owe any amount
under any such agreement. Tamarack is not obligated to make any payments and is
not a party to any agreement that under certain circumstances could obligate it
to make any payments that, either in whole or in part, would be nondeductible
under Sections 280G or 162 of the Code. Tamarack has not been a "United States
real property holding corporation" (within the meaning of Section 897(c)(2) of
the Code) at any time within the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
3.13 Contracts and Commitments.
(a) Except as set forth in the Tamarack Disclosure Schedule,
Tamarack is not a party to any: (i) collective bargaining agreement or
contract with any labor union; (ii) bonus, pension, profit sharing,
retirement, or other form of deferred compensation plan; (iii) medical
insurance or similar plan or practice, whether formal or informal; (iv)
contract for the employment of any officer, employee, or other person
on a full-time or consulting basis or relative to severance pay or
change-in-control benefits for any such person; (v) agreement or
indenture relating to the borrowing of money in excess of $25,000 or to
mortgaging, pledging or otherwise placing a lien on any assets of
Tamarack which has a fair market value in excess of $25,000 in the
aggregate; (vi) guaranty of any obligation for borrowed money or
otherwise, other than endorsements made for collection; (vii) lease or
agreement under which it is lessor of, or permits any third party to
hold or operate, any property, real or personal; (viii) contract or
group of related contracts with the same party for the purchase of
products or services, under which the undelivered balance of such
products and services has a purchase price in excess of $25,000; (ix)
contract or group of related contracts with the same party for the sale
of products or services under which the undelivered balance of such
products or services has a sales price in excess of $25,000; (x) other
contract or group of related contracts with the same party continuing
over a period of more than twelve (12) months from the date or dates
thereof or involving more than $25,000; (xi) material contract relating
to the distribution of Tamarack's products; (xii) franchise agreement;
or (xiii) other agreement material to Tamarack's business or not
entered into in the ordinary course of business.
(b) Tamarack has attached to the Tamarack Disclosure Schedule
or otherwise furnished to SuperShuttle a true and correct copy of each
written contract or commitment, and a written description of each oral
contract or commitment, referred to in this Section 3.13, together with
all amendments, waivers or other changes thereto.
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(c) Except as specifically disclosed in the Tamarack
Disclosure Schedule: (i) Tamarack's relations with customers and
suppliers are current and good; (ii) since the date of the December 31,
1997 Tamarack Balance Sheet, no significant customer or supplier has
indicated that it will stop or materially decrease the rate of business
done with Tamarack, except for changes in the ordinary course of
Tamarack's business; (iii) Tamarack has performed all material
obligations required to be performed by it in connection with the
contracts or commitments described herein and Tamarack has not been
advised of or received any claim of default under any such contract or
commitment; (iv) Tamarack has no present expectation or intention of
not fully performing any obligation pursuant to any contract or
commitment; and (v) Tamarack has no knowledge of any breach or
anticipated breach by any other party to any contract or commitment.
3.14 Restrictions on Business Activities. Except as set forth in the
Tamarack Disclosure Schedule, there is no agreement (noncompete or otherwise),
commitment, judgment, injunction, order or decree to which Tamarack is a party
or otherwise binding on Tamarack which has or reasonably could be expected to
have the effect of prohibiting or impairing any business practice of Tamarack.
3.15 Intellectual Property Rights.
(a) The Tamarack Disclosure Schedule lists all of Tamarack's
federal, state and foreign registrations of trademarks, service marks
and other marks, trade names or other trade rights, and all pending
applications for any such registrations, all other trademarks and other
marks, trade names and other trade rights, or in which Tamarack has any
interest whatsoever, and all other trade secrets and other intellectual
property rights, whether or not registered, created or used by or on
behalf of Tamarack, in each case relating to its business
(collectively, "Intellectual Property Rights"). The Intellectual
Property Rights listed in the Tamarack Disclosure Schedule are all
those used by Tamarack in connection with its business.
(b) No person has a right to receive a royalty or similar
payment in respect of any Intellectual Property Rights. Tamarack has no
licenses granted, sold or otherwise transferred by or to it or other
agreements to which it is a party, relating in whole or in part to any
of the Intellectual Property Rights, except as set forth in the
Tamarack Disclosure Schedule.
(c) Tamarack owns and has the sole right to use each of the
Intellectual Property Rights. None of the Intellectual Property Rights
is involved in any pending or threatened litigation. Tamarack has not
received any notice of invalidity or infringement of any rights of
others with respect to such Intellectual Property Rights. Tamarack has
taken all reasonable and prudent steps to protect the Intellectual
Property Rights from infringement by any other firm, corporation,
association or person. Tamarack's use of the Intellectual Property
Rights is not infringing upon or otherwise violating the rights of any
third party in or to such Intellectual Property Rights, nor has such
infringement been alleged by any third party. All of the Intellectual
Property Rights are valid and enforceable rights of Tamarack and will
not cease to be valid and in full force and effect
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by reason of the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated by this Agreement.
3.16 Litigation. Except as set forth in the Tamarack Disclosure
Schedule, there are no actions, suits, proceedings, orders or investigations
pending or, to the knowledge of Tamarack, threatened against Tamarack, at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and there is no basis known to Tamarack for any of the foregoing.
Except as set forth in the Tamarack Disclosure Schedule, Tamarack has not
received any opinion or legal advice to the effect that Tamarack is exposed from
a legal standpoint to any material liability. No governmental entity has at any
time challenged or questioned the legal right of Tamarack to offer or provide
any of its services in the present manner or style thereof.
3.17 Brokers' Fees. Tamarack is not liable for any brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement.
3.18 Employment. Except as set forth in the Tamarack Disclosure
Schedule: (i) no key executive employee of Tamarack and no group of Tamarack's
other employees has any plans to terminate his, her or its employment; (ii)
Tamarack has no material labor relations problems pending; and (iii) its labor
relations are satisfactory in all material respects. Tamarack has complied in
all material respects with all laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal opportunity and
collective bargaining, and has paid all social security and other similar taxes.
3.19 Employee Benefit Plans.
(a) With respect to the employees and former employees of
Tamarack, except as set forth in the Tamarack Disclosure Schedule,
Tamarack does not presently maintain, contribute to or have any
liability (including current or potential multi-employer plan
withdrawal liability under ERISA) under any (i) nonqualified deferred
compensation or retirement plan or arrangement which is an "employee
pension benefit plan" as such term is defined in Section 3(2) of ERISA,
(ii) defined contribution retirement plan or arrangement designed to
satisfy the requirements of Section 401(a) of the Code, which is an
employee pension benefit plan, (iii) defined benefit pension plan or
arrangement designed to satisfy the requirements of Section 401(a) of
the Code, which is an employee pension benefit plan, (iv)
"multi-employer plan" as such term is defined in Section 3(37) of
ERISA, (v) unfunded or funded medical, health or life insurance plan or
arrangement for present or future retirees or present or future
terminated employees which is an "employee welfare benefit plan" as
such term is defined in Section 3(1) of ERISA, except as required by
Section 4980B of the Code or Section s 601 through 609 of ERISA, or
(vi) any other employee welfare benefit plan.
(b) With respect to each of the employee benefit plans listed
in the Tamarack Disclosure Schedule, Tamarack has furnished to
SuperShuttle true and complete copies of (i) the plan documents
(including any related trust agreements), (ii) the most recent
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determination letter received from the Internal Revenue Service, (iii)
the latest actuarial valuation, (iv) the latest financial statement,
(v) the last Form 5500 Annual Report, and (vi) all related trust
agreements, insurance contracts or other funding agreements which
implement such employee benefit plan. Neither Tamarack nor any of its
directors, officers, employees or any other "fiduciary," as such term
is defined in Section 3(21) of ERISA, has any liability for failure to
comply with ERISA or the Code for any action or failure to act in
connection with the administration or investment of such plans.
(c) With respect to each plan listed in the Tamarack
Disclosure Schedule: (i) Tamarack has performed in all material
respects all obligations required to be performed by it under each such
plan and each such plan has been established and maintained in all
material respects in accordance with its terms and in compliance with
all applicable laws, statutes, rules, and regulations, including but
not limited to the Code and ERISA; (ii) there are no actions, suits or
claims pending or, to the knowledge of Tamarack, threatened (other than
routine claims for benefits) against any such plan; (iii) each such
plan can be amended or terminated after the Effective Time in
accordance with its terms, without liability to Tamarack; and (iv)
there are no inquiries or proceedings pending or, to the knowledge of
Tamarack, threatened by the Internal Revenue Service or the Department
of Labor with respect to any such plan.
(d) With respect to the insurance contracts or funding
agreements which implement any of the employee benefit plans listed in
the Tamarack Disclosure Schedule, such insurance contracts or funding
agreements are fully insured or the reserves under such contracts are
sufficient to pay claims incurred.
(e) Each plan listed in the Tamarack Disclosure Schedule that
is intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to so qualify and each trust
created thereunder has been determined by the Internal Revenue Service
to be exempt from tax under Section 501(a) of the Code and, to the
knowledge of Tamarack, nothing has occurred since the date of the most
recent determination that would be reasonably likely to cause any such
plan or trust to fail to qualify under Section 401(a) of the Code.
3.20 Insurance. The Tamarack Disclosure Schedule lists and briefly
describes each insurance policy and fidelity bond currently maintained by
Tamarack as well as each such policy and bond maintained by it for the five
years prior to the date of this Agreement, with respect to its properties,
assets, employees and officers and directors and sets forth the date of
expiration of each insurance policy. All insurance policies listed as currently
maintained are in full force and effect and Tamarack is not in default with
respect to its obligations under any of such insurance policies. All premiums
have been paid and there is no retroactive premium adjustment obligation of any
kind or character. There is no claim of Tamarack pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. Tamarack has no knowledge of any
threatened termination of, or material premium increase with respect to, any
such policies. To its knowledge, the insurance coverage of Tamarack is customary
for corporations of similar size engaged in similar lines of businesses.
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3.21 Insider Transactions. Except as set forth herein or in the
Tamarack Disclosure Schedule, no officer, director or shareholder of Tamarack or
any member of the immediate family of any such officer, director or shareholder,
or any entity in which any of such persons owns any beneficial interest (other
than a publicly-held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 5% of the stock of
which is beneficially owned by any of such persons) (collectively "Insiders"),
has any agreement with Tamarack or any interest in any property, real, personal
or mixed, tangible or intangible, used in or pertaining to the business of
Tamarack nor has had any such agreement or interest for the five years prior to
the date of this Agreement. For purposes of the preceding sentence, the members
of the immediate family of an officer, director or shareholder shall consist of
the spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and
daughters-in-law, and brothers- and sisters-in-law of such officer, director or
shareholder. A list of all payments made to or for the benefit of any Insiders
during the prior five years is included within Section 3.21 of the Tamarack
Disclosure Schedule.
3.22 Compliance With Laws; Permits; Certain Operations. Tamarack and
its officers, directors, agents and employees have complied in all material
respects with all applicable laws and regulations of foreign, federal, state and
local governments and all agencies thereof which affect the business or any
owned or leased properties of Tamarack and to which Tamarack may be subject, and
no claims have been filed against Tamarack alleging a violation of any such law
or regulation, except as set forth in the Tamarack Disclosure Schedule. Without
limiting the generality of the foregoing, Tamarack has not violated, or received
a notice or charge asserting any violation of, the Occupational Safety and
Health Act of 1970, or any other state or federal acts (including rules and
regulations thereunder) regulating or otherwise affecting employee health and
safety. Tamarack has not given or agreed to give any money, gift or similar
benefit (other than incidental gifts of articles of nominal value) to any actual
or potential customer, supplier, governmental employee or any other person in a
position to assist or hinder Tamarack in connection with any actual or proposed
transaction. Tamarack holds all permits, licenses, certificates and other
authorizations of foreign, federal, state and local governmental agencies
required for the conduct of its business, including specifically the permits,
licenses, certificates and other authorizations described in Section 3.22 of the
Tamarack Disclosure Schedule.
3.23 Disclosure. Neither this Agreement nor any of the schedules or
exhibits hereto contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading, and there is
no fact which has not been disclosed to SuperShuttle that materially affects
adversely or could reasonably be anticipated to materially affect adversely the
assets, financial condition or operating results, customer, employee or supplier
relations, business condition or prospects, or financing arrangements of
Tamarack.
3.24 Minute Books. The minute books of Tamarack shall be made available
to counsel for SuperShuttle and those delivered shall be the only minute books
of Tamarack and shall contain an accurate summary of all meetings of directors
(or committees thereof) and shareholders or actions by written consent since the
time of incorporation of Tamarack.
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ARTICLE 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each of the Shareholders hereby represents and warrants to SuperShuttle
and Merger Sub as of the date hereof, and again at the Effective Time, with
respect to itself each of the following:
4.1 Organization, Standing and Authority of Shareholders. The
Shareholder has all requisite power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
4.2 Execution and Delivery; No Conflicts.
(a) This Agreement has been duly executed and delivered by
Shareholder and the agreements of Shareholder contained herein
constitute the valid and binding obligations of the Shareholder,
enforceable against Shareholder in accordance with their terms, except
as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium, other laws affecting generally the enforcement of
creditors' rights, or by public policy related to the availability of
equitable remedies.
(b) The execution, delivery and performance of this Agreement
by Shareholder and the consummation of the transactions contemplated
hereby (i) have been duly and validly authorized by all necessary
action on the part of the Shareholder; and (ii) are not prohibited by,
do not violate any provision of, and will not result in the breach of,
or accelerate or permit the acceleration of the performance required by
the terms of any applicable law, rule, regulation, judgment, decree,
order or other requirement of the United States or any state of the
United States, or any court, authority, department, commission, board,
bureau, agency or instrumentality of either thereof, in a manner which
would have a material adverse affect on the ability of the Shareholder
to enter into and consummate this Agreement, or any material contract,
indenture, agreement or commitment to which Shareholder is a party or
is bound in a manner which would have a material adverse affect on
Shareholder.
4.3 Consents and Approvals. The execution, delivery and performance by
Shareholder of this Agreement and the consummation by Shareholder of the
transactions contemplated hereby do not require Shareholder to obtain any
consent, approval or action of, or make any filing with or give any notice to,
any corporation, person or firm or any public, governmental or judicial
authority except: (a) such as have been duly obtained or made, as the case may
be, and are in full force and effect on the date hereof; and (b) those which the
failure to obtain would have no material adverse affect on the transactions
contemplated hereby.
4.4 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Shareholder directly
with the other parties hereto, without the intervention of any person on behalf
of Shareholder in such manner as to give rise to any claim by any person against
the Company, Tamarack or Shareholders for a finder's fee, brokerage commission
or similar payment.
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4.5 Securities Laws Compliance. The securities to be acquired by
Shareholders under the terms of this Agreement will be acquired for
Shareholder's own account for the purpose of investment and not with the present
intention of public resale or public distribution of all or any part of the
securities. Each Shareholder agrees that he/she will refrain from transferring
or otherwise disposing of any of the securities, or any interest therein, in
such manner as to violate the Securities Act of 1933 (the "Securities Act"), as
amended, or of any applicable state securities law regulating the disposition
thereof. Shareholder agrees that the certificates representing the securities
shall bear legends to the effect that such securities have not been registered
under the Securities Act or any applicable state securities laws and that no
interest therein may be transferred or otherwise disposed of in violation of the
provisions thereof or of the rules and regulations issued thereunder.
4.6 Shareholder Experience and Investment Representations.
(a) The Shareholder is able to bear the economic risk of an
investment in the securities acquired by it pursuant to this Agreement
and can afford to sustain a total loss on such investment.
(b) The Shareholder is an experienced and sophisticated
investor and has such knowledge and experience in financial and
business matters that it is capable of evaluating the risks and merits
of acquiring the SuperShuttle securities. The Shareholder has not been
formed or organized for the specific purpose of acquiring the
securities. The Shareholder has had, during the course of this
transaction and prior to its acquisition of the SuperShuttle
securities, the opportunity to ask questions of, and receive answers
from, SuperShuttle and its management concerning SuperShuttle and the
terms and conditions of this Agreement. The Shareholder hereby
acknowledges that it or its representatives has received all such
information as it considers necessary for evaluating the risks and
merits of acquiring the securities and for verifying the accuracy of
any information furnished to it or to which it had access. The
Shareholder represents and warrants that the nature and amount of the
securities it is purchasing is consistent with its investment
objectives, abilities and resources.
(c) The Shareholder, by reason of its business or financial
experience and the business or financial experience of its professional
advisors (who are unaffiliated with and who are not compensated by the
Company or any affiliate or selling agent of the Company, directly or
indirectly), has the capacity to protect its own interest in connection
with the purchase of the securities. The Shareholder has consulted with
counsel of its own choosing in making an informed decision with respect
to the Merger consideration and the terms of this Agreement.
(d) The Shareholder is an "accredited investor" as defined in
and for purposes of Rule 501 and Regulation D promulgated by the
Securities and Exchange Commission ("SEC") under the Securities Act.
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ARTICLE 5
CONDUCT PENDING AND SUBSEQUENT TO THE MERGER
5.1 Conduct of Business Pending the Merger. Tamarack covenants and
agrees that, prior to the Effective Time, unless SuperShuttle shall otherwise
agree in writing or as otherwise expressly contemplated or permitted by this
Agreement:
(a) Tamarack (i) shall conduct its business only in the
ordinary course, on an arm's length basis and in accordance with all
applicable laws, rules and regulations and past custom and practice;
(ii) shall maintain its facilities in good operating condition,
ordinary wear and tear excepted; and (iii) shall use its reasonable
best efforts to preserve intact its business organization and goodwill,
keep available the services of its officers and employees as a group
and maintain satisfactory relationships with suppliers, distributors,
customers and others having business relationships with it;
(b) Tamarack (i) shall confer on a regular basis and upon
demand with representatives of SuperShuttle and report operational
matters and the general status of ongoing operations; (ii) shall notify
SuperShuttle of any emergency or other change in the normal course of
its business or in the operation of its properties and of any
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated); and (iii)
shall not take any action which would render, or which reasonably may
be expected to render, any representation or warranty made by it in
this Agreement untrue at, or at any time prior to, the Effective Time;
(c) Tamarack shall not, directly or indirectly, do or permit
to occur any of the following: (i) amend or propose to amend its
Articles of Incorporation or Bylaws; (ii) issue, sell, pledge, dispose
of or encumber (A) any additional shares of, or any options, warrants,
conversion privileges or rights of any kind to acquire any shares of,
any of its capital stock (other than pursuant to the exercise of
previously granted options) or (B) any of its assets, except in the
ordinary course of business consistent with past practices; (iii)
split, combine or reclassify any of its outstanding shares, or declare,
set aside or pay any dividend or other distribution payable in cash,
stock, property or otherwise with respect to any shares of its capital
stock; (iv) redeem, purchase or acquire or offer to acquire any shares
of its capital stock; (v) acquire (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any corporation,
partnership, joint venture or other business organization or division
or material assets thereof or any interest therein; (vi) incur any
indebtedness for borrowed money or issue any debt securities (other
than in the ordinary course of business and in amounts consistent with
past practices); (vii) make any loans (except for advances to sales
personnel in the ordinary course of business and consistent with past
practice); (viii) enter into any Insider transactions; or (ix) enter
into or propose to enter into, or modify or propose to modify, any
agreement, arrangement or understanding with respect to any of the
matters set forth in this Section 5.1(c);
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(d) Tamarack shall not, directly or indirectly, enter into or
modify any contract, agreement or understanding, written or oral, that
involves consideration or performance of Tamarack, as the case may be,
of a value exceeding $25,000 or a term exceeding twelve months, except
in the ordinary course of business and consistent with past practice;
(e) Tamarack shall not enter into or modify any employment,
severance or similar agreements or arrangements with, or grant any
bonuses, salary increases, or severance or termination pay to, any
officers, directors, employees or consultants other than in the
ordinary course of business and consistent with past practice;
(f) Tamarack shall not adopt or amend in any material respect
any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other benefit plan,
trust, fund or group arrangement for the benefit or welfare of any
officers, directors or employees; and
(g) Tamarack shall not allow its current insurance policies to
be canceled or terminated or any of the coverage thereunder to lapse,
unless simultaneous with such termination, cancellation or lapse,
replacement policies providing coverage equal to or greater than the
coverage under the canceled, terminated or lapsed policies for
substantially similar premiums are in full force and effect.
5.2 Conduct Subsequent to the Merger.
(a) SuperShuttle agrees and covenants to use its best efforts
to consummate an initial public offering of SuperShuttle Common Stock
within a reasonable period of time, which shall not exceed 130 days
from the date of this Agreement. If SuperShuttle does not consummate an
initial public offering of SuperShuttle Common Stock within such
period, the Shareholders shall have the right to repurchase, at fair
market value, all of the shares of Tamarack Common Stock transferred to
SuperShuttle. Tamarack will be responsible for payment of its own and
its Shareholders' fees and expenses in connection with the exercise of
such repurchase right. Each of SuperShuttle and Tamarack agree that if
the Shareholders exercise the repurchase right referenced above, the
exchange of Tamarack's SuperShuttle Common Stock for Tamarack Common
Stock will occur with no liability on the part of SuperShuttle as to
the condition of Tamarack during the time SuperShuttle was in
possession of the Tamarack Common Stock.
(b) Until the earlier of (a) an underwritten public offering
by SuperShuttle of its common stock pursuant to an effective
registration statement under the Securities Act, or (b) 60 days after
July 31, 1998, SuperShuttle shall (i) not cause the Surviving
Corporation to make any material changes in its business, operations,
facilities or personnel unless such change is approved by the holders
of a majority of the stock issued pursuant to Section 1.5(a), (ii)
shall use its best efforts to preserve intact the business organization
and goodwill of the Surviving Corporation, (iii) will not cause the
Surviving Corporation to take any of the actions described in Section
5.1(c) and (iv) shall devote reasonable financial and personnel
resources to the Surviving Corporation.
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(c) Each of SuperShuttle and Tamarack covenant and agree that
SuperShuttle shall have the right (for thirty (30) days following the
applicable target date) to repurchase, at fair market value, all of the
SuperShuttle Common Stock to be transferred to Tamarack in connection
with the Merger, if either of the conditions in Section 7.4 are not
satisfied. SuperShuttle will be responsible for payment of its own fees
and expenses in connection with the exercise of such repurchase right.
(d) The parties intend to effect the Merger as a tax-free
reorganization. SuperShuttle undertakes to do all things reasonably
necessary to effect the transaction in a tax-free manner as requested
by Tamarack, provided such actions do not affect the underlying
economics of the transaction for SuperShuttle. However, SuperShuttle
shall not be responsible for any set of circumstances that affects the
tax-free nature of the transaction.
(e) SuperShuttle agrees to undertake to remove the
Shareholders as personal guarantors of any and all loans and leases of
the Surviving Corporation and to replace the Shareholders as the
guarantors of such obligations, provided that there has been no
personal wrongdoing or misrepresentation on the part of the
Shareholders in connection with such obligations. This assumption of
personal guarantees will take effect upon the later of (a) an
underwritten public offering by SuperShuttle of its common stock
pursuant to an effective registration statement under the Securities
Act or (b) 60 days after July 31, 1998. Unless and until such personal
guarantees of Shareholders have been removed, SuperShuttle agrees to
indemnify, defend and hold harmless the Shareholders from and against
any and all claims, damages and expenses arising from or related to
such personal guarantees.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Shareholders' Meeting. Tamarack shall promptly after the date
hereof, take all action necessary in accordance with California Law and its
Articles of Incorporation and Bylaws to convene a meeting of the Shareholders to
consider the Merger (the "Tamarack Shareholders Meeting") (or solicit the
written consent of the Shareholders to the Merger). Tamarack shall consult
SuperShuttle as to the date of the Tamarack Shareholders Meeting (or the date
written consents are expected to be requested) and shall not postpone or adjourn
(other than for the absence of a quorum) the Tamarack Shareholders Meeting
without the consent of SuperShuttle. Tamarack shall use its reasonable best
efforts to secure the vote (or consent) of the Shareholders required by
California Law to effect the Merger. Tamarack has received irrevocable consents
from the Shareholders executing this Agreement to approve the Merger and by
their signatures below the Shareholders agree to all acts and things necessary
to effect the Merger on the terms hereof.
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6.2 Expenses. Each of SuperShuttle, the Shareholders and Tamarack shall
bear their own legal and accounting fees and other expenses relating to this
transaction. In addition, Tamarack will bear the expenses associated with the
conduct of the required accounting audit of its books and records relating to
this transaction.
6.3 No Negotiations. Until March 31, 1998, or such later date as the
parties may mutually agree, Tamarack and the Shareholders agree that neither
they nor Tamarack's directors, officers, employees or agents (i) shall solicit,
negotiate or accept any offers for the sale of Tamarack or any substantial
portion thereof (whether by merger or sale of stock or assets or otherwise) or
provide any non-public information with respect thereto, or (ii) shall solicit,
negotiate, or accept any offers for the acquisition of any material business.
Tamarack shall promptly notify SuperShuttle if it (or to its knowledge any of
the other enumerated persons or any Shareholder) is approached by any person
interested in acquiring the assets or capital stock of Tamarack.
6.4 Notification of Certain Matters. SuperShuttle and Tamarack shall
give prompt notice to each other of (i) the occurrence or failure to occur of
any event, which occurrence or failure would be likely to cause any
representation or warranty on its part contained in this Agreement to be untrue
or inaccurate at, or at any time prior to, the Effective Time, and (ii) any
material failure of such party, or any officer, director, shareholder, employee
or agent thereof, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder.
6.5 Access to Information; Confidentiality.
(a) Until March 31, 1998, or the Effective Time each of
SuperShuttle and Merger Sub shall have the opportunity to make a
complete review of the books, records, business and affairs of
Tamarack. Such review may be conducted at any and all reasonable times
by such persons as SuperShuttle designates. To facilitate such review,
Tamarack shall provide to SuperShuttle and its agents complete access
to all of its records and documents, shall provide the other party with
personal, bank and professional references, and shall use reasonable
efforts to make available for consultation customers, employees,
suppliers and distribution channels.
(b) Each of SuperShuttle, Merger Sub and Tamarack agrees that
all non-public information provided to the other enumerated parties
will be treated as confidential, and if this Agreement is terminated,
will return to such other parties all confidential documents (and all
copies thereof) in its possession, or will certify to the other parties
that all such documents not returned have been destroyed. Further,
regardless of whether this Agreement is terminated, each party shall
continue to hold all confidential information of the other in strictest
confidence in accordance with the Letter of Intent entered into by
SuperShuttle and Tamarack on March 2, 1998.
6.6 Consents; Approvals. SuperShuttle, Merger Sub and Tamarack shall
each use their reasonable best efforts to obtain all consents, waivers,
approvals, authorizations or orders, and each such party shall make all filings
required in connection with the authorization,
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execution and delivery of this Agreement by such party and the consummation by
them of the transactions contemplated hereby. Each of SuperShuttle, Merger Sub
and Tamarack shall furnish all information required to be included for any
application or filing to be made pursuant to the rules and regulations of any
applicable governmental body in connection with the transactions contemplated by
this Agreement.
6.7 Supplements to Disclosure Schedules. From time to time prior to the
Effective Time, SuperShuttle and Tamarack will each promptly supplement or amend
their respective Disclosure Schedules with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in any such Disclosure Schedule
or which is necessary to correct any information in any such Disclosure Schedule
which has been rendered inaccurate thereby. No supplement or amendment to any
such Disclosure Schedule shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Sections 7.2 or 7.3 of this
Agreement, as the case may be, except as otherwise provided in Sections 7.2(a)
and 7.3(a).
6.8 Non-Solicitation of Employees. For a period of one year from the
date hereof, no party shall solicit, negotiate with or hire any employee of the
other party.
6.9 Election of Directors. SuperShuttle shall promptly after the date
hereof take all action necessary in accordance with Delaware Law and its
Certificate of Incorporation and Bylaws to (i) increase, effective as of the
Effective Time, the number of directors serving on the SuperShuttle Board of
Directors to accommodate the election of one (1) designee of Tamarack and (ii)
elect, effective as of the Effective Time, the one designee of Tamarack to
SuperShuttle's Board of Directors.
6.10 Confidential Information and Covenant Not To Compete. Each of the
Shareholders hereby covenants and agrees as follows:
(a) that until the later of a period of three years following
the consummation of the Merger transactions or following the
termination of the employment agreement referenced in Section 7.1(d),
the Shareholder shall not use or disclose, directly or indirectly, for
any reason whatsoever or in any way any confidential information or
trade secrets of Tamarack, SuperShuttle or Merger Sub, including by way
of example, names or descriptions of customers, financial statements,
product or service pricing or other information, contract proposals and
bidding information, and any other information of a proprietary or
confidential character;
(b) that until the later of a period of three years following
the consummation of the Merger transactions or following the
termination of the employment agreement referenced in Section 7.1(d),
the Shareholder shall not, directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director or in any other capacity whatsoever, engage
or participate in any businesses in competition in any manner
whatsoever with the business of Tamarack, SuperShuttle or any affiliate
of either of them as such business is presently conducted in either
Orange, Los Angeles, Riverside or San Diego counties or any county
contiguous
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thereto (the "Applicable Counties"). Not limiting the generality of the
foregoing, the business of Tamarack and SuperShuttle shall be deemed to
consist of the transportation, over land, of passengers for hire,
including, by way of example, transportation to and from airports,
ports or stations of embarkation for travel, but excluding the
operation of taxis;
(c) that until the later of a period of three years following
the consummation of the Merger transactions or following the
termination of the employment agreement referenced in Section 7.1(d),
the Shareholder shall not solicit or negotiate any contract or
agreement that constitutes or would constitute engaging in competition
with the business of Tamarack or SuperShuttle in the Applicable
Counties; and
(d) each of the Shareholders by execution of this Agreement
grants to Tamarack a fully paid irrevocable license to use any and all
rights and interests in the business concept employed by Tamarack to
the extent that they have any interest therein, and in any name under
which such businesses may have been conducted, and agree not to
undertake to conduct business employing any such name at any place at
which SuperShuttle or any of its affiliates conduct business. To the
extent that any business concept employed by a Shareholder would
involve the conduct of any form of shared ride transportation business,
the license granted to SuperShuttle shall be deemed exclusive to
SuperShuttle.
In connection with the limitation protections afforded to SuperShuttle
by the covenants set forth above in this Section 6.10, the Shareholders
recognize that SuperShuttle has a need for the covenants and that need is based
upon the following:
(i) SuperShuttle's expenditure of substantial time, money and
effort in developing its business and the valuable list of customers
and information about the requirements and needs associated with the
business, including the business of Tamarack being acquired through the
Merger;
(ii) Shareholder through the course of his or her relationship
with Tamarack has been or may have been entrusted with or exposed to
certain trade secrets and other confidential information, the
confidentiality of which is critical to the ongoing business of
SuperShuttle, including the business to be acquired through the Merger
of Tamarack into Merger Sub;
(iii) SuperShuttle provides and will provide services
throughout the Applicable Counties; and
(iv) SuperShuttle would suffer great loss and irreparable harm
if the Shareholders were to violate the foregoing covenants.
The Shareholders hereby specifically acknowledge and agree that the
temporal, geographical and other restrictions contained in this Section 6.10 are
reasonable and necessary to protect the business and prospects of Tamarack and
SuperShuttle and that the enforcement of
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the provisions of this Section 6.10 will not work an undue hardship on the
Shareholders. Shareholders further agree that in the event that either the
temporal, geographical or any other restrictions, or a portion thereof, set
forth in this Section 6.10 is determined to be overly restrictive and
nonenforceable, the covenants set forth shall be reduced and modified to those
which are reasonable and enforceable under the circumstances to the fullest
extent permitted under applicable law in the judgment of the applicable court.
The Shareholders acknowledge and agree that SuperShuttle does not have an
adequate remedy at law for the breach or threatened breach of the covenants
contained in this Section 6.10 and the Shareholders therefore specifically agree
that SuperShuttle may, in addition to any other remedies which may be available
hereunder or as a matter of law or in equity, file a suit in equity to enjoin
the Shareholder from the breach or threatened breach.
If the provisions of this Section 6.10 are held to be invalid or
unenforceable as against public policy, the remaining provisions of this
Agreement shall not be affected thereby.
ARTICLE 7
CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) this Agreement and the Merger with respect to Tamarack,
and the issuance of the SuperShuttle Common Stock, shall have been
approved and/or adopted, as required by applicable law and the parties'
Certificate/Articles of Incorporation and Bylaws, by the requisite vote
of the Shareholders and/or the boards of directors of SuperShuttle and
Tamarack;
(b) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of
the Merger shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be
pending; and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to
the Merger, which makes the consummation of the Merger illegal;
(c) no party hereto shall have terminated this Agreement as
permitted herein;
(d) SuperShuttle and Gene Hauck shall have entered into an
Employment Agreement substantially in the form attached hereto as
Exhibit "D";
(e) SuperShuttle agrees to grant the Shareholders piggyback
and demand registration rights pursuant to the terms of the
registration rights agreement, a form of which is attached hereto as
Exhibit "E";
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<PAGE> 37
(f) the Registration Rights Agreement and the Escrow Agreement
shall be executed and delivered by the parties on or before April 22,
1998; and
(g) all associated documents that are referenced in this
Agreement, including, but not limited to, the Employment Agreement, the
Disclosure Schedules referenced in Article 2 and Article 3, Schedule
1.1 and the Opinion Letter referenced in Section 7.2 (k) that are not
in final form when this Agreement is signed, shall be completed in form
and substance satisfactory to the parties as soon as possible
thereafter but no later than April 22, 1998.
7.2 Additional Conditions to Obligations of SuperShuttle and Merger
Sub. The obligations of SuperShuttle and Merger Sub to effect the Merger are
also subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) the representations and warranties of Tamarack and the
Shareholders in this Agreement shall be true and correct in all
material respects as of the Effective Time as if made at and as of the
Effective Time (subject to any changes permitted or contemplated hereby
and except for the updating or correction of the disclosures in the
Tamarack Disclosure Schedule which do not reflect any change that is
reasonably likely to have a material adverse effect on the assets,
liabilities, business, results of operations, financial condition or
prospects of Tamarack); and Tamarack shall in all material respects
have performed each obligation and agreement and complied with each
covenant to be performed and complied with by it hereunder at or prior
to the Effective Time;
(b) Tamarack and the Shareholders shall have furnished to
SuperShuttle a certificate in which Tamarack shall certify that the
conditions set forth in Section 7.2(a) have been fulfilled;
(c) Tamarack shall have furnished to SuperShuttle (i) a copy
of the text of the resolutions by which the corporate action on the
part of Tamarack necessary to approve this Agreement and the Merger
were taken and (ii) certificates executed on behalf of Tamarack
certifying to SuperShuttle that such copy is a true, correct and
complete copy of such resolutions and that such resolutions were duly
adopted and have not been amended or rescinded;
(d) Tamarack shall have furnished to SuperShuttle (i) a
balance sheet dated a date not more than thirty days prior to the
Effective Time (the "Current Balance Sheet") and (ii) an income
statement for the period from January 1, 1998, to the date of the
Current Balance Sheet;
(e) no Shareholder shall have exercised dissenter's rights;
(f) there shall have been no material adverse change in the
business, assets, properties, financial condition or operating results
of Tamarack;
32
<PAGE> 38
(g) Tamarack shall have obtained each consent and approval
necessary in order that the Merger and the transactions contemplated
herein not constitute a breach or violation of, or result in a right of
termination or acceleration or any encumbrance on any of Tamarack's
assets pursuant to the provisions of any material agreement,
arrangement or understanding or any material license, franchise or
permit;
(h) there shall have been no damage, destruction or loss of or
to any property or properties owned or used by Tamarack, whether or not
covered by insurance, which in the aggregate has had or is reasonably
likely to have a material adverse effect on Tamarack;
(i) there shall not have been instituted, pending or
threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction,
nor shall there be in effect any judgment, decree or order of any
governmental authority, administrative agency or court of competent
jurisdiction, in either case, seeking to prohibit or limit SuperShuttle
from exercising the material rights and privileges pertaining to its
ownership of the Surviving Corporation or the ownership or operation by
SuperShuttle or any of its subsidiaries of all or a material portion of
the business or assets of SuperShuttle or any of its subsidiaries, or
seeking to compel SuperShuttle or any of its subsidiaries to dispose of
or hold separate all or any material portion of the business or assets
of SuperShuttle or any of its subsidiaries, as a result of the Merger
or the transactions contemplated by this Agreement;
(j) SuperShuttle shall have otherwise been reasonably
satisfied with all of its due diligence;
(k) SuperShuttle shall have received an opinion of counsel of
Tamarack in form and substance reasonably acceptable to SuperShuttle;
and
(l) All of the transactions contemplated by Schedule 1.1 shall
have been consummated or shall be simultaneously consummated with the
Effective Time in a manner reasonably acceptable to SuperShuttle and as
contemplated by Schedule 1.1.
Notwithstanding the failure of any condition in this Section 7.2, SuperShuttle
may conditionally waive the failed condition and consummate the transaction, but
shall be entitled to pursue adequate and appropriate reimbursement for all
costs, damages and liabilities in connection with the failed condition and may
withhold such of the Merger consideration as SuperShuttle deems reasonably
appropriate to assure payment of the costs, damages and liabilities associated
with the failed condition.
7.3 Additional Conditions to Obligations of Tamarack. The obligation of
Tamarack to effect the Merger is also subject to the fulfillment at or prior to
the Effective Time of the following conditions:
33
<PAGE> 39
(a) the representations and warranties of SuperShuttle and
Merger Sub set forth in Article 2 shall be true and correct in all
material respects as of the Effective Time as if made at and as of the
Effective Time (subject to any changes permitted or contemplated hereby
and except for the updating or correction of the disclosures in the
SuperShuttle Disclosure Schedule which do not reflect any change that
is reasonably likely to have a material adverse effect on the assets,
liabilities, business, results of operations, financial condition or
prospects of SuperShuttle and its subsidiaries, taken as a whole) and
each of SuperShuttle and Merger Sub shall in all material respects have
performed each obligation and agreement and complied with each covenant
to be performed and complied with by it hereunder at or prior to the
Effective Time;
(b) SuperShuttle shall have furnished to Tamarack a
certificate in which SuperShuttle and Merger Sub shall certify that the
conditions set forth in Section 7.3(a) have been fulfilled;
(c) SuperShuttle shall have furnished to Tamarack (i) a copy
of the text of the resolutions by which the corporate actions on the
part of SuperShuttle and Merger Sub necessary to approve this Agreement
and the Merger were taken and (ii) certificates executed on behalf of
SuperShuttle and Merger Sub by their respective corporate secretaries
or one of their respective assistant corporate secretaries certifying
to Tamarack, in each case, that such copy is a true, correct and
complete copy of such resolutions and that such resolutions were duly
adopted and have not been amended or rescinded;
(d) SuperShuttle shall have obtained each consent and approval
necessary in order that the Merger and the transactions contemplated
herein not constitute a breach or violation of, or result in a right of
termination or acceleration or any encumbrance on any of SuperShuttle's
assets pursuant to the provisions of any material agreement,
arrangement or understanding or any material license, franchise or
permit; and
(e) all corporate action necessary by SuperShuttle to elect,
as of the Effective Time and as contemplated by Section 6.9 hereof, the
one designee of Tamarack to SuperShuttle's Board of Directors, shall
have been duly and validly taken.
7.4 Conditions Subsequent to the Merger. The following are conditions
subsequent to the Merger. In the event that these conditions are not satisfied,
SuperShuttle shall, at its discretion, have the right to exercise the repurchase
right set forth at Section 5.2(c).
(a) the obtaining, by July 31, 1998, of all consents necessary
by reason of any change of control provisions in any license, permit or
third party contract material to the business of Tamarack; and
(b) the approval of the PUC of the change of control of
Tamarack by July 31, 1998, in a manner reasonably acceptable to
SuperShuttle.
34
<PAGE> 40
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual written consent of a duly authorized officer of
SuperShuttle and Tamarack;
(b) by either party if the other party breaches any of its
material representations, warranties or covenants contained herein and,
if such breach is curable, such breach is not cured on or prior to 10
days after notice;
(c) by either SuperShuttle or Tamarack if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any
other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger;
(d) by either SuperShuttle or Tamarack if the Merger shall not
have been consummated on or before March 31, 1998, or such later date
as may be mutually agreed upon by the parties;
(e) by SuperShuttle, if the conditions set forth in Section
7.2 hereof shall have not been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by Tamarack on or
before March 31, 1998; or
(f) by Tamarack, if the conditions set forth in Section 7.3
hereof shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by SuperShuttle and/or
Merger Sub on or before March 31, 1998;
provided, however, that no party shall have the right to terminate this
Agreement unilaterally if the event giving rise to such right shall be primarily
attributable to such party or to any affiliated party.
8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall become void and there
shall be no liability or further obligation hereunder on the part of
SuperShuttle, Merger Sub, Tamarack or their respective shareholders, officers or
directors, except as set forth in Sections 6.2, 6.5(b), or 6.8 hereof.
8.3 Amendment. This Agreement may not be amended except by an
instrument in writing approved by the parties to this Agreement and signed on
behalf of each of the parties hereto.
35
<PAGE> 41
8.4 Waiver. At any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of any other party hereto or (b) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations, in
each case only to the extent such obligations, agreements and conditions are
intended for its benefit.
ARTICLE 9
GENERAL PROVISIONS
9.1 Survival of Representations and Warranties. All representations and
warranties made by SuperShuttle, Merger Sub, Tamarack and the Shareholders in
this Agreement shall terminate as of the Effective Time or upon termination of
this Agreement as provided in Section 8.1, as the case may be.
9.2 Public Announcements. SuperShuttle and Tamarack shall consult with
each other upon an agreed form of press release and before issuing any such
press release or otherwise making any public statements with respect to the
Merger or this Agreement. Neither SuperShuttle nor Tamarack shall issue any such
press release or make any such public statement without the prior consent of the
other party, which shall not be unreasonably withheld.
9.3 Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by telecopier,
or by registered or certified mail (postage prepaid and return receipt
requested) to the parties at the following addresses (or if such other address
for a party as shall be specified by it by like notice):
If to SuperShuttle or SuperShuttle International, Inc.
Merger Sub: 4610 South 35th Street
Phoenix, Arizona 85040
FAX: (602) 243-6446
Attn: R. Brian Wier
With a copy to: Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004-4441
FAX: (602) 253-8129
Attn: Christopher D. Johnson, Esq.
If to Tamarack or Tamarack Transportation, Inc.
the Shareholders: dba SuperShuttle Los Angeles
531 Van Ness Avenue
Torrance, California 90501
FAX: _______________
Attn: Gene Hauck
36
<PAGE> 42
With a copy to: Petillon & Hansen
1260 Union Bank Tower
21515 Hawthorne Boulevard
Torrance, California 90503
PH: (310) 543-0500
FAX: (310) 543-0550
Attn: Raymond Seto
All such notices and other communications shall be deemed to have been
duly given: (i) when delivered by hand, if personally delivered; (ii) three
business days after being deposited in the mail, postage prepaid, if delivered
by mail; and (iii) when receipt is acknowledged, if telecopied.
9.4 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the exhibits and attachments hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires. The rule of construction that an agreement is construed in
favor of the nondrafting party shall not apply to this Agreement. This Agreement
shall be deemed to have been mutually drafted by the parties.
9.5 Schedules and Exhibits. All schedules and exhibits attached hereto
or referred to herein are hereby incorporated in and made a part of this
Agreement as set forth in full herein. Information set forth in any section to
the SuperShuttle Disclosure Schedule or the Tamarack Disclosure Schedule is
deemed to be set forth in all other sections of such Disclosure Schedule.
Disclosure of any fact or item in any schedule or exhibit hereto referenced by a
particular paragraph or section in this Agreement shall, should the existence of
the fact or item or its contents be relevant to any other paragraph or section,
be deemed to be disclosed with respect to that other paragraph or schedule
whether or not a specific cross reference appears. Disclosure of any fact or
item in any schedule or exhibit hereto shall not necessarily mean that such item
or fact individually is material to a party.
9.6 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the court shall modify the
Agreement or, in the absence thereof, the parties shall negotiate in good faith
to modify this Agreement to preserve each party's anticipated benefits under
this Agreement.
9.7 Jurisdiction; Venue; Service of Process. The parties expressly
agree that any controversy, dispute, litigation or claim arising out of the
subject matter of this Agreement and the transactions contemplated hereby shall
be brought or commenced only in a federal or state court located in Maricopa
County, Arizona. The parties agree to be subject to the personal
37
<PAGE> 43
jurisdiction of the federal and/or state courts situated in Maricopa County,
Arizona and agree that a claim of forum non-conveniens shall not be a defense to
an action initiated in such venues. The parties agree to the service of process
of any such courts in any such action or proceeding by registered or certified
mail, postage prepaid, return receipt requested, to the addresses listed in this
Agreement and agree that such service shall become effective thirty (30) days
after such mailing.
9.8 Waiver of Jury Trial. EACH OF SUPERSHUTTLE, MERGER SUB AND TAMARACK
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY.
9.9 Miscellaneous. This Agreement (together with all other documents
and instruments referred to herein): (a) constitutes the entire agreement, and
supersedes all other prior agreements, representations, warranties and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof; (b) is not intended to confer upon any other person any
rights or remedies hereunder; (c) shall not be assigned by any party, except
that Merger Sub may assign all or any portion of its rights under this Agreement
to any wholly owned subsidiary of SuperShuttle, but no such assignment shall
relieve SuperShuttle of its obligations hereunder; and (d) shall be governed in
all respects, including validity, interpretation and effect, by the internal
laws of the State of Arizona, without giving effect to the principles of
conflict of laws thereof; provided, however, that the Merger shall be governed
by the Arizona Law and California Law, as appropriate. Each certificate,
agreement or other document making reference to the Agreement and Plan of
Reorganization and Merger among SuperShuttle International, Inc., SuperShuttle
Acquisition Co. II, Tamarack Transportation, Inc. ("Tamarack") and the
shareholders of Tamarack, dated as of March 31, 1998, shall be deemed to refer
to this Amended and Restated Agreement and Plan of Reorganization and Merger.
This Agreement may be executed in two or more counterparts, which together shall
constitute a single agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
38
<PAGE> 44
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
SIGNATURE PAGE
IN WITNESS WHEREOF, SuperShuttle, Merger Sub, Tamarack and the
Shareholders have caused this Agreement to be executed on the date first written
above by their respective officers thereunder duly authorized.
SUPERSHUTTLE INTERNATIONAL
INC., a Delaware corporation
By /s/ Thomas C. LaVoy
--------------------------------
Thomas LaVoy, Secretary and CFO
SUPERSHUTTLE ACQUISITION CO. II,
an Arizona corporation
By /s/ Thomas C. LaVoy
--------------------------------
Secretary
TAMARACK TRANSPORTATION, INC.,
a California corporation
By /s/ Gene Hauck
---------------------------------
Gene Hauck, President
SHAREHOLDERS OF TAMARACK
/s/ Gene Hauck
------------------------------------
39
<PAGE> 1
Exhibit 2.3
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
AMONG
SUPERSHUTTLE INTERNATIONAL, INC.,
AAA WHEELCHAIR WAGON SERVICES, INC.
WHEELCHAIR AMBULANCE OF HOLLYWOOD
LIMOUSINES OF SOUTH FLORIDA, INC.
A1A SNOWBIRD LEASING, INC.
AND
KAREN N. CAPUTO
APRIL 30, 1998
<PAGE> 2
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1.........................................................................................................1
THE STOCK PURCHASE................................................................................................1
1.1 Basic Transaction...............................................................................2
1.2 Effective Time; Closing Date....................................................................3
1.3 Articles of Incorporation and Bylaws............................................................3
1.4 Deliveries at the Effective Time................................................................3
1.5 Closing of AAA-LSF Transfer Books...............................................................3
1.6 Lost, Stolen or Destroyed Certificates..........................................................3
1.7 Taking of Necessary Action; Further Action......................................................3
1.8 Tax Treatment...................................................................................3
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SUPERSHUTTLE....................................................................4
2.1 Organization and Qualification..................................................................4
2.2 Authority Relative to This Agreement............................................................4
2.3 Capitalization..................................................................................4
2.4 Financial Statements............................................................................5
2.5 Subsidiaries....................................................................................5
2.6 Litigation......................................................................................5
2.7 Brokers' Fees...................................................................................6
2.8 Compliance With Laws; Permits; Certain Operations...............................................6
2.9 Absence of Undisclosed Liabilities..............................................................6
2.10 No Material Adverse Changes.....................................................................7
2.11 Other Agreements................................................................................7
2.12 Disclosure......................................................................................7
2.13 Liens...........................................................................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF AAA-LSF AND THE SHAREHOLDER.....................................................7
3.1 Organization and Qualification..................................................................8
3.2 Authority Relative to This Agreement............................................................8
3.3 Capitalization..................................................................................8
3.4 Financial Statements............................................................................9
3.5 Subsidiaries....................................................................................9
3.6 Absence of Undisclosed Liabilities..............................................................9
3.7 No Material Adverse Changes....................................................................10
3.8 Absence of Certain Developments................................................................10
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
3.9 Title to and Condition of Properties...........................................................12
3.10 Environmental Matters..........................................................................13
3.11 Accounts Receivable............................................................................13
3.12 Tax Matters....................................................................................13
3.13 Contracts and Commitments......................................................................14
3.14 Restrictions on Business Activities............................................................15
3.15 Intellectual Property Rights...................................................................15
3.16 Litigation.....................................................................................15
3.17 Brokers' Fees..................................................................................16
3.18 Employment.....................................................................................16
3.19 Employee Benefit Plans.........................................................................16
3.20 Insurance......................................................................................16
3.21 Insider Transactions...........................................................................16
3.22 Compliance With Laws; Permits; Certain Operations..............................................16
3.23 Disclosure.....................................................................................17
3.24 Minute Books...................................................................................17
3.25 Compensation...................................................................................17
3.26 Medicaid and Other Third Party Payor Matters...................................................17
ARTICLE 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER.........................................................18
4.1 Organization, Standing and Authority of Shareholder............................................18
4.2 Execution and Delivery; No Conflicts...........................................................18
4.3 Consents and Approvals.........................................................................18
4.4 Brokers........................................................................................19
4.5 Securities Laws Compliance.....................................................................19
4.6 Shareholder Experience and Investment Representations..........................................19
ARTICLE 5
CONDUCT PENDING AND SUBSEQUENT TO THE EXCHANGE...................................................................20
5.1 Conduct of Business Pending the Exchange.......................................................20
5.2 Conduct Subsequent to the Exchange.............................................................21
5.3 SuperShuttle Recision Right ...................................................................22
5.4 Conduct by SuperShuttle........................................................................22
ARTICLE 6
ADDITIONAL AGREEMENTS............................................................................................23
6.1 Expenses.......................................................................................23
6.2 No Negotiations................................................................................23
6.3 Notification of Certain Matters................................................................23
6.4 Access to Information; Confidentiality.........................................................24
6.5 Consents; Approvals............................................................................24
6.6 Supplements to Disclosure Schedules............................................................24
6.7 Non-Solicitation of Employees..................................................................24
6.8 Election of Directors..........................................................................25
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
6.9 Confidential Information and Covenant Not To Compete...........................................25
6.10 Collateral and/or Guarantees for Certain AAA-LSF Loans.........................................26
6.11 Shareholder Loans..............................................................................26
6.12 Tax Treatment..................................................................................26
ARTICLE 7
CONDITIONS.......................................................................................................27
7.1 Conditions to Obligations of Each Party to Effect the Exchange.................................27
7.2 Additional Conditions to Obligations of SuperShuttle...........................................27
7.3 Additional Conditions to Obligation of AAA-LSF.................................................29
7.4 Conditions to the Closing......................................................................30
7.5 Other Deliveries...............................................................................30
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER ...............................................................................31
8.1 Termination....................................................................................31
8.2 Effect of Termination..........................................................................31
8.3 Amendment......................................................................................31
8.4 Waiver.........................................................................................32
ARTICLE 9
GENERAL PROVISIONS...............................................................................................32
9.1 Survival of Representations and Warranties.....................................................32
9.2 Public Announcements...........................................................................32
9.3 Notices........................................................................................32
9.4 Interpretation.................................................................................33
9.5 Schedules and Exhibits.........................................................................33
9.6 Severability...................................................................................33
9.7 Jurisdiction; Venue; Service of Process........................................................33
9.8 Waiver of Jury Trial...........................................................................34
9.9 Miscellaneous..................................................................................34
</TABLE>
iii
<PAGE> 5
INDEX OF EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Exhibit "A" Registration Rights Agreement
Exhibit "B" Form of Articles of Incorporation of AAA-LSF
Exhibit "C" Form of Bylaws of AAA-LSF
Exhibit "D Employment Agreement
Schedule "1.1(a)" List of Assets and Method of Transfer
Schedule "1.1(b)" List of Assets to be Transferred from AAA-LSF
</TABLE>
iv
<PAGE> 6
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
This AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of April 30, 1998 by and among SUPERSHUTTLE INTERNATIONAL, INC., a
Delaware corporation ("SuperShuttle"); AAA WHEELCHAIR WAGON SERVICES, INC., a
Florida corporation, WHEELCHAIR AMBULANCE OF HOLLYWOOD, INC., a Florida
corporation, LIMOUSINES OF SOUTH FLORIDA, INC., a Florida corporation, and A1A
SNOWBIRD LEASING, INC. (collectively, "AAA-LSF"); and
Karen N. Caputo ("Shareholder") and amends and restates in its entirety that
certain Stock Purchase Agreement, dated March 31, 1998, by and among
SuperShuttle, AAA-LSF and the Shareholder.
RECITALS
A. SuperShuttle and AAA-LSF are parties to a letter agreement dated
February 25, 1998 (the "Letter of Intent"), and SuperShuttle, AAA-LSF and
Shareholder are parties to that certain Stock Purchase Agreement dated March 31,
1998, which contemplates the acquisition by SuperShuttle of all of the
outstanding capital stock of AAA-LSF.
B. The Shareholder currently owns all of the issued and outstanding
shares of capital stock of AAA-LSF, with Shareholder owning the number of shares
set forth opposite Shareholder's name on Schedule 1.
C. The Shareholder is joined herein for purposes of affirming the
representations and warranties made in Article 3, and to otherwise be bound
hereto for the obligations of AAA-LSF for which she is jointly and severally
liable.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, the parties agree as follows:
ARTICLE 1
THE STOCK PURCHASE
1.1 Basic Transaction.
(a) On and subject to the terms and conditions of this
Agreement, SuperShuttle agrees to purchase from the Shareholder, and
the Shareholder agrees to sell to SuperShuttle, all of her shares of
capital stock of AAA-LSF (the "AAA-LSF Common Stock") and the
Shareholder agrees to purchase from SuperShuttle, and SuperShuttle
agrees to sell to the Shareholder, 419,521 shares of Common Stock,
$0.01 par value per share, of SuperShuttle (the "SuperShuttle Common
Stock"). The aggregate number of shares of SuperShuttle Common Stock to
be issued in order to give effect to this provision will represent six
percent (6%) on a fully-diluted basis of the total number of
outstanding shares
1
<PAGE> 7
of SuperShuttle Common Stock when issued (after giving effect to any
SuperShuttle Common Stock issued in connection with the contemporaneous
acquisitions of the Los Angeles and Orange County franchisees and
Southern Shuttle Services, Inc. and the conversion of the currently
outstanding shares of SuperShuttle's Series B Convertible Preferred
Stock into shares of SuperShuttle Common Stock).
The number of shares of SuperShuttle Common Stock to be
issued to the Shareholder shall be adjusted to reflect fully the effect
of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into SuperShuttle
Common Stock or AAA-LSF Common Stock), reorganization, recapitalization
or other like change with respect to SuperShuttle Common Stock or AAA-
LSF Common Stock occurring after the date hereof and prior to the
Effective Time, but shall not be adjusted for the exercise of any
outstanding SuperShuttle options or warrants convertible into
SuperShuttle Common Stock. No fractional shares of SuperShuttle Common
Stock shall be issued. Fractional shares of such stock shall be rounded
up to the nearest whole share.
(b) SuperShuttle agrees to grant the Shareholder
registration rights pursuant to the terms of the Registration Rights
Agreement, a form of is attached hereto as Exhibit "A."
(c) As an incident to the share exchange transactions and
as a predicate and condition to them, certain assets are required to be
transferred into AAA-LSF or other accommodations made in order to
effect the purpose of allowing AAA-LSF to operate the business of
AAA-LSF as presently conducted. In this regard, the assets described on
Schedule 1.1(a) attached hereto and incorporated by reference herein
shall be assigned to AAA-LSF immediately prior to the Effective Time.
It is acknowledged by the parties hereto that any and all radio
frequencies, real estate interests, permits, and similar assets
necessary to the conduct of the business of AAA-LSF immediately prior
to the Effective Time shall be and become the property of AAA-LSF
effective upon the Exchange through the processes described on Schedule
1.1(a) without any further form of consideration or payment owing to
AAA-LSF or the Shareholder. As an incident to the share exchange
transactions and as a predicate and condition to them, certain assets
are required to be transferred from AAA-LSF to third parties or
affiliates. In this regard, the assets described on Schedule 1.1(b)
attached hereto and incorporated by reference herein and any
indebtedness relating hereto shall be transferred to the party
identified therein on or before April 30, 1998. The transactions
contemplated by Schedules 1.1(a) and 1.1(b) are a fundamental part of
this Agreement and the consummation of those transactions is a
condition to the effectiveness of the Agreement.
1.2 Effective Time; Closing Date. The date and time when the share
exchange shall become effective, March 31, 1998, is referred to as the
"Effective Time." The closing of the transaction contemplated hereunder (the
"Closing") shall occur upon the earlier of (i) the
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satisfaction or waiver of the conditions provided at Article 7, or (ii) April
30, 1998 (the "Closing Date") at the offices of Shareholder's counsel, or such
other place as the parties may agree.
1.3 Articles of Incorporation and Bylaws. The Articles of Incorporation
and the Bylaws of each of the AAA-LSF entities shall be restated in the forms of
Exhibits "B" and "C" hereto and incorporated herein.
1.4 Deliveries at the Effective Time. At the Effective Time, the
Shareholder shall surrender the certificate or certificates representing shares
of AAA-LSF Common Stock to the Escrow Agent. Promptly following surrender,
SuperShuttle shall issue the SuperShuttle Common Stock to the Escrow Agent
pursuant to Section 1.1. The certificates of AAA-LSF Common Stock surrendered to
Escrow Agent shall be duly endorsed and otherwise in proper form for transfer as
SuperShuttle may require. SuperShuttle shall not be obligated to deliver the
consideration to which Shareholder is entitled as a result of the share exchange
until Shareholder surrenders her certificate or certificates representing the
shares of AAA-LSF Common Stock to be exchanged.
1.5 Closing of AAA-LSF Transfer Books. At the Effective Time, the stock
transfer books of AAA-LSF shall be closed and no transfer of shares of AAA-LSF
Common Stock issued and outstanding immediately prior to the Effective Time
shall thereafter be made (except as provided for or contemplated in Section 1.1
above).
1.6 Lost, Stolen or Destroyed Certificates. In the event any
certificates representing shares of AAA-LSF Common Stock shall have been lost,
stolen or destroyed, SuperShuttle shall issue in exchange for such lost, stolen
or destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of SuperShuttle Common Stock as required pursuant to
Section 1.1; provided, however, that SuperShuttle may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificates to deliver an indemnity agreement in such form
as SuperShuttle may reasonably direct as indemnity against any claim that may be
made against SuperShuttle with respect to the certificates alleged to have been
lost, stolen or destroyed.
1.7 Taking of Necessary Action; Further Action. SuperShuttle, on the
one hand, and AAA-LSF on the other hand, shall use reasonable best efforts to
take all such actions (including, without limitation, actions to cause the
satisfaction of the conditions of the other to effect the share exchange) as may
be necessary or appropriate in order to effectuate the Exchange as promptly as
possible. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement, the officers
and directors of the SuperShuttle are fully authorized in the name of AAA-LSF or
otherwise to take, and shall take, all such lawful and necessary actions.
1.8 Tax Treatment. The parties hereto acknowledge and agree that the
transactions contemplated hereby are intended to be a tax free reorganization
under Section 368(a)(1)(B) of the U.S. Internal Revenue Code of 1986, as amended
(the "Code").
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SUPERSHUTTLE
SuperShuttle hereby represents and warrants to AAA-LSF as of the date
hereof, and again at the Effective Time (subject to any changes permitted or
contemplated hereby), each of the following, except to the extent set forth in
the disclosure schedule that has been delivered to AAA-LSF hereunder (the
"SuperShuttle Disclosure Schedule"):
2.1 Organization and Qualification. SuperShuttle is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own and operate
its properties and to carry on its business as now conducted in every
jurisdiction where the failure to do so would have a material adverse effect on
its business, properties or ability to conduct the business currently conducted
by it. The copies of the Certificate of Incorporation and Bylaws of SuperShuttle
previously furnished to AAA-LSF are correct and complete and reflect all
amendments thereto.
2.2 Authority Relative to This Agreement. SuperShuttle has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by SuperShuttle and the consummation by SuperShuttle of the
transactions contemplated hereby have been duly authorized by SuperShuttle, and
no other corporate proceedings on the part of SuperShuttle are necessary to
authorize this Agreement and such transactions. This Agreement has been duly
executed and delivered by SuperShuttle and, assuming the due authorization,
execution and delivery by AAA-LSF, constitutes a valid and binding obligation of
SuperShuttle, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity. Except as set forth in the SuperShuttle
Disclosure Schedule, SuperShuttle is not subject to, or obligated under, any
provision of (a) its Certificate of Incorporation or Bylaws, (b) any material
agreement, arrangement or understanding, (c) any material license, franchise or
permit, or (d) any law, regulation, order, judgment or decree, which would be
breached or violated, or in respect of which a right of termination or
acceleration would arise or any encumbrance on any of its or any of its
subsidiaries' assets would be created, by its execution, delivery and
performance of this Agreement and the consummation by it of the transactions
contemplated hereby. No authorization, consent or approval of, or filing with,
any public body, court or authority is necessary on the part of SuperShuttle for
the consummation by SuperShuttle of the transactions contemplated by this
Agreement.
2.3 Capitalization. The authorized equity capitalization of
SuperShuttle consists of 20,000,000 shares of SuperShuttle Common Stock and
5,000,000 shares of Preferred Stock, $0.01 par value per share ("SuperShuttle
Preferred Stock"). As of March 31, 1998, 2,760,860 shares of SuperShuttle Common
Stock and 479,475 shares of SuperShuttle Preferred Stock are issued and
outstanding, all of which shares are duly authorized, validly issued, fully paid
and nonassessable. The SuperShuttle Common Stock when issued to the Shareholder
will be duly authorized, validly issued, fully paid and non-assessable shares of
SuperShuttle.
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Except as set forth in Section 2.3 of the SuperShuttle Disclosure
Schedule, there are no options, warrants, call, conversion privileges or other
rights, agreements, arrangements or commitments obligating SuperShuttle to issue
or sell any shares of capital stock or securities or obligations of any kind
convertible into or exchangeable for any shares of capital stock thereof or of
any other corporation, nor are there any stock appreciation, phantom stock or
similar rights outstanding based upon the book value or any other attribute of
SuperShuttle. No holders of outstanding shares of SuperShuttle Common Stock are
entitled to preemptive or other similar rights.
There are no obligations, contingent or otherwise, of SuperShuttle or
any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of
SuperShuttle Common Stock or the capital stock of any subsidiary or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity. All of the outstanding
shares of capital stock of each of SuperShuttle's subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and, except as
disclosed in the SuperShuttle Disclosure Schedule, all such shares are owned by
SuperShuttle free and clear of all security interests, liens, claims, pledges,
agreements, limitations in SuperShuttle's voting rights, charges or other
encumbrances of any nature whatsoever.
2.4 Financial Statements. SuperShuttle has delivered a balance sheet
dated as of February 28, 1998, and other financial statements for the years
ended September 30, 1997 and September 30, 1996 audited by Deloitte & Touche LLP
to AAA-LSF (collectively, the "SuperShuttle Financial Statements.") The
SuperShuttle Financial Statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved and present fairly the consolidated financial position, results
of operations, and cash flows of SuperShuttle and its consolidated subsidiaries
as of the dates and for the periods indicated therein, subject, in the case of
unaudited interim statements, to normal year-end accounting adjustments and the
absence of complete footnote disclosure.
2.5 Subsidiaries. Except as set forth in the SuperShuttle Disclosure
Schedule, SuperShuttle does not have any subsidiaries and does not otherwise own
any stock, partnership interest, joint venture interest, or any other security
issued by or equity interest in any other corporation, organization or entity.
For purposes hereof, the term "subsidiary" means any corporation of which
securities having a majority of the ordinary voting power in electing directors
are owned directly or indirectly by a party. Unless the context requires
otherwise, the term "SuperShuttle" shall hereafter refer to SuperShuttle and/or
its Subsidiaries.
2.6 Litigation. Except as set forth in the SuperShuttle Disclosure
Schedule or the SuperShuttle Financial Statements, there are no actions, suits,
proceedings, orders or investigations pending or, to the knowledge of
SuperShuttle, threatened against SuperShuttle, at law or in equity, or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which, if
determined adversely to SuperShuttle, would result in a material adverse effect
to SuperShuttle's operations and financial condition, and there is no basis
known to SuperShuttle for any of the foregoing.
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Except as set forth in the SuperShuttle Disclosure Schedule, SuperShuttle has
not received any opinion or legal advice to the effect that SuperShuttle is
exposed from a legal standpoint to any material liability. No governmental
entity has at any time challenged or questioned the legal right of SuperShuttle
to offer or provide any of its services in the present manner or style thereof.
2.7 Brokers' Fees. SuperShuttle is not liable for any brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement.
2.8 Compliance With Laws; Permits; Certain Operations. SuperShuttle and
its officers, directors, agents and employees have complied in all material
respects with all applicable laws and regulations of foreign, federal, state and
local governments and all agencies thereof which affect the business or any
owned or leased properties of SuperShuttle and to which SuperShuttle may be
subject, and no claims have been filed against SuperShuttle alleging a violation
of any such law or regulation, except as set forth in the SuperShuttle
Disclosure Schedule. Without limiting the generality of the foregoing,
SuperShuttle has not violated, or received a notice or charge asserting any
violation of, the Occupational Safety and Health Act of 1970, or any other state
or federal acts (including rules and regulations thereunder) regulating or
otherwise affecting employee health and safety. SuperShuttle has not given or
agreed to give any money, gift or similar benefit (other than incidental gifts
of articles of nominal value) to any actual or potential customer, supplier,
governmental employee or any other person in a position to assist or hinder
SuperShuttle in connection with any actual or proposed transaction. SuperShuttle
holds all permits, licenses, certificates and other authorizations of foreign,
federal, state and local governmental agencies required for the conduct of its
business, including specifically the permits, licenses, certificates and other
authorizations described in Section 2.8 of the SuperShuttle Disclosure Schedule.
2.9 Absence of Undisclosed Liabilities. SuperShuttle has no obligations
or liabilities whether accrued, absolute, contingent, liquidated or otherwise
whether due or to become due regardless of when asserted, except:
(a) To the extent reflected or taken into account in its
September 30, 1997 financial statement and not
heretofore paid or discharged,
(b) To the extent specifically set forth in or
incorporated by reference in the SuperShuttle
Disclosure Schedules,
(c) Liabilities incurred in the ordinary course of
business consistent with past practice since the date
of the September 30, 1997 financial statement (none
of which relates to breach of contract, breach of
warranty, tort, infringement or violation of law, or
which arose out of any action, suit, claim,
governmental investigation or arbitration
proceeding),
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(d) Normal accruals, reclassifications, and audit
adjustments which would be reflected on an audited
financial statement,
(e) Liabilities incurred in the ordinary course of
business, and
(f) Liabilities which are not material in scope or
amount.
2.10 No Material Adverse Changes. Except as set forth in the
SuperShuttle Disclosure Schedule since December 31, 1997, there has not been any
material adverse change in the assets, financial condition or operating results
of SuperShuttle, taken as a whole.
2.11 Other Agreements. SuperShuttle has not entered or will enter into
any agreement with Tamarack Transportation, Inc., Preferred Transportation,
Inc., or Southern Shuttle Services, Inc. (the "Target Companies") or any
shareholders of such Target Companies other than share exchange agreements,
merger agreements, registration rights agreements and employment agreements.
Such agreements contain terms no less favorable than those set forth in this
agreement, the registration rights agreement and the employment agreements
entered into by the Shareholder.
2.12 Disclosure. Neither this Agreement nor any of the schedules or
exhibits hereto contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading, and there is
no fact which has not been disclosed to AAA-LSF that materially affects
adversely or could reasonably be anticipated to materially affect adversely the
assets, financial condition or operating results, customer, employee or supplier
relations, business condition or prospects, or financing arrangements of
SuperShuttle.
2.13 Liens. SuperShuttle is not a party to any loan, indebtedness,
security agreement, loan agreement, guarantee or financing statement which shall
upon the Closing Date or thereafter subject the Transferred Assets (as defined
in Section 5.3) to a lien, pledge, charge or encumbrance.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF AAA-LSF AND
THE SHAREHOLDER
Each of the AAA-LSF entities and the Shareholder hereby represent and
warrant to SuperShuttle as of the date hereof, and again at the Effective Time
(subject to any changes permitted or contemplated hereby), each of the
following, all of which are made jointly and severally by AAA-LSF and the
Shareholder who agree to be bound to and liable for the representations and
warranties set forth below and all other obligations of AAA-LSF under this
Agreement. Each of the following representations and warranties are qualified to
the extent set forth in the disclosure schedule that has been delivered to
SuperShuttle simultaneously with the execution and delivery of this Agreement
(the "AAA-LSF Disclosure Schedule"). The AAA-LSF
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Disclosure Schedule describes exceptions to each applicable representation below
by section numbers corresponding to the section number of the applicable
qualified representation.
3.1 Organization and Qualification. AAA-LSF is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, and has the requisite corporate power and authority to own and operate
its properties and to carry on its business as now conducted in every
jurisdiction where the failure to do so would have a material adverse effect on
its business, properties or ability to conduct the business currently conducted
by it. The copies of the Articles of Incorporation and Bylaws of AAA-LSF
previously furnished to SuperShuttle are correct and complete and reflect all
amendments thereto.
3.2 Authority Relative to This Agreement. AAA-LSF has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by AAA-LSF
and the consummation by AAA-LSF of the transactions contemplated hereby have
been duly authorized by AAA-LSF, and no other corporate proceedings on the part
of AAA-LSF are necessary to authorize this Agreement and such transactions
(other than the approval of the Shareholder). This Agreement has been duly
executed and delivered by AAA-LSF and, assuming the due authorization and
delivery thereof by SuperShuttle, constitutes a valid and binding obligation of
AAA-LSF, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or other
similar laws relating to the enforcement of creditors' rights generally and by
general principles of equity. Except as set forth in the AAA-LSF Disclosure
Schedule, AAA-LSF is not subject to, or obligated under, any provision of (a)
its Articles of Incorporation or Bylaws, (b) any material agreement, arrangement
or understanding, (c) any material license, franchise or permit, or (d) any law,
regulation, order, judgment or decree, which would be breached or violated, or
in respect of which a right of termination or acceleration would arise or any
encumbrance on any of its or its subsidiaries' assets would be created, by
AAA-LSF's execution, delivery and performance of this Agreement and the
consummation by it of the transactions contemplated hereby. No authorization,
consent or approval of, or filing with, any public body, court or authority is
necessary on the part of AAA-LSF for the consummation by AAA-LSF of the
transactions contemplated by this Agreement.
3.3 Capitalization. The authorized equity capitalization of AAA
Wheelchair Wagon Services, Inc. consists of 1,000 shares of Common Stock and as
of the date hereof, 1,000 shares of Common Stock are issued and outstanding, all
of which shares are validly issued, fully paid and non-assessable. The
authorized equity capitalization of Wheelchair Ambulance of Hollywood, Inc.
consists of 100 shares of Common Stock and as of the date hereof, 100 shares of
Common Stock are issued and outstanding, all of which shares are validly issued,
fully paid and non-assessable. The authorized equity capitalization of
Limousines of South Florida, Inc. consists of 100 shares of Common Stock and as
of the date hereof, 100 shares of Common Stock are issued and outstanding, all
of which shares are validly issued, fully paid and non-assessable. The
authorized equity capitalization of A1A Snowbird Leasing, Inc. consists of 7,500
shares of Common Stock and as of the date hereof, 100 shares of Common Stock are
issued and outstanding, all of which
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shares are validly issued, fully paid and non-assessable. All of the issued and
outstanding shares of Common Stock of AAA-LSF are owned by the Shareholder.
Except as set forth in Section 3.3 of the AAA-LSF Disclosure Schedule, there are
no options, warrants, conversion privileges or other rights, agreements,
arrangements or commitments obligating AAA-LSF to issue or sell any shares of
capital stock or securities or obligations of any kind convertible into or
exchangeable for any shares of capital stock thereof or of any other
corporation, nor are there any stock appreciation, phantom stock or similar
rights outstanding based upon the book value or any other attribute of AAA-LSF.
No holders of outstanding shares of AAA-LSF Common Stock are entitled to any
preemptive or other similar rights. There are no obligations, contingent or
otherwise, of AAA-LSF to repurchase, redeem or otherwise acquire any shares of
AAA-LSF or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any entity other than guarantees of bank
obligations of subsidiaries entered into in the ordinary course of business.
Upon consummation of the Exchange, SuperShuttle will own, directly or
indirectly, the entire equity interest in AAA-LSF, and there will be no options,
warrants, conversion privileges or other rights, agreements, arrangements or
commitments obligating AAA-LSF to issue or sell any shares of capital stock of
AAA-LSF or any other corporation.
3.4 Financial Statements. The consolidated financial statements of
AAA-LSF for the fiscal years ended December 31, 1996 and 1997, and for the
interim period ended February 28, 1998, (the "AAA-LSF Financial Statements")
have been delivered to SuperShuttle and were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved and present fairly in all material respects the
consolidated financial position, results of operations, and cash flows of
AAA-LSF as of the dates and for the periods indicated therein, subject, in the
case of unaudited interim statements, to normal year-end accounting adjustments
and the absence of complete footnote disclosure and as set forth on the AAA-LSF
Disclosure Schedules.
3.5 Subsidiaries. Except as set forth in the AAA-LSF Disclosure
Schedule, AAA-LSF does not have any Subsidiaries and does not otherwise own any
stock, partnership interest, joint venture interest, or any other security
issued by or equity interest in any other corporation, organization or entity.
3.6 Absence of Undisclosed Liabilities. AAA-LSF has no obligations or
liabilities (whether accrued, absolute, contingent, liquidated or otherwise,
whether due or to become due and regardless of when asserted), except:
(a) To the extent reflected or taken into account in its
December 31, 1997 financial statement and not
heretofore paid or discharged,
(b) To the extent specifically set forth in or
incorporated by reference in the AAA-LSF Disclosure
Schedules,
(c) Liabilities incurred in the ordinary course of
business consistent with past practice since the date
of the December 31, 1997 financial statement (none
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of which relates to breach of contract, breach of
warranty, tort, infringement or violation of law, or
which arose out of any action, suit, claim,
governmental investigation or arbitration
proceeding),
(d) Normal accruals, reclassifications, and audit
adjustments which would be reflected on an audited
financial statement,
(e) Liabilities incurred in the ordinary course of
business, and
(f) Liabilities which are not material in scope or
amount.
3.7 No Material Adverse Changes. Except as set forth in the AAA-LSF
Disclosure Schedule, since December 31, 1997, there has not been any material
adverse change in the assets, financial condition or operating results of
AAA-LSF, taken as a whole.
3.8 Absence of Certain Developments. Except as set forth in the AAA-LSF
Disclosure Schedule or except as contemplated in this Agreement, since December
31, 1997, AAA-LSF has not:
(a) changed its accounting methods or practices (including
any change in depreciation or amortization policies or rates) or
revalued any of its assets;
(b) redeemed or purchased, directly or indirectly, any
shares of its capital stock, or declared or paid any dividends or
distributions with respect to any shares of its capital stock;
(c) issued or sold any equity securities of it, securities
convertible into or exchangeable for equity securities of it, warrants,
options or other rights to acquire equity securities of it, or bonds or
other securities of it;
(d) borrowed any amount under existing lines of credit or
otherwise or incurred or become subject to any indebtedness, except as
reasonably necessary for the ordinary operation of AAA-LSF's business
and in a manner and in amounts that are in keeping with the historical
practice of AAA-LSF;
(e) discharged or satisfied any lien or encumbrance or
paid any liability, other than current liabilities and related liens
(or current installments due on intermediate or long-term liabilities)
paid or satisfied in the ordinary course of business;
(f) mortgaged, pledged or subjected to any lien, charge or
other encumbrance, any assets of AAA-LSF with a fair market value in
excess of $25,000 in the aggregate, except in the ordinary course of
business or liens for current property taxes not yet due and payable;
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(g) sold, assigned or transferred (including, without
limitation, transfers to any employees, shareholders or affiliates of
AAA-LSF) any tangible assets, except in the ordinary course of
business;
(h) sold, assigned or transferred (including, without
limitation, transfers to any employees, shareholders or affiliates of
AAA-LSF) any patents, trademarks, trade names, copyrights, trade
secrets or other intangible assets, or disclosed any proprietary or
confidential information, to any person other than SuperShuttle, except
in the ordinary course of business;
(i) materially changed the pricing or royalties set or
charged by AAA-LSF to its customers or licensees or agreed to any
material change in the pricing or royalties set or charged by persons
who have licensed Intellectual Property Rights (as described in Section
3.15) to AAA-LSF;
(j) canceled, waived or compromised any right, claim or
debt, other than the write-off or compromise of any account receivable
in the ordinary course of business and consistent with past practice;
(k) suffered any material theft, damage, destruction or
loss of or to any property or properties owned or used by it, whether
or not covered by insurance;
(l) increased the annualized level of compensation of or
granted any extraordinary bonuses, benefits or other forms of direct or
indirect compensation to any employee, officer, director or consultant,
or terminated, amended or otherwise modified any plans for the benefit
of employees, except in the ordinary course of business and consistent
with historical adjustments to such compensation and benefits;
(m) made any capital expenditures or commitments therefor,
except for motor vehicles, that aggregate in excess of $25,000;
(n) acquire or make any commitments to acquire any motor
vehicles without the prior written approval of SuperShuttle;
(o) made any loans or advances to, or guarantees for the
benefit of, any persons (other than advances to sales personnel in the
ordinary course of business); or
(p) except in the ordinary course of business, entered
into any contract, written or oral, that involves consideration or
performance by AAA-LSF of a value exceeding $25,000 or a term exceeding
twelve (12) months.
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3.9 Title to and Condition of Properties.
(a) AAA-LSF owns good and marketable title to the
properties and assets reflected on the December 31, 1997 AAA-LSF
Balance Sheet or acquired since the date thereof, free and clear of all
liens and encumbrances, except for (A) liens for current taxes not yet
due and payable, (B) liens described in Section 3.6 of the AAA-LSF
Disclosure Schedule, (C) the properties subject to the leases set forth
in Section 3.9(b) of the AAA-LSF Disclosure Schedule, and (D) assets
disposed of since December 31, 1997, in the ordinary course of
business.
(b) (i) At the Effective Time, AAA-LSF will not own any
real estate; (ii) the properties subject to the real property leases
described in Section 3.9(b) of the AAA-LSF Disclosure Schedule
constitute all of the real estate used or occupied by AAA-LSF (the
"AAA-LSF Real Estate"), and (iii) AAA-LSF Real Estate has access,
sufficient for the conduct of AAA-LSF's business, to public roads and
to all utilities, including electricity, sanitary and storm sewer,
potable water, natural gas and other utilities, used in the operations
of AAA-LSF.
(c) The real property leases described in Section 3.9(b)
of the AAA-LSF Disclosure Schedule are in full force and effect, and
AAA-LSF has a valid and existing leasehold interest under each such
lease for the term set forth therein. AAA-LSF has delivered to
SuperShuttle complete and accurate copies of each of the leases and
none of such leases has been modified in any respect, except to the
extent that such modifications are disclosed by the copies delivered to
SuperShuttle. AAA-LSF is not in default, and to the knowledge of
AAA-LSF no circumstances exist which could result in such default,
under any of such leases.
(d) A complete list of all motor vehicles and computer
equipment used in the business of AAA-LSF is included as Section 3.9(d)
of the AAA-LSF Disclosure Schedule. AAA-LSF owns or leases under valid
leases, all buildings, machinery, equipment and other tangible assets
necessary for the conduct of its business. AAA-LSF has delivered to
SuperShuttle complete and accurate copies of all equipment leases and
such leases are listed in the AAA-LSF Disclosure Schedule. None of such
equipment leases has been modified in any respect, except to the extent
that such modifications are disclosed by the copies delivered to
SuperShuttle. AAA-LSF is not in default, and to the knowledge of
AAA-LSF no circumstances exist which could result in such default,
under any of such equipment leases.
(e) To the knowledge of AAA-LSF, AAA-LSF is not in any
material respect in violation of any applicable zoning ordinance or
other law, regulation or requirement relating to the operation of any
properties used in the operation of its business, and AAA-LSF has not
received any notice of any such violation, or of the existence of any
condemnation proceeding with respect to any properties owned or leased
by AAA-LSF.
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3.10 Environmental Matters. Except as set forth in the AAA-LSF
Disclosure Schedule, AAA-LSF (i) has obtained all applicable permits, licenses
and other authorizations (a list of which is set forth in the AAA-LSF Disclosure
Schedule) which are required under federal, state or local laws relating to
pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by AAA-LSF; (ii) is in material compliance with all terms and conditions of any
required permits, licenses and authorizations, and to its knowledge with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in such laws or in
any regulation, code, plan, order, decree, judgment, notice or demand letter
issued, entered, promulgated or approved thereunder; (iii) is not aware of nor
has it received notice of any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued compliance with or which would give rise to any common law
or statutory liability based on or resulting from AAA-LSF's manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, or release into the environment, of any
pollutant, contaminant, or hazardous or toxic material or waste; (iv) to its
knowledge has taken all actions necessary under applicable requirements of such
federal, state or local laws, rules or regulations to register any products or
materials required to be registered by AAA-LSF thereunder; and (v) has neither
disposed of nor handled any hazardous substance.
3.11 Accounts Receivable. AAA-LSF's notes and accounts receivable
recorded on the February 28, 1998 AAA-LSF Balance Sheet and those arising since
the date thereof are to its knowledge valid and collectible in accordance with
their terms, subject to no valid counterclaims or setoffs, other than to the
extent of the reserves set forth on the books and records of AAA-LSF or as
disclosed in the AAA-LSF Disclosure Schedule. All such accounts receivable of
AAA-LSF arose in the ordinary course of business and are carried at values
determined in accordance with generally accepted accounting principles
consistently applied.
3.12 Tax Matters. Except as set forth in the AAA-LSF Disclosure
Schedule, AAA-LSF has filed all federal, foreign, state, county and local
income, excise, property, sales and other tax returns which are required to be
filed by it for all periods prior to the Effective Time, and all such returns
are true and correct; all taxes due and payable by AAA-LSF (whether or not shown
on any tax return) for all periods prior to December 31, 1997 have been paid;
AAA-LSF's reserves and provisions for taxes on the balance sheets included in
the AAA-LSF Financial Statements are sufficient for all accrued and unpaid taxes
as of the dates of such balance sheets; AAA-LSF has paid all taxes due and
payable by it or which it is obligated to withhold from amounts owing to any
employee, creditor, or third party; AAA-LSF has not waived any statute of
limitations in respect of taxes or agreed to any extension of time with respect
to a tax assessment or deficiency; and AAA-LSF has not received notice of any
unresolved questions or claims concerning the tax liability of AAA-LSF. AAA-LSF
has not filed any consent agreement under Section 341(f) of the Code or agreed
to have Section 341(f)(2) of the Code apply to any disposition of a "subsection
(f) asset" as defined in Section 341(f)(4) of the Code) owned by AAA-
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LSF. AAA-LSF (i) is not and has not been a member of an affiliated group filing
a consolidated federal income tax return (other than an affiliated group the
common parent of which was AAA-LSF) and (ii) does not have any liability for
taxes of any person (other than AAA-LSF) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor by contract or otherwise. AAA-LSF is not a party to a
tax sharing or allocation agreement nor does AAA-LSF owe any amount under any
such agreement. AAA-LSF is not obligated to make any payments and is not a party
to any agreement that under certain circumstances could obligate it to make any
payments that, either in whole or in part, would be nondeductible under Sections
280G or 162 of the Code. AAA-LSF has not been a "United States real property
holding corporation" (within the meaning of Section 897(c)(2) of the Code) at
any time within the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code.
3.13 Contracts and Commitments.
(a) Except as set forth in the AAA-LSF Disclosure
Schedule, AAA-LSF is not a party to any: (i) collective bargaining
agreement or contract with any labor union; (ii) bonus, pension, profit
sharing, retirement, or other form of deferred compensation plan; (iii)
medical insurance or similar plan or practice, whether formal or
informal; (iv) contract for the employment of any officer, employee, or
other person on a full-time or consulting basis or relative to
severance pay or change-in-control benefits for any such person; (v)
agreement or indenture relating to the borrowing of money in excess of
$25,000 or to mortgaging, pledging or otherwise placing a lien on any
assets of AAA-LSF which has a fair market value in excess of $25,000 in
the aggregate; (vi) guaranty of any obligation for borrowed money or
otherwise, other than endorsements made for collection; (vii) lease or
agreement under which it is lessor of, or permits any third party to
hold or operate, any property, real or personal; (viii) contract or
group of related contracts with the same party for the purchase of
products or services, under which the undelivered balance of such
products and services has a purchase price in excess of $25,000; (ix)
contract or group of related contracts with the same party for the sale
of products or services under which the undelivered balance of such
products or services has a sales price in excess of $25,000; (x) other
contract or group of related contracts with the same party continuing
over a period of more than twelve (12) months from the date or dates
thereof or involving more than $25,000; (xi) material contract relating
to the distribution of AAA-LSF's products; (xii) franchise agreement;
or (xiii) other agreement material to AAA-LSF's business or not entered
into in the ordinary course of business.
(b) AAA-LSF has furnished or otherwise made available to
SuperShuttle a true and correct copy of each written contract or
commitment, and a written description of each oral contract or
commitment, referred to in this Section 3.13, together with all
amendments, waivers or other changes thereto.
(c) Except as specifically disclosed in the AAA-LSF
Disclosure Schedule: (i) AAA-LSF's relations with customers and
suppliers are good; (ii) since the date of the December 31, 1997
AAA-LSF Balance Sheet, no significant customer or supplier has
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indicated that it will stop or materially decrease the rate of business
done with AAA-LSF, except for changes in the ordinary course of
AAA-LSF's business; (iii) AAA-LSF has performed all material
obligations required to be performed by it in connection with the
contracts or commitments described herein and AAA-LSF has not been
advised of or received any claim of default under any such contract or
commitment; (iv) AAA-LSF has no present expectation or intention of not
fully performing any obligation pursuant to any contract or commitment;
and (v) AAA-LSF has no knowledge of any breach by any other party to
any contract or commitment.
3.14 Restrictions on Business Activities. Except as set forth in the
AAA-LSF Disclosure Schedule, there is no agreement (noncompete or otherwise),
commitment, judgment, injunction, order or decree to which AAA-LSF is a party or
otherwise binding on AAA-LSF which has or reasonably could be expected to have
the effect of prohibiting or impairing any business practice of AAA-LSF.
3.15 Intellectual Property Rights.
(a) The AAA-LSF Disclosure Schedule lists all of AAA-LSF's
federal, state and foreign registrations of trademarks, service marks
and other marks, trade names or other trade rights, and all pending
applications for any such registrations, all other trademarks and other
marks, trade names and other trade rights, or in which AAA-LSF has any
interest whatsoever, and all other trade secrets and other intellectual
property rights, whether or not registered, created or used by or on
behalf of AAA-LSF, in each case relating to its business (collectively,
"Intellectual Property Rights"). The Intellectual Property Rights
listed in the AAA-LSF Disclosure Schedule are all those used by AAA-
LSF in connection with its business.
(b) Except as set forth on the AAA-LSF Disclosure
Schedule, AAA-LSF has full legal right, title and interest to the
Intellectual Property and has not granted any rights in or to the same
to any third party. To the knowledge AAA-LSF and except as set forth on
the AAA-LSF Disclosure Schedule, conduct of the business as presently
conducted and the conduct, use and exploitation of the Intellectual
Property does not infringe or misappropriate any rights held or
asserted by any person or entity and no person or entity is infringing
on the Intellectual Property. Except as set forth on the AAA-LSF
Disclosure Schedule, no payments are required for the continued use of
the Intellectual Property. None of the Intellectual Property has ever
been declared invalid or unenforceable or is the subject of any pending
or to the knowledge of AAA-LSF threatened action for opposition,
cancellation, declaration, infringement or invalidity, unenforceability
or misappropriation or like claim, action or proceeding.
3.16 Litigation. Except as set forth in the AAA-LSF Disclosure
Schedule, there are no actions, suits, proceedings, orders or investigations
pending or, to the knowledge of AAA-LSF, threatened against AAA-LSF, at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
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<PAGE> 21
or foreign, which, if determined adversely to AAA-LSF, would result in a
material adverse effect to AAA-LSF's operations and financial condition and
there is no basis known to AAA-LSF for any of the foregoing. Except as set forth
in the AAA-LSF Disclosure Schedule, AAA-LSF has not received any opinion or
legal advice to the effect that AAA-LSF is exposed from a legal standpoint to
any material liability. No governmental entity has at any time challenged or
questioned the legal right of AAA-LSF to offer or provide any of its services in
the present manner or style thereof.
3.17 Brokers' Fees. AAA-LSF is not liable for any brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement.
3.18 Employment. Except as set forth in the AAA-LSF Disclosure
Schedule, to the knowledge of AAA-LSF: (i) no key executive employee of AAA-LSF
and no group of AAA-LSF's other employees has any plans to terminate his, her
or its employment; (ii) AAA-LSF has no material labor relations problems
pending; and (iii) its labor relations are satisfactory in all material
respects.
3.19 Employee Benefit Plans. AAA-LSF has no employee benefit plans.
3.20 Insurance. The AAA-LSF Disclosure Schedule lists each insurance
policy and fidelity bond currently maintained by AAA-LSF with respect to its
properties, assets, employees and officers and directors and sets forth the date
of expiration of each insurance policy. All insurance policies listed as
currently maintained are in full force and effect and AAA-LSF is not in default
with respect to its obligations under any of such insurance policies. All
premiums have been paid and there is no retroactive premium adjustment
obligation of any kind or character. There is no claim of AAA-LSF pending under
any of such policies or bonds as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or bonds. AAA-LSF has no
knowledge of any threatened termination of, or material premium increase with
respect to, any such policies.
3.21 Insider Transactions. Except as set forth herein or in the AAA-LSF
Disclosure Schedule, no officer, director or shareholder of AAA-LSF or any
member of the immediate family of any such officer, director or shareholder, or
any entity in which any of such persons owns any beneficial interest (other than
a publicly-held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 5% of the stock of
which is beneficially owned by any of such persons) (collectively "Insiders"),
has any agreement with AAA-LSF or any interest in any property, real, personal
or mixed, tangible or intangible, used in or pertaining to the business of
AAA-LSF. For purposes of the preceding sentence, the members of the immediate
family of an officer, director or shareholder shall consist of the spouse,
parents, children, siblings, mothers- and fathers-in-law, sons- and
daughters-in-law, and brothers- and sisters-in-law of such officer, director or
shareholder.
3.22 Compliance With Laws; Permits; Certain Operations. AAA-LSF and its
officers, directors, and to its knowledge agents and employees have complied in
all material
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respects with all applicable laws and regulations of foreign, federal, state and
local governments and all agencies thereof which affect the business or any
owned or leased properties of AAA-LSF and to which AAA-LSF may be subject, and
no claims have been filed against AAA-LSF alleging a violation of any such law
or regulation, except as set forth in the AAA-LSF Disclosure Schedule. Without
limiting the generality of the foregoing, AAA-LSF has not violated, or received
a notice or charge asserting any violation of, the Occupational Safety and
Health Act of 1970, or any other state or federal acts (including rules and
regulations thereunder) regulating or otherwise affecting employee health and
safety. AAA-LSF has not given or agreed to give any money, gift or similar
benefit (other than incidental gifts of articles of nominal value) to any actual
or potential customer, supplier, governmental employee or any other person in a
position to assist or hinder AAA-LSF in connection with any actual or proposed
transaction. AAA-LSF holds all permits, licenses, certificates and other
authorizations of foreign, federal, state and local governmental agencies
required for the conduct of its business, including specifically the permits,
licenses, certificates and other authorizations described in Section 3.22 of the
AAA-LSF Disclosure Schedule.
3.23 Disclosure. Neither this Agreement nor any of the schedules or
exhibits hereto contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.
3.24 Minute Books. The minute books of AAA-LSF shall be made available
to counsel for SuperShuttle and those delivered shall be the only minute books
of AAA-LSF and shall contain an accurate summary of all meetings of directors
(or committees thereof) and shareholders or actions by written consent since the
time of incorporation of AAA-LSF.
3.25 Compensation. Any amounts paid, if any, as compensation or
otherwise to the Shareholder following the Effective Time shall equal the fair
value for services provided by the Shareholder to AAA-LSF and/or to
SuperShuttle.
3.26 Medicaid and Other Third Party Payor Matters.
(a) To the best of AAA-LSF's knowledge, AAA-LSF has met
and continues to meet without material exception, all State and Federal
laws and regulations governing participation in the Third Party Payor
programs and plans, all of the terms and conditions set forth in the
Third Party Payor agreements and all of the terms and conditions for
participation in the health care plans described in the Third Party
Payor agreements. In addition, AAA-LSF has not received any notice from
any governmental or public body, agency or instrumentality alleging
that the operation of AAA-LSF is not in accordance with regulations
affecting its certifications or participation in any Third Party Payor
program.
(b) Except as otherwise set forth in the AAA-LSF
Disclosure Schedules, there is no claim, action, temporary restraining
order, injunction, suit, proceeding, inquiry or investigation, at law
or in equity, before or by an internal board or body of AAA-LSF, any
external board, body or entity chosen, retained or hired by AAA-LSF,
any judicial or
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administrative court, governmental agency, public board or body,
pending, contemplated or, to the best of AAA-LSF's knowledge,
threatened against AAA-LSF, nor is there any basis therefore wherein an
unfavorable decision, ruling or finding would in any way adversely
affect AAA-LSF's compensation and/or reimbursement under the Third
Party Payor agreements.
ARTICLE 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
The Shareholder hereby represents and warrants to SuperShuttle as of
the date hereof, and again at the Effective Time, with respect to herself each
of the following:
4.1 Organization, Standing and Authority of Shareholder. The
Shareholder has all requisite power and authority to execute and deliver this
Agreement, to perform her obligations hereunder and to consummate the
transactions contemplated hereby.
4.2 Execution and Delivery; No Conflicts.
(a) This Agreement has been duly executed and delivered by
Shareholder and the agreements of Shareholder contained herein
constitute the valid and binding obligations of the Shareholder,
enforceable against Shareholder in accordance with their terms, except
as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other laws affecting generally the enforcement of
creditors' rights.
(b) The execution, delivery and performance of this
Agreement by Shareholder and the consummation of the transactions
contemplated hereby (i) have been duly and validly authorized by all
necessary action on the part of the Shareholder; and (ii) are not
prohibited by, do not violate any provision of, and will not result in
the breach of, or accelerate or permit the acceleration of the
performance required by the terms of any applicable law, rule,
regulation, judgment, decree, order or other requirement of the United
States or any state of the United States, or any court, authority,
department, commission, board, bureau, agency or instrumentality of
either thereof, in a manner which would have a material adverse affect
on the ability of the Shareholder to enter into and consummate this
Agreement, or any material contract, indenture, agreement or commitment
to which Shareholder is a party or is bound in a manner which would
have a material adverse affect on Shareholder.
4.3 Consents and Approvals. The execution, delivery and performance by
Shareholder of this Agreement and the consummation by Shareholder of the
transactions contemplated hereby do not require Shareholder to obtain any
consent, approval or action of, or make any filing with or give any notice to,
any corporation, person or firm or any public, governmental or judicial
authority except: (a) such as have been duly obtained or made, as the case may
be, and are in full force and effect on the date hereof; and (b) those which the
failure to obtain would have no material adverse affect on the transactions
contemplated hereby.
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4.4 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Shareholder directly
with the other parties hereto, without the intervention of any person on behalf
of Shareholder in such manner as to give rise to any claim by any person against
the Company, AAA-LSF or Shareholder for a finder's fee, brokerage commission or
similar payment.
4.5 Securities Laws Compliance. The securities to be acquired by
Shareholder under the terms of this Agreement will be acquired for Shareholder's
own account for the purpose of investment and not with the present intention of
public resale or public distribution of all or any part of the securities.
Shareholder agrees that she will refrain from transferring or otherwise
disposing of any of the securities, or any interest therein, in such manner as
to violate the Securities Act of 1933 (the "Securities Act") or of any
applicable state securities law regulating the disposition thereof. Shareholder
agrees that the certificates representing the securities shall bear legends to
the effect that such securities have not been registered under the Securities
Act or any applicable state securities laws and that no interest therein may be
transferred or otherwise disposed of in violation of the provisions thereof or
of the rules and regulations issued thereunder.
4.6 Shareholder Experience and Investment Representations.
(a) The Shareholder is able to bear the economic risk of
an investment in the securities acquired by it pursuant to this
Agreement.
(b) The Shareholder is an experienced and sophisticated
investor in the shuttle transportation business and has such knowledge
and experience in such matters that it is capable of evaluating the
risks and merits of acquiring the SuperShuttle securities. The
Shareholder has not been formed or organized for the specific purpose
of acquiring the securities. The Shareholder has had, during the course
of this transaction and prior to its acquisition of the SuperShuttle
securities, the opportunity to ask questions of, and receive answers
from, SuperShuttle and its management concerning SuperShuttle and the
terms and conditions of this Agreement. The Shareholder hereby
acknowledges that it or its representatives has received all such
information as it considers necessary for evaluating the risks and
merits of acquiring the securities and for verifying the accuracy of
any information furnished to it or to which it had access.
(c) The Shareholder has had the opportunity to consult
with financial advisers and counsel of its own choosing in making an
informed decision with respect to the Exchange consideration and has
consulted with counsel of its own choosing in making an informed
decision with respect to the terms of this Agreement.
(d) The Shareholder is an "accredited investor" as defined
in and for purposes of Rule 501 and Regulation D promulgated by the
Securities and Exchange Commission ("SEC") under the Securities Act.
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ARTICLE 5
CONDUCT PENDING AND SUBSEQUENT TO THE EXCHANGE
5.1 Conduct of Business Pending the Exchange. AAA-LSF covenants and
agrees that, prior to the Effective Time, unless SuperShuttle shall otherwise
agree in writing or as otherwise expressly contemplated or permitted by this
Agreement:
(a) AAA-LSF (i) shall conduct its business only in the
ordinary course, on an arm's length basis and in accordance with all
applicable laws, rules and regulations and past custom and practice;
(ii) shall maintain its facilities in good operating condition,
ordinary wear and tear excepted; and (iii) shall use its reasonable
best efforts to preserve intact its business organization and goodwill,
keep available the services of its officers and employees as a group
and maintain satisfactory relationships with suppliers, distributors,
customers and others having business relationships with it;
(b) AAA-LSF (i) shall confer on a regular basis and upon
demand with representatives of SuperShuttle and report operational
matters and the general status of ongoing operations; (ii) shall
deliver to SuperShuttle monthly financial reports including balance
sheets and income statements prepared in accordance with generally
accepted accounting principles by the 20th day of the following month
during the period from March 31, 1998 until the expiration of the right
of Recision (as defined in Section 5.2) and shall deliver statements of
cash flows by July 30, 1998 for the first quarter; (iii) shall notify
SuperShuttle of any emergency or other change in the normal course of
its business or in the operation of its properties and of any
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated); and (iv)
shall not take any action which would render, or which reasonably may
be expected to render, any representation or warranty made by it in
this Agreement untrue at, or at any time prior to, the Effective Time;
(c) AAA-LSF shall not, directly or indirectly, do or
permit to occur any of the following: (i) amend or propose to amend its
Articles of Incorporation or Bylaws; (ii) issue, sell, pledge, dispose
of or encumber (A) any additional shares of, or any options, warrants,
conversion privileges or rights of any kind to acquire any shares of,
any of its capital stock (other than pursuant to the exercise of
previously granted options) or (B) any of its assets, except in the
ordinary course of business consistent with past practices; (iii)
split, combine or reclassify any of its outstanding shares, or declare,
set aside or pay any dividend or other distribution payable in cash,
stock, property or otherwise with respect to any shares of its capital
stock; (iv) redeem, purchase or acquire or offer to acquire any shares
of its capital stock; (v) acquire (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any corporation,
partnership, joint venture or other business organization or division
or material assets thereof or any interest therein; (vi) incur any
indebtedness for borrowed money or issue any debt securities (other
than in the ordinary course of business and in amounts consistent with
past practices); (vii) make any loans (except for advances to sales
personnel in the ordinary course of business and consistent
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with past practice); (viii) enter into any Insider transactions; or
(ix) enter into or propose to enter into, or modify or propose to
modify, any agreement, arrangement or understanding with respect to any
of the matters set forth in this Section 5.1(c);
(d) AAA-LSF shall not, directly or indirectly, enter into
or modify any contract, agreement or understanding, written or oral,
that involves consideration or performance of AAA-LSF, as the case may
be, of a value exceeding $25,000 or a term exceeding twelve months,
except in the ordinary course of business and consistent with past
practice;
(e) AAA-LSF shall not enter into or modify any employment,
severance or similar agreements or arrangements with, or grant any
bonuses, salary increases, or severance or termination pay to, any
officers, directors, employees or consultants other than in the
ordinary course of business and consistent with past practice;
(f) AAA-LSF shall not adopt or amend in any material
respect any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other benefit plan,
trust, fund or group arrangement for the benefit or welfare of any
officers, directors or employees;
(g) AAA-LSF shall not allow its current insurance policies
to be canceled or terminated or any of the coverage thereunder to
lapse, unless simultaneous with such termination, cancellation or
lapse, replacement policies providing coverage equal to or greater than
the coverage under the canceled, terminated or lapsed policies for
substantially similar premiums are in full force and effect; and
(h) AAA-LSF shall promptly notify SuperShuttle if AAA-LSF
learns of any dispute between AAA-LSF and any governmental or
regulatory body which, if adversely determined, would have a material
adverse effect, (ii) any material change in the manner, method or
procedure of Medicare reimbursement or Medicaid reimbursement in the
State of Florida, or notice from any governmental or public body,
agency or instrumentality that AAA-LSF is proposed to be excluded,
suspended or debarred from any governmental health care program
advising that AAA-LSF is not in compliance with statutes or regulations
affecting its operations, including statutes and regulations under the
Medicare and Medicaid programs.
5.2 Conduct Subsequent to the Exchange.
(a) The Share Exchange shall be rescinded automatically
(the "Recision") upon the occurrence of any of the following events:
(i) if SuperShuttle does not file a registration statement for an
initial public offering on Form S-1 with the SEC by May 31, 1998 to
register for sale shares of SuperShuttle Common Stock; (ii) if the SEC
does not declare such registration statement effective by July 31,
1998, or (iii) if the underwritten initial registration statement for
an initial public offering on a firm commitment basis does not
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occur by August 10, 1998, providing a per share offering price to the
public of at least $6.50.
(b) As security for each party's rights of recision
hereunder, the parties designate Akerman, Senterfitt & Eidson, P.A. as
escrow agent (the "Escrow Agent") to hold: (i) the stock certificates
in AAA-LSF formerly held by the Shareholder to be held for the benefit
of SuperShuttle; and (ii) the stock certificates in SuperShuttle issued
hereunder for the benefit of the Shareholder. If this Agreement is
rescinded in accordance with Section 5.2(a), the Escrow Agent shall
immediately, and without any further action by any party, deliver (a)
to SuperShuttle the stock certificates of SuperShuttle, which
certificates shall be immediately canceled, and (b) to Shareholder the
stock certificates of AAA-LSF delivered by each Shareholder to the
Escrow Agent. During the period in which the stock certificates as held
in escrow, the Escrow Agent shall vote the SuperShuttle Common Stock as
directed by the Shareholder and shall vote the AAA-LSF Common Stock as
directed by SuperShuttle.
(c) If this Agreement is rescinded, the parties' rights
and obligations shall cease as if this Agreement never existed, except
for the indemnification provisions set forth in Section 5.2(d) below.
SuperShuttle, AAA-LSF and each Shareholder upon recision agrees to
treat this transaction as rescinded effective as of the Effective Time
and file all tax returns, reports or other statements consistent with
such agreement.
(d) In the event that the Share Exchange is rescinded,
SuperShuttle shall indemnify and hold the Shareholder and AAA-LSF
harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages, including, without limitation,
related counsel and paralegal fees and expenses incurred or suffered by
the Shareholder or AAA-LSF arising out of or resulting from a breach by
SuperShuttle of any covenant or agreement as set forth in Section 5.3
and a breach of the representation set forth in Section 2.13.
5.3 SuperShuttle Recision Right. SuperShuttle shall have the option to
rescind the Share Exchange if Southern Shuttle Services, Inc. ("Southern") has
not received the written approval of the Aviation Department for Dade County of
the changes in ownership of Southern to Supershuttle by the effective date of
SuperShuttle's registration statement on Form S-1.
5.4 Conduct by SuperShuttle. During the time from the Closing Date to
such time as the Share Exchange is rescinded or until the Recision rights expire
(the "Option Period"), SuperShuttle shall not take any action which could affect
the Recision rights and affect the ability of the Shareholder to then operate
AAA-LSF as if the exchange never occurred, including, but not limited to:
(a) Cancellation of any material contracts;
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(b) Combining any operations, duties or tasks of AAA-LSF
with and into any operations of SuperShuttle or its
subsidiaries;
(c) Combining any employee benefit plans with the plans of
SuperShuttle;
(d) Pledging, encumbering or incurring any liens upon the
assets, properties, business or the shares of AAA-LSF
(the "Transferred Assets");
(e) Declaring any dividends in property or cash;
(f) Taking any of the actions contemplated by Section
5.1;
(g) Using or allowing the use of the Transferred Assets
to satisfy any judgments or claims.
In addition, during the Option Period, the board of directors of AAA-LSF will be
comprised of three members: Karen N. Caputo, Mark Levitt and a designee of
SuperShuttle and Karen N. Caputo shall remain as President. If the Share
Exchange is rescinded, the SuperShuttle designee shall immediately resign from
the board of directors of AAA-LSF. Upon the expiration of the Recision rights,
the board of directors of AAA-LSF will be comprised of: R. Brian Wier, Thomas C.
LaVoy and a designee of the Shareholder.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Expenses. Each of SuperShuttle and AAA-LSF shall bear their own
legal and accounting fees and other expenses relating to this transaction. In
addition, AAA-LSF will bear the expenses associated with the conduct of the
required accounting audit of its books and records relating to this transaction.
6.2 No Negotiations. Until March 31, 1998, or such later date as the
parties may mutually agree, AAA-LSF and the Shareholder agree that neither they
nor AAA-LSF's directors, officers, employees or agents (i) shall solicit,
negotiate or accept any offers for the sale of AAA-LSF or any substantial
portion thereof (whether by merger or sale of stock or assets or otherwise) or
provide any non-public information with respect thereto, or (ii) shall solicit,
negotiate, or accept any offers for the acquisition of any material business.
AAA-LSF shall promptly notify SuperShuttle if it (or to its knowledge any of the
other enumerated persons or any Shareholder) is approached by any person
interested in acquiring the assets or capital stock of AAA-LSF.
6.3 Notification of Certain Matters. SuperShuttle and AAA-LSF shall
give prompt notice to each other of (i) the occurrence or failure to occur of
any event, which occurrence or failure would be likely to cause any
representation or warranty on its part contained in this Agreement to be untrue
or inaccurate at, or at any time prior to, the Effective Time, and (ii) any
material failure of such party, or any officer, director, shareholder, employee
or agent thereof,
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to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder.
6.4 Access to Information; Confidentiality.
(a) Until March 31, 1998, or the Effective Time each of
SuperShuttle and AAA-LSF shall have the opportunity to make a complete
review of the books, records, business and affairs of AAA-LSF or
SuperShuttle, as applicable. Such review may be conducted at any and
all reasonable times by such persons as SuperShuttle or Southern
designates. To facilitate such review, the parties shall provide to the
other party and its agents complete access to all of its records and
documents, shall provide the other party with personal, bank and
professional references, and shall use reasonable efforts to make
available for consultation customers, employees, suppliers and
distribution channels.
(b) Each of SuperShuttle and AAA-LSF agrees that all
non-public information provided to the other enumerated parties will be
treated as confidential, and if this Agreement is terminated, will
return to such other parties all confidential documents (and all copies
thereof) in its possession, or will certify to the other parties that
all such documents not returned have been destroyed. Further,
regardless of whether this Agreement is terminated, each party shall
continue to hold all confidential information of the other in strictest
confidence in accordance with the Letter of Intent entered into by
SuperShuttle and AAA-LSF on February 25, 1998.
6.5 Consents; Approvals. SuperShuttle and AAA-LSF shall each use their
reasonable best efforts to obtain all consents, waivers, approvals,
authorizations or orders, and each such party shall make all filings required in
connection with the authorization, execution and delivery of this Agreement by
such party and the consummation by them of the transactions contemplated hereby.
Each of SuperShuttle and AAA-LSF shall furnish all information required to be
included for any application or filing to be made pursuant to the rules and
regulations of any applicable governmental body in connection with the
transactions contemplated by this Agreement.
6.6 Supplements to Disclosure Schedules. From time to time prior to the
Effective Time, SuperShuttle and AAA-LSF will each promptly supplement or amend
their respective Disclosure Schedules with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in any such Disclosure Schedule
or which is necessary to correct any information in any such Disclosure Schedule
which has been rendered inaccurate thereby. No supplement or amendment to any
such Disclosure Schedule shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Sections 7.2 or 7.3 of this
Agreement, as the case may be, except as otherwise provided in Sections 7.2(a)
and 7.3(a).
6.7 Non-Solicitation of Employees. For a period of one year from the
date hereof, no party shall solicit, negotiate with or hire any employee of the
other party.
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<PAGE> 30
6.8 Election of Directors. SuperShuttle shall promptly after the date
hereof take all action necessary in accordance with Delaware Law and its
Certificate of Incorporation and Bylaws to (i) increase, effective as of the
Effective Time, the number of directors serving on the SuperShuttle Board of
Directors to accommodate the election of one (1) designee of AAA-LSF (designated
collectively with Southern Shuttle Services, Inc.); (ii) elect, effective as of
the Effective Time, that one designee to SuperShuttle's Board of Directors and
(iii) appoint such designee to Supershuttle's "pricing committee" of the Board
of Directors.
6.9 Confidential Information and Covenant Not To Compete. The
Shareholder hereby covenants and agrees as follows:
(a) at any time following execution of this Agreement and
consummation of the Exchange transactions, unless the Share Exchange
Agreement is rescinded the Shareholder shall not use or disclose,
directly or indirectly, for any reason whatsoever or in any way any
confidential information or trade secrets of AAA-LSF or SuperShuttle,
including by way of example, names or descriptions of customers,
financial statements, product or service pricing or other information,
contract proposals and bidding information, and any and other
information of a proprietary or confidential character;
(b) that until the later of three (3) years following the
consummation of the Exchange transactions or termination of the
employment agreement referenced in Section 7.1(d), the Shareholder
shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer,
director or in any other capacity whatsoever, engage or participate in
any businesses in competition in any manner whatsoever with the
business of AAA-LSF, SuperShuttle or any affiliate of either of them as
such business is presently conducted (the "Business") in Dade, Palm
Beach, Broward and Orange Counties, Florida or (the "Applicable
Counties"). Not limiting the generality of the foregoing, the business
of AAA-LSF and SuperShuttle shall be deemed to consist of the
transportation, over land, of passengers for hire, including, by way of
example, transportation to and from airports, ports or stations of
embarkation for travel. In addition, until the expiration of five years
following the consummation of the Exchange transactions the Shareholder
shall not enter into any agreement with a party currently doing
business with Southern, SuperShuttle or any affiliates of either of
them for the provision of services substantially similar to those
provided currently.
(c) from and after the date of this Agreement, the
Shareholder shall not solicit or negotiate any contract or agreement
that constitutes or would constitute engaging in competition with the
Business of AAA-LSF or SuperShuttle in the Applicable Counties;
(d) each of the Shareholder by execution of this Agreement
assigns to AAA-LSF any and all rights and interests in the business
concept employed by AAA-LSF to the
25
<PAGE> 31
extent that they have any interest therein, and in any name under which
such businesses may have been conducted, and agree not to undertake to
conduct business employing any such name or business concept at any
place at which SuperShuttle or any of its affiliates conduct business.
In the event that the Share Exchange Agreement is rescinded, this Section 6.9
shall be void and of no further effect and any employment agreement between
AAA-LSF and a Shareholder in effect shall be terminated and the non-competition
provisions hereof shall immediately terminate.
The Shareholder hereby specifically acknowledges and agrees that the
temporal, geographical and other restrictions contained in this Section 6.9 are
reasonable and necessary to protect the business and prospects of AAA-LSF and
SuperShuttle and that the enforcement of the provisions of this Section 6.9 will
not work an undue hardship on the Shareholder. Shareholder further agree that in
the event that either the temporal, geographical or any other restrictions, or a
portion thereof, set forth in this Section 6.9 is determined to be overly
restrictive and nonenforceable, the covenants set forth shall be reduced and
modified to those which are reasonable and enforceable under the circumstances
to the fullest extent permitted under applicable law in the judgment of the
applicable court. The Shareholder acknowledges and agrees that SuperShuttle does
not have an adequate remedy at law for the breach or threatened breach of the
covenants contained in this Section 6.9 and the Shareholder therefore
specifically agrees that SuperShuttle may, in addition to any other remedies
which may be available hereunder or as a matter of law or in equity, file a suit
in equity to enjoin the Shareholder from the breach or threatened breach.
If the provisions of this Section 6.9 are held to be invalid or
unenforceable as against public policy, the remaining provisions of this
Agreement shall not be affected thereby.
6.10 Collateral and/or Guarantees for Certain AAA-LSF Loans. As soon as
practical after the expiration of the Recision rights, SuperShuttle shall take
such steps to replace (i) the personal guarantees of the Shareholder on certain
AAA-LSF loans and (ii) the cash collateral pledged by certain Shareholder to
secure certain bonds and letters of credit established on behalf of AAA-LSF.
Notwithstanding the foregoing, Southern may at its option, replace such personal
guaranties and cash collateral with such bonds as are acceptable to the lender.
6.11 Shareholder Loans. The AAA-LSF loans reflected on the books of
AAA-LSF, which are listed on Schedule 6.11 hereto, shall be forgiven by
Shareholder.
6.12 Tax Treatment. The parties hereto will use their respective best
efforts to cause the Exchange to be a tax free reorganization under Section
368(a)(1)(B) of the Code and do not intend to take any action after the
Effective Date to cause the Exchange to lose its tax free status. All parties
hereto agree to file the Share Exchange Agreement with its respective Federal
Income Tax returns in the year in which the Exchange is effective and to comply
with the reporting requirements. The parties shall take no action with respect
to the Share Exchange to jeopardize such tax free status.
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<PAGE> 32
ARTICLE 7
CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Exchange. The
respective obligations of each party to effect the Exchange shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) this Agreement and the Exchange with respect to
AAA-LSF, and the issuance of the SuperShuttle Common Stock, shall have
been approved and/or adopted, as required by applicable law and the
parties' Certificate/Articles of Incorporation and Bylaws, by the
requisite vote of the Shareholder, if any, and/or the boards of
directors of SuperShuttle and AAA-LSF;
(b) no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Exchange shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking
any of the foregoing be pending; and there shall not be any action
taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Exchange, which makes the
consummation of the Exchange illegal;
(c) no party hereto shall have terminated this Agreement
as permitted herein; and
(d) SuperShuttle and Karen Caputo shall have entered into
an Employment Agreement substantially in the form attached hereto as
Exhibit "D."
7.2 Additional Conditions to Obligations of SuperShuttle. The
obligations of SuperShuttle to effect the Exchange are also subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) the representations and warranties of AAA-LSF and the
Shareholder in this Agreement shall be true and correct in all material
respects as of the Effective Time as if made at and as of the Effective
Time (subject to any changes permitted or contemplated hereby and
except for the updating or correction of the disclosures in the AAA-LSF
Disclosure Schedule which do not reflect any change that is reasonably
likely to have a material adverse effect on the assets, liabilities,
business, results of operations, financial condition or prospects of
AAA-LSF); and AAA-LSF shall in all material respects have performed
each obligation and agreement and complied with each covenant to be
performed and complied with by it hereunder at or prior to the
Effective Time;
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<PAGE> 33
(b) AAA-LSF and the Shareholder shall have furnished to
SuperShuttle a certificate in which AAA-LSF shall certify that the
conditions set forth in Section 7.2(a) have been fulfilled;
(c) AAA-LSF shall have furnished to SuperShuttle (i) a
copy of the text of the resolutions by which the corporate action on
the part of AAA-LSF necessary to approve this Agreement and the
Exchange were taken and (ii) certificates executed on behalf of AAA-LSF
certifying to SuperShuttle that such copy is a true, correct and
complete copy of such resolutions and that such resolutions were duly
adopted and have not been amended or rescinded;
(d) AAA-LSF shall have furnished to SuperShuttle (i) a
balance sheet dated a date not more than thirty days prior to the
Effective Time (the "Current Balance Sheet") and (ii) an income
statement for the period from January 1, 1998, to the date of the
Current Balance Sheet;
(e) there shall have been no material adverse change in
the business, assets, properties, financial condition or operating
results of AAA-LSF;
(f) there shall not have been instituted, pending or
threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction,
nor shall there be in effect any judgment, decree or order of any
governmental authority, administrative agency or court of competent
jurisdiction, in either case, seeking to prohibit or limit SuperShuttle
from exercising the material rights and privileges pertaining to its
ownership of AAA-LSF or the ownership or operation by SuperShuttle or
any of its subsidiaries of all or a material portion of the business or
assets of SuperShuttle or any of its subsidiaries, or seeking to compel
SuperShuttle or any of its subsidiaries to dispose of or hold separate
all or any material portion of the business or assets of SuperShuttle
or any of its subsidiaries, as a result of the Exchange or the
transactions contemplated by this Agreement;
(g) SuperShuttle shall have otherwise been reasonably
satisfied with all of its due diligence;
(h) All of the transactions contemplated by Schedule
1.1(a) and Schedule 1.1(b) shall have been consummated or shall be
simultaneously consummated with the Effective Time in a manner
reasonably acceptable to SuperShuttle and as contemplated by Schedule
1.1(a) and Schedule 1.1(b).
Notwithstanding the failure of any condition in this Section 7.2, SuperShuttle
may conditionally waive the failed condition and consummate the transaction, but
shall be entitled to pursue adequate and appropriate reimbursement for all
costs, damages and liabilities in connection with the failed
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<PAGE> 34
condition and may withhold such of the Exchange consideration as SuperShuttle
deems reasonably appropriate to assure payment of the costs, damages and
liabilities associated with the failed condition.
7.3 Additional Conditions to Obligation of AAA-LSF. The obligation of
AAA-LSF to effect the Exchange is also subject to the fulfillment at or prior to
the Effective Time of the following conditions:
(a) the representations and warranties of SuperShuttle set
forth in Article 2 shall be true and correct in all material respects
as of the Effective Time as if made at and as of the Effective Time
(subject to any changes permitted or contemplated hereby and except for
the updating or correction of the disclosures in the SuperShuttle
Disclosure Schedule which do not reflect any change that is reasonably
likely to have a material adverse effect on the assets, liabilities,
business, results of operations, financial condition or prospects of
SuperShuttle and its subsidiaries, taken as a whole) and each of
SuperShuttle shall in all material respects have performed each
obligation and agreement and complied with each covenant to be
performed and complied with by it hereunder at or prior to the
Effective Time;
(b) SuperShuttle shall have furnished to AAA-LSF a
certificate in which SuperShuttle shall certify that the conditions set
forth in Section 7.3(a) have been fulfilled;
(c) SuperShuttle shall have furnished to AAA-LSF (i) a
copy of the text of the resolutions by which the corporate actions on
the part of SuperShuttle necessary to approve this Agreement and the
Exchange were taken and (ii) certificates executed on behalf of
SuperShuttle by its corporate secretary or one of its assistant
corporate secretaries certifying to AAA-LSF, in each case, that such
copy is a true, correct and complete copy of such resolutions and that
such resolutions were duly adopted and have not been amended or
rescinded;
(d) SuperShuttle shall have obtained each consent and
approval necessary in order that the Exchange and the transactions
contemplated herein not constitute a breach or violation of, or result
in a right of termination or acceleration or any encumbrance on any of
SuperShuttle's assets pursuant to the provisions of any material
agreement, arrangement or understanding or any material license,
franchise or permit;
(e) all corporate action necessary by SuperShuttle to
elect, as of the Effective Time and as contemplated by Section 6.9
hereof, the one designee of AAA-LSF to SuperShuttle's Board of
Directors, shall have been duly and validly taken;
(f) SuperShuttle shall have furnished to AAA-LSF (i) a
balance sheet dated a date not more than thirty days prior to the
Effective Time (the "Current Balance Sheet") and (ii) an income
statement for the period from January 1, 1998, to the date of the
Current Balance Sheet;
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<PAGE> 35
(g) AAA-LSF shall have otherwise been reasonably satisfied
with its due diligence investigation;
(h) there shall have been no material adverse change in
the business, assets, properties, financial condition or operating
results of SuperShuttle; and
(i) there shall not have been instituted, pending or
threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction,
nor shall there be in effect any judgment, decree or order of any
governmental authority, administrative agency or court of competent
jurisdiction, in either case, seeking to prohibit or limit the
Shareholder from exercising the material rights and privileges
pertaining to his or her ownership of AAA-LSF or the ownership or
operation by AAA-LSF of all or a material portion of the business or
assets of AAA-LSF, or seeking to compel AAA-LSF or any of its
subsidiaries to dispose of or hold separate all or any material portion
of the business or assets of AAA-LSF or any of its subsidiaries, as a
result of the Exchange or the transactions contemplated by this
Agreement.
7.4 Conditions to the Closing. The Closing shall occur upon the
fulfillment of the following conditions:
(a) SuperShuttle shall have closed the transactions
contemplated with Preferred Transportation, Inc. and Tamarack Transportation,
Inc.
(b) Southern shall have received written approval of the
Aviation Department for Dade County of the changes in ownership of Southern to
SuperShuttle; and
(c) Limousines of South Florida, Inc. ("LSF") shall have
received the written consent of Broward County to the change in ownership of LSF
to SuperShuttle.
7.5 Other Deliveries. AAA-LSF and SuperShuttle shall cooperate after
the Effective Time to complete the following:
(a) AAA-LSF shall deliver full and complete AAA-LSF
Disclosure Schedules to SuperShuttle on or before April 22, 1998; and
(b) AAA-LSF shall use its reasonable best efforts to
receive the written consent, in form reasonably acceptable to
SuperShuttle, to the transfer of the AAA-LSF Common Stock whenever
required by the terms of each material contract to which AAA-LSF is a
party or where required by federal, state or local law, on or before
the Closing Date.
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<PAGE> 36
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual written consent of a duly authorized officer
of SuperShuttle and AAA-LSF;
(b) by either party if the other party breaches any of its
material representations, warranties or covenants contained herein and,
if such breach is curable, such breach is not cured on or prior to 10
days after notice;
(c) by either SuperShuttle or AAA-LSF if a court of
competent jurisdiction or governmental, regulatory or administrative
agency or commission shall have issued an order, decree or ruling or
taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Exchange;
(d) by either SuperShuttle or AAA-LSF if the Closing Date
shall not have occurred on or before April 30, 1998, or such later date
as may be mutually agreed upon by the parties;
(e) by SuperShuttle, if the conditions set forth in
Section 7.2 hereof shall have not been complied with or performed and
such noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by AAA-LSF
on or before April 30, 1998; or
(f) by AAA-LSF, if the conditions set forth in Section 7.3
hereof shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by SuperShuttle on or
before April 30, 1998.
provided, however, that no party shall have the right to terminate this
Agreement unilaterally if the event giving rise to such right shall be primarily
attributable to such party or to any affiliated party.
8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall become void and there
shall be no liability or further obligation hereunder on the part of
SuperShuttle, AAA-LSF or their respective shareholders, officers or directors,
except as set forth in Sections 5.2, 6.2, 6.4(b), or 6.7 hereof.
8.3 Amendment. This Agreement may not be amended except by an
instrument in writing approved by the parties to this Agreement and signed on
behalf of each of the parties hereto.
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<PAGE> 37
8.4 Waiver. At any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of any other party hereto or (b) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations, in
each case only to the extent such obligations, agreements and conditions are
intended for its benefit.
ARTICLE 9
GENERAL PROVISIONS
9.1 Survival of Representations and Warranties. All representations and
warranties made by SuperShuttle, AAA-LSF and the Shareholder in this Agreement
shall terminate as of the Effective Time or upon termination of this Agreement
as provided in Section 8.1, as the case may be.
9.2 Public Announcements. SuperShuttle and AAA-LSF shall consult with
each other upon an agreed form of press release, and before issuing any such
press release or otherwise making any public statements with respect to the
Exchange or this Agreement. Neither SuperShuttle nor AAA-LSF shall issue any
such press release or make any such public statement without the prior consent
of the other party, which shall not be unreasonably withheld.
9.3 Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by telecopier,
or by registered or certified mail (postage prepaid and return receipt
requested) to the parties at the following addresses (or if such other address
for a party as shall be specified by it by like notice):
If to SuperShuttle: SuperShuttle International,
Inc.
4610 South 35th Street
Phoenix, Arizona 85040
FAX: (602) 243-6446
Attn: R. Brian Wier
With a copy to: Squire, Sanders & Dempsey
L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite
2700
Phoenix, Arizona 85004-4441
FAX: (602) 253-8129
Attn: Christopher D. Johnson,
Esq.
If to AAA-LSF or the Shareholder: 2631 Garfield St.
Hollywood, FL 33020
FAX: (954) 922-0566
Attn: Karen Caputo
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<PAGE> 38
With a copy to: Akerman, Senterfitt & Eidson
Sun Trust International Center
One S.E. Third Avenue
Miami, Florida 33131
PH: (305) 374-5600
FAX: (305) 374-5095
Attn: Jonathan L. Awner
All such notices and other communications shall be deemed to have been
duly given: (i) when delivered by hand, if personally delivered; (ii) three
business days after being deposited in the mail, postage prepaid, if delivered
by mail; and (iii) when receipt is acknowledged, if telecopied.
9.4 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the exhibits and attachments hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires. The rule of construction that an agreement is construed in
favor of the nondrafting party shall not apply to this Agreement. This Agreement
shall be deemed to have been mutually drafted by the parties.
9.5 Schedules and Exhibits. All schedules and exhibits attached hereto
or referred to herein are hereby incorporated in and made a part of this
Agreement as set forth in full herein. Information set forth in any section to
the SuperShuttle Disclosure Schedule or the AAA-LSF Disclosure Schedule is
deemed to be set forth in all other sections of such Disclosure Schedule.
Disclosure of any fact or item in any schedule or exhibit hereto referenced by a
particular paragraph or section in this Agreement shall, should the existence of
the fact or item or its contents be relevant to any other paragraph or section,
be deemed to be disclosed with respect to that other paragraph or schedule
whether or not a specific cross reference appears. Disclosure of any fact or
item in any schedule or exhibit hereto shall not necessarily mean that such item
or fact individually is material to a party.
9.6 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the court shall modify the
Agreement or, in the absence thereof, the parties shall negotiate in good faith
to modify this Agreement to preserve each party's anticipated benefits under
this Agreement.
9.7 Jurisdiction; Venue; Service of Process. The parties expressly
agree that any controversy, dispute, litigation or claim arising out of the
subject matter of this Agreement and
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<PAGE> 39
the transactions contemplated hereby shall be brought or commenced only in a
federal or state court located in Broward or Dade County, Florida. The parties
agree to be subject to the personal jurisdiction of the federal and/or state
courts situated in Broward or Dade County, Florida and agree that a claim of
forum non-conveniens shall not be a defense to an action initiated in such
venues. The parties agree to the service of process of any such courts in any
such action or proceeding by registered or certified mail, postage prepaid,
return receipt requested, to the addresses listed in this Agreement and agree
that such service shall become effective thirty (30) days after such mailing.
9.8 Waiver of Jury Trial. EACH OF SUPERSHUTTLE AND AAA-LSF HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
9.9 Miscellaneous. This Agreement (together with all other documents
and instruments referred to herein): (a) is not intended to confer upon any
other person any rights or remedies hereunder; (b) shall not be assigned by any
party; and (c) shall be governed in all respects, including validity,
interpretation and effect, by the internal laws of the State of Florida, without
giving effect to the principles of conflict of laws thereof. Each certificate,
agreement or other document making reference to the Stock Purchase Agreement
among Supershuttle, AAA-LSF and the Shareholders dated as of March 31, 1998
shall be deemed to refer to this Amended and Restated Stock Purchase Agreement.
This Agreement may be executed in two or more counterparts, which together shall
constitute a single agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 40
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, SuperShuttle, AAA-LSF and the Shareholder have
caused this Agreement to be executed on the date first written above by their
respective officers thereunder duly authorized.
SUPERSHUTTLE INTERNATIONAL
INC., a Delaware corporation
By /s/ Thomas C. LaVoy
-------------------------------------------
Thomas C. LaVoy, Chief Financial Officer
AAA WHEELCHAIR WAGON SERVICES,
INC., a Florida corporation
By /s/ Karen Caputo
-------------------------------------------
Karen Caputo, President
WHEELCHAIR AMBULANCE OF
HOLLYWOOD, INC., a Florida corporation
By /s/ Karen Caputo
-------------------------------------------
Karen Caputo, President
LIMOUSINES OF SOUTH FLORIDA,
INC., a Florida corporation
By /s/ Karen Caputo
-------------------------------------------
Karen Caputo, President
A1A SNOWBIRD LEADING, INC., a
Florida corporation
By /s/ Karen Caputo
-------------------------------------------
Karen Caputo, President
35
<PAGE> 41
Shareholder
/s/ Karen Caputo
---------------------------------------------
Karen Caputo
36
<PAGE> 1
EXHIBIT 2.3a
AMENDMENT NO. 1
TO THE
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
This AMENDMENT NO. 1 TO THE AMENDED AND RESTATED STOCK PURCHASE
AGREEMENT (the "Agreement"), dated as of April 30, 1998, is made as of May 27,
1998 by and among SUPERSHUTTLE INTERNATIONAL, INC., a Delaware corporation
("SuperShuttle"); AAA WHEELCHAIR WAGON SERVICES, INC., a Florida corporation
("AAA"); WHEELCHAIR AMBULANCE OF HOLLYWOOD, INC., a Florida corporation
("Wheelchair Ambulance"); LIMOUSINES OF SOUTH FLORIDA, INC., a Florida
corporation ("LSF"); A1A SNOWBIRD LEASING, INC., a Florida corporation
("Snowbird"); and Karen Caputo (the "Shareholder").
Section 5.2(a) of the Agreement is hereby amended and restated in its
entirety as follows:
(a) The Share Exchange shall be rescinded automatically without further
notice (the "Recision") upon the occurrence of any of the following
events: (i) if SuperShuttle does not file a registration statement for
an initial public offering on Form S-1 with the SEC by June 8, 1998 to
register for sale shares of SuperShuttle Common Stock; (ii) if the SEC
does not declare such registration statement effective by July 31,
1998; or (iii) if the underwritten initial registration statement for
an initial public offering on a firm commitment basis does not close by
August 10, 1998, providing a per share offering price to the public of
at least $6.50.
IN WITNESS WHEREOF, SuperShuttle, AAA, Wheelchair Ambulance, LSF, Snowbird and
the Shareholder have caused this Amendment No. 1 to be executed on the date
first written above by their respective officers thereunder duly authorized.
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Thomas C. LaVoy
--------------------------------------------
Thomas C. LaVoy, Chief Financial Officer
AAA WHEELCHAIR WAGON SERVICES,
INC., a Florida corporation
By: /s/ Karen Caputo
--------------------------------------------
Karen Caputo, President
<PAGE> 2
WHEELCHAIR AMBULANCE OF
HOLLYWOOD, INC., a Florida corporation
By: /s/ Karen Caputo
--------------------------------------------
Karen Caputo, President
LIMOUSINES OF SOUTH FLORIDA, INC.,
a Florida corporation
By: /s/ Karen Caputo
--------------------------------------------
Karen Caputo, President
A1A SNOWBIRD LEASING, INC.,
a Florida corporation
By: /s/ Karen Caputo
--------------------------------------------
Karen Caputo, President
SHAREHOLDER
/s/ Karen Caputo
-----------------------------------------------
Karen Caputo
<PAGE> 1
Exhibit 2.4
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
AMONG
SUPERSHUTTLE INTERNATIONAL, INC.,
SOUTHERN SHUTTLE SERVICES, INC.
AND
THE SHAREHOLDERS LISTED ON SCHEDULE 1
April 30, 1998
<PAGE> 2
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1
THE STOCK PURCHASE ...............................................................................................1
1.1 Basic Transaction...............................................................................1
1.2 Effective Time; Closing Date....................................................................2
1.3 Articles of Incorporation and Bylaws............................................................3
1.4 Deliveries at the Effective Time................................................................3
1.5 Closing of Southern Transfer Books..............................................................3
1.6 Lost, Stolen or Destroyed Certificates..........................................................3
1.7 Taking of Necessary Action; Further Action......................................................3
1.8 Tax Treatment...................................................................................3
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SUPERSHUTTLE....................................................................4
2.1 Organization and Qualification..................................................................4
2.2 Authority Relative to This Agreement............................................................4
2.3 Capitalization.................................................................................4
2.4 Financial Statements............................................................................5
2.5 Subsidiaries....................................................................................5
2.6 Litigation......................................................................................5
2.7 Brokers' Fees...................................................................................6
2.8 Compliance With Laws; Permits; Certain Operations...............................................6
2.9 Absence of Undisclosed Liabilities..............................................................6
2.10 No Material Adverse Changes.....................................................................7
2.11 Other Agreements................................................................................7
2.12 Disclosure......................................................................................7
2.13 Liens...........................................................................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SOUTHERN AND THE SHAREHOLDERS...................................................7
3.1 Organization and Qualification..................................................................8
3.2 Authority Relative to This Agreement............................................................8
3.3 Capitalization..................................................................................8
3.4 Financial Statements............................................................................9
3.5 Subsidiaries....................................................................................9
3.6 Absence of Undisclosed Liabilities..............................................................9
3.7 No Material Adverse Changes....................................................................10
3.8 Absence of Certain Developments................................................................10
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
3.9 Title to and Condition of Properties...........................................................11
3.10 Environmental Matters..........................................................................12
3.11 Accounts Receivable............................................................................13
3.12 Tax Matters....................................................................................13
3.13 Contracts and Commitments......................................................................14
3.14 Restrictions on Business Activities............................................................14
3.15 Intellectual Property Rights...................................................................15
3.16 Litigation.....................................................................................15
3.17 Brokers' Fees..................................................................................15
3.18 Employment.....................................................................................16
3.19 Employee Benefit Plans.........................................................................16
3.20 Insurance......................................................................................16
3.21 Insider Transactions...........................................................................16
3.22 Compliance With Laws; Permits; Certain Operations..............................................16
3.23 Disclosure.....................................................................................17
3.24 Minute Books...................................................................................17
3.25 Compensation...................................................................................17
3.26 Medicaid and Other Third Party Payor Matters...................................................17
ARTICLE 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS........................................................17
4.1 Organization, Standing and Authority of Shareholders...........................................18
4.2 Execution and Delivery; No Conflicts...........................................................18
4.3 Consents and Approvals.........................................................................18
4.4 Brokers........................................................................................18
4.5 Securities Laws Compliance.....................................................................18
4.6 Shareholder Experience and Investment Representations..........................................19
ARTICLE 5
CONDUCT PENDING AND SUBSEQUENT TO THE EXCHANGE...................................................................19
5.1 Conduct of Business Pending the Exchange.......................................................19
5.2 Conduct Subsequent to the Exchange.............................................................21
5.3 SuperShuttle Recision Right ...................................................................22
5.4 Conduct by SuperShuttle........................................................................22
ARTICLE 6
ADDITIONAL AGREEMENTS............................................................................................23
6.1 Expenses.......................................................................................23
6.2 No Negotiations................................................................................23
6.3 Notification of Certain Matters................................................................23
6.4 Access to Information; Confidentiality.........................................................23
6.5 Consents; Approvals............................................................................24
6.6 Supplements to Disclosure Schedules............................................................24
6.7 Non-Solicitation of Employees..................................................................24
6.8 Election of Directors..........................................................................24
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
6.9 Confidential Information and Covenant Not To Compete...........................................24
6.10 Collateral and/or Guarantees for Certain Southern Loans........................................26
6.11 Shareholder Loans..............................................................................26
6.12 Tax Treatment..................................................................................26
ARTICLE 7
CONDITIONS.......................................................................................................26
7.1 Conditions to Obligations of Each Party to Effect the Exchange.................................26
7.2 Additional Conditions to Obligations of SuperShuttle...........................................27
7.3 Additional Conditions to Obligation of Southern................................................28
7.4 Conditions to the Closing......................................................................30
7.5 Other Deliveries...............................................................................30
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER................................................................................30
8.1 Termination....................................................................................30
8.2 Effect of Termination..........................................................................31
8.3 Amendment......................................................................................31
8.4 Waiver.........................................................................................31
ARTICLE 9
GENERAL PROVISIONS...............................................................................................31
9.1 Survival of Representations and Warranties.....................................................31
9.2 Public Announcements...........................................................................32
9.3 Notices........................................................................................32
9.4 Interpretation.................................................................................33
9.5 Schedules and Exhibits.........................................................................33
9.6 Severability...................................................................................33
9.7 Jurisdiction; Venue; Service of Process........................................................33
9.8 Waiver of Jury Trial...........................................................................34
9.9 Miscellaneous..................................................................................34
</TABLE>
iii
<PAGE> 5
INDEX OF EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Exhibit "A" Registration Rights Agreement
Exhibit "B" Articles of Incorporation of Southern
Exhibit "C" Bylaws of Southern
Exhibit "D" Employment Agreement
Schedule "1" Southern Shareholders and Common Stock Ownership
Schedule "1.1(a)" List of Assets and Method of Transfer
Schedule "1.1(b)" List of Assets to be Transferred from Southern
</TABLE>
iv
<PAGE> 6
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
This AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of April 30, 1998 by and among SUPERSHUTTLE INTERNATIONAL, INC., a
Delaware corporation ("SuperShuttle"); SOUTHERN SHUTTLE SERVICES, INC., a
Florida corporation ("Southern"); and those Southern shareholders listed on
Schedule "1" hereto (collectively, the "Shareholders" and, individually, a
"Shareholder") and amends and restates in its entirety that certain Stock
Purchase Agreement dated March 31, 1998, by and among SuperShuttle, Southern and
the Shareholders.
RECITALS
A. SuperShuttle and Southern are parties to a letter agreement dated
February 25, 1998 (the "Letter of Intent"), and SuperShuttle, Southern and the
Shareholders are parties to that certain Stock Purchase Agreement dated March
31, 1998, which contemplates the acquisition by SuperShuttle of all of the
outstanding capital stock of Southern.
B. The Shareholders currently and collectively own all of the issued
and outstanding shares of capital stock of Southern, with each Shareholder
owning the number of shares set forth opposite such Shareholder's name on
Schedule 1.
C. The Shareholders are joined herein for purposes of affirming the
representations and warranties made in Article 3, and to otherwise be bound
hereto for the obligations of Southern for which they are jointly and severally
liable.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, the parties agree as follows:
ARTICLE 1
THE STOCK PURCHASE
1.1 Basic Transaction.
(a) On and subject to the terms and conditions of this
Agreement, SuperShuttle agrees to purchase from the Shareholders, and
each of the Shareholders agrees to sell to SuperShuttle, all of his or
her shares of capital stock of Southern (the "Southern Common Stock")
and the Shareholders agree to purchase from SuperShuttle, and
SuperShuttle agrees to sell to the Shareholders, 978,882 shares of
Common Stock, $0.01 par value per share, of SuperShuttle (the
"SuperShuttle Common Stock"), pro rata to their Southern Common Stock
ownership as reflected on Schedule 1 (hereinafter, the "Exchange"). The
aggregate number of shares of SuperShuttle Common Stock to be issued in
order to give effect to this provision will represent fifteen percent
(15%) on a fully-diluted basis of the total number of outstanding
shares of SuperShuttle Common Stock when issued (after giving effect to
any SuperShuttle Common Stock issued in connection with the
contemporaneous
1
<PAGE> 7
acquisitions of the Los Angeles and Orange County franchisees and AAA
Wheelchair Wagon Services, Inc., Wheelchair Ambulance of Hollywood,
Inc., Limousines of South Florida, Inc. and A1A Snowbird Leasing, Inc.
and the conversion of the currently outstanding shares of
SuperShuttle's Series B Convertible Preferred Stock into shares of
SuperShuttle Common Stock).
The number of shares of SuperShuttle Common Stock to be issued
to the Shareholders shall be adjusted to reflect fully the effect of
any stock split, reverse split, stock dividend (including any dividend
or distribution of securities convertible into SuperShuttle Common
Stock or Southern Common Stock), reorganization, recapitalization or
other like change with respect to SuperShuttle Common Stock or Southern
Common Stock occurring after the date hereof and prior to the Effective
Time, but shall not be adjusted for the exercise of any outstanding
SuperShuttle options or warrants convertible into SuperShuttle Common
Stock. No fractional shares of SuperShuttle Common Stock shall be
issued. Fractional shares of such stock shall be rounded up to the
nearest whole share.
(b) SuperShuttle agrees to grant the Shareholders registration
rights pursuant to the terms of the Registration Rights Agreement, a
form of is attached hereto as Exhibit "A."
(c) As an incident to the share exchange transactions and as a
predicate and condition to them, certain assets are required to be
transferred into Southern or other accommodations made in order to
effect the purpose of allowing Southern to operate the business of
Southern as presently conducted. In this regard, the assets described
on Schedule 1.1(a) attached hereto and incorporated by reference herein
shall be assigned to Southern immediately prior to the Effective Time.
It is acknowledged by the parties hereto that any and all radio
frequencies, real estate interests, permits, and similar assets
necessary to the conduct of the business of Southern immediately prior
to the Effective Time shall be and become the property of Southern
effective upon the Exchange through the processes described on Schedule
1.1(a) without any further form of consideration or payment owing to
Southern or any of the Shareholders. As an incident to the share
exchange transactions and as a predicate and condition to them, certain
assets are required to be transferred from Southern to third parties or
affiliates. In this regard, the assets described on Schedule 1.1(b)
attached hereto and incorporated by reference herein and any
indebtedness relating hereto shall be transferred to the party
identified therein on or before April 30, 1998. The transactions
contemplated by Schedules 1.1(a) and 1.1(b) are a fundamental part of
this Agreement and the consummation of those transactions is a
condition to the effectiveness of the Agreement.
1.2 Effective Time; Closing Date. The date and time when the share
exchange shall become effective, March 31, 1998, is referred to as the
"Effective Time." The closing of the transactions contemplated hereunder (the
"Closing") shall occur upon the earlier of (i) the
2
<PAGE> 8
satisfaction or waiver of the conditions provided at Article 7, or (ii) April
30, 1998 (the "Closing Date") at the offices of Shareholders' counsel, or such
other place as the parties may agree.
1.3 Articles of Incorporation and Bylaws. The Articles of Incorporation
and the Bylaws of Southern shall be restated in the forms of Exhibits "B" and
"C" hereto and incorporated herein.
1.4 Deliveries at the Effective Time. At the Effective Time, each of
the Shareholders shall surrender the certificate or certificates representing
shares of Southern Common Stock to the Escrow Agent. Promptly following
surrender, SuperShuttle shall issue the SuperShuttle Common Stock to the
Shareholders pursuant to Section 1.1. The certificates of Southern Common Stock
surrendered to the Escrow Agent shall be duly endorsed and otherwise in proper
form for transfer as SuperShuttle may require. Escrow Agent shall not be
obligated to deliver the consideration to which any Shareholder is entitled as a
result of the share exchange until such Shareholder surrenders his or her
certificate or certificates representing the shares of Southern Common Stock to
be exchanged.
1.5 Closing of Southern Transfer Books. At the Effective Time, the
stock transfer books of Southern shall be closed and no transfer of shares of
Southern Common Stock issued and outstanding immediately prior to the Effective
Time shall thereafter be made (except as provided for or contemplated in Section
1.1 above).
1.6 Lost, Stolen or Destroyed Certificates. In the event any
certificates representing shares of Southern Common Stock shall have been lost,
stolen or destroyed, SuperShuttle shall issue in exchange for such lost, stolen
or destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of SuperShuttle Common Stock as required pursuant to
Section 1.1; provided, however, that SuperShuttle may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificates to deliver an indemnity agreement in such form
as SuperShuttle may reasonably direct as indemnity against any claim that may be
made against SuperShuttle with respect to the certificates alleged to have been
lost, stolen or destroyed.
1.7 Taking of Necessary Action; Further Action. SuperShuttle, on the
one hand, and Southern on the other hand, shall use reasonable best efforts to
take all such actions (including, without limitation, actions to cause the
satisfaction of the conditions of the other to effect the share exchange) as may
be necessary or appropriate in order to effectuate the Exchange as promptly as
possible. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement, the officers
and directors of the SuperShuttle are fully authorized in the name of Southern
or otherwise to take, and shall take, all such lawful and necessary actions.
1.8 Tax Treatment. The parties hereto acknowledge and agree that the
transactions contemplated hereby are intended to be a tax free reorganization
under Section 368(a)(1)(B) of the U.S. Internal Revenue Code of 1986, as amended
(the "Code").
3
<PAGE> 9
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SUPERSHUTTLE
SuperShuttle hereby represents and warrants to Southern as of the date
hereof, and again at the Effective Time (subject to any changes permitted or
contemplated hereby), each of the following, except to the extent set forth in
the disclosure schedule that has been delivered to Southern hereunder (the
"SuperShuttle Disclosure Schedule"):
2.1 Organization and Qualification. SuperShuttle is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own and operate
its properties and to carry on its business as now conducted in every
jurisdiction where the failure to do so would have a material adverse effect on
its business, properties or ability to conduct the business currently conducted
by it. The copies of the Certificate of Incorporation and Bylaws of SuperShuttle
previously furnished to Southern are correct and complete and reflect all
amendments thereto.
2.2 Authority Relative to This Agreement. SuperShuttle has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by SuperShuttle and the consummation by SuperShuttle of the
transactions contemplated hereby have been duly authorized by SuperShuttle, and
no other corporate proceedings on the part of SuperShuttle are necessary to
authorize this Agreement and such transactions. This Agreement has been duly
executed and delivered by SuperShuttle and, assuming the due authorization,
execution and delivery by Southern, constitutes a valid and binding obligation
of SuperShuttle, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity. Except as set forth in the SuperShuttle
Disclosure Schedule, SuperShuttle is not subject to, or obligated under, any
provision of (a) its Certificate of Incorporation or Bylaws, (b) any material
agreement, arrangement or understanding, (c) any material license, franchise or
permit, or (d) any law, regulation, order, judgment or decree, which would be
breached or violated, or in respect of which a right of termination or
acceleration would arise or any encumbrance on any of its or any of its
subsidiaries' assets would be created, by its execution, delivery and
performance of this Agreement and the consummation by it of the transactions
contemplated hereby. No authorization, consent or approval of, or filing with,
any public body, court or authority is necessary on the part of SuperShuttle for
the consummation by SuperShuttle of the transactions contemplated by this
Agreement.
2.3 Capitalization. The authorized equity capitalization of
SuperShuttle consists of 20,000,000 shares of SuperShuttle Common Stock and
5,000,000 shares of Preferred Stock, $0.01 par value per share ("SuperShuttle
Preferred Stock"). As of March 31, 1998, 2,760,860 shares of SuperShuttle Common
Stock and 479,475 shares of SuperShuttle Preferred Stock are issued and
outstanding, all of which shares are duly authorized, validly issued, fully paid
and nonassessable. The SuperShuttle Common Stock when issued to the Shareholders
will be duly authorized, validly issued, fully paid and non-assessable shares of
SuperShuttle.
4
<PAGE> 10
Except as set forth in Section 2.3 of the SuperShuttle Disclosure
Schedule, there are no options, warrants, call, conversion privileges or other
rights, agreements, arrangements or commitments obligating SuperShuttle to issue
or sell any shares of capital stock or securities or obligations of any kind
convertible into or exchangeable for any shares of capital stock thereof or of
any other corporation, nor are there any stock appreciation, phantom stock or
similar rights outstanding based upon the book value or any other attribute of
SuperShuttle. No holders of outstanding shares of SuperShuttle Common Stock are
entitled to preemptive or other similar rights.
There are no obligations, contingent or otherwise, of SuperShuttle or
any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of
SuperShuttle Common Stock or the capital stock of any subsidiary or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity. All of the outstanding
shares of capital stock of each of SuperShuttle's subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and, except as
disclosed in the SuperShuttle Disclosure Schedule, all such shares are owned by
SuperShuttle free and clear of all security interests, liens, claims, pledges,
agreements, limitations in SuperShuttle's voting rights, charges or other
encumbrances of any nature whatsoever.
2.4 Financial Statements. SuperShuttle has delivered a balance sheet
dated as of February 28, 1998, and other financial statements for the years
ended September 30, 1997 and September 30, 1996 audited by Deloitte & Touche LLP
to Southern (collectively, the "SuperShuttle Financial Statements.") The
SuperShuttle Financial Statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved and present fairly the consolidated financial position, results
of operations, and cash flows of SuperShuttle and its consolidated subsidiaries
as of the dates and for the periods indicated therein, subject, in the case of
unaudited interim statements, to normal year-end accounting adjustments and the
absence of complete footnote disclosure.
2.5 Subsidiaries. Except as set forth in the SuperShuttle Disclosure
Schedule, SuperShuttle does not have any subsidiaries and does not otherwise own
any stock, partnership interest, joint venture interest, or any other security
issued by or equity interest in any other corporation, organization or entity.
For purposes hereof, the term "subsidiary" means any corporation of which
securities having a majority of the ordinary voting power in electing directors
are owned directly or indirectly by a party. Unless the context requires
otherwise, the term "SuperShuttle" shall hereafter refer to SuperShuttle and/or
its Subsidiaries.
2.6 Litigation. Except as set forth in the SuperShuttle Disclosure
Schedule or the SuperShuttle Financial Statements, there are no actions, suits,
proceedings, orders or investigations pending or, to the knowledge of
SuperShuttle, threatened against SuperShuttle, at law or in equity, or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which, if
determined adversely to SuperShuttle, would result in a material adverse effect
to SuperShuttle's operations and financial condition, and there is no basis
known to SuperShuttle for any of the foregoing.
5
<PAGE> 11
Except as set forth in the SuperShuttle Disclosure Schedule, SuperShuttle has
not received any opinion or legal advice to the effect that SuperShuttle is
exposed from a legal standpoint to any material liability. No governmental
entity has at any time challenged or questioned the legal right of SuperShuttle
to offer or provide any of its services in the present manner or style thereof.
2.7 Brokers' Fees. SuperShuttle is not liable for any brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement.
2.8 Compliance With Laws; Permits; Certain Operations. SuperShuttle and
its officers, directors, agents and employees have complied in all material
respects with all applicable laws and regulations of foreign, federal, state and
local governments and all agencies thereof which affect the business or any
owned or leased properties of SuperShuttle and to which SuperShuttle may be
subject, and no claims have been filed against SuperShuttle alleging a violation
of any such law or regulation, except as set forth in the SuperShuttle
Disclosure Schedule. Without limiting the generality of the foregoing,
SuperShuttle has not violated, or received a notice or charge asserting any
violation of, the Occupational Safety and Health Act of 1970, or any other state
or federal acts (including rules and regulations thereunder) regulating or
otherwise affecting employee health and safety. SuperShuttle has not given or
agreed to give any money, gift or similar benefit (other than incidental gifts
of articles of nominal value) to any actual or potential customer, supplier,
governmental employee or any other person in a position to assist or hinder
SuperShuttle in connection with any actual or proposed transaction. SuperShuttle
holds all permits, licenses, certificates and other authorizations of foreign,
federal, state and local governmental agencies required for the conduct of its
business, including specifically the permits, licenses, certificates and other
authorizations described in Section 2.8 of the SuperShuttle Disclosure Schedule.
2.9 Absence of Undisclosed Liabilities. SuperShuttle has no obligations
or liabilities whether accrued, absolute, contingent, liquidated or otherwise
whether due or to become due regardless of when asserted, except:
(a) To the extent reflected or taken into account in its
September 30, 1997 financial statement and not
heretofore paid or discharged,
(b) To the extent specifically set forth in or
incorporated by reference in the SuperShuttle
Disclosure Schedules,
(c) Liabilities incurred in the ordinary course of
business consistent with past practice since the date
of the September 30, 1997 financial statement (none
of which relates to breach of contract, breach of
warranty, tort, infringement or violation of law, or
which arose out of any action, suit, claim,
governmental investigation or arbitration
proceeding),
(d) Normal accruals, reclassifications, and audit
adjustments which would be reflected on an audited
financial statement,
6
<PAGE> 12
(e) Liabilities incurred in the ordinary course of
business, and
(f) Liabilities which are not material in scope or
amount.
2.10 No Material Adverse Changes. Except as set forth in the
SuperShuttle Disclosure Schedule since December 31, 1997, there has not been any
material adverse change in the assets, financial condition or operating results
of SuperShuttle, taken as a whole.
2.11 Other Agreements. SuperShuttle has not entered or will enter into
any agreement with Tamarack Transportation, Inc., Preferred Transportation,
Inc., AAA Wheelchair Wagon Services, Inc., Wheelchair Ambulance of Hollywood,
Inc., Limousines of South Florida, Inc. or A1A Snowbird Leasing, Inc. (the
"Target Companies") or any shareholders of such Target Companies other than
share exchange agreements, merger agreements, registration rights agreements and
employment agreements. Such agreements contain terms no less favorable than
those set forth in this agreement, the registration rights agreement and the
employment agreements entered into by the Shareholders.
2.12 Disclosure. Neither this Agreement nor any of the schedules or
exhibits hereto contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading, and there is
no fact which has not been disclosed to Southern that materially affects
adversely or could reasonably be anticipated to materially affect adversely the
assets, financial condition or operating results, customer, employee or supplier
relations, business condition or prospects, or financing arrangements of
SuperShuttle.
2.13 Liens. SuperShuttle is not a party to any loan, indebtedness,
security agreement, loan agreement, guarantee or financing statement which shall
upon the Closing Date or thereafter subject the Transferred Assets (as defined
in Section 5.3) to a lien, pledge, charge or encumbrance.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SOUTHERN AND
THE SHAREHOLDERS
Southern and the Shareholders hereby represent and warrant to
SuperShuttle as of the date hereof, and again at the Effective Time (subject to
any changes permitted or contemplated hereby), each of the following, all of
which are made jointly and severally by Southern and the Shareholders who agree
to be bound to and liable for the representations and warranties set forth below
and all other obligations of Southern under this Agreement. Each of the
following representations and warranties are qualified to the extent set forth
in the disclosure schedule that has been delivered to SuperShuttle
simultaneously with the execution and delivery of this Agreement (the "Southern
Disclosure Schedule"). The Southern Disclosure Schedule describes exceptions to
each applicable representation below by section numbers corresponding to the
section number of the applicable qualified representation.
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<PAGE> 13
3.1 Organization and Qualification. Southern is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, and has the requisite corporate power and authority to own and operate
its properties and to carry on its business as now conducted in every
jurisdiction where the failure to do so would have a material adverse effect on
its business, properties or ability to conduct the business currently conducted
by it. The copies of the Articles of Incorporation and Bylaws of Southern
previously furnished to SuperShuttle are correct and complete and reflect all
amendments thereto.
3.2 Authority Relative to This Agreement. Southern has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Southern
and the consummation by Southern of the transactions contemplated hereby have
been duly authorized by Southern, and no other corporate proceedings on the part
of Southern are necessary to authorize this Agreement and such transactions
(other than the approval of the Shareholders). This Agreement has been duly
executed and delivered by Southern and, assuming the due authorization and
delivery thereof by SuperShuttle, constitutes a valid and binding obligation of
Southern, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or other
similar laws relating to the enforcement of creditors' rights generally and by
general principles of equity. Except as set forth in the Southern Disclosure
Schedule, Southern is not subject to, or obligated under, any provision of (a)
its Articles of Incorporation or Bylaws, (b) any material agreement, arrangement
or understanding, (c) any material license, franchise or permit, or (d) any law,
regulation, order, judgment or decree, which would be breached or violated, or
in respect of which a right of termination or acceleration would arise or any
encumbrance on any of its or its subsidiaries' assets would be created, by
Southern's execution, delivery and performance of this Agreement and the
consummation by it of the transactions contemplated hereby. No authorization,
consent or approval of, or filing with, any public body, court or authority is
necessary on the part of Southern for the consummation by Southern of the
transactions contemplated by this Agreement.
3.3 Capitalization. The authorized equity capitalization of Southern
consists of 500 shares of Common Stock. As of the date hereof, 75 shares of
Common Stock are issued and outstanding, all of which shares are validly issued,
fully paid and nonassessable. All of the issued and outstanding shares of Common
Stock of Southern are owned by the Shareholders. Except as set forth in Section
3.3 of the Southern Disclosure Schedule, there are no options, warrants,
conversion privileges or other rights, agreements, arrangements or commitments
obligating Southern to issue or sell any shares of capital stock or securities
or obligations of any kind convertible into or exchangeable for any shares of
capital stock thereof or of any other corporation, nor are there any stock
appreciation, phantom stock or similar rights outstanding based upon the book
value or any other attribute of Southern. No holders of outstanding shares of
Southern Common Stock are entitled to any preemptive or other similar rights.
There are no obligations, contingent or otherwise, of Southern to repurchase,
redeem or otherwise acquire any shares of Southern or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any entity other than guarantees of bank obligations of subsidiaries
8
<PAGE> 14
entered into in the ordinary course of business. Upon consummation of the
Exchange, SuperShuttle will own, directly or indirectly, the entire equity
interest in Southern, and there will be no options, warrants, conversion
privileges or other rights, agreements, arrangements or commitments obligating
Southern to issue or sell any shares of capital stock of Southern or any other
corporation.
3.4 Financial Statements. The consolidated financial statements of
Southern for the fiscal years ended December 31, 1996 and 1997, and for the
interim period ended February 28, 1998, (the "Southern Financial Statements")
have been delivered to SuperShuttle and were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved and present fairly in all material respects the
consolidated financial position, results of operations, and cash flows of
Southern as of the dates and for the periods indicated therein, subject, in the
case of unaudited interim statements, to normal year-end accounting adjustments
and the absence of complete footnote disclosure and as set forth on the Southern
Disclosure Schedules.
3.5 Subsidiaries. Except as set forth in the Southern Disclosure
Schedule, Southern does not have any Subsidiaries and does not otherwise own any
stock, partnership interest, joint venture interest, or any other security
issued by or equity interest in any other corporation, organization or entity.
3.6 Absence of Undisclosed Liabilities. Southern has no obligations or
liabilities (whether accrued, absolute, contingent, liquidated or otherwise,
whether due or to become due and regardless of when asserted), except:
(a) To the extent reflected or taken into account in its
December 31, 1997 financial statement and not
heretofore paid or discharged,
(b) To the extent specifically set forth in or
incorporated by reference in the Southern Disclosure
Schedules,
(c) Liabilities incurred in the ordinary course of
business consistent with past practice since the date
of the December 31, 1997 financial statement (none of
which relates to breach of contract, breach of
warranty, tort, infringement or violation of law, or
which arose out of any action, suit, claim,
governmental investigation or arbitration
proceeding),
(d) Normal accruals, reclassifications, and audit
adjustments which would be reflected on an audited
financial statement,
(e) Liabilities incurred in the ordinary course of
business, and
(f) Liabilities which are not material in scope or
amount.
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3.7 No Material Adverse Changes. Except as set forth in the Southern
Disclosure Schedule, since December 31, 1997, there has not been any material
adverse change in the assets, financial condition or operating results of
Southern, taken as a whole.
3.8 Absence of Certain Developments. Except as set forth in the
Southern Disclosure Schedule or except as contemplated in this Agreement, since
December 31, 1997, Southern has not:
(a) changed its accounting methods or practices (including any
change in depreciation or amortization policies or rates) or revalued
any of its assets;
(b) redeemed or purchased, directly or indirectly, any shares
of its capital stock, or declared or paid any dividends or
distributions with respect to any shares of its capital stock;
(c) issued or sold any equity securities of it, securities
convertible into or exchangeable for equity securities of it, warrants,
options or other rights to acquire equity securities of it, or bonds or
other securities of it;
(d) borrowed any amount under existing lines of credit or
otherwise or incurred or become subject to any indebtedness, except as
reasonably necessary for the ordinary operation of Southern's business
and in a manner and in amounts that are in keeping with the historical
practice of Southern;
(e) discharged or satisfied any lien or encumbrance or paid
any liability, other than current liabilities and related liens (or
current installments due on intermediate or long-term liabilities) paid
or satisfied in the ordinary course of business;
(f) mortgaged, pledged or subjected to any lien, charge or
other encumbrance, any assets of Southern with a fair market value in
excess of $25,000 in the aggregate, except in the ordinary course of
business or liens for current property taxes not yet due and payable;
(g) sold, assigned or transferred (including, without
limitation, transfers to any employees, shareholders or affiliates of
Southern) any tangible assets, except in the ordinary course of
business;
(h) sold, assigned or transferred (including, without
limitation, transfers to any employees, shareholders or affiliates of
Southern) any patents, trademarks, trade names, copyrights, trade
secrets or other intangible assets, or disclosed any proprietary or
confidential information, to any person other than SuperShuttle, except
in the ordinary course of business;
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(i) materially changed the pricing or royalties set or charged
by Southern to its customers or licensees or agreed to any material
change in the pricing or royalties set or charged by persons who have
licensed Intellectual Property Rights (as described in Section 3.15) to
Southern;
(j) canceled, waived or compromised any right, claim or debt,
other than the write-off or compromise of any account receivable in the
ordinary course of business and consistent with past practice;
(k) suffered any material theft, damage, destruction or loss
of or to any property or properties owned or used by it, whether or not
covered by insurance;
(l) increased the annualized level of compensation of or
granted any extraordinary bonuses, benefits or other forms of direct or
indirect compensation to any employee, officer, director or consultant,
or terminated, amended or otherwise modified any plans for the benefit
of employees, except in the ordinary course of business and consistent
with historical adjustments to such compensation and benefits;
(m) made any capital expenditures or commitments therefor,
except for motor vehicles, that aggregate in excess of $25,000;
(n) acquire or make any commitments to acquire any motor
vehicles without the prior written approval of SuperShuttle;
(o) made any loans or advances to, or guarantees for the
benefit of, any persons (other than advances to sales personnel in the
ordinary course of business); or
(p) except in the ordinary course of business, entered into
any contract, written or oral, that involves consideration or
performance by Southern of a value exceeding $25,000 or a term
exceeding twelve (12) months.
3.9 Title to and Condition of Properties.
(a) Southern owns good and marketable title to the properties
and assets reflected on the December 31, 1997 Southern Balance Sheet or
acquired since the date thereof, free and clear of all liens and
encumbrances, except for (A) liens for current taxes not yet due and
payable, (B) liens described in Section 3.6 of the Southern Disclosure
Schedule, (C) the properties subject to the leases set forth in Section
3.9(b) of the Southern Disclosure Schedule, and (D) assets disposed of
since December 31, 1997, in the ordinary course of business.
(b) (i) At the Effective Time, Southern will not own any real
estate; (ii) the properties subject to the real property leases
described in Section 3.9(b) of the Southern Disclosure Schedule
constitute all of the real estate used or occupied by Southern (the
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"Southern Real Estate"), and (iii) Southern Real Estate has access,
sufficient for the conduct of Southern's business, to public roads and
to all utilities, including electricity, sanitary and storm sewer,
potable water, natural gas and other utilities, used in the operations
of Southern.
(c) The real property leases described in Section 3.9(b) of
the Southern Disclosure Schedule are in full force and effect, and
Southern has a valid and existing leasehold interest under each such
lease for the term set forth therein. Southern has delivered to
SuperShuttle complete and accurate copies of each of the leases and
none of such leases has been modified in any respect, except to the
extent that such modifications are disclosed by the copies delivered to
SuperShuttle. Southern is not in default, and to the knowledge of
Southern no circumstances exist which could result in such default,
under any of such leases.
(d) A complete list of all motor vehicles and computer
equipment used in the business of Southern is included as Section
3.9(d) of the Southern Disclosure Schedule. Southern owns or leases
under valid leases, all buildings, machinery, equipment and other
tangible assets necessary for the conduct of its business. Southern has
delivered to SuperShuttle complete and accurate copies of all equipment
leases and such leases are listed in the Southern Disclosure Schedule.
None of such equipment leases has been modified in any respect, except
to the extent that such modifications are disclosed by the copies
delivered to SuperShuttle. Southern is not in default, and to the
knowledge of Southern no circumstances exist which could result in such
default, under any of such equipment leases.
(e) To the knowledge of Southern, Southern is not in any
material respect in violation of any applicable zoning ordinance or
other law, regulation or requirement relating to the operation of any
properties used in the operation of its business, and Southern has not
received any notice of any such violation, or of the existence of any
condemnation proceeding with respect to any properties owned or leased
by Southern.
3.10 Environmental Matters. Except as set forth in the Southern
Disclosure Schedule, Southern (i) has obtained all applicable permits, licenses
and other authorizations (a list of which is set forth in the Southern
Disclosure Schedule) which are required under federal, state or local laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by Southern; (ii) is in material compliance with all terms and conditions of any
required permits, licenses and authorizations, and to its knowledge with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in such laws or in
any regulation, code, plan, order, decree, judgment, notice or demand letter
issued, entered, promulgated or approved thereunder; (iii) is not aware of nor
has it received notice of any event,
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condition, circumstance, activity, practice, incident, action or plan which is
reasonably likely to interfere with or prevent continued compliance with or
which would give rise to any common law or statutory liability based on or
resulting from Southern's manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission, discharge, or
release into the environment, of any pollutant, contaminant, or hazardous or
toxic material or waste; (iv) to its knowledge has taken all actions necessary
under applicable requirements of such federal, state or local laws, rules or
regulations to register any products or materials required to be registered by
Southern thereunder; and (v) has neither disposed of nor handled any hazardous
substance.
3.11 Accounts Receivable. Southern's notes and accounts receivable
recorded on the February 28, 1998 Southern Balance Sheet and those arising since
the date thereof are to its knowledge valid and collectible in accordance with
their terms, subject to no valid counterclaims or setoffs, other than to the
extent of the reserves set forth on the books and records of Southern or as
disclosed in the Southern Disclosure Schedule. All such accounts receivable of
Southern arose in the ordinary course of business and are carried at values
determined in accordance with generally accepted accounting principles
consistently applied.
3.12 Tax Matters. Except as set forth in the Southern Disclosure
Schedule, Southern has filed all federal, foreign, state, county and local
income, excise, property, sales and other tax returns which are required to be
filed by it for all periods prior to the Effective Time, and all such returns
are true and correct; all taxes due and payable by Southern (whether or not
shown on any tax return) for all periods prior to December 31, 1997 have been
paid; Southern's reserves and provisions for taxes on the balance sheets
included in the Southern Financial Statements are sufficient for all accrued and
unpaid taxes as of the dates of such balance sheets; Southern has paid all taxes
due and payable by it or which it is obligated to withhold from amounts owing to
any employee, creditor, or third party; Southern has not waived any statute of
limitations in respect of taxes or agreed to any extension of time with respect
to a tax assessment or deficiency; and Southern has not received notice of any
unresolved questions or claims concerning the tax liability of Southern.
Southern has not filed any consent agreement under Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
"subsection (f) asset" as defined in Section 341(f)(4) of the Code) owned by
Southern. Southern (i) is not and has not been a member of an affiliated group
filing a consolidated federal income tax return (other than an affiliated group
the common parent of which was Southern) and (ii) does not have any liability
for taxes of any person (other than Southern) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor by contract or otherwise. Southern is not a party to a
tax sharing or allocation agreement nor does Southern owe any amount under any
such agreement. Southern is not obligated to make any payments and is not a
party to any agreement that under certain circumstances could obligate it to
make any payments that, either in whole or in part, would be nondeductible under
Sections 280G or 162 of the Code. Southern has not been a "United States real
property holding corporation" (within the meaning of Section 897(c)(2) of the
Code) at any time within the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
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3.13 Contracts and Commitments.
(a) Except as set forth in the Southern Disclosure Schedule,
Southern is not a party to any: (i) collective bargaining agreement or
contract with any labor union; (ii) bonus, pension, profit sharing,
retirement, or other form of deferred compensation plan; (iii) medical
insurance or similar plan or practice, whether formal or informal; (iv)
contract for the employment of any officer, employee, or other person
on a full-time or consulting basis or relative to severance pay or
change-in-control benefits for any such person; (v) agreement or
indenture relating to the borrowing of money in excess of $25,000 or to
mortgaging, pledging or otherwise placing a lien on any assets of
Southern which has a fair market value in excess of $25,000 in the
aggregate; (vi) guaranty of any obligation for borrowed money or
otherwise, other than endorsements made for collection; (vii) lease or
agreement under which it is lessor of, or permits any third party to
hold or operate, any property, real or personal; (viii) contract or
group of related contracts with the same party for the purchase of
products or services, under which the undelivered balance of such
products and services has a purchase price in excess of $25,000; (ix)
contract or group of related contracts with the same party for the sale
of products or services under which the undelivered balance of such
products or services has a sales price in excess of $25,000; (x) other
contract or group of related contracts with the same party continuing
over a period of more than twelve (12) months from the date or dates
thereof or involving more than $25,000; (xi) material contract relating
to the distribution of Southern's products; (xii) franchise agreement;
or (xiii) other agreement material to Southern's business or not
entered into in the ordinary course of business.
(b) Southern has furnished or otherwise made available to
SuperShuttle a true and correct copy of each written contract or
commitment, and a written description of each oral contract or
commitment, referred to in this Section 3.13, together with all
amendments, waivers or other changes thereto.
(c) Except as specifically disclosed in the Southern
Disclosure Schedule: (i) Southern's relations with customers and
suppliers are good; (ii) since the date of the December 31, 1997
Southern Balance Sheet, no significant customer or supplier has
indicated that it will stop or materially decrease the rate of business
done with Southern, except for changes in the ordinary course of
Southern's business; (iii) Southern has performed all material
obligations required to be performed by it in connection with the
contracts or commitments described herein and Southern has not been
advised of or received any claim of default under any such contract or
commitment; (iv) Southern has no present expectation or intention of
not fully performing any obligation pursuant to any contract or
commitment; and (v) Southern has no knowledge of any breach by any
other party to any contract or commitment.
3.14 Restrictions on Business Activities. Except as set forth in the
Southern Disclosure Schedule, there is no agreement (noncompete or otherwise),
commitment, judgment, injunction, order or decree to which Southern is a party
or otherwise binding on Southern which has or
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reasonably could be expected to have the effect of prohibiting or impairing any
business practice of Southern.
3.15 Intellectual Property Rights.
(a) The Southern Disclosure Schedule lists all of Southern's
federal, state and foreign registrations of trademarks, service marks
and other marks, trade names or other trade rights, and all pending
applications for any such registrations, all other trademarks and other
marks, trade names and other trade rights, or in which Southern has any
interest whatsoever, and all other trade secrets and other intellectual
property rights, whether or not registered, created or used by or on
behalf of Southern, in each case relating to its business
(collectively, "Intellectual Property Rights"). The Intellectual
Property Rights listed in the Southern Disclosure Schedule are all
those used by Southern in connection with its business.
(b) Except as set forth on the Southern Disclosure Schedule,
Southern has full legal right, title and interest to the Intellectual
Property and has not granted any rights in or to the same to any third
party. To the knowledge Southern and except as set forth on the
Southern Disclosure Schedule, conduct of the business as presently
conducted and the conduct, use and exploitation of the Intellectual
Property does not infringe or misappropriate any rights held or
asserted by any person or entity and no person or entity is infringing
on the Intellectual Property. Except as set forth on the Southern
Disclosure Schedule, no payments are required for the continued use of
the Intellectual Property. None of the Intellectual Property has ever
been declared invalid or unenforceable or is the subject of any pending
or to the knowledge of Southern threatened action for opposition,
cancellation, declaration, infringement or invalidity, unenforceability
or misappropriation or like claim, action or proceeding.
3.16 Litigation. Except as set forth in the Southern Disclosure
Schedule, there are no actions, suits, proceedings, orders or investigations
pending or, to the knowledge of Southern, threatened against Southern, at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to Southern, would result in a material
adverse effect to Southern's operations and financial condition and there is no
basis known to Southern for any of the foregoing. Except as set forth in the
Southern Disclosure Schedule, Southern has not received any opinion or legal
advice to the effect that Southern is exposed from a legal standpoint to any
material liability. No governmental entity has at any time challenged or
questioned the legal right of Southern to offer or provide any of its services
in the present manner or style thereof.
3.17 Brokers' Fees. Southern is not liable for any brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement.
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3.18 Employment. Except as set forth in the Southern Disclosure
Schedule, to the knowledge of Southern: (i) no key executive employee of
Southern and no group of Southern's other employees has any plans to terminate
his, her or its employment; (ii) Southern has no material labor relations
problems pending; and (iii) its labor relations are satisfactory in all material
respects.
3.19 Employee Benefit Plans. Southern has no employee benefit plans.
3.20 Insurance. The Southern Disclosure Schedule lists each insurance
policy and fidelity bond currently maintained by Southern with respect to its
properties, assets, employees and officers and directors and sets forth the date
of expiration of each insurance policy. All insurance policies listed as
currently maintained are in full force and effect and Southern is not in default
with respect to its obligations under any of such insurance policies. All
premiums have been paid and there is no retroactive premium adjustment
obligation of any kind or character. There is no claim of Southern pending under
any of such policies or bonds as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or bonds. Southern has no
knowledge of any threatened termination of, or material premium increase with
respect to, any such policies.
3.21 Insider Transactions. Except as set forth herein or in the
Southern Disclosure Schedule, no officer, director or shareholder of Southern or
any member of the immediate family of any such officer, director or shareholder,
or any entity in which any of such persons owns any beneficial interest (other
than a publicly-held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 5% of the stock of
which is beneficially owned by any of such persons) (collectively "Insiders"),
has any agreement with Southern or any interest in any property, real, personal
or mixed, tangible or intangible, used in or pertaining to the business of
Southern. For purposes of the preceding sentence, the members of the immediate
family of an officer, director or shareholder shall consist of the spouse,
parents, children, siblings, mothers- and fathers-in-law, sons- and
daughters-in-law, and brothers- and sisters-in-law of such officer, director or
shareholder.
3.22 Compliance With Laws; Permits; Certain Operations. Southern and
its officers, directors, and to its knowledge agents and employees have complied
in all material respects with all applicable laws and regulations of foreign,
federal, state and local governments and all agencies thereof which affect the
business or any owned or leased properties of Southern and to which Southern may
be subject, and no claims have been filed against Southern alleging a violation
of any such law or regulation, except as set forth in the Southern Disclosure
Schedule. Without limiting the generality of the foregoing, Southern has not
violated, or received a notice or charge asserting any violation of, the
Occupational Safety and Health Act of 1970, or any other state or federal acts
(including rules and regulations thereunder) regulating or otherwise affecting
employee health and safety. Southern has not given or agreed to give any money,
gift or similar benefit (other than incidental gifts of articles of nominal
value) to any actual or potential customer, supplier, governmental employee or
any other person in a position to assist or hinder Southern in connection with
any actual or proposed transaction. Southern holds all permits, licenses,
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certificates and other authorizations of foreign, federal, state and local
governmental agencies required for the conduct of its business, including
specifically the permits, licenses, certificates and other authorizations
described in Section 3.22 of the Southern Disclosure Schedule.
3.23 Disclosure. Neither this Agreement nor any of the schedules or
exhibits hereto contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.
3.24 Minute Books. The minute books of Southern shall be made available
to counsel for SuperShuttle and those delivered shall be the only minute books
of Southern and shall contain an accurate summary of all meetings of directors
(or committees thereof) and shareholders or actions by written consent since the
time of incorporation of Southern.
3.25 Compensation. Any amounts paid, if any, as compensation or
otherwise to the Shareholders following the Effective Time shall equal the fair
value for services provided by the Shareholders to Southern and/or to
SuperShuttle.
3.26 Medicaid and Other Third Party Payor Matters.
(a) To the best of Southern's knowledge, Southern has met and
continues to meet without material exception, all State and Federal
laws and regulations governing participation in the Third Party Payor
programs and plans, all of the terms and conditions set forth in the
Third Party Payor agreements and all of the terms and conditions for
participation in the health care plans described in the Third Party
Payor agreements. In addition, Southern has not received any notice
from any governmental or public body, agency or instrumentality
alleging that the operation of Southern is not in accordance with
regulations affecting its certifications or participation in any Third
Party Payor program.
(b) Except as otherwise set forth in the Southern Disclosure
Schedules, there is no claim, action, temporary restraining order,
injunction, suit, proceeding, inquiry or investigation, at law or in
equity, before or by an internal board or body of Southern, any
external board, body or entity chosen, retained or hired by Southern,
any judicial or administrative court, governmental agency, public board
or body, pending, contemplated or, to the best of Southern's knowledge,
threatened against Southern, nor is there any basis therefore wherein
an unfavorable decision, ruling or finding would in any way adversely
affect Southern's compensation and/or reimbursement under the Third
Party Payor agreements.
ARTICLE 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each of the Shareholders hereby represents and warrants to SuperShuttle
as of the date hereof, and again at the Effective Time, with respect to himself
or herself each of the following:
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4.1 Organization, Standing and Authority of Shareholders. The
Shareholder has all requisite power and authority to execute and deliver this
Agreement, to perform his or her obligations hereunder and to consummate the
transactions contemplated hereby.
4.2 Execution and Delivery; No Conflicts.
(a) This Agreement has been duly executed and delivered by
Shareholder and the agreements of Shareholder contained herein
constitute the valid and binding obligations of the Shareholder,
enforceable against Shareholder in accordance with their terms, except
as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other laws affecting generally the enforcement of
creditors' rights.
(b) The execution, delivery and performance of this Agreement
by Shareholder and the consummation of the transactions contemplated
hereby (i) have been duly and validly authorized by all necessary
action on the part of the Shareholder; and (ii) are not prohibited by,
do not violate any provision of, and will not result in the breach of,
or accelerate or permit the acceleration of the performance required by
the terms of any applicable law, rule, regulation, judgment, decree,
order or other requirement of the United States or any state of the
United States, or any court, authority, department, commission, board,
bureau, agency or instrumentality of either thereof, in a manner which
would have a material adverse affect on the ability of the Shareholder
to enter into and consummate this Agreement, or any material contract,
indenture, agreement or commitment to which Shareholder is a party or
is bound in a manner which would have a material adverse affect on
Shareholder.
4.3 Consents and Approvals. The execution, delivery and performance by
Shareholder of this Agreement and the consummation by Shareholder of the
transactions contemplated hereby do not require Shareholder to obtain any
consent, approval or action of, or make any filing with or give any notice to,
any corporation, person or firm or any public, governmental or judicial
authority except: (a) such as have been duly obtained or made, as the case may
be, and are in full force and effect on the date hereof; and (b) those which the
failure to obtain would have no material adverse affect on the transactions
contemplated hereby.
4.4 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Shareholder directly
with the other parties hereto, without the intervention of any person on behalf
of Shareholder in such manner as to give rise to any claim by any person against
the Company, Southern or Shareholders for a finder's fee, brokerage commission
or similar payment.
4.5 Securities Laws Compliance. The securities to be acquired by
Shareholders under the terms of this Agreement will be acquired for
Shareholder's own account for the purpose of investment and not with the present
intention of public resale or public distribution of all or any part of the
securities. Each Shareholder agrees that he/she will refrain from transferring
or otherwise disposing of any of the securities, or any interest therein, in
such manner as to violate
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the Securities Act of 1933 (the "Securities Act") or of any applicable state
securities law regulating the disposition thereof. Shareholder agrees that the
certificates representing the securities shall bear legends to the effect that
such securities have not been registered under the Securities Act or any
applicable state securities laws and that no interest therein may be transferred
or otherwise disposed of in violation of the provisions thereof or of the rules
and regulations issued thereunder.
4.6 Shareholder Experience and Investment Representations.
(a) The Shareholder is able to bear the economic risk of an
investment in the securities acquired by it pursuant to this Agreement.
(b) The Shareholder is an experienced and sophisticated
investor in the shuttle transportation business and has such knowledge
and experience in such matters that it is capable of evaluating the
risks and merits of acquiring the SuperShuttle securities. The
Shareholder has not been formed or organized for the specific purpose
of acquiring the securities. The Shareholder has had, during the course
of this transaction and prior to its acquisition of the SuperShuttle
securities, the opportunity to ask questions of, and receive answers
from, SuperShuttle and its management concerning SuperShuttle and the
terms and conditions of this Agreement. The Shareholder hereby
acknowledges that it or its representatives has received all such
information as it considers necessary for evaluating the risks and
merits of acquiring the securities and for verifying the accuracy of
any information furnished to it or to which it had access.
(c) The Shareholder has had the opportunity to consult with
financial advisers and counsel of its own choosing in making an
informed decision with respect to the Exchange consideration and has
consulted with counsel of its own choosing in making an informed
decision with respect to the terms of this Agreement.
(d) The Shareholder is an "accredited investor" as defined in
and for purposes of Rule 501 and Regulation D promulgated by the
Securities and Exchange Commission ("SEC") under the Securities Act.
ARTICLE 5
CONDUCT PENDING AND SUBSEQUENT TO THE EXCHANGE
5.1 Conduct of Business Pending the Exchange. Southern covenants and
agrees that, prior to the Effective Time, unless SuperShuttle shall otherwise
agree in writing or as otherwise expressly contemplated or permitted by this
Agreement:
(a) Southern (i) shall conduct its business only in the
ordinary course, on an arm's length basis and in accordance with all
applicable laws, rules and regulations and past custom and practice;
(ii) shall maintain its facilities in good operating condition,
ordinary wear and tear excepted; and (iii) shall use its reasonable
best efforts to preserve intact its business organization and goodwill,
keep available the services of its officers and
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employees as a group and maintain satisfactory relationships with
suppliers, distributors, customers and others having business
relationships with it;
(b) Southern (i) shall confer on a regular basis and upon
demand with representatives of SuperShuttle and report operational
matters and the general status of ongoing operations; (ii) shall
deliver to SuperShuttle monthly financial reports including balance
sheets and income statements prepared in accordance with generally
accepted accounting principles by the 20th day of the following month
during the period from March 31, 1998 until the expiration of the right
of Recision (as defined in Section 5.2) and shall deliver statements of
cash flows by July 30, 1998 for the first quarter; (iii) shall notify
SuperShuttle of any emergency or other change in the normal course of
its business or in the operation of its properties and of any
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated); and (iv)
shall not take any action which would render, or which reasonably may
be expected to render, any representation or warranty made by it in
this Agreement untrue at, or at any time prior to, the Effective Time;
(c) Southern shall not, directly or indirectly, do or permit
to occur any of the following: (i) amend or propose to amend its
Articles of Incorporation or Bylaws; (ii) issue, sell, pledge, dispose
of or encumber (A) any additional shares of, or any options, warrants,
conversion privileges or rights of any kind to acquire any shares of,
any of its capital stock (other than pursuant to the exercise of
previously granted options) or (B) any of its assets, except in the
ordinary course of business consistent with past practices; (iii)
split, combine or reclassify any of its outstanding shares, or declare,
set aside or pay any dividend or other distribution payable in cash,
stock, property or otherwise with respect to any shares of its capital
stock; (iv) redeem, purchase or acquire or offer to acquire any shares
of its capital stock; (v) acquire (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any corporation,
partnership, joint venture or other business organization or division
or material assets thereof or any interest therein; (vi) incur any
indebtedness for borrowed money or issue any debt securities (other
than in the ordinary course of business and in amounts consistent with
past practices); (vii) make any loans (except for advances to sales
personnel in the ordinary course of business and consistent with past
practice); (viii) enter into any Insider transactions; or (ix) enter
into or propose to enter into, or modify or propose to modify, any
agreement, arrangement or understanding with respect to any of the
matters set forth in this Section 5.1(c);
(d) Southern shall not, directly or indirectly, enter into or
modify any contract, agreement or understanding, written or oral, that
involves consideration or performance of Southern, as the case may be,
of a value exceeding $25,000 or a term exceeding twelve months, except
in the ordinary course of business and consistent with past practice;
(e) Southern shall not enter into or modify any employment,
severance or similar agreements or arrangements with, or grant any
bonuses, salary increases, or
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severance or termination pay to, any officers, directors, employees or
consultants other than in the ordinary course of business and
consistent with past practice;
(f) Southern shall not adopt or amend in any material respect
any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other benefit plan,
trust, fund or group arrangement for the benefit or welfare of any
officers, directors or employees;
(g) Southern shall not allow its current insurance policies to
be canceled or terminated or any of the coverage thereunder to lapse,
unless simultaneous with such termination, cancellation or lapse,
replacement policies providing coverage equal to or greater than the
coverage under the canceled, terminated or lapsed policies for
substantially similar premiums are in full force and effect; and
(h) Southern shall promptly notify SuperShuttle if Southern
learns of any dispute between Southern and any governmental or
regulatory body which, if adversely determined, would have a material
adverse effect, (ii) any material change in the manner, method or
procedure of Medicaid reimbursement in the State of Florida, or notice
from any governmental or public body, agency or instrumentality that
Southern is proposed to be excluded, suspended or debarred from any
governmental health care program advising that Southern is not in
compliance with statutes or regulations affecting its operations,
including statutes and regulations under the Medicaid program.
5.2 Conduct Subsequent to the Exchange.
(a) The Share Exchange shall be rescinded automatically
without further notice (the "Recision") upon the occurrence of any of
the following events: (i) if SuperShuttle does not file a registration
statement for an initial public offering on Form S-1 with the SEC by
May 31, 1998 to register for sale shares of SuperShuttle Common Stock;
(ii) if the SEC does not declare such registration statement effective
by July 31, 1998, or (iii) if the underwritten initial registration
statement for an initial public offering on a firm commitment basis
does not close by August 10, 1998, providing a per share offering price
to the public of at least $6.50.
(b) As security for each party's rights of recision hereunder,
the parties designate Akerman, Senterfitt & Eidson, P.A. as escrow
agent (the "Escrow Agent") to hold: (i) the stock certificates in
Southern formerly held by the Shareholders to be held for the benefit
of SuperShuttle; and (ii) the stock certificates in SuperShuttle issued
hereunder for the benefit of the Shareholders as their respective
interests may appear in accordance with Schedule 1. If this Agreement
is rescinded in accordance with Section 5.2(a), the Escrow Agent shall
immediately, and without any further action by any party, deliver (a)
to SuperShuttle the stock certificates of SuperShuttle, which
certificates shall be immediately canceled, and (b) to each Shareholder
the stock certificates of Southern delivered by each Shareholder to the
Escrow Agent. During the period in which the stock
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certificates as held in escrow, the Escrow Agent shall vote the
SuperShuttle Common Stock as directed by the Shareholders and shall
vote the Southern Common Stock as directed by SuperShuttle.
(c) If this Agreement is rescinded, the parties' rights and
obligations shall cease as if this Agreement never existed, except for
the indemnification provisions set forth in Section 5.2(d) below.
SuperShuttle, Southern and each Shareholder upon recision agrees to
treat this transaction as rescinded effective as of the Effective Time
and file all tax returns, reports or other statements consistent with
such agreement.
(d) In the event that the Share Exchange is rescinded,
SuperShuttle shall indemnify and hold the Shareholders and Southern
harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages, including, without limitation,
related counsel and paralegal fees and expenses incurred or suffered by
the Shareholders or Southern arising out of or resulting from a breach
by Super Shuttle of any covenant or agreement as set forth in Section
5.3 and a breach of the representation set forth in Section 2.13.
5.3 SuperShuttle Recision Right. SuperShuttle shall have the option to
rescind the Share Exchange if Southern has not received the written approval of
the Aviation Department for Dade County of the changes in ownership of Southern
to Supershuttle by the effective date of SuperShuttle's registration statement
on Form S-1.
5.4 Conduct by SuperShuttle. During the time from the Closing Date to
such time as the Share Exchange is rescinded or until the Recision rights expire
(the "Option Period"), SuperShuttle shall not take any action which could affect
the Recision rights and affect the ability of the Shareholders to then operate
Southern as if the exchange never occurred, including, but not limited to:
(a) Cancellation of any material contracts;
(b) Combining any operations, duties or tasks of Southern
with and into any operations of SuperShuttle or its
subsidiaries;
(c) Combining any employee benefit plans with the plans
of SuperShuttle;
(d) Pledging, encumbering or incurring any liens upon the
assets, properties, business or the shares of
Southern (the "Transferred Assets");
(e) Declaring any dividends in property or cash;
(f) Taking any of the actions contemplated by Section
5.1;
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(g) Using or allowing the use of the Transferred Assets
to satisfy any judgments or claims.
In addition, during the Option Period, the board of directors of Southern will
be comprised of three members: Mark Levitt, Karen N. Caputo and a designee of
SuperShuttle and Mark Levitt shall remain as President. If the Share Exchange is
rescinded, the SuperShuttle designee shall immediately resign from the board of
directors of Southern. Upon the expiration of the Recision rights, the board of
directors of Southern will be comprised of: R. Brian Wier, Thomas C. LaVoy and a
designee of the Shareholders.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Expenses. Each of SuperShuttle and Southern shall bear their own
legal and accounting fees and other expenses relating to this transaction. In
addition, Southern will bear the expenses associated with the conduct of the
required accounting audit of its books and records relating to this transaction.
6.2 No Negotiations. Until March 31, 1998, or such later date as the
parties may mutually agree, Southern and the Shareholders agree that neither
they nor Southern's directors, officers, employees or agents (i) shall solicit,
negotiate or accept any offers for the sale of Southern or any substantial
portion thereof (whether by merger or sale of stock or assets or otherwise) or
provide any non-public information with respect thereto, or (ii) shall solicit,
negotiate, or accept any offers for the acquisition of any material business.
Southern shall promptly notify SuperShuttle if it (or to its knowledge any of
the other enumerated persons or any Shareholder) is approached by any person
interested in acquiring the assets or capital stock of Southern.
6.3 Notification of Certain Matters. SuperShuttle and Southern shall
give prompt notice to each other of (i) the occurrence or failure to occur of
any event, which occurrence or failure would be likely to cause any
representation or warranty on its part contained in this Agreement to be untrue
or inaccurate at, or at any time prior to, the Effective Time, and (ii) any
material failure of such party, or any officer, director, shareholder, employee
or agent thereof, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder.
6.4 Access to Information; Confidentiality.
(a) Until March 31, 1998, or the Effective Time each of
SuperShuttle and Southern shall have the opportunity to make a complete
review of the books, records, business and affairs of Southern or
SuperShuttle, as applicable. Such review may be conducted at any and
all reasonable times by such persons as SuperShuttle or Southern
designates. To facilitate such review, the parties shall provide to the
other party and its agents complete access to all of its records and
documents, shall provide the other party
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with personal, bank and professional references, and shall use
reasonable efforts to make available for consultation customers,
employees, suppliers and distribution channels.
(b) Each of SuperShuttle and Southern agrees that all
non-public information provided to the other enumerated parties will be
treated as confidential, and if this Agreement is terminated, will
return to such other parties all confidential documents (and all copies
thereof) in its possession, or will certify to the other parties that
all such documents not returned have been destroyed. Further,
regardless of whether this Agreement is terminated, each party shall
continue to hold all confidential information of the other in strictest
confidence in accordance with the Letter of Intent entered into by
SuperShuttle and Southern on February 25, 1998.
6.5 Consents; Approvals. SuperShuttle and Southern shall each use their
reasonable best efforts to obtain all consents, waivers, approvals,
authorizations or orders, and each such party shall make all filings required in
connection with the authorization, execution and delivery of this Agreement by
such party and the consummation by them of the transactions contemplated hereby.
Each of SuperShuttle and Southern shall furnish all information required to be
included for any application or filing to be made pursuant to the rules and
regulations of any applicable governmental body in connection with the
transactions contemplated by this Agreement.
6.6 Supplements to Disclosure Schedules. From time to time prior to the
Effective Time, SuperShuttle and Southern will each promptly supplement or amend
their respective Disclosure Schedules with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in any such Disclosure Schedule
or which is necessary to correct any information in any such Disclosure Schedule
which has been rendered inaccurate thereby. No supplement or amendment to any
such Disclosure Schedule shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Sections 7.2 or 7.3 of this
Agreement, as the case may be, except as otherwise provided in Sections 7.2(a)
and 7.3(a).
6.7 Non-Solicitation of Employees. For a period of one year from the
date hereof, no party shall solicit, negotiate with or hire any employee of the
other party.
6.8 Election of Directors. SuperShuttle shall promptly after the date
hereof take all action necessary in accordance with Delaware Law and its
Certificate of Incorporation and Bylaws to (i) increase, effective as of the
Effective Time, the number of directors serving on the SuperShuttle Board of
Directors to accommodate the election of one (1) designee of Southern
(designated collectively with AAA Wheelchair Wagon Service, Inc. and Limousines
of South Florida, Inc.); (ii) elect, effective as of the Effective Time, that
one designee to SuperShuttle's Board of Directors; and (iii) appoint such
designee to Supershuttle's "pricing committee" of the Board of Directors.
6.9 Confidential Information and Covenant Not To Compete. Each of the
Shareholders hereby covenants and agrees as follows:
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(a) at any time following execution of this Agreement and
consummation of the Exchange transactions, unless the Share Exchange
Agreement is rescinded the Shareholder shall not use or disclose,
directly or indirectly, for any reason whatsoever or in any way any
confidential information or trade secrets of Southern or SuperShuttle,
including by way of example, names or descriptions of customers,
financial statements, product or service pricing or other information,
contract proposals and bidding information, and any and other
information of a proprietary or confidential character;
(b) that until the later of three (3) years following the
consummation of the Exchange transactions or termination of the
employment agreement referenced in Section 7.1(d), the Shareholder
shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer,
director or in any other capacity whatsoever, engage or participate in
any businesses in competition in any manner whatsoever with the
business of Southern, SuperShuttle or any affiliate of either of them
as such business is presently conducted (the "Business") in either
Dade, Palm Beach, Broward and Orange Counties, Florida (the "Applicable
Counties"). Not limiting the generality of the foregoing, the business
of Southern and SuperShuttle shall be deemed to consist of the
transportation, over land, of passengers for hire, including, by way of
example, transportation to and from airports, ports or stations of
embarkation for travel. In addition, until the expiration of five years
following the consummation of the Exchange transactions the
Shareholder, shall not enter into any agreement with a party currently
doing business with Southern, Super Shuttle or any affiliates of either
of them for the provision of services substantially similar to those
provided currently. Notwithstanding the foregoing the parties
acknowledge that Robert Siedlecki currently holds certain interests in
the taxi cab business, and such current interests and future expansion
of such business shall not be a violation of Subsections 6.9(b) and
(c).
(c) from and after the date of this Agreement, the Shareholder
shall not solicit or negotiate any contract or agreement that
constitutes or would constitute engaging in competition with the
Business of Southern or SuperShuttle in the Applicable Counties;
(d) each of the Shareholders by execution of this Agreement
assigns to Southern any and all rights and interests in the business
concept employed by Southern to the extent that they have any interest
therein, and in any name under which such businesses may have been
conducted, and agree not to undertake to conduct business employing any
such name or business concept at any place at which SuperShuttle or any
of its affiliates conduct business.
In the event that the Share Exchange Agreement is rescinded, this Section 6.9
shall be void and of no further effect and any employment agreement between
Southern and a Shareholder in effect shall be terminated and the non-competition
provisions hereof shall immediately terminate.
The Shareholders hereby specifically acknowledge and agree that the
temporal, geographical and other restrictions contained in this Section 6.9 are
reasonable and necessary to
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protect the business and prospects of Southern and SuperShuttle and that the
enforcement of the provisions of this Section 6.9 will not work an undue
hardship on the Shareholders. Shareholders further agree that in the event that
either the temporal, geographical or any other restrictions, or a portion
thereof, set forth in this Section 6.9 is determined to be overly restrictive
and nonenforceable, the covenants set forth shall be reduced and modified to
those which are reasonable and enforceable under the circumstances to the
fullest extent permitted under applicable law in the judgment of the applicable
court. The Shareholders acknowledge and agree that SuperShuttle does not have an
adequate remedy at law for the breach or threatened breach of the covenants
contained in this Section 6.9 and the Shareholders therefore specifically agree
that SuperShuttle may, in addition to any other remedies which may be available
hereunder or as a matter of law or in equity, file a suit in equity to enjoin
the Shareholder from the breach or threatened breach.
If the provisions of this Section 6.9 are held to be invalid or
unenforceable as against public policy, the remaining provisions of this
Agreement shall not be affected thereby.
6.10 Collateral and/or Guarantees for Certain Southern Loans. As soon
as practical after the expiration of the Recision rights, SuperShuttle shall
take such steps to replace (i) the personal guarantees of the Shareholders on
certain Southern loans and (ii) the cash collateral pledged by certain
Shareholders to secure certain bonds and letters of credit established on behalf
of Southern. Notwithstanding the foregoing, Southern may at its option, replace
such personal guaranties and cash collateral with such bonds as are acceptable
to the lender.
6.11 Shareholder Loans. The Shareholder loans reflected on the books of
Southern, which are listed on Schedule 6.11 hereto, shall be forgiven by
Southern.
6.12 Tax Treatment. The parties hereto will use their respective best
efforts to cause the Exchange to be a tax free reorganization under Section
368(a)(1)(B) of the Code and do not intend to take any action after the
Effective Date to cause the Exchange to lose its tax free status. All parties
hereto agree to file the Share Exchange Agreement with its respective Federal
Income Tax returns in the year in which the Exchange is effective and to comply
with the reporting requirements. The parties shall take no action with respect
to the Share Exchange to jeopardize such tax free status.
ARTICLE 7
CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Exchange. The
respective obligations of each party to effect the Exchange shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) this Agreement and the Exchange with respect to Southern,
and the issuance of the SuperShuttle Common Stock, shall have been
approved and/or adopted, as required by applicable law and the parties'
Certificate/Articles of Incorporation and Bylaws, by the
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requisite vote of the Shareholders, if any, and/or the boards of
directors of SuperShuttle and Southern;
(b) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of
the Exchange shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be
pending; and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to
the Exchange, which makes the consummation of the Exchange illegal;
(c) no party hereto shall have terminated this Agreement as
permitted herein; and
(d) Southern and Mark Levitt shall have entered into an
Employment Agreement substantially in the form attached hereto as
Exhibit "D".
7.2 Additional Conditions to Obligations of SuperShuttle. The
obligations of SuperShuttle to effect the Exchange are also subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) the representations and warranties of Southern and the
Shareholders in this Agreement shall be true and correct in all
material respects as of the Effective Time as if made at and as of the
Effective Time (subject to any changes permitted or contemplated hereby
and except for the updating or correction of the disclosures in the
Southern Disclosure Schedule which do not reflect any change that is
reasonably likely to have a material adverse effect on the assets,
liabilities, business, results of operations, financial condition or
prospects of Southern); and Southern shall in all material respects
have performed each obligation and agreement and complied with each
covenant to be performed and complied with by it hereunder at or prior
to the Effective Time;
(b) Southern and the Shareholders shall have furnished to
SuperShuttle a certificate in which Southern shall certify that the
conditions set forth in Section 7.2(a) have been fulfilled;
(c) Southern shall have furnished to SuperShuttle (i) a copy
of the text of the resolutions by which the corporate action on the
part of Southern necessary to approve this Agreement and the Exchange
were taken and (ii) certificates executed on behalf of Southern
certifying to SuperShuttle that such copy is a true, correct and
complete copy of such resolutions and that such resolutions were duly
adopted and have not been amended or recinded;
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(d) Southern shall have furnished to SuperShuttle (i) a
balance sheet dated a date not more than thirty days prior to the
Effective Time (the "Current Balance Sheet") and (ii) an income
statement for the period from January 1, 1998, to the date of the
Current Balance Sheet;
(e) there shall have been no material adverse change in the
business, assets, properties, financial condition or operating results
of Southern;
(f) there shall not have been instituted, pending or
threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction,
nor shall there be in effect any judgment, decree or order of any
governmental authority, administrative agency or court of competent
jurisdiction, in either case, seeking to prohibit or limit SuperShuttle
from exercising the material rights and privileges pertaining to its
ownership of Southern or the ownership or operation by SuperShuttle or
any of its subsidiaries of all or a material portion of the business or
assets of SuperShuttle or any of its subsidiaries, or seeking to compel
SuperShuttle or any of its subsidiaries to dispose of or hold separate
all or any material portion of the business or assets of SuperShuttle
or any of its subsidiaries, as a result of the Exchange or the
transactions contemplated by this Agreement;
(g) SuperShuttle shall have otherwise been reasonably
satisfied with all of its due diligence;
(h) All of the transactions contemplated by Schedule 1.1(a)
and Schedule 1.1(b) shall have been consummated or shall be
simultaneously consummated with the Effective Time and by the Closing
Date respectively in a manner reasonably acceptable to SuperShuttle and
as contemplated by Schedule 1.1(a) and Schedule 1.1(b).
Notwithstanding the failure of any condition in this Section 7.2, SuperShuttle
may conditionally waive the failed condition and consummate the transaction, but
shall be entitled to pursue adequate and appropriate reimbursement for all
costs, damages and liabilities in connection with the failed condition and may
withhold such of the Exchange consideration as SuperShuttle deems reasonably
appropriate to assure payment of the costs, damages and liabilities associated
with the failed condition.
7.3 Additional Conditions to Obligation of Southern. The obligation of
Southern to effect the Exchange is also subject to the fulfillment at or prior
to the Effective Time of the following conditions:
(a) the representations and warranties of SuperShuttle set
forth in Article 2 shall be true and correct in all material respects
as of the Effective Time as if made at and as of the Effective Time
(subject to any changes permitted or contemplated hereby and except
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for the updating or correction of the disclosures in the SuperShuttle
Disclosure Schedule which do not reflect any change that is reasonably
likely to have a material adverse effect on the assets, liabilities,
business, results of operations, financial condition or prospects of
SuperShuttle and its subsidiaries, taken as a whole) and each of
SuperShuttle shall in all material respects have performed each
obligation and agreement and complied with each covenant to be
performed and complied with by it hereunder at or prior to the
Effective Time;
(b) SuperShuttle shall have furnished to Southern a
certificate in which SuperShuttle shall certify that the conditions set
forth in Section 7.3(a) have been fulfilled;
(c) SuperShuttle shall have furnished to Southern (i) a copy
of the text of the resolutions by which the corporate actions on the
part of SuperShuttle necessary to approve this Agreement and the
Exchange were taken and (ii) certificates executed on behalf of
SuperShuttle by its corporate secretary or one of its assistant
corporate secretaries certifying to Southern, in each case, that such
copy is a true, correct and complete copy of such resolutions and that
such resolutions were duly adopted and have not been amended or
recinded;
(d) SuperShuttle shall have obtained each consent and approval
necessary in order that the Exchange and the transactions contemplated
herein not constitute a breach or violation of, or result in a right of
termination or acceleration or any encumbrance on any of SuperShuttle's
assets pursuant to the provisions of any material agreement,
arrangement or understanding or any material license, franchise or
permit;
(e) all corporate action necessary by SuperShuttle to elect,
as of the Effective Time and as contemplated by Section 6.9 hereof, the
one designee of Southern to SuperShuttle's Board of Directors, shall
have been duly and validly taken;
(f) SuperShuttle shall have furnished to Southern (i) a
balance sheet dated a date not more than thirty days prior to the
Effective Time (the "Current Balance Sheet") and (ii) an income
statement for the period from January 1, 1998, to the date of the
Current Balance Sheet;
(g) Southern shall have otherwise been reasonably satisfied
with its due diligence investigation;
(h) there shall have been no material adverse change in the
business, assets, properties, financial condition or operating results
of SuperShuttle; and
(i) there shall not have been instituted, pending or
threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction,
nor shall
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there be in effect any judgment, decree or order of any governmental
authority, administrative agency or court of competent jurisdiction, in
either case, seeking to prohibit or limit the Shareholders from
exercising the material rights and privileges pertaining to his or her
ownership of Southern or the ownership or operation by Southern of all
or a material portion of the business or assets of Southern, or seeking
to compel Southern or any of its subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of
Southern or any of its subsidiaries, as a result of the Exchange or the
transactions contemplated by this Agreement;
7.4 Conditions to the Closing. The Closing shall occur upon the
fulfillment of the following conditions:
(a) SuperShuttle shall have closed the transactions
contemplated with Preferred Transportation, Inc. and Tamarack Transportation,
Inc.
(b) Southern shall have received written approval of the
Aviation Department for Dade County of the changes in ownership of Southern to
SuperShuttle; and
(c) Limousines of South Florida, Inc. ("LSF") shall have
received the written consent of Broward County to the change in ownership of LSF
to SuperShuttle.
7.5 Other Deliveries. Southern and SuperShuttle shall
cooperate after the Effective Time to complete the following:
(a) Southern shall deliver full and complete Southern
Disclosure Schedules to SuperShuttle on or before April 22, 1998; and
(b) Southern shall use its reasonable best efforts to receive
the written consent, in form reasonably acceptable to SuperShuttle, to
the transfer of the Southern Common Stock whenever required by the
terms of each material contract to which Southern is a party or where
required by federal, state or local law, on or before the Closing Date.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual written consent of a duly authorized officer of
SuperShuttle and Southern;
(b) by either party if the other party breaches any of its
material representations, warranties or covenants contained herein and,
if such breach is curable, such breach is not cured on or prior to 10
days after notice;
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(c) by either SuperShuttle or Southern if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any
other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Exchange;
(d) by either SuperShuttle or Southern if the Closing Date
shall not have occurred on or before April 30, 1998, or such later date
as may be mutually agreed upon by the parties;
(e) by SuperShuttle, if the conditions set forth in Section
7.2 hereof shall have not been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by Southern on or
before April 30, 1998; or
(f) by Southern, if the conditions set forth in Section 7.3
hereof shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated
(or by its nature cannot be cured or eliminated) by SuperShuttle on or
before April 30, 1998.
provided, however, that no party shall have the right to terminate this
Agreement unilaterally if the event giving rise to such right shall be primarily
attributable to such party or to any affiliated party.
8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall become void and there
shall be no liability or further obligation hereunder on the part of
SuperShuttle, Southern or their respective shareholders, officers or directors,
except as set forth in Sections 5.2, 6.2, 6.4(b), or 6.7 hereof.
8.3 Amendment. This Agreement may not be amended except by an
instrument in writing approved by the parties to this Agreement and signed on
behalf of each of the parties hereto.
8.4 Waiver. At any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of any other party hereto or (b) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations, in
each case only to the extent such obligations, agreements and conditions are
intended for its benefit.
ARTICLE 9
GENERAL PROVISIONS
9.1 Survival of Representations and Warranties. All representations and
warranties made by SuperShuttle, Southern and the Shareholders in this Agreement
shall terminate as of the
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Effective Time or upon termination of this Agreement as provided in Section 8.1,
as the case may be.
9.2 Public Announcements. SuperShuttle and Southern shall consult with
each other upon an agreed form of press release, and before issuing any such
press release or otherwise making any public statements with respect to the
Exchange or this Agreement. Neither SuperShuttle nor Southern shall issue any
such press release or make any such public statement without the prior consent
of the other party, which shall not be unreasonably withheld.
9.3 Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by telecopier,
or by registered or certified mail (postage prepaid and return receipt
requested) to the parties at the following addresses (or if such other address
for a party as shall be specified by it by like notice):
<TABLE>
<CAPTION>
<S> <C> <C>
If to SuperShuttle: SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
FAX: (602) 243-6446
Attn: R. Brian Wier
With a copy to: Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004-4441
FAX: (602) 253-8129
Attn: Christopher D. Johnson, Esq.
If to Southern or the Shareholders: Southern Shuttle Services, Inc.
2595 NW 38th Street
Miami, Florida 33142
FAX: (305) 871-8475
Attn: Mark Levitt
With a copy to: Akerman, Senterfitt & Eidson
Sun Trust International Center
One S.E. Third Avenue
Miami, Florida 33131
PH: (305) 374-5600
FAX: (305) 374-5095
Attn: Jonathan L. Awner
</TABLE>
All such notices and other communications shall be deemed to have been
duly given: (i) when delivered by hand, if personally delivered; (ii) three
business days after being deposited in
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the mail, postage prepaid, if delivered by mail; and (iii) when receipt is
acknowledged, if telecopied.
9.4 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the exhibits and attachments hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires. The rule of construction that an agreement is construed in
favor of the nondrafting party shall not apply to this Agreement. This Agreement
shall be deemed to have been mutually drafted by the parties.
9.5 Schedules and Exhibits. All schedules and exhibits attached hereto
or referred to herein are hereby incorporated in and made a part of this
Agreement as set forth in full herein. Information set forth in any section to
the SuperShuttle Disclosure Schedule or the Southern Disclosure Schedule is
deemed to be set forth in all other sections of such Disclosure Schedule.
Disclosure of any fact or item in any schedule or exhibit hereto referenced by a
particular paragraph or section in this Agreement shall, should the existence of
the fact or item or its contents be relevant to any other paragraph or section,
be deemed to be disclosed with respect to that other paragraph or schedule
whether or not a specific cross reference appears. Disclosure of any fact or
item in any schedule or exhibit hereto shall not necessarily mean that such item
or fact individually is material to a party.
9.6 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the court shall modify the
Agreement or, in the absence thereof, the parties shall negotiate in good faith
to modify this Agreement to preserve each party's anticipated benefits under
this Agreement.
9.7 Jurisdiction; Venue; Service of Process. The parties expressly
agree that any controversy, dispute, litigation or claim arising out of the
subject matter of this Agreement and the transactions contemplated hereby shall
be brought or commenced only in a federal or state court located in Broward or
Dade County, Florida. The parties agree to be subject to the personal
jurisdiction of the federal and/or state courts situated in Broward or Dade
County, Florida and agree that a claim of forum non-conveniens shall not be a
defense to an action initiated in such venues. The parties agree to the service
of process of any such courts in any such action or proceeding by registered or
certified mail, postage prepaid, return receipt requested, to the addresses
listed in this Agreement and agree that such service shall become effective
thirty (30) days after such mailing.
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9.8 Waiver of Jury Trial. EACH OF SUPERSHUTTLE AND SOUTHERN HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
9.9 Miscellaneous. This Agreement (together with all other documents
and instruments referred to herein): (a) is not intended to confer upon any
other person any rights or remedies hereunder; (b) shall not be assigned by any
party; and (c) shall be governed in all respects, including validity,
interpretation and effect, by the internal laws of the State of Florida, without
giving effect to the principles of conflict of laws thereof. Each certificate,
agreement or other document making reference to the Stock Purchase Agreement
among SuperShuttle, Southern and the Shareholders, dated as of March 31, 1998,
shall be deemed to refer to this Amended and Restated Stock Purchase Agreement.
This Agreement may be executed in two or more counterparts, which together shall
constitute a single agreement.
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<PAGE> 40
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, SuperShuttle, Southern and the Shareholders have
caused this Agreement to be executed on the date first written above by their
respective officers thereunder duly authorized.
SUPERSHUTTLE INTERNATIONAL
INC., a Delaware corporation
By: /s/ Thomas C. LaVoy
-------------------------------------
Thomas C. LaVoy, Chief Financial
Officer
SOUTHERN SHUTTLE SERVICES, INC.,
a Florida corporation
By: /s/ Mark Levitt
-------------------------------------
Mark Levitt, President
SHAREHOLDERS OF SOUTHERN
/s/ Mark Levitt
----------------------------------------
Mark Levitt
/s/ Karen Caputo
----------------------------------------
Karen Caputo
/s/ Robert Siedlecki
----------------------------------------
Robert Siedlecki
35
<PAGE> 41
SCHEDULE 1
OWNERSHIP OF SOUTHERN COMMON STOCK
<TABLE>
<CAPTION>
Shareholder Name Number of Shares
- ---------------- ----------------
<S> <C>
Mark Levitt 35
Karen Caputo 4.81
Robert Siedlecki 36.19
-----
76
</TABLE>
36
<PAGE> 1
EXHIBIT 2.4a
AMENDMENT NO. 1
TO THE
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
This AMENDMENT NO. 1 TO THE AMENDED AND RESTATED STOCK PURCHASE
AGREEMENT (the "Agreement"), dated as of April 30, 1998, is made as of May 27,
1998 by and among SUPERSHUTTLE INTERNATIONAL, INC., a Delaware corporation
("SuperShuttle"); SOUTHERN SHUTTLE SERVICES, INC., a Florida corporation
("Southern"); and Mark Levitt, Karen Caputo and Robert Siedlecki (the
"Shareholders").
Section 5.2(a) of the Agreement is hereby amended and restated in its
entirety as follows:
(a) The Share Exchange shall be rescinded automatically without further
notice (the "Recision") upon the occurrence of any of the following
events: (i) if SuperShuttle does not file a registration statement for
an initial public offering on Form S-1 with the SEC by June 8, 1998 to
register for sale shares of SuperShuttle Common Stock; (ii) if the SEC
does not declare such registration statement effective by July 31,
1998; or (iii) if the underwritten initial registration statement for
an initial public offering on a firm commitment basis does not close by
August 10, 1998, providing a per share offering price to the public of
at least $6.50.
IN WITNESS WHEREOF, SuperShuttle, Southern and the Shareholders have caused this
Amendment No. 1 to be executed on the date first written above by their
respective officers thereunder duly authorized.
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Thomas C. LaVoy
---------------------------------------------
Thomas C. LaVoy, Chief Financial Officer
SOUTHERN SHUTTLE SERVICES, INC.,
a Florida corporation
By: /s/ Mark Levitt
---------------------------------------------
Mark Levitt, President
<PAGE> 2
SHAREHOLDERS OF SOUTHERN
/s/ Mark Levitt
------------------------------------------------
Mark Levitt
/s/ Karen Caputo
------------------------------------------------
Karen Caputo
/s/ Robert Siedlecki
------------------------------------------------
Robert Siedlecki
<PAGE> 1
EX-2.5
Subscription and Stock Purchase Agreement
SUBSCRIPTION
AND
STOCK PURCHASE AGREEMENT
THIS SUBSCRIPTION AND STOCK PURCHASE AGREEMENT ("Agreement") is made and entered
into effective as of the 1st day of September, 1997, by and among SUPERSHUTTLE
INTERNATIONAL, INC., a Delaware corporation (hereinafter referred to as "SSI"),
SHUTTLE EXPRESS, INC., a Maryland corporation (hereinafter referred to as the
"Company"), and YELLOW HOLDING, INC., a Maryland corporation (hereinafter
referred to as "Yellow").
RECITALS
The Company is a wholly-owned subsidiary of Yellow and is the sole owner
and operator of a licensed SuperShuttle franchise business operating a
"SuperShuttle" dedicated shared-ride shuttle van service to and from
Baltimore-Washington International Airport pursuant to an exclusive contract
with the Maryland Aviation Administration (hereinafter referred to as the
"Service").
The Company and Yellow are desirous of obtaining the management experience
and financial resources of SSI for the purpose of improving the management and
operation of the Service, and SSI is desirous of acquiring a one-half (1/2)
interest in the Company for that purpose.
The parties have reached an understanding with respect to the issuance to
(and purchase by) SSI of so many shares of stock of the Company as shall equal,
after issuance, fifty percent (50%) of the authorized, issued and outstanding
shares of stock of the Company, upon the terms and conditions contained herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements and subject to the
terms and conditions set forth in this Agreement, the parties agree as follows:
1.0 Subscription for Shares. SSI hereby subscribes for and, subject to the
terms and conditions of this Agreement and in reliance on the representations,
warranties and promises contained herein, agrees to purchase 1,000 fully paid
and nonassessable shares of Common Stock, par value $1.00 per share, of the
Company (the "Shares"), free and clear of all liens, claims, and encumbrances
other than as specifically required hereby. Said number of shares equals, after
issuance, fifty percent (50%) of the authorized, issued and outstanding shares
of Common Stock of
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<PAGE> 2
the Company. The Company agrees to issue, sell and deliver to SSI the Shares
subscribed upon the terms and conditions contained herein.
2.0 Consideration For Shares. In consideration of and in exchange for the
issuance and sale of the Shares to be paid by SSI shall be as follows: SSI
agrees to contribute to the capital of the Company on an "as needed basis" such
sums of money as are required from to time to adequately find the continued
operation and expansion of the Company and Service following the date of this
Agreement, not to exceed in total the sum of Seven Hundred Thousand Dollars
($700,000.00).
3.0 Vehicle Leases; Other Liabilities of the Company.
3.1 Vehicle Leases. In addition to the aforesaid capital contribution, SSI
shall indemnify Yellow for the remaining indebtedness of Yellow on the
NationsBank vehicle leases for those vehicles (and those vehicles only) that SSI
determines it desires for the Company's continued use in the Service (the
"Vehicles"). All other vehicles shall be disposed of by Yellow as Yellow may
determine for its sole benefit. Upon payment of the balance of the vehicle
leases for the Vehicles, Yellow shall exercise the purchase option (for the sum
of One Dollar ($1.00) each) and title to the Vehicles shall be conveyed to the
Company.
3.2 Other Liabilities. All liabilities of the Company, excepting the
selected vehicle leases as provided herein above, as of the date hereof, shall
be assumed and paid by Yellow. With regard to any current or former key
management personnel of the Company as of the date hereof, Yellow shall
indemnify SSI and the Company for any liability with respect to said personnel
for any claims existing or hereinafter arising based in whole or in part upon
matters past or existing as of the date hereof.
4.0 Representations and Warranties of the Company and Yellow. The Company
and Yellow represent and warrant to SSI as follows, and acknowledge and confirm
that SSI is relying upon such representations and warranties in connection with
the execution, delivery and performance of this Agreement, notwithstanding any
investigation made by SSI or on its behalf.
4.1. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland, has all of the requisite corporate power and authority and has all of
the licenses, permits, authorities and consents that are necessary to own,
operate and lease its properties and to carry on its business as now being
conducted. The Company is duly qualified to do business and is in good standing
as a foreign corporation in all jurisdictions in which the property owned,
leased or operated by the Company or the nature of the business conducted by the
Company makes such qualification necessary. The Company is not a party to or
subject to any agreement, consent decree or order, or other understanding or
arrangement with, or any directive of, any governmental authority or other
person which imposes any restriction or otherwise affects in any material way
the conduct of its business in any jurisdiction or location. True and accurate
copies of the Company's Articles of Incorporation, as amended, and By-laws, as
presently in effect, are attached as Schedule 4.1 to this Agreement.
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<PAGE> 3
4.2. Capitalization. The authorized capital of the Company consists solely
of 100,000 shares of common stock, $1.00 par value, of which 1,000 shares have
been validly issued and are now outstanding, all of which are owned by Yellow.
All such shares of capital stock have been validly authorized and issued and are
filly paid and nonassessable.
4.3. Subsidiaries. The Company has no subsidiaries and does not otherwise
presently own or control, directly or indirectly, any other corporation,
association, or other business entity.
4.4. Authorization. The Company has all the requisite legal and corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company and its officers, directors and stockholders necessary for the
authorization, execution, delivery, and performance of all obligations of the
Company under this Agreement has been taken. This Agreement, when executed and
delivered, shall constitute a legal, valid and binding obligation of the Company
and Yellow, enforceable in accordance with its terms.
4.5. Governmental Consents. Except as set forth in Schedule 4.5, no
consent, approval, order, or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority is required on the part of the Company in connection with
the execution, delivery or performance of this Agreement or consummation of the
transactions contemplated hereby. Based in part upon the accuracy of the SSI's
representations and warranties as set forth in Section 6.1, the sale and
issuance of the Shares by SSI in conformity with the terms of this Agreement is
exempt from the registration requirements of all applicable federal and state
securities laws.
4.6. Compliance with Other Instruments. The Company will not be, as a
result of the execution, delivery or performance of this Agreement, in violation
of or default under any provision of its Articles of Incorporation or By-laws,
as amended and in effect on the date hereof, or of any provision of any
instrument, contract or lease to which it is a party, or of any provision of any
federal or state judgment, writ, decree, order, statute, rule, or governmental
regulation applicable to the Company.
4.7. Financial Statements. An unaudited balance sheet and income statement
as of and for each of the fiscal years ending December 31, 1996 and December 31,
1995, and an unaudited balance sheet, income statement and statement of cash
flows as of and for the period ending July 31, 1997 (collectively, the "Company
Financials"), are attached hereto as Schedule 4.7.
The Company Financials have been prepared by management, are true and
correct and fairly present the financial position of the Company as of their
respective dates and the results of its operations for the periods then ended
and contain all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation. The Company has established a standard system
of accounting and has consistently carried out and administered the same. Except
to the extent reflected or reserved against or disclosed in the Company
Financials, as of their respective
3
<PAGE> 4
dates, the Company has not incurred any material liabilities or obligations of
any kind, whether accrued, absolute, contingent or otherwise, which should have
been so reflected or reserved against or disclosed (including, without
limitation, all liabilities to vendors and customers of the Company).
4.8 Undisclosed Liabilities. The Company has no liabilities or obligations,
either absolute, accrued, contingent or otherwise, which individually or in the
aggregate are materially adverse to the financial condition and business of the
Company, which (i) have not been reflected in the Company Financials, (ii) have
not been described in this Agreement or in any of the Schedules hereto, or (iii)
have not been incurred in the ordinary course of business since July 31, 1997,
consistent with past practices.
4.9 Assets of the Company. The assets of the Company consist primarily, in
addition to the Vehicles, of the name and good will of the Company, the
SuperShuttle franchise license agreement, the contract with Maryland Aviation
Administration ("MAA") for the Service, certain office equipment and computer
hardware and software, its driver and employee relationships, and other general
intangibles. There exist no substantial accounts receivable or cash on hand or
in the bank.
4.10. No Prebillings. The Company has not prebilled or received payment,
and the Company will not prebill or receive payment, from any of its accounts
for services to be rendered or for expenses to be incurred subsequent to the
date hereof; other than in the ordinary course of business, which is not more
than $1,000.00.
4.11. Changes. Except as set forth in Schedule 4.11, since July 31, 1997:
(a) The Company has not entered into any transaction which was not in
the ordinary course of business;
(b) There has been no adverse change in the condition (financial or
otherwise), business, property, assets or liabilities of the Company other
than changes in the ordinary course of business, none of which,
individually or in the aggregate, has been material;
(c) There has been no damage to, destruction of or loss of physical
property (whether or not covered by insurance) adverse to the business or
operations of the Company;
(d) The Company has not increased the compensation of any of its
officers or the rate of pay of their employees as a group, except as part
of regular compensation increases in the ordinary course of business;
(e) There has been no resignation or termination of employment of any
key officer or employee of the Company, and the Company does not know of
any impending resignation or termination of employment of any such officer
or employee that if consummated would have an adverse effect on the
business of the Company;
4
<PAGE> 5
(f) There has been no labor dispute involving the Company or any of
its employees and none is pending or, to the best of the Company's
knowledge, threatened;
(g) There have not been any changes, except in the ordinary course of
business, in the contingent obligations of the Company, by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(h) There have not been any loans made by the Company to any of its
employees, officers or directors other than travel advances and office
advances made in the ordinary course of business;
(j) There has been no litigation or administrative agency charges or
proceedings commenced involving, relating to or affecting the business of
the Company; and
(j) There has been no other event or condition of any character
pertaining to and materially adverse to the assets or business of the
Company.
4.12 Title to Assets; Liens, etc. The assets, both real, personal and
mixed, tangible and intangible, necessary or useful to the operation of the
business of the Company are in good condition and repair, ordinary wear and tear
excepted, and suitable for the uses intended. The assets are being maintained in
a state of good repair, and, in all respects, comply with and are operated in
conformity with all applicable laws, ordinances, regulations, orders, permits
and other requirements relating thereto adopted or currently in effect. The
Company has good and marketable title to the assets, free and clear of all
liens, other than the lien for current taxes not yet due and payable and liens
set forth on Schedule 4.12, and except for the vehicle leases with respect to
the Vehicles. Schedule 4.12 identifies and sets forth a complete list of each
parcel of real estate or interest therein owned or leased by the Company. The
buildings and improvements owned or leased by the Company and the uses thereof
do not contravene any zoning or building law or ordinance or violate any
restrictive covenant. Each lease of real property creates a legal, valid and
enforceable leasehold interest in favor of the Company, free and clear of all
liens. No default or event of default on the part of the Company, as lessee or
mortgagor, as the case may be, exists with respect to any lease or mortgage (and
related loan documents) with respect to such real property.
4.13. Contracts and Obligations. Set forth in Schedule 4.13 is a list of
all material written and oral agreements, contracts, indebtedness, liabilities
and other obligations to which the Company is a party or by which it is bound
which (a) involve transactions or proposed transactions between the Company and
its officers, directors, stockholders, affiliates or any affiliate thereof; (b)
involve strategic arrangements or cooperation agreements; or (c) involve
commitments on behalf of the Company in excess of $10,000 in any twelve-month
period. Copies of such written, and summaries of such oral agreements,
contracts, indebtedness, liabilities and obligations have been made available
for inspection by SSI. All such agreements are legal, valid and binding
obligations and are in full force and effect in all respects. Except as set
forth in Schedule 4.13, The Company has avoided every
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<PAGE> 6
condition and has not performed any act the occurrence of which would result in
the Company's loss of any right granted under any license, distribution or other
agreement.
4.14 Conflicts of Interest; Transactions with Principals. Except as
described in Schedule 4.14, no officer, director or stockholder of the Company
and no affiliate (as defined under the Securities Act of 1933, as amended) of
any such officer, director or stockholder has, either directly or indirectly,
(a) an interest in any corporation, partnership, proprietorship, association or
other person or entity which furnishes or sells services or products to the
Company or which purchases services from the Company or whose services are
similar to those furnished or sold by the Company, or (b) a beneficial interest
in any contract, agreement or commitment to which the Company may be bound,
other than Yellow.
4.15 Outstanding Indebtedness. The Company has no indebtedness for borrowed
money (including deferred compensation) which the Company has directly or
indirectly created, incurred, assumed or guaranteed, or with respect to which
the Company has otherwise become directly or indirectly liable, other than as
disclosed in Schedule 4.15 or the Company Financials.
4.16 Employees. Except as set forth in Schedule 4.16, the Company has no
employment contracts with any of its employees which are not terminable at will
or any consulting or independent contractor agreements with any individual or
entity, and it does not have any collective bargaining agreements covering any
of its employees. The Company complied with all applicable federal and state
equal employment opportunity laws and other laws related to employment. The
Company is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with the Company, whether as a
result of the transactions contemplated hereby or otherwise, nor does the
Company have a present intention to terminate the employment of any of the
foregoing.
4.17 Employee Benefit Plans.
(a) Schedule 4.17 sets forth:
(i) all "employee welfare benefit plans," as defined in Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any other employee benefit arrangements or payroll
practices, including, without limitation, sick leave, vacation pay, salary
continuation for disability, severance hospitalization, medical insurance,
and life insurance programs maintained by the Company or each trade or
business under common control with the Company (as determined under Section
4001(b)(l) of ERISA, an "ERISA Affiliate") or to which the Company or any
ERISA Affiliate has made contributions during the preceding five (5) years
(the "Welfare Plans"); and
(ii) all "employee pension benefit plans," as defined in Section 3(2)
of ERISA, maintained by the Company or any ERISA Affiliate or to which the
Company or any ERISA Affiliate has made contributions during the preceding
five (5) years thereunder, including, without limitation,
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<PAGE> 7
retirement, pension, savings, profit sharing, severance and stock purchase
programs (the "Pension Plans"). The Welfare Plans and Pension Plans are
hereinafter collectively referred to as the "Employee Benefit Plans."
(b) No Employee Benefit Plan is required to be qualified under ERISA or
other applicable laws. There is no violation of ERISA with respect to the filing
of any applicable reports, documents and notices regarding the Employee Benefit
Plans with the Secretary of Labor and the Secretary of the Treasury or the
furnishing of such documents to the participants or beneficiaries of the
Employee Benefit Plans.
(c) The Company does not maintain retiree life or retiree health insurance
plans which provide for continuing benefits or coverage for any participant or
any beneficiary of a participant after termination of employment except as may
be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA").
(d) The Company is in compliance with the notice and continuation
requirements of COBRA and the regulations thereunder.
(e) The Company has no formal plan or commitment, whether legally binding
or not, to create any additional Employee Benefit Plans or arrangement or modify
or change any existing Employee Benefit Plan, which would affect any employee or
former employee of the Company.
(f) Neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated hereby will result in any rights
under any of the Employee Benefit Plans becoming exercisable by the holders
thereof or result in the creation or vesting of any rights in such holder under
any of the Employee Benefit Plans, or accelerate the time of payment or vesting
or increase the amount of compensation or benefits due to any director, officer,
employee or former employee of the Company.
4.18 Taxes. The Company has filed all federal, state, county, local and
foreign tax returns, reports and forms for income, excise, social security,
property, payroll, unemployment and other taxes which are required to be filed
by it ("Tax Returns"). The Company has paid, or adequate provision has been made
on the Company Financials for the payment of, all federal, state, county, local
and foreign taxes, assessments, levies or duties, howsoever measured or imposed,
and related interest and penalties, if any (collectively, "Taxes"). There are no
tax examinations or audits underway involving the Company.
4.19 No Sales or Conveyance Tax Due. No sales, use or other transfer or
conveyance taxes are or will become payable by any of the parties to this
Agreement as a consequence of the execution, delivery or performance of this
Agreement or any other agreements between the parties executed upon the date
hereof; other than taxes based upon the net income of the parties.
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<PAGE> 8
4.20 Insurance. All assets of the Company are covered by such fire,
casualty, environmental liability and other insurance policies issued by
reputable insurers as are customarily obtained to cover comparable properties
and assets by businesses in the region in which the assets are located, in
amounts, scope and coverage which are reasonable in light of existing
conditions. Schedule 4.20 sets forth a list and description of all of the
policies of insurance and fidelity or surety bonds carried by the Company,
including, but not limited to, fire, liability, product liability, workers'
compensation, officers' life, and directors' and officers' liability insurance
policies. The Company has not failed to give any notice or present any material
claim under any insurance policy in due and timely fashion and all insurance
premiums due and payable by the Company in connection with the policies set
forth on Schedule 4.20 have been paid. There are no material claims, actions,
suits or proceedings arising out of or based upon any of such policies of
insurance, and, to the knowledge of the Company, no basis for any such material
claim, action, suit or proceeding exists. There are no notices of any pending or
threatened terminations or substantial premium increases with respect to any of
such policies, and the Company is in compliance with all conditions contained
therein.
4.21 Disposal of Waste. The Company has not disposed, spilled or deposited
at any time on any of the properties previously or currently owned or leased by
it, nor does it have any knowledge of such disposal, spill or deposit on any of
the properties currently owned or leased by it, any "Hazardous Substance" in
excess of the corresponding "Reportable Quantity" (as those terms are defined in
the Comprehensive Environmental Response compensation and Liability Act, as
amended ("CERCLA") or its state or local equivalent), oil or petroleum in excess
of 100 kilograms, or "Hazardous Waste" in any quantity (as that term is defined
in the Resource Conservation and Recovery Act, as amended, or its state or local
equivalent), or disposed, spilled or deposited any Hazardous Substances, oil,
petroleum, or Hazardous Waste (collectively, "Materials"), the nature, amount,
or concentration of which would enable the United States Environmental
Protection Agency or any state regulatory agency to undertake or require the
removal or remediation of such Materials.
4.22. Other Environmental Matters. As to all operations relating to the
business of the Company: (a) The Company has complied with all applicable
federal, state and local laws, regulations, rulings and guidelines (collectively
referred to as "Environmental Laws") in all material respects relating to any
Materials used, generated, managed, handled, treated, stored or disposed of at,
or moved or transported from, the sites where its business is conducted; (b) The
Company has not received any notices that it has been designated as a
"Potentially Responsible Party," a "Responsible Party," (as those terms are
defined, used or construed pursuant to CERCLA or its state or local
counterparts) or a defendant in any action, suit or proceeding pursuant to any
Environmental Law; (c) no Materials have been delivered to any site listed by
the United States Environmental Protection Agency (i.e., CERCLA) or by any state
as a site that actually or potentially requires investigation or remedial
action, (d) The Company is not a party to, have received notice of; or is aware
of any actual or threatened litigation or administrative proceedings concerning
environmental claims or liabilities; and (e) there are no environmental studies
or reports in the possession or control of the Company.
4.23 Compliance With Laws.
(a) The Company is in full compliance with all laws, rules and regulations
applicable to or affecting it or the conduct of its business and has secured all
governmental licenses, permits and approvals necessary to its business.
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<PAGE> 9
(b) Other than sales tax licensing, corporate approvals to do business, and
the contracts with MAA and the Public Service Commission of Maryland, no
government licenses, permits or appraisals are otherwise issued to or relied
upon by the Company to conduct its business.
4.24 Litigation. Except as set forth in Schedule 4.24, there is no action,
suit, arbitration, proceeding or investigation pending or threatened against the
Company before any court or administrative agency, nor does the Company know or
have any reason to know of any basis for any such action, proceeding or
investigation. The Company has not received any opinion or memorandum or legal
advice or notice from legal counsel to the effect that it is likely, from a
legal standpoint, that it will incur any liability which may be material to its
business.
4.25 Full Disclosure; No Misrepresentation. The Company has fully provided
SSI with all the information which SSI has requested for deciding whether to
enter into this Agreement. Neither this Agreement nor any certificate or
Schedule or other information furnished by or on behalf of the Company pursuant
to this Agreement contains any untrue statement of a material fact or, when this
Agreement and such certificates, Schedules and other information are taken in
their entirety, omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
4.26 Validity of Shares. The Shares, when issued, sold and delivered to SSI
in accordance with this Agreement for the consideration expressed herein, will
be validly issued, fully paid and nonassessable and will be free and clear of
all liens.
5.0 Representations and Warranties of SSI. SSI represents and warrants to
Yellow and the Company as follows, and acknowledges and confirms that Yellow and
the Company are relying upon such representations and warranties in connection
with the execution, delivery and performance of this Agreement, notwithstanding
any investigation made by Yellow or the Company or on their behalf.
5.1. Organization and Standing. SSI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has all of the requisite corporate power and authority and has all of the
licenses, permits, authorities and consents that are necessary to own, operate
and lease its properties and to carry on its business as now being conducted and
as proposed to be conducted. SSI is duly qualified to do business and is in good
standing as a foreign corporation in all jurisdictions in which the property
owned, leased or operated by SSI or the nature of the business conducted by SSI
makes such qualification necessary.
5.2 Authorization. SSI has all the requisite legal and corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of SSI and
its officers, directors and stockholders necessary for the authorization,
execution, delivery, and performance of all obligations of SSI under this
Agreement has been taken. This Agreement, when executed and delivered, shall
constitute a legal, valid and binding obligation of SSI, enforceable in
accordance with its terms.
5.3 Governmental Consents. No consent, approval, order, or authorization
of; or registration, qualification, designation, declaration or filing with, any
federal, state or local
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<PAGE> 10
governmental authority is required on the part of SSI in connection with the
execution, delivery or performance of this Agreement or consummation of the
transactions contemplated hereby.
5.7 Compliance with Other Instruments. SSI will not be, as a result of the
execution, delivery or performance of this Agreement, in violation of or default
under any provision of its Articles of Incorporation or By-laws, as amended and
in effect on date hereof, or of any provision of any instrument, contract or
lease to which it is a party, or of any provision of any federal or state
judgment, writ, decree, order, statute, rule, or governmental regulation
applicable to SSI.
6. Private Placement Status; Representations and Warranties of SSI.
6.1 SSI represents and warrants as follows and acknowledges and confirms
that the Company is relying upon such representations and warranties in
connection with the execution, delivery and performance of this Agreement:
(a) SSI has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the
investment by it in the Company as contemplated by this Agreement and is
able to bear the economic risk of such investment for an indefinite period
of time. SSI has been furnished access to such information and documents as
it has requested and has been afforded an opportunity to ask questions of
and receive answers from representatives of the Company concerning the
business and financial condition of the Company and the terms and
conditions of this Agreement and the issuance of securities contemplated
hereby.
(b) SSI is acquiring the Shares for investment for its own account and
not with a view to, or for resale in connection with, any distribution. SSI
understands that the Shares to be issued to SSI hereunder have not been
registered under the Act by reason of a specific exemption from the
registration provisions of the Act which depends upon, among other things,
the accuracy of SSI's representations expressed herein.
(c) SSI acknowledges that the Shares must be held indefinitely and may
not be sold or offered for sale in the absence of an effective registration
statement as to such securities under said Act and any applicable state
securities laws or an exemption from such registration is available.
(d) SSI has had an opportunity to discuss the business, management and
financial affairs of the Company with their management and an opportunity
to review the facilities of the Company. SSI understands that such
discussions, as well as the written information provided by the Company,
were intended to describe the aspects of the Company's business and
prospects which it believes to be material but were not necessarily a
thorough or exhaustive description.
6.2. Legend. Each certificate representing the Shares shall be endorsed
with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (TILE "ACT") OR ANY OTHER SECURITIES
LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS
AN EFFECTIVE REGISTRATION STATEMENT
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<PAGE> 11
UNDER THE ACT AND OTHER APPLICABLE SECURITIES LAWS COVERING SUCH SECURITIES, OR
THE ISSUER RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT THAT ANOTHER
EXEMPTION FROM REGISTRATION IS AVAILABLE.
7. Post Closing Agreements. The parties agree that from the date hereof,
unless the Buyer otherwise approves:
7.1 Issuance of Shares; Dividends. (a) Except as provided in (b) below, the
Company will not issue, sell or deliver, or authorize the issuance, sale or
delivery of; or redeem, any shares of any class of its capital stock or any
securities convertible into or exercisable or exchangeable for any such shares,
or any warrants, calls, options, stock appreciation rights or other rights
calling for the issuance, sale or delivery of any such shares or convertible,
exercisable or exchangeable securities.
(b) The Company will not declare or pay any dividend or make any other
distribution with respect to the capital stock of the Company, or redeem, retire
or repurchase any of the capital stock of the Company or reclassify or subdivide
or authorize the reclassification or subdivision of any the capital stock of the
Company.
7.2 Board Membership. (a) Immediately hereafter, the Company's Board of
Directors shall have five (5) members, two (2) of which are to be appointed by
each of the shareholders, SSI and Yellow, and the fifth (5th) of which shall be
the President of SSI. Either shareholder shall have the right to remove any
director designated by that shareholder at any time and for any reason, and a
replacement designated by that shareholder shall be immediately elected by the
remaining board members. In the event that any designee of a shareholder shall
cease to serve as a director for any reason, the Company shall cause the vacancy
resulting therefrom to be filled by a designee of such shareholder.
Notwithstanding the foregoing, in the event SSI rejects Yellow's exercise of its
put option as set forth in the Shareholders Agreement attached hereto as Exhibit
C, then Yellow shall have the right to elect the fifth director as provided in
said Shareholders Agreement.
(b) In the event that the Board of Directors of the Company ever designates
any of its members as an Executive Committee, SSI and Yellow shall be entitled
to designate such number of members of the Executive Committee so that the
percentage of members so designated by either SSI or Yellow shall be equal to
the percentage of members of the full Board of Directors designated by SSI and
Yellow pursuant to this Section 7.2 at that time.
(c) SSI and Yellow agree to vote their shares of Common Stock in order to
effect the board membership requirements or removal rights set forth in this
Section 7.2 If either SSI or Yellow shall refuse to vote its shares of Common
Stock in order to effect the board membership requirements or removal rights set
forth in this Section 7.2, or shall refuse to give its written consent in lieu
of a meeting, thereupon, without further action by either SSI or Yellow, the
President or any Vice President of the Company shall be, and hereby is,
irrevocably constituted the attorney-in-fact and proxy of SSI or Yellow, as the
case may be, for the purpose of voting, and shall vote such shares at such
meeting or give such consent, as the case may be, in order to effect the board
membership requirements or removal rights set forth in this Section 7.2.
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<PAGE> 12
(d) Except as provided in this Section, the Company shall not change the
size of the Board of Directors.
7.3 Operating Agreement. SSI shall have the primary responsibilities for
the day-to-day management of the affairs of the Company and operational control
over the Service. The Company and SSI shall enter into a Operating Agreement for
the day-to-day management of the affairs of the Company in the form attached
hereto as Exhibit A (the "Operating Agreement"). Management fees shall be paid
to SSI and Yellow, over and above any compensation to SSI as set forth in the
Operating Agreement, on an equal basis to the extent that cash flow and the
revenues of the Company permit.
7.4 Financial Statements. Operating financial statements as provided by SSI
in accordance with the Operating Agreement shall be provided to all members of
the Company's Board of Directors monthly.
7.5 Additional Capital Requirements.
(a) After the payment by SSI of the Subscription price for the Shares, up
to but not exceeding $700,000.00, both SSI and Yellow agree to equally make such
loans or contributions to the capital of the Company as are necessary (as
determined by the Board of Directors of the Company) to the continued management
and operation and the Company and Service. In the event the Board of Directors
determines that such additional capital is required, SSI and Yellow shall each
loan or contribute their share of such additional capital within thirty (30)
days of notice of such determination (the "Additional Contribution").
(b) A failure by either SSI or Yellow to make an Additional Contribution as
required in subparagraph (a) above is a "Capital Contribution Default." A
Capital Contribution Default shall be subject to the remedies ("Capital
Contribution Default Remedies") set forth below. With respect to any Capital
Contribution Default, the party that fails to make the required payment is a
"Defaulting Shareholder," and the party that has actually paid its Additional
Contribution when due is a "Nondefaulting Shareholder."
(i) Default Loan. A Nondefaulting Shareholder may advance as a recourse
loan ("Default Loan") to a Defaulting Shareholder to be paid directly
to the Company, all or any portion of an Additional Contribution
required of a Defaulting Member. A Default Loan shall bear interest on
the unpaid balance at the rate of 18% per annum. The unpaid portion of
the Default Loan, together with all accrued but unpaid interest, shall
be due and payable in full at any time on written demand. Such Default
Loan shall not be deemed to have cured the default of a Defaulting
Shareholder but for Company accounting purposes shall be deemed to be
a Capital Contribution by the Defaulting Shareholder.
(ii) Nondefaulting Shareholder's Right to Distributions. If a Defaulting
Shareholder has not paid a Default Loan in full prior to a
distribution of management fees or other fees, dividends or
liquidation proceeds from the Company, then any such amount that would
otherwise be distributable to a Defaulting Shareholder shall be paid
to the
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<PAGE> 13
Nondefaulting Shareholder who has made the Default Loan to the
Defaulting Shareholder until the Nondefaulting Shareholder has
received sufficient funds to pay in full all principal, interest and
other charges owing on account of the Default Loan. All such
distributions received by a Nondefaulting Shareholder in payment of
the amounts owing on the Default Loan shall be deemed to have been
received by a Defaulting Shareholder.
(iii) Application of Payments; Evidence of Default Loan. All amounts repaid
or deemed repaid on a Default Loan shall be applied first against
accrued interest, and then against costs, if any, and finally against
principal. A Defaulting Shareholder shall, upon demand by a
Nondefaulting Shareholder, execute a promissory note and any
additional documents in the form and substance reasonably requested by
a Nondefaulting Shareholder to confirm and evidence the Default Loan.
(iv) In the event a Default Loan is outstanding upon the exercise of the
call option, put option or sale of the Company or substantially all of
its assets as provided in the Shareholders Agreement attached hereto
as Exhibit C, then the amount thereof, including all principal,
interest and costs accrued, shall be paid by the Defaulting
Shareholder at such time and if Yellow is the Defaulting Shareholder
and the call or put option is duly exercised, the Default Loan may be
credited against the amount otherwise owed by SSI to Yellow upon such
exercise.
7.6 Fee Upon MAA Contract Renewal. The current service contract, including
existing options for extension terms, with the MAA for the Service expires
December 31, 2002. In the event that the MAA awards an additional contract to
the Company for the Service when the current contract with MAA expires, SSI
shall pay the sum of $175,000.00 directly to Yellow.
7.7 Covenant Not to Compete. SSI and Yellow agree not to compete with the
Company with respect to the Service and the parties shall, coincident with the
execution hereof, enter into a Non-Competition Agreement in the form attached
hereto as Exhibit B (the "Non-Competition Agreement").
7.8 Shareholders Agreement. Upon the execution hereof, the parties shall
enter into a Shareholders Agreement setting forth various rights and options of
the parties with respect to the shares of stock in the Company owned or to be
owned by SSI and Yellow in the form of Exhibit C attached hereto (the
"Shareholders Agreement").
8. Closing Documents. Upon the execution hereof; the parties shall exchange
documents as follows:
8.1. Delivery by The Company and Yellow. The Company and Yellow shall
deliver to SSI:
(a) A copy of the resolutions duly adopted by the Board of Directors
of the Company and Yellow authorizing and approving the execution, delivery
and performance of this Agreement, and the execution and delivery of any
and all other documents and agreements
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<PAGE> 14
contemplated hereunder, certified by the Secretary or an Assistant
Secretary of the Company or Yellow, as the case may be.
(b) A stock certificate representing 1,000 shares of the Company's
Common Stock, $1.00 par value per share, issued in the name of SSI. The
stock certificate shall contain a restrictive legend to the effect that the
shares represented by said certificate have not been registered under
either the federal or state securities laws and are not transferable except
pursuant to an exemption from said securities laws or subsequent
registration of said shares as set forth in Section 6.2 above.
(c) The opinion of counsel to the Company and Yellow to SSI to the
following effect:
(1) The Company, or Yellow as the case may be, is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Maryland, and is entitled to own its properties and to carry
on its business in the places where such properties are located and
where such business is being conducted.
(2) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action of the Company,
or Yellow as the case may be, and this Agreement has been duly
executed and delivered by the Company and Yellow and constitutes a
valid and binding obligation of the Company and Yellow in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditor's rights and the remedies of
specific performance and injunction and other forms of equitable
relief which may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. No further corporate authorization or by any other person is
necessary with respect to the execution and delivery of this Agreement
by the Company or Yellow or their obligations hereunder.
(3) Except as may be specified by such counsel, they do not know of
any litigation, proceeding or governmental investigation pending or
threatened against, or relating to, the Company, or Yellow as the case
may be, or the their properties or business or the transactions
contemplated under this Agreement.
(4) The shares of the Company's Common Stock to be issued to SSI, when
issued, shall be fully paid, non assessable, and validly issued.
(d) A Certificate of Good Standing as of a recent date issued by the
Secretary of the State of Maryland to the effect that the Company, and
Yellow as the case may be, is in good standing under the laws of that
state.
(e) The Operating Agreement.
(f) The Non-Competition Agreement.
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<PAGE> 15
(g) The Shareholders Agreement.
(h) Written evidence satisfactory to SSI that The Company and Yellow
has obtained all necessary governmental or regulatory approvals for the
transactions contemplated hereby.
(i) Such further instruments or documents as SSI or its counsel may
reasonably request to assure the effective carrying out of the transactions
contemplated hereby.
8.2. Delivery by SSI. SSI shall deliver to the Company or Yellow:
(a) A copy of the resolutions duly adopted by the Board of Directors
of SSI authorizing and approving the execution, delivery and performance of
this Agreement, and the execution and delivery of any and all other
documents and agreements contemplated hereunder and thereunder, certified
by the Secretary or an Assistant Secretary of SSI.
(b) The opinion of counsel to SSI to the Company and Yellow to the
following effect:
(1) SSI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is entitled to
own its properties and to carry on its business in the places where
such properties are located and where such business is being
conducted.
(2) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action of SSI and this
Agreement has been duly executed and delivered by SSI and constitutes
a valid and binding obligation of SSI in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditor's rights and the remedies of specific
performance and injunction and other forms of equitable relief which
may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. No further
corporate authorization or by any other person is necessary with
respect to the execution and delivery of this Agreement by SSI or its
obligations hereunder.
(3) Except as may be specified by such counsel, they do not know of
any litigation, proceeding or governmental investigation pending or
threatened against, or relating to, SSI or SSI's properties or
business or the transactions contemplated under this Agreement.
(c) A Certificate of Good Standing as of a recent date issued by the
Secretary of State of the State of Delaware to the effect that SSI is in
good standing under the laws of that state.
(d) The Operating Agreement.
(e) The Non-Competition Agreement.
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<PAGE> 16
(f) The Shareholders Agreement.
(g) Such further instruments or other documents as The Company or
Yellow or their counsel may reasonably request to assure the effective
carrying out of the transactions contemplated hereby.
8.3. Form of Closing Documents. All closing documents shall be in form and
substance reasonably satisfactory to counsel for the respective parties.
8.4 Additional Documents. The parties further agree that at any time
subsequent to the date hereof; they will, upon request and at the expense of the
requesting party, do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, all such further acts, documents, or
assurances as may be required for the better consumation of the transactions
contemplated herein.
9.0 Indemnification.
9.1 The Yellow. Yellow agrees to and does hereby indemnify, and hold
harmless SSI, its directors, officers, employees and agents, against and in
respect to any claims, losses, expenses, obligations and liabilities, including
reasonable attorney's fees, which arise or result from or relate to any breach
of or failure by The Company or Yellow to perform any of their warranties,
representations, guarantees, commitments, covenants, or conditions under this
Agreement, including, but without limitation, loss or liability from any and all
liabilities of the Company (other than the vehicle leases with respect to the
Vehicles) existing on or before the date hereof in accordance with Section 3.2
above.
9.2 SSI. SSI agrees to and hereby indemnifies and holds harmless Yellow,
its officers, directors, employees and agents, against and in respect to any
claims, losses, expenses, costs, obligations and liabilities, including
reasonable attorney's fees, which Yellow may incur or suffer by reason of a
breach of or failure by the SSI to perform any of its warranties,
representations, guarantees, commitments or covenants in this Agreement, or by
reason of any act or omission of SSI subsequent to the date hereof which
constitutes a breach or default hereunder.
10.0 Agreement Expenses. Each of the parties shall bear its own expenses in
connection with the transactions covered or contemplated by this Agreement, and
each represents and warrants to the other that there is no broker, agent or
other person entitled to compensation or a fee in connection with this Agreement
or with the transactions contemplated hereby, except such fees or compensations
as each of the parties is hereby representing and warranting that it is
exclusively liable to pay.
11. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any benefits to any person (including, without limiting the
generality of the foregoing, any present or former employee of the Company) or
corporation or other entity, other than Yellow, the Company, and SSI, and this
Agreement shall be for the sole and exclusive benefit of Yellow, the Company,
and SSI.
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<PAGE> 17
12. Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon, the successors, heirs, executors, administrators and
permitted assigns of the parties hereto. This Agreement may not be assigned by
any of the parties hereto without the prior written consent of the other
parties.
13. Notices. Any notice from one party to the other shall be deemed given
when delivered to, or on the day after being sent by a nationally recognized
overnight courier service addressed to, the person at the address listed below
or to such other person and/or address as may be designated from time to time in
writing:
To SSI: SuperShuttle International, Inc.
4610 S. 35th Street
Phoenix, Arizona 85040
Attn: Brian Wier, President
With a copy to: Oman, Schulenburg & Politan, P.L.C.
4801 E. Greenway Road
Scottsdale, AZ 85254
Attn: Steven P. Oman, Esq.
To Company: Shuffle Express, Inc.
508 DiGuilian Blvd.
Glen Burnie, Maryland 21061
Attn: Marty Haynes
With a copy to: Moldawer & Marshall, P.C.
30 Courthouse Square, Suite 300
Rockville, Maryland 20850
Attn: Alan B. Moldawer, Esq.
To Yellow: Yellow Holding, Inc.
2100 Huntingdon Avenue
Baltimore, Maryland 21211
Attn: Terry Oates
With a copy to: Moldawer & Marshall, P.C.
30 Courthouse Square, Suite 300
Rockville, Maryland 20850
Attn: Alan B. Moldawer, Esq.
14. Severability. In the event any covenant, condition or other provision
of this Agreement is held to be invalid or unenforceable by a final judgment of
a court of competent jurisdiction, then such covenant, condition or other
provision shall be automatically terminated and performance thereof waived, and
such invalidity or unenforceability shall in no way affect any of the other
covenants, conditions or provisions hereof; and the parties hereto shall
negotiate in good faith
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<PAGE> 18
to agree to such amendments, modifications or supplements of or to this
Agreement or such other appropriate actions as, to the maximum extent
practicable, shall implement and give effect to the intentions of the parties as
reflected herein.
15. Entire Agreement. This Agreement and any other additional agreements
contemplated herein contain all of the terms agreed upon by the parties with
respect to the subject matter hereof and thereof and there are no
representations or understandings between the parties except as provided herein
and therein. This Agreement may not be amended or modified in any way except by
a written amendment to this Agreement duly executed by the parties.
16. Waiver. No waiver of a breach of or default under, any provision of
this Agreement shall be deemed a waiver of such provision or of any subsequent
breach or default of the same or similar nature or of any other provision or
condition of this Agreement.
17. Applicable Law. This Agreement shall be governed by and construed (both
as to validity and performance) and enforced in accordance with the laws of the
State of Maryland.
18. Attorneys' Fees. In any action brought to enforce the provisions of
this Agreement, the prevailing party shall be entitled to recover its attorneys'
fees and costs as determined by the court and not the jury.
19. Equitable Relief. The parties agree that the remedies at law for any
breach of the terms of this Agreement are inadequate. Accordingly, the parties
consent and agree that an injunction may be issued to restrain any breach or
alleged breach of such provisions. The parties agree that terms of this
Agreement shall be enforceable by a decree of specific performance. Such
remedies shall be cumulative and not exclusive, and shall be in addition to any
other remedies which the parties may have at law or in equity.
20. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument, but all of such counterparts taken together shall be
deemed to constitute one and the same instrument. No party shall be bound until
each party has signed at least one (1) such counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
their respective names as of the day and year first above written.
SHUTTLE EXPRESS, INC.
a Maryland corporation
By: /s/ ILLEGIBLE
---------------------
Its: President
------------------
18
<PAGE> 19
YELLOW HOLDING, INC.
a Maryland corporation
By: /s/ ILLEGIBLE
---------------------
Its: President
------------------
SUPERSHUTTLE INTERNATIONAL, INC.
a Delaware corporation
By: /s/ Tom LaVay
---------------------
Its: CFO/Treasurer
------------------
19
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SUPERSHUTTLE INTERNATIONAL, INC.
FIRST: The name of the Corporation is "SuperShuttle International,
Inc."
SECOND: The registered office of the Corporation in the State of
Delaware is to be located at 306 South State Street in the City of Dover, County
of Kent, State of Delaware, and the name of its registered agent at such address
is United States Corporation Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of all classes of Stock which the
Corporation shall have the authority to issue is 25,000,000 shares, consisting
of (i) 5,000,000 shares of Preferred Stock, $0.01 par value per share (the
"Preferred Stock"), and (ii) 20,000,000 shares of Common Stock, $0.01 par value
per share (the "Common Stock").
As to the Preferred Stock, the power to issue any shares of Preferred
Stock of any class or any series of any class and designations, voting powers,
preferences, and relative participating, optional or other rights, if any, or
the qualifications, limitations, or restrictions thereof, shall be determined by
the Board of Directors.
FIFTH: The name and mailing address of the incorporator is Anthony A.
Adler, c/o Mitchell, Silberberg & Knupp, 11377 West Olympic Boulevard, Los
Angeles, California 90064.
SIXTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law, as the same may be amended
and supplemented from time to time, indemnify directors, and may indemnify in
the discretion of the Board of Directors of the Corporation any and all persons
whom it shall have power to indemnify under said section from and against any
and all of the expenses, liabilities or other matters referred to in or covered
by said section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaws, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent
<PAGE> 2
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
Furthermore, to the extent applicable, the Corporation is authorized to
provide indemnification of agents (as defined in Section 317 of the California
Corporations Code) for breach of duty to the Corporation and its stockholders
through bylaw provisions or through agreements with the agents, or both, in
excess of the indemnification otherwise permitted by Section 317 of the
California Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the California Corporations Code.
SEVENTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except that this Article SEVENTH shall not
eliminate or limit a director's 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 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article SEVENTH to authorize corporate
action further eliminating or limiting the personal liability of directors, then
the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation Law, as so
amended from time to time.
Any repeat or modification of this Article SEVENTH shall not increase
the personal liability of any director of the Corporation for any act or
occurrence taking place prior to such repeal or modification, or otherwise
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification. The provisions of this
Article SEVENTH shall not be deemed to limit or preclude indemnification of a
director by the Corporation for any liability of a director which has not been
eliminated by the provisions of this Article SEVENTH.
Furthermore, to the extent that the Corporation is found to be subject
to the laws of the State of California the liability of directors of the
Corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law.
EIGHTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation or in the Bylaws of the Corporation, in the manner now or
hereafter previously prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation, provided, however,
that notwithstanding anything in this Amended and Restated Certificate of
Incorporation to the contrary, the affirmative vote of sixty-six
<PAGE> 3
and two-thirds percent (66 2/3%) of the outstanding shares of stock of this
Corporation entitled to vote shall be required to amend, alter, change or
repeal, or adopt any provision inconsistent with, this Amended and Restated
Certificate of Incorporation.
NINTH: The Board of Directors shall have sole authority to determine
the number of Directors serving on the Board, and may increase or decrease the
exact number of Directors from time to time by resolution duly adopted by such
Board. No decrease in the number of Directors shall have the effect of
shortening the term of any incumbent Director.
TENTH: The Corporation shall have perpetual existence.
ELEVENTH: The Corporation shall be managed by the Board of Directors,
which shall exercise all powers conferred under the laws of the State of
Delaware.
TWELFTH: Meetings of Stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the Bylaws of the Corporation.
THIRTEENTH: The fiscal year of the Corporation shall initially end on
September 30 and begin on October 1 of each year; provided, however, that such
date may be changed from time to time as determined by the Board of Directors to
be in the best interest of the Corporation.
IN WITNESS WHEREOF, I have hereunder set my hand this 27th day of
February, 1998.
------------------------
R. Brian Wier, President
ATTEST:
- -------------------------------
Thomas C. LaVoy, Secretary
<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED
BYLAWS
OF
SUPERSHUTTLE INTERNATIONAL, INC.
ARTICLE I
OFFICES
1. Registered Office.
The registered office of the Corporation in the State of Delaware shall
be at 306 South State Street in the City of Dover, County of Kent, State of
Delaware.
2. Other Offices.
The Corporation may also have offices at such other places both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
1. Annual Meeting.
The annual meeting of the stockholders shall be held on such date and
place each year as the Board of Directors shall determine, for the purpose of
electing Directors and for the transaction of such other business as may
properly come before the meeting. If the election of Directors is not held on
the day designated herein for any annual meeting of the stockholders, or any
adjournment thereof, the Directors shall cause the election to be held at a
special meeting of the stockholders as soon thereafter as convenient.
2. Special Meetings.
Special meetings of the stockholders may be called for any purpose or
purposes at any time by the Board of Directors, Chairman of the Board or the
President, and shall be called by the Chairman of the Board or the President at
the request of the holders of not less than ten percent (10%) of all outstanding
stock of the Corporation entitled to vote at such meeting, or otherwise as
provided by the Delaware General Corporation Law and Section 12 of Article III
<PAGE> 2
of these Bylaws. Such request shall state the purpose or purposes of the
proposed meeting. Business transacted at any special meeting shall be limited to
the purposes stated in the notice thereof.
3. Place of Meetings.
Annual and special meetings of the stockholders shall be held at the
principal office of the Corporation, unless otherwise specified in the notice
calling any such meeting, or in the event of a waiver of notice of such meeting,
in such waiver of notice.
4. Notice of Meeting.
Written notice stating the place, date and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered to each stockholder of record entitled to vote at
such meeting not less than ten (10) nor more than sixty (60) days before the
date of the meeting. Notice may be delivered either personally or by first
class, certified or registered mail, by an officer of the Corporation at the
direction of the person or persons calling the meeting. If mailed, notice shall
be deemed to be delivered when mailed to the stockholders at his or her address
as it appears on the stock transfer books of the Corporation. Notice need not be
given of an adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken, provided that such adjournment is for
less than thirty (30) days and further provided that a new record date is not
fixed for the adjourned meeting, in either of which events, written notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at such meeting. At any adjourned meeting, any business may be transacted
which might have been transacted at the meeting as originally noticed. A written
waiver of notice, whether given before or after the meeting to which it relates,
shall be equivalent to the giving of notice of such meeting to the stockholder
or stockholders signing such waiver. Attendance of a stockholder at a meeting
shall constitute a waiver of notice of such meeting, except when the stockholder
attends for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
5. Fixing Date for Determination of Stockholders Record.
In order that the Corporation may determine the stockholders entitled
to notice of and to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or to receive payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any other change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix in advance a record date, which shall not be more than sixty
(60) nor less than ten (10) days prior to the date of such meeting or such
action, as the case may be. If the Board has not fixed a record date for
determining the stockholders entitled to notice of and to vote at a meeting of
stockholders, the record date shall be at close of business on the day next
preceding the day on which notice is given, or if notice is waived, at the close
of business on the day next
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preceding the day on which the meeting is held. If the Board has not fixed a
record date for determining the stockholders entitled to express consent to
corporate action in writing without a meeting, when no prior action by the Board
is necessary, the record date shall be the day on which the first written
consent is expressed by any stockholder. If the Board has not fixed a record
date for determining stockholders for any other purpose, the record date shall
be at the close of business on the day on which the Board adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record date for the
adjourned meeting.
6. Record of Stockholders.
The Secretary or other officer having charge of the stock transfer
books of the Corporation shall make, or cause to be made, at least ten (10) days
before every meeting of stockholders, a complete record of the stockholders
entitled to vote at a meeting of stockholders or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
7. Quorum and Manner of Acting.
At any meeting of the stockholders, the presence, in person or by
proxy, of the holders of a majority of the outstanding stock entitled to vote
shall constitute a quorum. All shares represented and entitled to vote on any
single subject matter which may be brought before the meeting shall be counted
for quorum purposes. Only those shares entitled to vote on a particular subject
matter shall be counted for the purpose of voting on that subject matter.
Business may be conducted once a quorum is present and may continue to be
conducted until adjournment sine die, notwithstanding the withdrawal or
temporary absence of stockholders leaving less than a quorum. Except as
otherwise provided in the Delaware General Corporation Law, the affirmative vote
of the holders of a majority of the shares of stock then represented at the
meeting and entitled to vote thereat shall be the act of the stockholders;
provided, however, that if the shares of stock so represented are less than the
number required to constitute a quorum, the affirmative vote must be such as
would constitute a majority if a quorum were present, except that the
affirmative vote of the holders of a majority of the shares of stock then
present is sufficient in all cases to adjourn a meeting.
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8. Voting of Shares of Stock.
Each stockholder shall be entitled to one vote or corresponding
fraction thereof for each share of stock or fraction thereof standing in his,
her or its name on the books of the Corporation on the record date. A
stockholder may vote either in person or by proxy executed in writing by the
stockholder or by his, her or its duly authorized attorney in fact, but no such
proxy shall be voted or acted upon after three (3) years from the date of its
execution unless the proxy provides for a longer period. Shares of its own stock
belonging to the Corporation or to another corporation, if a majority of the
shares entitled to vote in the election of directors of such other corporation
is held, directly or indirectly, by the Corporation, shall neither be entitled
to vote nor counted for quorum purposes; provided, however, that the foregoing
shall not limit the right of any corporation to vote stock, including but not
limited to its own stock, when held by it in a fiduciary capacity. Shares of
stock standing in the name of another corporation may be voted by such officer,
agent or proxy as the bylaws of such other corporation may prescribe or, in the
absence of such provision, as the board of directors of such other corporation
may determine. Unless demanded by a stockholder present in person or by proxy at
any meeting of the stockholders and entitled to vote thereat, or unless so
directed by the chairman of the meeting, the vote thereat on any question need
not be by ballot. If such demand or direction is made, a vote by ballot shall be
taken, and each ballot shall be signed by the stockholder voting, or by his or
her proxy, and shall state the number of shares voted.
9. Organization.
At each meeting of the stockholders, the Chairman of the Board, or, if
he or she is absent therefrom, the President, or, if he or she is absent
therefrom, another officer of the Corporation chosen as chairman of such meeting
by stockholders holding a majority of the shares present in person or by proxy
and entitled to vote thereat, or, if all the officers of the Corporation are
absent therefrom, a stockholder of record so chosen, shall act as chairman of
the meeting and preside thereat. The Secretary, or, if he or she is absent from
the meeting or is required pursuant to the provisions of this Section 9 to act
as chairman of such meeting, the person (who shall be an Assistant Secretary, if
any and if present) whom the chairman of the meeting shall appoint shall act as
secretary of the meeting and keep the minutes thereof.
10. Order of Business.
The order of business at each meeting of the stockholders shall be
determined by the chairman of such meeting, but the order of business may be
changed by the vote of stockholders holding a majority of the shares present in
person or by proxy at such meeting and entitled to vote thereat.
11. Voting.
At all meetings of stockholders, each stockholder entitled to vote
thereat shall have the right to vote, in person or by proxy, and shall have, for
each share of stock registered in his,
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her or its name, the number of votes provided by the Certificate of
Incorporation in respect of stock of such class. Stockholders shall not have
cumulative voting rights with respect to the election of Directors.
12. Voting by Proxy.
At any meeting of the stockholders, any stockholder may be represented
and vote by a proxy or proxies appointed by an instrument in writing. In the
event that any such instrument in writing shall designate two (2) or more
persons to act as proxies, a majority of such persons present at the meeting,
or, if only one shall be present, then that one shall have and may exercise all
of the powers conferred by such written instrument upon all of the persons so
designated unless the instrument shall otherwise provide. No such proxy shall be
valid after the expiration of six (6) months from the date of its execution,
unless coupled with an interest, or unless the person executing it specifies
therein the length of time for which it is to continue in force, which in no
case shall exceed seven (7) years from the date of its execution. Subject to the
above, any proxy duly executed is not revoked and continues in full force and
effect until an instrument revoking it or a duly executed proxy bearing a later
date is filed with the Secretary of the Corporation.
13. Action By Stockholders Without a Meeting.
Any action required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting without notice and without a vote,
if a consent in writing, setting forth the action so taken, is signed by the
holders of outstanding stock having not less than the number of votes that would
have been necessary to authorize such action at a meeting at which all shares
entitled to vote were present and voted. Such written consent shall not be valid
unless it is (a) signed by the stockholder, (b) dated, as to the date of such
stockholder's signature, and (c) delivered to the Corporation personally or be
certified or registered mail, return receipt requested, to the Corporation's
principal place of business, principal office in the State of Delaware or
officer or agent who has custody of the book in which the minutes of meetings of
stockholders are recorded, within sixty (60) days after the earliest date that a
stockholder signed the written consent. Prompt notice of the taking of any such
action shall be given to any such stockholder entitled to vote who has not so
consented in writing.
14. Nomination of Directors.
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors. Nomination for election
to the Board of Directors of the Corporation at a meeting of stockholders may be
made by the Board of Directors or by any stockholder of the Corporation entitled
to vote for the election of directors at such meeting who complies with the
notice procedures set forth in this Section 14. Such nominations, other than
those made by or on behalf of the Board of Directors, shall be made by notice in
writing delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation, and received not less than thirty (30) days
nor more than sixty (60) days prior to
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such meeting; provided, however, that if less than forty-five (45) days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, such nomination shall have been mailed or delivered to the
Secretary not later than the close of business on the 10th day of following the
date on which the notice of the meeting was mailed or public disclosure was
made, whichever occurs first. Such notice shall set forth (a) as to each
proposed nominee (i) the name, age, business address and, if known, residence
address of each such nominee, (ii) the principal occupation or employment of
each such nominee, (iii) the number of shares of stock of the Corporation which
are beneficially owned by each such nominee, and (iv) any other information
concerning the nominee that must be disclosed to as nominees in proxy
solicitations pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including such person's written consent to be named as a
nominee and to serve as a director if elected); (b) as to the stockholder giving
the notice (i) the name and address, as they appear on the Corporation's books,
of such stockholder, and (ii) the class and number of shares of the Corporation
which are beneficially owned by such stockholder; and (c) as to the beneficial
owner, if any, on whose behalf the nomination is made, (i) the name and address
of such person and (ii) the class and number of shares of the Corporation which
are beneficially owned by such person.
The Chairman presiding at a meeting of stockholders may, if the facts
warrant, determine and declare to the meeting that nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.
Nothing in the foregoing provision shall obligate the Corporation or
the Board of Directors to include in any proxy statement or other stockholder
communication distributed on behalf of the Corporation or the Board of Directors
information with respect to any nominee for directors submitted by a
stockholder.
ARTICLE III
BOARD OF DIRECTORS
1. General Powers.
The business and affairs of the Corporation shall be managed by the
Board of Directors.
2. Number, Term of Office and Qualifications.
Subject to the requirements of the Delaware General Corporation Law,
the Board of Directors may from time to time determine the number of Directors.
Until the Board shall otherwise determine, the number of Directors shall be that
number comprising the initial Board as set forth in the Certificate of
Incorporation. Each Director shall hold office until his or her
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successor is duly elected or until his or her earlier death or resignation or
removal in the manner hereinafter provided. Directors need not be stockholders.
3. Place of Meeting.
The Board of Directors may hold its meetings at such place or places as
it may from time to time by resolution determine or as shall be designated in
any notices or waivers of notice thereof. Any such meeting, whether regular or
special, may be held by conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting in such manner shall constitute presence in
person at such meeting.
4. Annual Meetings.
As soon as practicable after each annual election of Directors and on
the same day, the Board of Directors shall meet for the purpose of organization
and the transaction of other business at the place where regular meetings of the
Board of Directors are held, and no notice of such meeting shall be necessary in
order to legally hold the meeting, provided that a quorum is present. If such
meeting is not held as provided above, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for a
special meeting of the Board of Directors, or in the event of waiver of notice
as specified in the written waiver of notice.
5. Regular Meetings.
Regular meetings of the Board of Directors may be held without notice
at such times as the Board of Directors shall from time to time by resolution
determine.
6. Special Meetings; Notice.
Special meetings of the Board of Directors shall be held whenever
called by the Chairman of the Board or a majority of the Directors at the time
in office. Notice shall be given, in the manner hereinafter provided, of each
such special meeting, which notice shall state the time and place of such
meeting, but need not state the purposes thereof. Except as otherwise provided
in Section 7 of this Article III, notice of each such meeting shall be mailed to
each Director, addressed to him or her at his or her residence or usual place of
business, at least two (2) days before the day on which such meeting is to be
held, or shall be sent addressed to him or her at such place by telegraph,
cable, wireless or other form of recorded communication or delivered personally
or by telephone not later than the day before the day on which such meeting is
to be held. A written waiver of notice, whether given before or after the
meeting to which it relates, shall be equivalent to the giving of notice of such
meeting to the Director or Directors signing such waiver. Attendance of a
Director at a special meeting of the Board of Directors shall constitute a
waiver of notice of such meeting, except when he or she attends the meeting for
the
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express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
7. Quorum and Manner of Acting.
A majority of the whole Board of Directors shall be present in person
at any meeting of the Board of Directors in order to constitute a quorum for the
transaction of business at such meeting, and except as otherwise specified in
these Bylaws, and except also as otherwise expressly provided by the Delaware
General Corporation Law, the vote of a majority of the Directors present at any
such meeting at which a quorum is present shall be the act of the Board of
Directors. In the absence of a quorum from any such meeting, a majority of the
Directors present thereat may adjourn such meeting from time to time to another
time or place, without notice other than announcement at the meeting, until a
quorum shall be present thereat. The Directors shall act only as a Board and the
individual Directors shall have no power as such.
8. Organization.
At each meeting of the Board of Directors, the Chairman of the Board of
Directors, or, if he or she is absent therefrom, the President, or if he or she
is absent therefrom, a Director chosen by a majority of the Directors present
thereat, shall act as chairman of such meeting and preside thereat. The
Secretary, or if he or she is absent, the person (who shall be an Assistant
Secretary, if any and if present) whom the chairman of such meeting shall
appoint, shall act as Secretary of such meeting and keep the minutes thereof.
9. Action by Directors Without a Meeting.
Any action required or permitted to be taken at a meeting of the Board
of Directors may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, is signed by
all Directors and such consent is filed with the minutes of the proceedings of
the Board of Directors.
10. Resignations.
Any Director may resign at any time by giving written notice of his or
her resignation to the Corporation. Any such resignation shall take effect at
the time specified therein, or, if the time when it shall become effective is
not specified therein, it shall take effect immediately upon its receipt by the
Chairman of the Board, the President or the Secretary; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
11. Removal of Directors.
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Directors may be removed, with or without cause, by the affirmative
vote of stockholders representing at least fifty-one percent (51%) of the
outstanding capital stock entitled to vote thereon.
12. Vacancies.
Vacancies and newly created directorships resulting from any increase
in the authorized number of Directors elected by all of the stockholders having
the right to vote as a single class may be filled by a majority of the Directors
then in office, although less than a quorum, or by a sole remaining Director. If
at any time, by reason of death or resignation or other cause, the Corporation
has no Directors in office, then any officer or any stockholder or an executor,
administrator, trustee or guardian of a stockholder, may call a special meeting
of stockholders for the purpose of filling vacancies in the Board of Directors.
If one or more Directors shall resign from the Board of Directors, effective at
a future date, a majority of the Directors then in office, including those who
have so resigned, shall have the power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office as provided in this
section in the filling of other vacancies.
13. Compensation.
Unless otherwise expressly provided by resolution adopted by the Board
of Directors, no Director shall receive any compensation for his or her services
as a Director. The Board of Directors may at any time and from time to time by
resolution provide that the Directors shall be paid a fixed sum for attendance
at each meeting of the Board of Directors or a stated salary as Director. In
addition, the Board of Directors may at any time and from time to time by
resolution provide that Directors shall be paid their actual expenses, if any,
of attendance at each meeting of the Board of Directors. Nothing in this section
shall be construed as precluding any Director from serving the Corporation in
any other capacity and receiving compensation therefor, but the Board of
Directors may by resolution provide that any Director receiving compensation for
his or her services to the Corporation in any other capacity shall not receive
additional compensation for his or her services as a Director.
ARTICLE IV
OFFICERS
1. Number.
The Corporation shall have the following officers: a Chairman of the
Board (who shall be a Director), a President, a Vice President, a Secretary and
a Treasurer. At the discretion of the Board of Directors, the Corporation may
also have additional Vice Presidents, one or more Assistant Vice Presidents, one
or more Assistant Secretaries and one or more Assistant Treasurers. Any two or
more offices may be held by the same person.
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2. Election and Term of Office.
The officers of the Corporation shall be elected annually by the Board
of Directors. Each such officer shall hold office until his or her successor is
duly elected or until his or her earlier death or resignation or removal in the
manner hereinafter provided.
3. Agents.
In addition to the officers mentioned in Section 1 of this Article IV,
the Board of Directors may appoint such agents as the Board of Directors may
deem necessary or advisable, each of which agents shall have such authority and
perform such duties as are provided in these Bylaws or as the Board of Directors
may from time to time determine. The Board of Directors may delegate to any
officer or to any committee the power to appoint or remove any such agents.
4. Removal.
Any officer may be removed, with or without cause, at any time by
resolution adopted by a majority of the whole Board of Directors.
5. Resignations.
Any officer may resign at any time by giving written notice of his or
her resignation to the Board of Directors, the Chairman of the Board, the
President or the Secretary. Any such resignation shall take effect at the times
specified therein, or, if the time when it shall become effective is not
specified therein, it shall take effect immediately upon its receipt by the
Board of Directors, the Chairman of the Board, the President or the Secretary;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
6. Vacancies.
A vacancy in any office due to death, resignation, removal,
disqualification or any other cause may be filled for the unexpired portion of
the term thereof by the Board of Directors.
7. Chairman of the Board.
The Chairman of the Board shall be the chief executive officer of the
Corporation and shall have, subject to the control of the Board, general and
active supervision and direction over the business and affairs of the
Corporation and over its several officers. The Chairman of the Board shall: (a)
preside at all meetings of the stockholders and at all meetings of the Board;
(b) make a report of the state of the business of the Corporation at each annual
meeting of the stockholders; (c) see that all orders and resolutions of the
Board are carried into effect; (d) sign, with the Secretary or an Assistant
Secretary, certificates for stock of the Corporation; (e) have the right to
sign, execute and deliver in the name of the Corporation all deeds, mortgages,
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bonds, contracts or other instruments authorized by the Board, except in cases
where the signing, execution or delivery thereof is expressly delegated by the
Board or by these Bylaws to some other officer or agent of the Corporation or
where any of them are required by law otherwise to be signed, executed or
delivered; and (f) have the right to cause the corporate seal, if any, to be
affixed to any instrument which requires it. In general, the Chairman of the
Board shall perform all duties incident to the office of the Chairman of the
Board and such other duties as from time to time may be assigned to him or her
by the Board.
8. President.
The President shall have, subject to the control of the Board and the
Chairman of the Board, general and active supervision and direction over the
business and affairs of the Corporation and over its several officers. At the
request of the Chairman of the Board, or in case of his or her absence or
inability to act, the President shall perform the duties of the Chairman of the
Board and, when so acting, shall have all the powers of, and be subject to all
the restrictions upon, the Chairman of the Board. He may sign, with the
Secretary or an Assistant Secretary, certificates for stock of the Corporation.
He may sign, execute and deliver in the name of the Corporation all deeds,
mortgages, bonds, contracts or other instruments authorized by the Board, except
in cases where the signing, execution or delivery thereof is expressly delegated
by the Board or by these Bylaws to some other officer or agent of the
Corporation or where any of them are required by law otherwise to be signed,
executed or delivered, and he may cause the corporate seal, if any, to be
affixed to any instrument which requires it. In general, the President shall
perform all duties incident to the office of the President and such other duties
as from time to time may be assigned to him or her by the Board or the Chairman
of the Board.
9. Vice President.
The Vice President and any additional Vice Presidents shall have such
powers and perform such duties as the Chairman of the Board, the President or
the Board of Directors may from time to time prescribe and shall perform such
other duties as may be prescribed by these Bylaws. At the request of the
President, or in case of his or her absence or inability to act, the Vice
President shall perform the duties of the President and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
President.
10. Secretary.
The Secretary shall: (a) record all the proceedings of the meetings of
the stockholders, the Board of Directors and the Executive Committee, if any, in
one or more books kept for that purpose; (b) see that all notices are duly given
in accordance with the provisions of these Bylaws or as required by law; (c) be
the custodian of all contracts, deeds, documents, all other indicia of title to
properties owned by the Corporation and of its other corporate records (except
accounting records) and of the corporate seal, if any, and affix such seal to
all documents the execution of which on behalf of the Corporation under its seal
is duly authorized; (d) sign, with
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the Chairman of the Board, the President, the Executive Vice President or a Vice
President, certificates for stock of the Corporation; (e) have charge, directly
or through the transfer clerk or transfer clerks, transfer agent or transfer
agents and registrar or registrars appointed as provided in Section 3 of Article
VII of these Bylaws, of the issue, transfer and registration of certificates for
stock of the Corporation and of the records thereof, such records to be kept in
such manner as to show at any time the amount of the stock of the Corporation
issued and outstanding, the manner in which and the time when such stock was
paid for, the names, alphabetically arranged, and the addresses of the holders
of record thereof, the number of shares held by each, and the time when each
became a holder of record; (f) upon request, exhibit or cause to be exhibited at
all reasonable times to any Director such records of the issue, transfer and
registration of the certificates for stock of the Corporation; (g) see that the
books, reports, statements, certificates and all other documents and records
required by law are properly kept and filed; and (h) see that the duties
prescribed by Section 6 of Article II of these Bylaws are performed. In general,
the Secretary shall perform all duties incident to the office of Secretary and
such other duties as from time to time may be assigned to him or her by the
Chairman of the Board, the President or the Board of Directors.
11. Treasurer.
If required by the Board of Directors, the Treasurer shall give a bond
for the faithful discharge of his or her duties in such sum and with such surety
or sureties as the Board of Directors shall determine. The Treasurer shall: (a)
have charge and custody of, and be responsible for, all funds, securities, notes
and valuable effects of the Corporation; (b) receive and give receipt for moneys
due and payable to the Corporation from any sources whatsoever; (c) deposit all
such moneys to the credit of the Corporation or otherwise as the Board of
Directors, the Chairman of the Board or the President shall direct in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article VI of these Bylaws; (d) cause such funds to be
disbursed by checks or drafts on the authorized depositories of the Corporation
signed as provided in Article VI of these Bylaws; (e) be responsible for the
accuracy of the amounts of, and cause to be preserved proper vouchers for, all
moneys so disbursed; (f) have the right to require from time to time reports or
statements giving such information as he or she may desire with respect to any
and all financial transactions of the Corporation from the officers or agents
transacting the same; (g) render to the Chairman of the Board, the President or
the Board, whenever they, respectively, shall request him or her so to do, an
account of the financial condition of the Corporation and of all his or her
transactions as Treasurer; and (h) upon request, exhibit or cause to be
exhibited at all reasonable times the cash books and other records to the
Chairman of the Board, the President or any of the Directors of the Corporation.
In general, the Treasurer shall perform all duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him or
her by the Chairman of the Board, the President or the Board of Directors.
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12. Assistant Officers.
Any persons elected as assistant officers shall assist in the
performance of the duties of the designated office and such other duties as
shall be assigned to them by any Vice President, the Secretary or the Treasurer,
as the case may be, or by the Board of Directors, the Chairman of the Board, or
the President.
ARTICLE V
COMMITTEES
1. Executive Committee; How Constituted and Powers.
The Board of Directors, by resolution adopted by a majority of the
whole Board of Directors, may designate one or more of the Directors then in
office, who shall include the Chairman of the Board, to constitute an Executive
Committee, which shall have and may exercise between meetings of the Board of
Directors all the delegable powers of the Board of Directors to the extent not
expressly prohibited by the Delaware General Corporation Law or by resolution of
the Board of Directors. The Board may designate one or more Directors as
alternate members of the Committee who may replace any absent or disqualified
member at any meeting of the Committee. Each member of the Executive Committee
shall continue to be a member thereof only during the pleasure of a majority of
the whole Board of Directors.
2. Executive Committee; Organization.
The Chairman of the Board shall act as chairman at all meetings of the
Executive Committee and the Secretary shall act as secretary thereof. In case of
the absence from any meeting of the Chairman of the Board or the Secretary, the
Committee may appoint a chairman or secretary, as the case may be, of the
meeting.
3. Executive Committee; Meetings.
Regular meetings of the Executive Committee may be held without notice
on such days and at such places as shall be fixed by resolution adopted by a
majority of the Committee and communicated to all its members. Special meetings
of the Committee shall be held whenever called by the Chairman of the Board or a
majority of the members thereof then in office. Notice of each special meeting
of the Committee shall be given in the manner provided in Section 6 of Article
III of these Bylaws for special meetings of the Board of Directors. Notice of
any such meeting of the Executive Committee, however, need not be given to any
member of the Committee if waived by him or her in writing or by telegraph,
cable, wireless or other form of recorded communication either before or after
the meeting, or if he or she is present at such meetings, except when he or she
attends for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Subject to the
provisions of this Article V, the Committee, by resolution adopted by a majority
of the whole
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Committee, shall fix its own rules of procedure and it shall keep a record of
its proceedings and report them to the board at the next regular meeting thereof
after such proceedings have been taken. All such proceedings shall be subject to
revision or alteration by the Board of Directors; provided, however, that third
parties shall not be prejudiced by any such revision or alteration.
4. Executive Committee; Quorum and Manner of Acting.
A majority of the Executive Committee shall constitute a quorum for the
transaction of business, and, except as specified in Section 3 of this Article
V, the act of a majority of those present at a meeting thereof at which a quorum
is present shall be the act of the Committee. The members of the Committee shall
act only as a committee, and the individual members shall have no power as such.
5. Other Committees.
The Board of Directors, by resolution adopted by a majority of the
whole Board, may constitute other committees, which shall in each case consist
of one or more of the Directors and, at the discretion of the Board of
Directors, such officers who are not Directors. The Board of Directors may
designate one or more Directors or officers who are not Directors as alternate
members of any committee who may replace any absent or disqualified member at
any meeting of the committee. Each such committee shall have and may exercise
such powers as the Board of Directors may determine and specify in the
respective resolutions appointing them; provided, however, that (a) unless all
of the members of any committee shall be Directors, such committee shall not
have authority to exercise any of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and (b) if any
committee shall have the power to determine the amounts of the respective fixed
salaries of the officers of the Corporation or any of them, such committee shall
consist of not less than three (3) members and none of its members shall have
any vote in the determination of the amount that shall be paid to him or her as
a fixed salary. A majority of all the members of any such committee may fix its
rules of procedure, determine its action and fix the time and place of its
meetings and specify what notice thereof, if any, shall be given, unless the
Board of Directors shall otherwise by resolution provide.
6. Resignations.
Any member of the Executive Committee or any other committee may resign
therefrom at any time by giving written notice of his or her resignation to the
Chairman of the Board, the President or the Secretary. Any such resignation
shall take effect at the time specified therein, or if the time when it shall
become effective is not specified therein, it shall take effect immediately upon
its receipt by the Chairman of the Board, the President or the Secretary; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
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7. Vacancies.
Any vacancy in the Executive Committee or any other committee shall be
filled by the vote of a majority of the whole Board of Directors.
8. Compensation.
Unless otherwise expressly provided by resolution adopted by the Board
of Directors, no member of the Executive Committee or any other committee shall
receive any compensation for his or her services as a committee member. The
Board of Directors may at any time and from time to time by resolution provide
that committee members shall be paid a fixed sum for attendance at each
committee meeting or a stated salary as a committee member. In addition, the
Board of Directors may at any time and from time to time by resolution provide
that such committee members shall be paid their actual expenses, if any, of
attendance at each committee meeting. Nothing in this section shall be construed
as precluding any committee member from serving the Corporation in any other
capacity and receiving compensation therefor, but the Board of Directors may by
resolution provide that any committee member receiving compensation for his or
her services to the Corporation in any other capacity shall not receive
additional compensation for his or her services as a committee member.
9. Dissolution of Committees; Removal of Committee Members.
The Board of Directors, by resolution adopted by a majority of the
whole Board, may, with or without cause, dissolve the Executive Committee or any
other committee, and, with or without cause, remove any member thereof.
ARTICLE VI
MISCELLANEOUS
1. Execution of Contracts.
Except as otherwise required by law or by these Bylaws, any contract or
other instrument may be executed and delivered in the name of the Corporation
and on its behalf by the Chairman of the Board, the President, or any Vice
President. In addition, the Board of Directors may authorize any other officer
of officers or agent or agents to execute and deliver any contract or other
instrument in the name of the Corporation and on its behalf, and such authority
may be general or confined to specific instances as the Board of Directors may
by resolution determine.
2. Attestation.
Any Vice President, the Secretary, or any Assistant Secretary may
attest the execution of any instrument or document by the Chairman of the Board,
the President, or any other duly authorized officer or agent of the Corporation
and may affix the corporate seal, if any, in
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witness thereof, but neither such attestation nor the affixing of a corporate
seal shall be requisite to the validity of any such document or instrument.
3. Checks, Drafts.
All checks, drafts, orders for the payment of money, bills of lading,
warehouse receipts, obligations, bills of exchange and insurance certificates
shall be signed or endorsed (except endorsements for collection for the account
of the Corporation or for deposit to its credit, which shall be governed by the
provisions of Section 4 of this Article VI) by such officer or officers or agent
or agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
4. Deposits.
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation or otherwise as the Board of
Directors, the Chairman of the Board of Directors, or the President shall direct
in general or special accounts at such banks, trust companies, savings and loan
associations, or other depositories as the Board of Directors may select or as
may be selected by any officer or officers or agent or agents of the Corporation
to whom power in that respect has been delegated by the Board of Directors. For
the purpose of deposit and for the purpose of collection for the account of the
Corporation, checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation may be endorsed, assigned and delivered
by any officer or agent of the Corporation. The Board of Directors may make such
special rules and regulations with respect to such accounts, not inconsistent
with the provisions of these Bylaws, as it may deem expedient.
5. Proxies in Respect of Stock or Other Securities of Other Corporations.
Unless otherwise provided by resolution adopted by the Board of
Directors, the Chairman of the Board of Directors, the President, or any Vice
President may exercise in the name and on behalf of the Corporation the powers
and rights which the Corporation may have as the holder of stock or other
securities in any other corporation, including without limitation the right to
vote or consent with respect to such stock or other securities.
6. Fiscal Year.
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors, and may thereafter be changed from time to time by action of
the Board of Directors. Initially, the fiscal year shall begin on October 1 and
end on September 30.
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ARTICLE VII
STOCK
1. Certificates.
Every holder of stock in the Corporation shall be entitled to have a
certificate signed by or in the name of the Corporation by the Chairman of the
Board of Directors, the President, or a Vice President and by the Secretary or
an Assistant Secretary. The signatures of such officers upon such certificate
may be facsimiles if the certificate is signed, manually or by facsimile
signature, by a transfer agent or registered by a registrar, other than the
Corporation itself or one of its employees. If any officer who has signed or
whose facsimile signature has been placed upon a certificate has ceased for any
reason to be such officer prior to issuance of the certificate, the certificate
may be issued with the same effect as if that person were such officer at the
date of issue. All certificates for stock of the Corporation shall be
consecutively numbered, shall state the number of shares represented thereby and
shall otherwise be in such form as shall be determined by the Board of
Directors, subject to such requirements as are imposed by the Delaware General
Corporation Law. The names and addresses of the persons to whom the shares
represented by certificates are issued shall be entered on the stock transfer
books of the Corporation, together with the number of shares and the date of
issue, and in the case of cancellation, the date of cancellation. Certificates
surrendered to the Corporation for transfer shall be canceled, and no new
certificate shall be issued in exchange for such shares until the original
certificate has been canceled; except that in the case of a lost, stolen,
destroyed or mutilated certificate, a new certificate may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
2. Transfer of Stock.
Transfers of shares of stock of the Corporation shall be made only on
the stock transfer books of the Corporation by the holder of record thereof or
by his or her legal representative or attorney in fact, who shall furnish proper
evidence of authority to transfer to the Secretary, or a transfer clerk or a
transfer agent, and upon surrender of the certificate or certificates for such
shares properly endorsed and payment of all taxes thereon. The person in whose
name shares of stock stand on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
3. Regulations.
The Board of Directors may make such rules and regulations as it may
deem expedient, not inconsistent with these Bylaws, concerning the issue,
transfer and registration of certificates for stock of the Corporation. The
Board of Directors may appoint, or authorize any officer or officers or any
committee to appoint, one or more transfer clerks or one or more transfer agents
and one or more registrars, and may require all certificates for stock to bear
the signature or signatures of any of them.
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ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares of stock in the manner
and upon the terms and conditions provided in the Delaware General Corporation
Law.
ARTICLE IX
SEAL
A corporate seal shall not be requisite to the validity of any
instrument executed by or on behalf of the Corporation. Nevertheless, if in any
instance a corporate seal is used, the same shall be in the form of a circle and
shall bear the full name of the Corporation and the year and state of
incorporation, or words and figures of similar import.
ARTICLE X
INDEMNIFICATION OF DIRECTORS AND OFFICERS
1. General.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
2. Derivative Actions.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the
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Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
3. Indemnification in Certain Cases.
To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 1 and 2 of this Article X, or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
4. Procedure.
Any indemnification under Sections 1 and 2 of this Article X (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in such Sections 1 and 2. Such
determination shall be made (a) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (c) by the stockholders.
5. Advances for Expenses.
Expenses incurred by a director, officer, employee, or agent of the
Corporation in defending a civil or criminal action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall be ultimately
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article X.
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6. Rights Not-Exclusive.
The indemnification and advancement of expenses provided by or granted
pursuant to, the other Sections of this Article X shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled under
any law, by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
7. Insurance.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article X.
8. Definition of Corporation.
For the purposes of this Article X, references to "the Corporation"
include, in addition to the resulting corporation, all constituent corporations
(including any constituent of a constituent) absorbed in consolidation or merger
which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees and agents so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Article X with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
9. Other Definitions.
For purposes of this Article X, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
X.
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10. Continuation of Rights.
The indemnification and advancement of expenses provided by, or granted
pursuant to this Article X shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person. No amendment to or repeal of
this Article X shall apply to or have any effect on, the rights of any director,
officer, employee or agent under this Article X which rights come into existence
by virtue of acts or omissions of such director, officer, employee or agent
occurring prior to such amendment or repeal.
ARTICLE XI
AMENDMENTS
These Bylaws may be repealed, altered or amended by the affirmative
vote of the holders of a majority of the stock issued and outstanding and
entitled to vote at any meeting of stockholders or by resolution duly adopted by
the affirmative vote of not less than a majority of the Directors in office at
any annual or regular meeting of the Board of Directors or at any special
meeting of the Board of Directors if notice of the proposed repeal, alteration
or amendment be contained in the notice of such special meeting; provided,
however, that an affirmative vote of sixty-six and two thirds percent (66 2/3%)
of the stock issued and outstanding and entitled to vote thereon is requested to
repeal, alter or amend Article X or this Article XI.
I, the undersigned, being the Secretary of SUPERSHUTTLE INTERNATIONAL,
INC., DO HEREBY CERTIFY the foregoing to be the Bylaws of the Corporation, as
adopted by the Board of Directors on the 20th day of February, 1998.
-------------------------------
Thomas C. LaVoy
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Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of March
31, 1998, is entered into by and among SUPERSHUTTLE INTERNATIONAL, INC., a
Delaware corporation (the "Company"), and the shareholders of PREFERRED
TRANSPORTATION, INC., a California corporation ("PTI") as listed on Exhibit A
attached hereto (the "Shareholders").
WHEREAS, the Company has entered into an Amended and Restated Agreement
and Plan of Reorganization and Merger dated as of the date hereof, by and among
the Company, SuperShuttle Acquisition Co. I, PTI, and the Shareholders (the
"Plan of Merger") pursuant to which the Shareholders shall receive an aggregate
of 915,570 shares of Common Stock, $.01 par value per share (the "Common
Stock"), of the Company; and
WHEREAS, pursuant to the terms of the Plan of Merger, the Company has
agreed to provide the Shareholders with certain registration rights with respect
to such shares in connection with a contemplated initial registration of the
Company's securities with the Commission (as defined in Section 9 below) for
sale to the public (the "Public Offering");
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Required Registration.
a. If within twelve months of the effective date of the Company's
initial registration for its Public Offering (the "Time Period") the Company has
not filed and caused to be declared effective a Registration Statement (as
defined in Section 9 below) so that all the shares of the Common Stock issued to
the Shareholders are eligible to be offered and sold under the Securities Act
(as defined in Section 9 below), the holder(s) of a majority of the Registrable
Shares (as defined in Section 9 below), provided that the Company is eligible to
register securities on Form S-3, shall have the right, any time after the Time
Period, to request registration (a "Demand Registration") under the Securities
Act, of any and all Registrable Shares, upon the terms, and subject to the
conditions, set forth herein. The Company covenants and agrees to timely file
all reports required to be filed by the Company pursuant to the Exchange Act (as
defined in Section 9 below) during the term of this Agreement.
b. One or more Shareholders holding a majority of the Registrable
Shares (the "Initiating Shareholders") may elect to exercise the right to
request a Demand Registration pursuant to this Section 1 by furnishing the
Company with written notice thereof (a "Demand Notice"). Upon receipt by the
Company of a Demand Notice, the Company shall promptly notify each other
Shareholder in writing of the Demand Notice received by the Company. Upon
receipt of such notice from the Company (the "Company Notice"), each such
Shareholder may give the Company a written
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request to register all or some of such Shareholder's Registrable Shares in the
registration described in the Company Notice, provided that such written request
is received within twenty (20) days after the date on which the Company Notice
is given (with such request stating (i) the amount of Registrable Shares to be
included, (ii) such Shareholder's intended method of distribution of such
Registrable Shares and (iii) any other information reasonably requested by the
Company to properly effect the registration of such Registrable Shares). The
Company shall as soon as practicable after the date on which the Company Notice
is given, but in no event less than 20 days from receipt of the Company notice
and no more than 45 days from receipt by the Company of the Demand Notice, file
with the Commission and use its commercially reasonable best efforts to promptly
cause to become effective no later than 60 days from filing a Registration
Statement on Form S-3 which shall cover the Registrable Shares specified in the
Demand Notice and in any written request from any other Shareholder received by
the Company within twenty (20) days from the date on which the Company Notice is
received.
c. The Registration Statement filed pursuant to the request of
the Initiating Shareholders may, subject to the provisions of Section 1(d)
below, include other securities of the Company which are held by persons who, by
virtue of agreements entered into with the Company prior or subsequent to the
date of this Agreement, are entitled to include their securities in such
registration.
If the Selling Shareholders who own a majority of the
Registrable Shares request registration, the public offering or distribution of
Registrable Shares pursuant to a Demand Registration shall be pursuant to a firm
commitment underwriting, the underwriters of which shall be an investment
banking firm selected and engaged by the Company (subject to the approval of the
Selling Shareholders, which approval shall not be unreasonably withheld).
If, by virtue of agreements with the Company, the holders of
other securities of the Company (the "Other Holders") request and are entitled
to inclusion in such registration, the Company shall, on behalf of all
Shareholders, offer to the Other Holders that such other securities be included
in the underwriting and may condition such offer on the acceptance by such Other
Holders of the further provisions of this Section 1. The Company shall (together
with all Shareholders and Other Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement with the
representative of the underwriter or underwriters.
Notwithstanding any other provision of this Agreement, if the
representative of the underwriter or underwriters advises the Company in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Shareholders and Other
Holders of securities which would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Securities and such other securities that
may be included in the registration and underwriting shall be allocated among
the Shareholders and the Other Holders in such proportion as the respective
number of shares each Shareholder and Other Holder requests to be included in
such registration bears to the total number of shares all Shareholders and Other
Holders request be included. All Registrable Securities or any other
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securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall not be included in such registration.
If any Shareholder or Other Holder of other securities
entitled (upon request) to be included in such registration, disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the underwriter and the Initiating Shareholders.
The securities so withdrawn shall also be withdrawn from registration. If the
underwriter has not limited the number of Registrable Securities or other
securities to be underwritten, the Company may include its securities for its
own account in such registration if the underwriter so agrees and if the number
of Registrable Securities and other securities which would otherwise have been
included in such registration and underwriting will not thereby be limited.
d. The Company shall be obligated to register Shareholder stock
pursuant to this Section 1 on one occasion only, provided, however, that such
obligation shall be deemed satisfied only when a registration statement covering
all shares of Shareholder stock specified in notices received as aforesaid, for
sale in accordance with the method of disposition specified by the requesting
holders, shall have (i) become effective, or (ii) been withdrawn at the request
of the Shareholders requesting such registration (other than solely as a result
of material information concerning the business or financial condition of the
Company which is made known to such Shareholders after the date on which
registration was requested). In addition, the Company shall not be required to
effect any registration (other than on Form S-3 or any successor form relating
to secondary offerings) within 180 days after the effective date of any other
Registration Statement of the Company.
e. If at the time of any request to register Registrable Shares
pursuant to this Section 1, the Company is engaged or has fixed plans to engage
within 30 days of the time of the Demand Notice in a registered public offering
as to which the Shareholders may include Registrable Shares pursuant to Section
2, then the Company may at its option direct that such request be delayed for a
period not in excess of 120 days from the effective date of such offering or 120
days from the date of commencement of such other material activity, as the case
may be, such right to delay a request to be exercised by the Company not more
than once.
2. Piggy-back Registration.
a. The holders of the Registrable Shares shall have piggy-back
registration rights as provided for herein. Whenever the Company proposes to
file a Registration Statement it will, prior to such filing, give written notice
to all Shareholders of its intention to do so and, upon the written request of a
Shareholder or Shareholders given within 20 days after the Company provides such
notice (which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its reasonable best efforts to cause
all Registrable Shares which the Company has been requested by such Shareholder
or Shareholders to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of such
Shareholder or Shareholders.
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b. If, by virtue of agreements with the Company, the Other
Holders request and are entitled to inclusion in such registration, the Company
shall, on behalf of all Shareholders, offer to the Other Holders that such other
securities be included in the underwriting and may condition such offer on the
acceptance by such Other Holders of the further provisions of this Section 2.
The Company shall (together with all Shareholders and Other Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement with the representative of the underwriter or
underwriters selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the
representative of the underwriter or underwriters advises the Company in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Shareholders and Other
Holders of securities which would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Securities and such other securities that
may be included in the registration and underwriting shall be allocated among
the Shareholders and the Other Holders in such proportion as the respective
number of shares each Shareholder and Other Holder requests to be included in
such registration bears to the total number of shares all Shareholders and Other
Holders request be included. All Registrable Securities or any other securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall not be included in such registration.
If any Shareholder or Other Holder of other securities
entitled (upon request) to be included in such registration, disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the underwriter and the other Shareholders. The
securities so withdrawn shall also be withdrawn from registration.
c. The Company intends to register a certain number of currently
unissued shares of its common stock in an initial public offering ("IPO"). If
the Company and the managing underwriter or underwriters elect, in their sole
and absolute discretion, to register shares of common stock owned by Mitch Rouse
or Wilmington Cab Co. of California, Inc. or any holder of at least 25,000
shares of SuperShuttle common stock (as of the date of filing of the Form S-1
registration statement) for sale in the IPO, the Company shall provide the
Shareholders notice of its intent to register such shares 25 days prior to the
filing of the Form S-1 registration statement (the "Filing Date"). The
Shareholders may elect to include a number of their shares of SuperShuttle
common stock in the IPO by giving written notice to the Company no less than 20
days prior to the Filing Date of the number of shares requested to be included
therein. If, in the opinion of the managing underwriter or underwriters,
inclusion of all shares for which registration has been requested would
adversely affect the marketing of the shares to be sold, the Company shall
register (subject to the approval of the managing underwriter or underwriters)
up to 125,000 shares of SuperShuttle common stock owned by Mitch Rouse or
Wilmington Cab. Co. of California, Inc., up to 135,000 shares of SuperShuttle
common stock owned by holders of less than 25,000 shares, and the number of
shares to be registered of SuperShuttle common stock owned by any other holder
of at least 25,000 shares shall be reduced pro rata among the requesting holders
based on the number of shares of SuperShuttle common stock owned by such
holders.
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<PAGE> 5
3. Registration Procedures. If and whenever the Company is required by the
provisions of Section 1 of this Agreement to use its reasonable best efforts to
effect the registration of any of the Registrable Shares under the Securities
Act, the Company shall:
a. prepare and file with the Commission a Registration Statement
with respect to such Registrable Shares and use its reasonable best efforts to
cause that Registration Statement to become and remain effective;
b. as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it but not more than one year after
the effective date and, in the case of any other offering, until the earlier of
the sale of all Registrable Shares covered thereby or one year after the
effective date thereof;
c. as expeditiously as possible furnish to each Selling
Shareholder such reasonable numbers of copies of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as the Selling Shareholder may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Shares owned by the selling Shareholder; and
d. as expeditiously as possible use its reasonable best efforts
to register or qualify the Registrable Shares covered by the Registration
Statement under the securities or blue sky laws of such states as the Selling
Shareholders shall reasonably request, and do any and all other acts and things
that may be necessary or desirable to enable the Selling Shareholders to
consummate the public sale or other disposition in such states of the
Registrable Shares owned by the selling Shareholder.
If the Company has delivered preliminary or final prospectuses
to the Selling Shareholders and after having done so the prospectus is amended
to comply with the requirements of the Securities Act, the Company shall
promptly notify the Selling Shareholders and, if requested, the Selling
Shareholders shall immediately cease making offers of Registrable Shares and
return all prospectuses to the Company at the Company's sole cost and expense.
The Company shall promptly provide the Selling Shareholders with revised
prospectuses and, following receipt of the revised prospectuses, the Selling
Shareholders shall be free to resume making offers of the Registrable Shares.
4. Allocation of Expenses. The Company will pay all Registration Expenses
of all registrations under this Agreement. For purposes of this Section
4, the term "Registration Expenses" shall mean all expenses to be
incurred by the Company in complying with this Agreement, including,
without limitation, all registration and filing fees, exchange listing
fees, printing
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<PAGE> 6
and shipping expenses, fees and expenses of counsel for the Company,
state blue sky fees and expenses. Notwithstanding the foregoing,
"Registration Expenses" shall not include any and all underwriting
discounts and selling commissions applicable to the sale of the
Registrable Securities.
5. Indemnification and Contribution.
a. In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company will indemnify
and hold harmless the Selling Shareholder of such Registrable Shares, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such Selling Shareholder or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Selling Shareholder, underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act, state securities or blue sky laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission 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; and the Company will
reimburse such Selling Shareholder, underwriter and each such controlling person
for any legal or any other expenses reasonably incurred by such Selling
Shareholder, underwriter or controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
untrue statement or omission made in such Registration Statement, preliminary
prospectus or final prospectus, or any such amendment or supplement, (i) in
reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of such Selling Shareholder, underwriter or controlling
person specifically for use in the preparation thereof or (ii) which untrue
statement was corrected by the Company and delivered to the Selling Shareholder
prior to consummation of the sale by the Selling Shareholder resulting in such
loss, claim, damage or liability.
b. In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each Selling Shareholder of
Registrable Shares, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or blue sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material
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<PAGE> 7
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission or alleged omission 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, provided that such
statement or omission was made in reliance upon and in conformity with
information relating to such Selling Shareholder furnished in writing to the
Company by and on behalf of such Selling Shareholder specifically for use in
connection with the preparation of such Registration Statement, prospectus,
amendment or supplement; provided, however, that the obligations of such Selling
Shareholders hereunder shall be limited to an amount equal to the proceeds to
each Selling Shareholder of Registrable Shares sold in connection with such
registration.
c. Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5, except to the extent
that such delay prejudices such indemnifying party. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between the Indemnified Party and
any other party represented by such counsel in such proceeding. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party.
d. If the indemnification provided for under this Section 5 is
unavailable to or insufficient to hold the Indemnified Party harmless under
subparagraphs (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein for any reason
other than as specified therein, then the Indemnifying Party shall contribute to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and such Indemnified Party on the other from
the subject offering or distribution or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Indemnifying Party on the one
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<PAGE> 8
hand and such Indemnified Party on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations. The relative benefits received by the Indemnifying Party on the
one hand and the Indemnified Party on the other hand shall be deemed to be in
the same proportion as the net proceeds of the offering or other distribution
(after deducting expenses) received by the Indemnifying Party bears to the net
proceeds of the offering or other distribution (after deducting expenses)
received by the Indemnified Party. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by (or omitted to be supplied by) the Company or
the Selling Shareholder, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
the relative benefits received by each party from the sale of the Registrable
Shares and any other equitable considerations appropriate under the
circumstances. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. 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.
6. Indemnification with Respect to Underwritten Offering. In the event that
Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 1 or 2 hereof, the Company agrees to
(i) enter into an underwriting agreement containing customary representations
and warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary provisions with
respect to indemnification by the Company of the underwriters of such offering,
and (ii) provide such other documents and agreements customarily delivered by an
issuer in an underwritten public offering, including, without limitation,
customary opinions of counsel and accountant "cold comfort" letters.
7. Information by Shareholder. Each Shareholder including Registrable Shares in
any registration shall furnish to the Company such information regarding such
Shareholder and the distribution proposed by such Shareholder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement. The
Shareholders shall perform all acts reasonably necessary to effect the
registration of the Registrable Shares.
8. Termination. All of the Company's obligations to register Registrable Shares
under this Agreement shall terminate upon the exercise of the repurchase right
pursuant to Section 5.2 of the Plan of Merger.
9. Certain Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
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<PAGE> 9
"Commission" means the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.
"Registration Expenses" means the expenses described in
Section 4.
"Registrable Shares" shall mean shares of Common Stock issued
to the Shareholders pursuant to the Purchase Agreements and any other shares of
capital stock of the Company issued to the Shareholders in respect of such
shares as a result of stock splits, stock dividends, reclassification,
recapitalizations, mergers, consolidations or similar events. References in this
Agreement to amounts or percentages of Registrable Shares as of or on any
particular date shall be deemed to refer to amounts or percentages after giving
effect to any applicable events contemplated by the preceding sentence.
"Registration Statement" shall mean any registration statement
of the Company, including, without limitation, an initial Registration
Statement, on any form (to be selected by the Company) for which the Company
then qualifies and which permits the secondary resale thereunder of Registrable
Shares. The term Registration Statement shall also include all exhibits and
financial statements and schedules and documents incorporated by reference in
such Registration Statement when it becomes effective under the Securities Act,
and in the case of the references to the Registration Statement as of a date
subsequent to the effective date, as amended or supplemented as of such date.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time.
"Selling Shareholder" shall mean any Shareholder whose
Registrable Shares are included at the request of such Shareholder in any
Registration Statement filed pursuant this Agreement.
"Shareholder" shall mean a Shareholder (as defined in the
preamble to this Agreement) or any transferee of Registrable Shares, if such
transferee has executed a counterpart hereof at the time of the transfer to such
transferee, unless the Registrable Shares held by such transferee are acquired
in a public distribution pursuant to a registration statement under the
Securities Act.
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<PAGE> 10
10. General.
a. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
given if sent by registered or certified mail, first class postage prepaid,
return receipt requested, to the address of such parties set forth on the
signature pages of this Agreement or such other future address as may be
specified by any party by notice to all of the other parties. Such
communications may also be given by personal delivery, by facsimile or by
regular mail, but shall be effective only if and when actually received.
b. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
c. Amendments and Waivers. Any term of this Agreement may be amended
with the written consent of the Company and each of the Shareholders. No waivers
of or exceptions to any term, condition or provision of this Agreement, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision. A party hereto may
waive the performance of any covenant for its benefit (either generally or in a
particular instance and either retroactively or prospectively), provided,
however, that no such waiver shall be effective unless in writing and signed by
such party.
d. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
e. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to its
principals of conflicts of law.
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 instrument.
g. Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, the successors, assigns and transferees of each of the
parties hereto.
h. Effect of Termination. In the event of termination of this Agreement
as provided in Section 8, this Agreement shall become void and there shall be no
liability or further obligation hereunder on the part of the Company, PTI, or
the Shareholders.
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IN WITNESS WHEREOF, the Company and the Shareholders have executed this
Agreement as of the 31st day of March, 1998.
COMPANY
SUPERSHUTTLE INTERNATIONAL, INC.
By: /s/ Thomas C. LaVoy
-----------------------------------------
Thomas C. LaVoy, Chief Financial Officer
Address for Notice:
4610 South 35th Street
Phoenix, AZ 85040
Telecopy: (602) 243-6446
with a copy to:
Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, AZ 85004
Telecopy: (602)253-8129
SHAREHOLDERS
/s/ Steve Allan
----------------------------------------------
Steve Allan
/s/ Dave Koscielak
----------------------------------------------
Dave Koscielak
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Address for Notice:
Preferred Transportation, Inc.
1430 South Anaheim
Anaheim, CA 92805
With a copy to:
Petillon & Hansen
1260 Union Bank Tower
21515 Hawthorne Boulevard
Torrance, CA 90503
Telecopy: (310) 543-0550
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EXHIBIT A
PTI Shareholders
Steve Allan
Dave Koscielak
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<PAGE> 1
Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of March
31, 1998, is entered into by and among SUPERSHUTTLE INTERNATIONAL, INC., a
Delaware corporation (the "Company"), and the shareholders of TAMARACK
TRANSPORTATION, INC., a California corporation ("Tamarack") as listed on Exhibit
A attached hereto (the "Shareholders").
WHEREAS, the Company has entered into an Amended and Restated Agreement
and Plan of Reorganization and Merger dated as of the date hereof, by and among
the Company, SuperShuttle Acquisition Co. I, Tamarack, and the Shareholders (the
"Plan of Merger") pursuant to which the Shareholders shall receive an aggregate
of 731,621 shares of Common Stock, $.01 par value per share (the "Common
Stock"), of the Company; and
WHEREAS, pursuant to the terms of the Plan of Merger, the Company has
agreed to provide the Shareholders with certain registration rights with respect
to such shares in connection with a contemplated initial registration of the
Company's securities with the Commission (as defined in Section 9 below) for
sale to the public (the "Public Offering");
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Required Registration.
a. If within twelve months of the effective date of the Company's
initial registration for its Public Offering (the "Time Period") the Company has
not filed and caused to be declared effective a Registration Statement (as
defined in Section 9 below) so that all the shares of the Common Stock issued to
the Shareholders are eligible to be offered and sold under the Securities Act
(as defined in Section 9 below), the holder(s) of a majority of the Registrable
Shares (as defined in Section 9 below), provided that the Company is eligible to
register securities on Form S-3, shall have the right, any time after the Time
Period, to request registration (a "Demand Registration") under the Securities
Act, of any and all Registrable Shares, upon the terms, and subject to the
conditions, set forth herein. The Company covenants and agrees to timely file
all reports required to be filed by the Company pursuant to the Exchange Act (as
defined in Section 9 below) during the term of this Agreement.
b. One or more Shareholders holding a majority of the Registrable
Shares (the "Initiating Shareholders") may elect to exercise the right to
request a Demand Registration pursuant to this Section 1 by furnishing the
Company with written notice thereof (a "Demand Notice"). Upon receipt by the
Company of a Demand Notice, the Company shall promptly notify each other
Shareholder in writing of the Demand Notice received by the Company. Upon
receipt of such notice from the Company (the "Company Notice"), each such
Shareholder may give the Company a written
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<PAGE> 2
request to register all or some of such Shareholder's Registrable Shares in the
registration described in the Company Notice, provided that such written request
is received within twenty (20) days after the date on which the Company Notice
is given (with such request stating (i) the amount of Registrable Shares to be
included, (ii) such Shareholder's intended method of distribution of such
Registrable Shares and (iii) any other information reasonably requested by the
Company to properly effect the registration of such Registrable Shares). The
Company shall as soon as practicable after the date on which the Company Notice
is given, but in no event less than 20 days from receipt of the Company notice
and no more than 45 days from receipt by the Company of the Demand Notice, file
with the Commission and use its commercially reasonable best efforts to promptly
cause to become effective no later than 60 days from filing a Registration
Statement on Form S-3 which shall cover the Registrable Shares specified in the
Demand Notice and in any written request from any other Shareholder received by
the Company within twenty (20) days from the date on which the Company Notice is
received.
c. The Registration Statement filed pursuant to the request of
the Initiating Shareholders may, subject to the provisions of Section 1(d)
below, include other securities of the Company which are held by persons who, by
virtue of agreements entered into with the Company prior or subsequent to the
date of this Agreement, are entitled to include their securities in such
registration.
If the Selling Shareholders who own a majority of the
Registrable Shares request registration, the public offering or distribution of
Registrable Shares pursuant to a Demand Registration shall be pursuant to a firm
commitment underwriting, the underwriters of which shall be an investment
banking firm selected and engaged by the Company (subject to the approval of the
Selling Shareholders, which approval shall not be unreasonably withheld).
If, by virtue of agreements with the Company, the holders of
other securities of the Company (the "Other Holders") request and are entitled
to inclusion in such registration, the Company shall, on behalf of all
Shareholders, offer to the Other Holders that such other securities be included
in the underwriting and may condition such offer on the acceptance by such Other
Holders of the further provisions of this Section 1. The Company shall (together
with all Shareholders and Other Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement with the
representative of the underwriter or underwriters.
Notwithstanding any other provision of this Agreement, if the
representative of the underwriter or underwriters advises the Company in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Shareholders and Other
Holders of securities which would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Securities and such other securities that
may be included in the registration and underwriting shall be allocated among
the Shareholders and the Other Holders in such proportion as the respective
number of shares each Shareholder and Other Holder requests to be included in
such registration bears to the total number of shares all Shareholders and Other
Holders request be included. All Registrable Securities or any other
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<PAGE> 3
securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall not be included in such registration.
If any Shareholder or Other Holder of other securities
entitled (upon request) to be included in such registration, disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the underwriter and the Initiating Shareholders.
The securities so withdrawn shall also be withdrawn from registration. If the
underwriter has not limited the number of Registrable Securities or other
securities to be underwritten, the Company may include its securities for its
own account in such registration if the underwriter so agrees and if the number
of Registrable Securities and other securities which would otherwise have been
included in such registration and underwriting will not thereby be limited.
d. The Company shall be obligated to register Shareholder stock
pursuant to this Section 1 on one occasion only, provided, however, that such
obligation shall be deemed satisfied only when a registration statement covering
all shares of Shareholder stock specified in notices received as aforesaid, for
sale in accordance with the method of disposition specified by the requesting
holders, shall have (i) become effective, or (ii) been withdrawn at the request
of the Shareholders requesting such registration (other than solely as a result
of material information concerning the business or financial condition of the
Company which is made known to such Shareholders after the date on which
registration was requested). In addition, the Company shall not be required to
effect any registration (other than on Form S-3 or any successor form relating
to secondary offerings) within 180 days after the effective date of any other
Registration Statement of the Company.
e. If at the time of any request to register Registrable Shares
pursuant to this Section 1, the Company is engaged or has fixed plans to engage
within 30 days of the time of the Demand Notice in a registered public offering
as to which the Shareholders may include Registrable Shares pursuant to Section
2, then the Company may at its option direct that such request be delayed for a
period not in excess of 120 days from the effective date of such offering or 120
days from the date of commencement of such other material activity, as the case
may be, such right to delay a request to be exercised by the Company not more
than once.
2. Piggy-back Registration.
a. The holders of the Registrable Shares shall have piggy-back
registration rights as provided for herein. Whenever the Company proposes to
file a Registration Statement it will, prior to such filing, give written notice
to all Shareholders of its intention to do so and, upon the written request of a
Shareholder or Shareholders given within 20 days after the Company provides such
notice (which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its reasonable best efforts to cause
all Registrable Shares which the Company has been requested by such Shareholder
or Shareholders to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of such
Shareholder or Shareholders.
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<PAGE> 4
b. If, by virtue of agreements with the Company, the Other
Holders request and are entitled to inclusion in such registration, the Company
shall, on behalf of all Shareholders, offer to the Other Holders that such other
securities be included in the underwriting and may condition such offer on the
acceptance by such Other Holders of the further provisions of this Section 2.
The Company shall (together with all Shareholders and Other Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement with the representative of the underwriter or
underwriters selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the
representative of the underwriter or underwriters advises the Company in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Shareholders and Other
Holders of securities which would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Securities and such other securities that
may be included in the registration and underwriting shall be allocated among
the Shareholders and the Other Holders in such proportion as the respective
number of shares each Shareholder and Other Holder requests to be included in
such registration bears to the total number of shares all Shareholders and Other
Holders request be included. All Registrable Securities or any other securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall not be included in such registration.
If any Shareholder or Other Holder of other securities
entitled (upon request) to be included in such registration, disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the underwriter and the other Shareholders. The
securities so withdrawn shall also be withdrawn from registration.
c. The Company intends to register a certain number of currently
unissued shares of its common stock in an initial public offering ("IPO"). If
the Company and the managing underwriter or underwriters elect, in their sole
and absolute discretion, to register shares of common stock owned by Mitch Rouse
or Wilmington Cab Co. of California, Inc. or any holder of at least 25,000
shares of SuperShuttle common stock (as of the date of filing of the Form S-1
registration statement) for sale in the IPO, the Company shall provide the
Shareholders notice of its intent to register such shares 25 days prior to the
filing of the Form S-1 registration statement (the "Filing Date"). The
Shareholders may elect to include a number of their shares of SuperShuttle
common stock in the IPO by giving written notice to the Company no less than 20
days prior to the Filing Date of the number of shares requested to be included
therein. If, in the opinion of the managing underwriter or underwriters,
inclusion of all shares for which registration has been requested would
adversely affect the marketing of the shares to be sold, the Company shall
register (subject to the approval of the managing underwriter or underwriters)
up to 125,000 shares of SuperShuttle common stock owned by Mitch Rouse or
Wilmington Cab. Co. of California, Inc., up to 135,000 shares of SuperShuttle
common stock owned by holders of less than 25,000 shares, and the number of
shares to be registered of SuperShuttle common stock owned by any other holder
of at least 25,000 shares shall be reduced pro rata among the requesting holders
based on the number of shares of SuperShuttle common stock owned by such
holders.
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<PAGE> 5
3. Registration Procedures. If and whenever the Company is required by the
provisions of Section 1 of this Agreement to use its reasonable best efforts to
effect the registration of any of the Registrable Shares under the Securities
Act, the Company shall:
a. prepare and file with the Commission a Registration Statement
with respect to such Registrable Shares and use its reasonable best efforts to
cause that Registration Statement to become and remain effective;
b. as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it but not more than one year after
the effective date and, in the case of any other offering, until the earlier of
the sale of all Registrable Shares covered thereby or one year after the
effective date thereof;
c. as expeditiously as possible furnish to each Selling
Shareholder such reasonable numbers of copies of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as the Selling Shareholder may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Shares owned by the selling Shareholder; and
d. as expeditiously as possible use its reasonable best efforts
to register or qualify the Registrable Shares covered by the Registration
Statement under the securities or blue sky laws of such states as the Selling
Shareholders shall reasonably request, and do any and all other acts and things
that may be necessary or desirable to enable the Selling Shareholders to
consummate the public sale or other disposition in such states of the
Registrable Shares owned by the selling Shareholder.
If the Company has delivered preliminary or final prospectuses
to the Selling Shareholders and after having done so the prospectus is amended
to comply with the requirements of the Securities Act, the Company shall
promptly notify the Selling Shareholders and, if requested, the Selling
Shareholders shall immediately cease making offers of Registrable Shares and
return all prospectuses to the Company at the Company's sole cost and expense.
The Company shall promptly provide the Selling Shareholders with revised
prospectuses and, following receipt of the revised prospectuses, the Selling
Shareholders shall be free to resume making offers of the Registrable Shares.
4. Allocation of Expenses. The Company will pay all Registration Expenses
of all registrations under this Agreement. For purposes of this Section
4, the term "Registration Expenses" shall mean all expenses to be
incurred by the Company in complying with this Agreement, including,
without limitation, all registration and filing fees, exchange listing
fees, printing
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and shipping expenses, fees and expenses of counsel for the Company,
state blue sky fees and expenses. Notwithstanding the foregoing,
"Registration Expenses" shall not include any and all underwriting
discounts and selling commissions applicable to the sale of the
Registrable Securities.
5. Indemnification and Contribution.
a. In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company will indemnify
and hold harmless the Selling Shareholder of such Registrable Shares, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such Selling Shareholder or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Selling Shareholder, underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act, state securities or blue sky laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission 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; and the Company will
reimburse such Selling Shareholder, underwriter and each such controlling person
for any legal or any other expenses reasonably incurred by such Selling
Shareholder, underwriter or controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
untrue statement or omission made in such Registration Statement, preliminary
prospectus or final prospectus, or any such amendment or supplement, (i) in
reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of such Selling Shareholder, underwriter or controlling
person specifically for use in the preparation thereof or (ii) which untrue
statement was corrected by the Company and delivered to the Selling Shareholder
prior to consummation of the sale by the Selling Shareholder resulting in such
loss, claim, damage or liability.
b. In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each Selling Shareholder of
Registrable Shares, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or blue sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material
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<PAGE> 7
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission or alleged omission 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, provided that such
statement or omission was made in reliance upon and in conformity with
information relating to such Selling Shareholder furnished in writing to the
Company by and on behalf of such Selling Shareholder specifically for use in
connection with the preparation of such Registration Statement, prospectus,
amendment or supplement; provided, however, that the obligations of such Selling
Shareholders hereunder shall be limited to an amount equal to the proceeds to
each Selling Shareholder of Registrable Shares sold in connection with such
registration.
c. Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5, except to the extent
that such delay prejudices such indemnifying party. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between the Indemnified Party and
any other party represented by such counsel in such proceeding. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party.
d. If the indemnification provided for under this Section 5 is
unavailable to or insufficient to hold the Indemnified Party harmless under
subparagraphs (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein for any reason
other than as specified therein, then the Indemnifying Party shall contribute to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and such Indemnified Party on the other from
the subject offering or distribution or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Indemnifying Party on the one
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<PAGE> 8
hand and such Indemnified Party on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations. The relative benefits received by the Indemnifying Party on the
one hand and the Indemnified Party on the other hand shall be deemed to be in
the same proportion as the net proceeds of the offering or other distribution
(after deducting expenses) received by the Indemnifying Party bears to the net
proceeds of the offering or other distribution (after deducting expenses)
received by the Indemnified Party. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by (or omitted to be supplied by) the Company or
the Selling Shareholder, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
the relative benefits received by each party from the sale of the Registrable
Shares and any other equitable considerations appropriate under the
circumstances. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. 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.
6. Indemnification with Respect to Underwritten Offering. In the event that
Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 1 or 2 hereof, the Company agrees to
(i) enter into an underwriting agreement containing customary representations
and warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary provisions with
respect to indemnification by the Company of the underwriters of such offering,
and (ii) provide such other documents and agreements customarily delivered by an
issuer in an underwritten public offering, including, without limitation,
customary opinions of counsel and accountant "cold comfort" letters.
7. Information by Shareholder. Each Shareholder including Registrable Shares in
any registration shall furnish to the Company such information regarding such
Shareholder and the distribution proposed by such Shareholder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement. The
Shareholders shall perform all acts reasonably necessary to effect the
registration of the Registrable Shares.
8. Termination. All of the Company's obligations to register Registrable Shares
under this Agreement shall terminate upon the exercise of the repurchase right
pursuant to Section 5.2 of the Plan of Merger.
9. Certain Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
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<PAGE> 9
"Commission" means the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.
"Registration Expenses" means the expenses described in
Section 4.
"Registrable Shares" shall mean shares of Common Stock issued
to the Shareholders pursuant to the Purchase Agreements and any other shares of
capital stock of the Company issued to the Shareholders in respect of such
shares as a result of stock splits, stock dividends, reclassification,
recapitalizations, mergers, consolidations or similar events. References in this
Agreement to amounts or percentages of Registrable Shares as of or on any
particular date shall be deemed to refer to amounts or percentages after giving
effect to any applicable events contemplated by the preceding sentence.
"Registration Statement" shall mean any registration statement
of the Company, including, without limitation, an initial Registration
Statement, on any form (to be selected by the Company) for which the Company
then qualifies and which permits the secondary resale thereunder of Registrable
Shares. The term Registration Statement shall also include all exhibits and
financial statements and schedules and documents incorporated by reference in
such Registration Statement when it becomes effective under the Securities Act,
and in the case of the references to the Registration Statement as of a date
subsequent to the effective date, as amended or supplemented as of such date.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time.
"Selling Shareholder" shall mean any Shareholder whose
Registrable Shares are included at the request of such Shareholder in any
Registration Statement filed pursuant this Agreement.
"Shareholder" shall mean a Shareholder (as defined in the
preamble to this Agreement) or any transferee of Registrable Shares, if such
transferee has executed a counterpart hereof at the time of the transfer to such
transferee, unless the Registrable Shares held by such transferee are acquired
in a public distribution pursuant to a registration statement under the
Securities Act.
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<PAGE> 10
10. General.
a. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
given if sent by registered or certified mail, first class postage prepaid,
return receipt requested, to the address of such parties set forth on the
signature pages of this Agreement or such other future address as may be
specified by any party by notice to all of the other parties. Such
communications may also be given by personal delivery, by facsimile or by
regular mail, but shall be effective only if and when actually received.
b. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
c. Amendments and Waivers. Any term of this Agreement may be amended
with the written consent of the Company and each of the Shareholders. No waivers
of or exceptions to any term, condition or provision of this Agreement, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision. A party hereto may
waive the performance of any covenant for its benefit (either generally or in a
particular instance and either retroactively or prospectively), provided,
however, that no such waiver shall be effective unless in writing and signed by
such party.
d. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
e. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to its
principals of conflicts of law.
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 instrument.
g. Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, the successors, assigns and transferees of each of the
parties hereto.
h. Effect of Termination. In the event of termination of this Agreement
as provided in Section 8, this Agreement shall become void and there shall be no
liability or further obligation hereunder on the part of the Company, Tamarack,
or the Shareholders.
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IN WITNESS WHEREOF, the Company and the Shareholders have executed this
Agreement as of the 31st day of March, 1998.
COMPANY
SUPERSHUTTLE INTERNATIONAL, INC.
By: /s/ Thomas C. LaVoy
------------------------------------------
Thomas C. LaVoy, Chief Financial Officer
Address for Notice:
4610 South 35th Street
Phoenix, AZ 85040
Telecopy: (602) 243-6446
with a copy to:
Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, AZ 85004
Telecopy: (602)253-8129
SHAREHOLDERS
/s/ Gene Hauck
---------------------------------------------
Gene Hauck
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Address for Notice:
Tamarack Transportation, Inc.
531 Van Ness Avenue
Torrance, CA 90501
With a copy to:
Petillon & Hansen
1260 Union Bank Tower
21515 Hawthorne Boulevard
Torrance, CA 90503
Telecopy: (310) 543-0550
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<PAGE> 13
EXHIBIT A
Tamarack Shareholders
Gene Hauck
13
<PAGE> 1
Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of March
31, 1998, is entered into by and among SUPERSHUTTLE INTERNATIONAL, INC., a
Delaware corporation (the "Company"), the stockholders of SOUTHERN SHUTTLE
SERVICES, INC., a Florida corporation ("Southern") as listed on Exhibit A
attached hereto (the "Southern Stockholders"), and the stockholder of AAA
WHEELCHAIR WAGON SERVICE, INC., a Florida corporation ("AAA"), LIMOUSINES OF
SOUTH FLORIDA, INC., a Florida corporation ("Limousines"), A1A SNOWBIRD LEASING,
INC.., a Florida corporation ("A1A") and WHEELCHAIR AMBULANCE OF HOLLYWOOD,
INC., a Florida corporation ("Ambulance") as listed on Exhibit B attached hereto
(the "AAA Stockholder", and together with the Southern Stockholders
collectively, the "Stockholders").
WHEREAS, the Company has entered into a Stock Purchase Agreement dated
as of the date hereof, by and among the Company, Southern, and the Southern
Stockholders (the "Southern Purchase Agreement") pursuant to which the Southern
Stockholders shall receive an aggregate of 978,882 shares of Common Stock, $.01
par value per share (the "Common Stock"), of the Company;
WHEREAS, the Company has entered into a Stock Purchase Agreement dated
as of the date hereof, by and among the Company, AAA, Limousines, A1A, Ambulance
and the AAA Stockholder (the "AAA Purchase Agreement", and collectively with the
Southern Purchase Agreement, the "Purchase Agreements") pursuant to which the
AAA Stockholder shall receive an aggregate of 419,521 shares of Common Stock of
the Company; and
WHEREAS, pursuant to the terms of the Purchase Agreements, Company has
agreed to provide the Stockholders with certain registration rights with respect
to such shares in connection with a contemplated initial registration of the
Company's securities with the Commission (as defined in Section 9 below) for
sale to the public (the "Public Offering");
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
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<PAGE> 2
1. Required Registration.
a. If within twelve months of the effective date of the Company's
initial registration for its Public Offering (the "Time Period") the Company has
not filed and caused to be declared effective a Registration Statement (as
defined in Section 9 below) so that all the shares of the Common Stock issued to
the Stockholders are eligible to be offered and sold under the Securities Act
(as defined in Section 9 below), the holder(s) of a majority of the Registrable
Shares (as defined in Section 9 below), provided that the Company is eligible to
register securities on Form S-3, shall have the right, any time after the Time
Period, to request registration (a "Demand Registration") under the Securities
Act, of any and all Registrable Shares, upon the terms, and subject to the
conditions, set forth herein. The Company covenants and agrees to timely file
all reports required to be filed by the Company pursuant to the Exchange Act (as
defined in Section 9 below) during the term of this Agreement.
b. One or more Stockholders holding a majority of the Registrable
Shares (the "Initiating Stockholders") may elect to exercise the right to
request a Demand Registration pursuant to this Section 1 by furnishing the
Company with written notice thereof (a "Demand Notice"). Upon receipt by the
Company of a Demand Notice, the Company shall promptly notify each other
Stockholder in writing of the Demand Notice received by the Company. Upon
receipt of such notice from the Company (the "Company Notice"), each such
Stockholder may give the Company a written request to register all or some of
such Stockholder's Registrable Shares in the registration described in the
Company Notice, provided that such written request is received within twenty
(20) days after the date on which the Company Notice is given (with such request
stating (i) the amount of Registrable Shares to be included, (ii) such
Stockholder's intended method of distribution of such Registrable Shares and
(iii) any other information reasonably requested by the Company to properly
effect the registration of such Registrable Shares). The Company shall as soon
as practicable after the date on which the Company Notice is given, but in no
event less than 20 days from receipt of the Company notice and no more than 45
days from receipt by the Company of the Demand Notice, file with the Commission
and use its commercially reasonable best efforts to promptly cause to become
effective no later than 60 days from filing a Registration Statement on Form S-3
which shall cover the Registrable Shares specified in the Demand Notice and in
any written request from any other Stockholder received by the Company within
twenty (20) days from the date on which the Company Notice is received.
c. The Registration Statement filed pursuant to the request of
the Initiating Stockholders may, subject to the provisions of Section 1(d)
below, include other securities of the Company which are held by persons who, by
virtue of agreements entered into with the Company prior or subsequent to the
date of this Agreement, are entitled to include their securities in such
registration.
If the Selling Stockholders who own a majority of the
Registrable Shares requesting registration, the public offering or distribution
of Registrable Shares pursuant to a Demand Registration shall be pursuant to a
firm commitment underwriting, the underwriters of which shall
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<PAGE> 3
be an investment banking firm selected and engaged by the Company (subject to
the approval of the Selling Shareholders, which approval shall not be
unreasonably withheld).
If, by virtue of agreements with the Company, the holders of
other securities of the Company (the "Other Holders") request and are entitled
to inclusion in such registration, the Company shall, on behalf of all
Stockholders, offer to the Other Holders that such other securities be included
in the underwriting and may condition such offer on the acceptance by such Other
Holders of the further provisions of this Section 1. The Company shall (together
with all Stockholders and Other Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement with the
representative of the underwriter or underwriters.
Notwithstanding any other provision of this Agreement, if the
representative of the underwriter or underwriters advises the Company in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Stockholders and Other
Holders of securities which would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Securities and such other securities that
may be included in the registration and underwriting shall be allocated among
the Stockholders and the Other Holders in such proportion as the respective
number of shares each Stockholder and Other Holder requests to be included in
such registration bears to the total number of shares all Stockholders and Other
Holders request be included. All Registrable Securities or any other securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall not be included in such registration.
If any Stockholder or Other Holder of other securities
entitled (upon request) to be included in such registration, disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the underwriter and the Initiating Stockholders.
The securities so withdrawn shall also be withdrawn from registration. If the
underwriter has not limited the number of Registrable Securities or other
securities to be underwritten, the Company may include its securities for its
own account in such registration if the underwriter so agrees and if the number
of Registrable Securities and other securities which would otherwise have been
included in such registration and underwriting will not thereby be limited.
d. The Company shall be obligated to register Stockholder stock
pursuant to this Section 1 on one occasion only, provided, however, that such
obligation shall be deemed satisfied only when a registration statement covering
all shares of Stockholder stock specified in notices received as aforesaid, for
sale in accordance with the method of disposition specified by the requesting
holders, shall have (i) become effective, or (ii) been withdrawn at the request
of the Stockholders requesting such registration (other than solely as a result
of material information concerning the business or financial condition of the
Company which is made known to such Stockholders after the date on which
registration was requested). In addition, the Company shall not be required to
effect any registration (other than on Form S-3 or any successor form relating
to secondary offerings) within 180 days after the effective date of any other
Registration Statement of the Company.
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<PAGE> 4
e. If at the time of any request to register Registrable Shares
pursuant to this Section 1, the Company is engaged or has fixed plans to engage
within 30 days of the time of the Demand Notice in a registered public offering
as to which the Stockholders may include Registrable Shares pursuant to Section
2, then the Company may at its option direct that such request be delayed for a
period not in excess of 120 days from the effective date of such offering or 120
days from the date of commencement of such other material activity, as the case
may be, such right to delay a request to be exercised by the Company not more
than once.
2. Piggy-back Registration.
a. The holders of the Registrable Shares shall have piggy-back
registration rights as provided for herein. Whenever the Company proposes to
file a Registration Statement it will, prior to such filing, give written notice
to all Stockholders of its intention to do so and, upon the written request of a
Stockholder or Stockholders given within 20 days after the Company provides such
notice (which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its reasonable best efforts to cause
all Registrable Shares which the Company has been requested by such Stockholder
or Stockholders to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of such
Stockholder or Stockholders.
b. If, by virtue of agreements with the Company, the Other
Holders request and are entitled to inclusion in such registration, the Company
shall, on behalf of all Stockholders, offer to the Other Holders that such other
securities be included in the underwriting and may condition such offer on the
acceptance by such Other Holders of the further provisions of this Section 2.
The Company shall (together with all Stockholders and Other Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement with the representative of the underwriter or
underwriters selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the
representative of the underwriter or underwriters advises the Company in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Stockholders and Other
Holders of securities which would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Securities and such other securities that
may be included in the registration and underwriting shall be allocated among
the Stockholders and the Other Holders in such proportion as the respective
number of shares each Stockholder and Other Holder requests to be included in
such registration bears to the total number of shares all Stockholders and Other
Holders request be included. All Registrable Securities or any other securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall not be included in such registration.
If any Stockholder or Other Holder of other securities
entitled (upon request) to be included in such registration, disapproves of the
terms of the underwriting, such person may elect
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<PAGE> 5
to withdraw therefrom by written notice to the Company, the underwriter and the
other Stockholders. The securities so withdrawn shall also be withdrawn from
registration.
c. The Company intends to register a certain number of currently
unissued shares of its common stock in an initial public offering ("IPO"). If
the Company and the managing underwriter or underwriters elect, in their sole
and absolute discretion, to register shares of common stock owned by Mitch Rouse
or Wilmington Cab Co. of California, Inc. or any holder of at least 25,000
shares of SuperShuttle common stock (as of the date of filing of the Form S-1
registration statement) for sale in the IPO, the Company shall provide the
Stockholders notice of its intent to register such shares 25 days prior to the
filing of the Form S-1 registration statement (the "Filing Date"). The
Stockholders may elect to include a number of their shares of SuperShuttle
common stock in the IPO by giving written notice to the Company no less than 20
days prior to the Filing Date of the number of shares requested to be included
therein. If, in the opinion of the managing underwriter or underwriters,
inclusion of all shares for which registration has been requested would
adversely affect the marketing of the shares to be sold, the Company shall
register (subject to the approval of the managing underwriter or underwriters)
up to 125,000 shares of SuperShuttle common stock owned by Mitch Rouse or
Wilmington Cab. Co. of California, Inc., up to 135,000 shares of SuperShuttle
common stock owned by holders of less than 25,000 shares, and the number of
shares to be registered of SuperShuttle common stock owned by any other holder
of at least 25,000 shares shall be reduced pro rata among the requesting holders
based on the number of shares of SuperShuttle common stock owned by such
holders.
3. Registration Procedures. If and whenever the Company is required by the
provisions of Section 1 of this Agreement to use its reasonable best efforts to
effect the registration of any of the Registrable Shares under the Securities
Act, the Company shall:
a. prepare and file with the Commission a Registration Statement with
respect to such Registrable Shares and use its reasonable best efforts to cause
that Registration Statement to become and remain effective;
b. as expeditiously as possible prepare and file with the Commission
any amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective, in the case of a firm commitment underwritten
public offering, until each underwriter has completed the distribution of all
securities purchased by it but not more than one year after the effective date
and, in the case of any other offering, until the earlier of the sale of all
Registrable Shares covered thereby or one year after the effective date thereof;
c. as expeditiously as possible furnish to each Selling Stockholder
such reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the Selling Stockholder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by the selling Stockholder; and
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<PAGE> 6
d. as expeditiously as possible use its reasonable best efforts
to register or qualify the Registrable Shares covered by the Registration
Statement under the securities or blue sky laws of such states as the Selling
Stockholders shall reasonably request, and do any and all other acts and things
that may be necessary or desirable to enable the Selling Stockholders to
consummate the public sale or other disposition in such states of the
Registrable Shares owned by the selling Stockholder.
If the Company has delivered preliminary or final prospectuses
to the Selling Stockholders and after having done so the prospectus is amended
to comply with the requirements of the Securities Act, the Company shall
promptly notify the Selling Stockholders and, if requested, the Selling
Stockholders shall immediately cease making offers of Registrable Shares and
return all prospectuses to the Company at the Company's sole cost and expense.
The Company shall promptly provide the Selling Stockholders with revised
prospectuses and, following receipt of the revised prospectuses, the Selling
Stockholders shall be free to resume making offers of the Registrable Shares.
4. Allocation of Expenses. The Company will pay all Registration Expenses
of all registrations under this Agreement. For purposes of this Section
4, the term "Registration Expenses" shall mean all expenses to be
incurred by the Company in complying with this Agreement, including,
without limitation, all registration and filing fees, exchange listing
fees, printing and shipping expenses, fees and expenses of counsel for
the Company, state blue sky fees and expenses. Notwithstanding the
foregoing, "Registration Expenses" shall not include any and all
underwriting discounts and selling commissions applicable to the sale
of the Registrable Securities.
5. Indemnification and Contribution.
a. In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the Selling Stockholder of such Registrable Shares,
each underwriter of such Registrable Shares, and each other person, if any, who
controls such Selling Stockholder or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Selling Stockholder, underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act, state securities or blue sky laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission 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; and the Company will
reimburse such Selling Stockholder, underwriter and each such
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<PAGE> 7
controlling person for any legal or any other expenses reasonably incurred by
such Selling Stockholder, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in such Registration Statement,
preliminary prospectus or final prospectus, or any such amendment or supplement,
(i) in reliance upon and in conformity with information furnished to the
Company, in writing, by or on behalf of such Selling Stockholder, underwriter or
controlling person specifically for use in the preparation thereof or (ii) which
untrue statement was corrected by the Company and delivered to the Selling
Stockholder prior to consummation of the sale by the Selling Stockholder
resulting in such loss, claim, damage or liability.
b. In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each Selling Stockholder of
Registrable Shares, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or blue sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission 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, provided that such statement or omission was made in reliance upon
and in conformity with information relating to such Selling Stockholder
furnished in writing to the Company by and on behalf of such Selling Stockholder
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
obligations of such Selling Stockholders hereunder shall be limited to an amount
equal to the proceeds to each Selling Stockholder of Registrable Shares sold in
connection with such registration.
c. Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5, except to the extent
that such delay prejudices such indemnifying
7
<PAGE> 8
party. The Indemnified Party may participate in such defense at such party's
expense; provided, however, that the Indemnifying Party shall pay such expense
if representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding. No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall consent to entry of any
judgment or settle such claim or litigation without the prior written consent of
the Indemnifying Party.
d. If the indemnification provided for under this Section 5 is
unavailable to or insufficient to hold the Indemnified Party harmless under
subparagraphs (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein for any reason
other than as specified therein, then the Indemnifying Party shall contribute to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and such Indemnified Party on the other from
the subject offering or distribution or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Indemnifying Party on the one hand and
such Indemnified Party on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations. The relative benefits received by the Indemnifying Party on the
one hand and the Indemnified Party on the other hand shall be deemed to be in
the same proportion as the net proceeds of the offering or other distribution
(after deducting expenses) received by the Indemnifying Party bears to the net
proceeds of the offering or other distribution (after deducting expenses)
received by the Indemnified Party. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by (or omitted to be supplied by) the Company or
the Selling Stockholder, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
the relative benefits received by each party from the sale of the Registrable
Shares and any other equitable considerations appropriate under the
circumstances. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. 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.
6. Indemnification with Respect to Underwritten Offering. In the event
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 1 or
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<PAGE> 9
2 hereof, the Company agrees to (i) enter into an underwriting agreement
containing customary representations and warranties with respect to the business
and operations of an issuer of the securities being registered and customary
covenants and agreements to be performed by such issuer, including without
limitation customary provisions with respect to indemnification by the Company
of the underwriters of such offering, and (ii) provide such other documents and
agreements customarily delivered by an issuer in an underwritten public
offering, including, without limitation, customary opinions of counsel and
accountant "cold comfort" letters.
7. Information by Stockholder. Each Stockholder including Registrable
Shares in any registration shall furnish to the Company such information
regarding such Stockholder and the distribution proposed by such Stockholder as
the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement. The Stockholders shall perform all acts reasonably necessary to
effect the registration of the Registrable Shares.
8. Termination. All of the Company's obligations to register Registrable
Shares under this Agreement shall terminate upon the rescission of the Purchase
Agreements pursuant to Section 5.2 of such Purchase Agreements.
9. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.
"Registration Expenses" means the expenses described in
Section 4.
"Registrable Shares" shall mean shares of Common Stock issued
to the Stockholders pursuant to the Purchase Agreements and any other shares of
capital stock of the Company issued to the Stockholders in respect of such
shares as a result of stock splits, stock dividends, reclassification,
recapitalizations, mergers, consolidations or similar events. References in this
Agreement to amounts or percentages of Registrable Shares as of or on any
particular date shall be deemed to refer to amounts or percentages after giving
effect to any applicable events contemplated by the preceding sentence.
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<PAGE> 10
"Registration Statement" shall mean any registration statement
of the Company, including, without limitation, an initial Registration
Statement, on any form (to be selected by the Company) for which the Company
then qualifies and which permits the secondary resale thereunder of Registrable
Shares. The term Registration Statement shall also include all exhibits and
financial statements and schedules and documents incorporated by reference in
such Registration Statement when it becomes effective under the Securities Act,
and in the case of the references to the Registration Statement as of a date
subsequent to the effective date, as amended or supplemented as of such date.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time.
"Selling Stockholder" shall mean any Stockholder whose
Registrable Shares are included at the request of such Stockholder in any
Registration Statement filed pursuant this Agreement.
"Stockholder" shall mean a Stockholder (as defined in the
preamble to this Agreement) or any transferee of Registrable Shares, if such
transferee has executed a counterpart hereof at the time of the transfer to such
transferee, unless the Registrable Shares held by such transferee are acquired
in a public distribution pursuant to a registration statement under the
Securities Act.
10. General.
a. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
given if sent by registered or certified mail, first class postage prepaid,
return receipt requested, to the address of such parties set forth on the
signature pages of this Agreement or such other future address as may be
specified by any party by notice to all of the other parties. Such
communications may also be given by personal delivery, by facsimile or by
regular mail, but shall be effective only if and when actually received.
b. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
c. Amendments and Waivers. Any term of this Agreement may be amended
with the written consent of the Company and each of the Stockholders. No waivers
of or exceptions to any term, condition or provision of this Agreement, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision. A party hereto may
waive the performance of any covenant for its benefit (either generally or in a
particular instance and either retroactively or prospectively), provided,
however, that no such waiver shall be effective unless in writing and signed by
such party.
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<PAGE> 11
d. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
e. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to its
principals of conflicts of law.
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 instrument.
g. Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, the successors, assigns and transferees of each of the
parties hereto.
h. Effect of Termination. In the event of termination of this Agreement
as provided in Section 8, this Agreement shall become void and there shall be no
liability or further obligation hereunder on the part of the Company, Southern,
AAA, Limousines, Ambulance or the Stockholders.
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<PAGE> 12
IN WITNESS WHEREOF, the Company and the Stockholders have executed this
Agreement as of the 31st day of March, 1998.
COMPANY
SUPERSHUTTLE INTERNATIONAL, INC.
By: /s/ Thomas C. LaVoy
----------------------------------------
Thomas C. LaVoy, Chief Financial Officer
Address for Notice:
4610 South 35th Street
Phoenix, AZ 85040
Telecopy: (602) 243-6446
with a copy to:
Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, AZ 85004
Telecopy: (602)253-8129
STOCKHOLDERS
/s/ Mark Levitt
--------------------------------------------
Mark Levitt
/s/ Karen Caputo
--------------------------------------------
Karen Caputo
/s/ Robert Siedlecki
--------------------------------------------
Robert Siedlecki
12
<PAGE> 13
Address for Notice:
2595 N.W. 38th Street
Miami, FL 33142
Telecopy: (305) _________
With a copy to:
Akerman, Senterfitt & Eidson, P.A.
1 S.E. Third Ave., Suite 2800
Miami, Florida 33131
Attention: Jonathan L. Awner, Esq.
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<PAGE> 14
EXHIBIT A
Southern Stockholders
Karen Caputo
Mark Levitt
Robert Siedlecki
14
<PAGE> 15
EXHIBIT B
AAA Stockholder
Karen Caputo
15
<PAGE> 1
Exhibit 4.5
ESCROW AGREEMENT
ESCROW AGREEMENT ("Escrow Agreement"), dated as of this 31st day of
March, 1998, by and among (i) SuperShuttle International, Inc., a Delaware
corporation ("SuperShuttle"); (ii) SuperShuttle Acquisition Co. II, an Arizona
corporation ("Merger Sub"); (iii) Tamarack Transportation, Inc., a California
corporation ("Tamarack"), (iv) Gene Hauck (the "Shareholder") and (v) Robert
Splinter (the "Escrow Agent").
W I T N E S S E T H
WHEREAS, (i) SuperShuttle, Merger Sub, Tamarack and the Shareholder are
parties to a certain Amended and Restated Agreement and Plan of Reorganization
and Merger (the "Merger Agreement"), pursuant to which SuperShuttle is acquiring
all of the outstanding capital stock of Tamarack (the "Tamarack Shares") in
consideration for, among other things, shares of common stock of SuperShuttle
(the "SuperShuttle Shares");
WHEREAS, the Tamarack Shares and the SuperShuttle Shares are to be placed
in escrow with the Escrow Agent to secure the rights of the parties in
accordance with the terms of the Merger Agreement, and the Tamarack Shares and
the SuperShuttle Shares are to be released in accordance with the terms and
conditions of this Escrow Agreement; and
WHEREAS, SuperShuttle, Merger Sub, Tamarack and the Shareholder are
desirous of having the Escrow Agent serve as the escrow agent for the Tamarack
Shares and the SuperShuttle Shares, and the Escrow Agent is desirous of serving
in such capacity, in accordance with the terms and conditions contained
hereinafter.
NOW, THEREFORE, in consideration of the mutual premises set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Establishment and Termination of Escrow. The parties hereto hereby
agree that the Tamarack Shares will be delivered by the Shareholder and the
SuperShuttle Shares will be delivered by SuperShuttle to the Escrow Agent in
accordance with the terms and conditions of the Merger Agreement, and the Escrow
Agent shall hold said Tamarack Shares and SuperShuttle Shares in accordance with
the terms and conditions set forth hereinafter. The Escrow Agent is hereby
appointed escrow agent for the purpose of receiving the Tamarack Shares and the
SuperShuttle Shares. This Escrow Agreement shall automatically terminate in
accordance with its terms upon the release of all of the Tamarack Shares and the
SuperShuttle Shares from escrow as provided herein.
2. Release of Shares.
A. The Tamarack Shares shall be released as follows:
(i) to the Shareholder, in accordance with the terms and
conditions set forth in the Merger Agreement and Schedule A attached
hereto, if SuperShuttle
<PAGE> 2
does not consummate an initial public offering of SuperShuttle
Common Stock within 130 days after the date of this Agreement, and
the Shareholder exercises his right to repurchase, at fair market
value, the Tamarack Common Stock transferred to SuperShuttle;
(ii) if Tamarack exercises the repurchase right set forth in
A(i) above, then the SuperShuttle Shares shall be released to
SuperShuttle.
B. The SuperShuttle Shares shall be released as follows:
(i) to SuperShuttle, in accordance with the terms and
conditions of the Merger Agreement, (a) if Tamarack fails to obtain,
by July 31, 1998, the written approval, acceptable to SuperShuttle,
of the California Public Utilities Commission to the change in
ownership of Tamarack to SuperShuttle; or (b) if Tamarack fails to
obtain, by July 31, 1998, all consents necessary by reason of any
change of control provisions in any license, permit or third party
contract material to the business of Tamarack, and SuperShuttle
exercises its right within thirty (30) days following the applicable
target date referenced herein to repurchase, at fair market value,
the SuperShuttle Common Stock transferred to Tamarack;
(ii) if SuperShuttle exercises the repurchase right set forth
in B(i) above, then the Tamarack Shares shall be released to
Tamarack.
C. If the Shareholder does not exercise the repurchase right set
forth in A(i) in accordance with any of the applicable target dates set
forth therein, and SuperShuttle does not exercise the repurchase right
set forth in B(i) in accordance with the applicable target date set forth
therein, then the Tamarack Shares shall be released to SuperShuttle and
the SuperShuttle Shares shall be released to Tamarack.
3. Rights, Duties and Responsibilities of Escrow Agent. The parties
hereto hereby acknowledge and agree that the duties of the Escrow Agent
hereunder are purely ministerial in nature. The parties hereto further agree
that:
A. During the term of the Escrow Agreement, the Escrow Agent
shall vote the SuperShuttle Shares as directed by the Shareholder and
shall vote the Tamarack Shares as directed by SuperShuttle.
B. The Escrow Agent shall not be responsible for the performance
by any party of its respective obligations under the Merger Agreement.
C. The Escrow Agent shall have the right to act in reliance upon
any document, instrument or signature reasonably believed by it to be
genuine and to assume that any person purporting to give any notice or
instructions in accordance with this Escrow Agreement or in connection
with any transaction to which this Escrow Agreement relates has been duly
authorized to do so.
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<PAGE> 3
D. In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to
the Tamarack Shares or the SuperShuttle Shares, which, in its sole
opinion, are in conflict with either other instructions received by it or
any provision of this Escrow Agreement, it shall be entitled to hold the
Tamarack Shares or the SuperShuttle Shares, in escrow, pending the
resolution of such uncertainty to the Escrow Agent's sole satisfaction,
by written confirmation of an agreement among SuperShuttle, Tamarack and
the Shareholder, or by final judgment of a court or courts of competent
jurisdiction; or the Escrow Agent, at its option, may deposit the
SuperShuttle Shares or the Tamarack Shares, into the registry of a United
States court of competent jurisdiction in a proceeding to which all
parties in interest are joined. Notwithstanding anything contained herein
to the contrary, in the event of any dispute among the parties hereto,
the parties hereto hereby agree that the Escrow Agent shall not be deemed
to have a conflict with the representation of Tamarack and the
Shareholder.
4. Amendment; Resignation. This Escrow Agreement may be modified or
amended only in writing and with the written consent of all of the parties
hereto. Should the parties herein attempt to change this Escrow Agreement in a
manner which, in the Escrow Agent's sole opinion, is undesirable, the Escrow
Agent may resign as Escrow Agent upon three days' written notice to the other
parties hereto; otherwise, it may resign as Escrow Agent at any time upon five
days' written notice to the parties hereto. In the case of the Escrow Agent's
resignation its only duty shall be to hold and dispose of the SuperShuttle
Shares and the Tamarack Shares in accordance with the original provisions of
this Escrow Agreement until a successor escrow agent shall be appointed and
written notice of the name and address of such successor escrow agent shall be
given to the Escrow Agent by SuperShuttle and/or Tamarack and the Shareholder;
whereupon the Escrow Agent's only duty shall be to deliver to the successor
escrow agent the SuperShuttle Shares and the Tamarack Shares. Any successor
escrow agent shall be appointed hereunder by SuperShuttle subject to the
approval of the Shareholder, which approval shall not be unreasonably withheld.
5. Expenses. The Escrow Agent shall be reimbursed by SuperShuttle and the
Shareholder for any and all reasonable expenses incurred in connection with this
Escrow Agreement. Any expenses to be reimbursed hereunder shall be due and
payable upon receipt of an invoice describing the same.
6. Indemnification. SuperShuttle, Tamarack and the Shareholder (the
"Indemnitors"), hereby agree to indemnify, jointly and severally, the Escrow
Agent against, and hold it harmless of and from, any and all loss, liability,
cost, damage and expense, including, without limitation, reasonable legal
counsel fees and court costs, which the Escrow Agent may suffer or incur by
reason of any action, claim, investigation, or proceeding brought against the
Escrow Agent, arising out of or relating in any way to this Escrow Agreement or
any transaction to which this Escrow Agreement related, other than any action,
claim or proceeding resulting from the gross negligence or willful misconduct of
the Escrow Agent. The indemnification provisions herein shall survive the
termination of this Escrow Agreement. SuperShuttle, Tamarack and the
Shareholder, further agree hereunder that in the event of any required
indemnification hereunder of the Escrow Agent, in the event said indemnification
is the result
3
<PAGE> 4
of any action or claim brought or asserted by either SuperShuttle, Tamarack or
the Shareholder, the prevailing party (either SuperShuttle, Tamarack and/or the
Shareholder) shall be entitled to be reimbursed in full for any damages or loss
suffered as a result of this indemnification provision and as a consequence of
the other party hereto (either SuperShuttle, Tamarack and/or the Shareholder)
bringing such action or asserting such claim against the Escrow Agent.
7. Miscellaneous.
A. No Waiver. Neither the failure nor any delay on the part of any
party to exercise any right, remedy, power or privilege under this Escrow
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy,
power or privilege, nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of such
right, remedy, power or privilege with respect to any other occurrence.
No waiver shall be effective unless it is in writing and is signed by the
party asserted to have granted such waiver.
B. Controlling Law. This Escrow Agreement shall be governed by the
laws of the State of Arizona, without regard to the principles of
conflict of laws thereof.
C. Notices. All notices, requests, demands and other communications
required or permitted under this Escrow Agreement shall be in writing and
shall be deemed to have been duly given, made and received only when
personally delivered, on the day received by certified mail, return
receipt requested or by overnight courier, as evidenced by the signature
on any receipt with respect to the foregoing, addressed to the addresses
set forth below, unless notice of a change in address was previously
given as aforesaid.
If to SuperShuttle: SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
FAX: (602) 243-6446
Attn: R. Brian Wier, President and CEO
With a copy to: Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004-4441
FAX: (602) 253-8129
Attn: Christopher D. Johnson, Esq.
4
<PAGE> 5
If to Tamarack or
the Shareholder: Tamarack Transportation, Inc.
531 Van Ness Avenue
Torrance, CA 90501
Attn: Gene Hauck
With a copy to: Petillon & Hansen
1260 Union Bank Tower
21515 Hawthorne Boulevard
Torrance, CA 90503
Attn: Ray Seto
D. Binding Nature of Agreement; No Assignment. This Escrow Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, personal representatives, successors and assigns,
except that no party may assign or transfer its rights under this
Agreement without the prior written consent of the other parties hereto.
E. Provisions Separable. The provisions of this Escrow Agreement are
independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that
for any reason any other or others of them may be invalid or
unenforceable in whole or in part.
F. Section Headings. The section headings in this Escrow Agreement
are for convenience only; they form no part of this Escrow Agreement and
shall not affect its interpretation.
G. Exhibits and Schedules. All Exhibits and Schedules attached
hereto are hereby incorporated by reference into, and made a part of,
this Escrow Agreement.
H. No Third-Party Beneficiaries. This Escrow Agreement shall not
confer any rights or remedies upon any person other than the parties and
their respective heirs, personal representatives, successors and
permitted assigns.
I. Entire Agreement; Amendments. This Escrow Agreement (including
the documents referred to herein) constitutes the entire agreement among
the parties and supersedes any prior understandings, agreements, or
representations by or among the parties, written or oral, that may have
related in any way to the subject matter hereof. This Escrow Agreement
may not be amended, supplemented or modified in whole or in part except
by an instrument executed by all of the parties hereto.
J. Construction. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to the rules and
regulations promulgated thereunder, unless the context requires
otherwise. This Escrow Agreement shall be
5
<PAGE> 6
neither construed against nor in favor of any of the parties hereto, but
rather in accordance with the fair meaning of its content.
K. Expenses. The parties hereto hereby agree that each party shall
bear its own legal and accounting expenses incurred in the preparation of
this Agreement and the consummation of the transactions hereunder.
IN WITNESS WHEREOF, the parties have executed and delivered this Escrow
Agreement on the date first above written.
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Thomas C. LaVoy
-----------------------------------
Name: Thomas C. LaVoy
Title: Secretary, CFO
SUPERSHUTTLE ACQUISITION CO. II INC.,
an Arizona corporation
By: /s/ Thomas C. LaVoy
-----------------------------------
Name: Thomas C. LaVoy
Title: Secretary
TAMARACK TRANSPORTATION, INC.
a California corporation
By: /s/ Gene Hauck
-----------------------------------
Name: Gene Hauck
Title: President
6
<PAGE> 7
SHAREHOLDER
/s/ Gene Hauck
-----------------------------------------
Gene Hauck
ESCROW AGENT
By: /s/ Robert Splinter
------------------------------------
Robert Splinter
7
<PAGE> 8
SCHEDULE A
ALLOCATION OF TAMARACK SHARES FOR
DISTRIBUTION AMONG SHAREHOLDER UPON EXERCISE OF REPURCHASE RIGHT
Gene Hauck 100%
8
<PAGE> 1
Exhibit 4.6
ESCROW AGREEMENT
ESCROW AGREEMENT ("Escrow Agreement"), dated as of this 31st day of
March, 1998, by and among (i) SuperShuttle International, Inc., a Delaware
corporation ("SuperShuttle"); (ii) SuperShuttle Acquisition Co. I, an Arizona
corporation ("Merger Sub"); (iii) Preferred Transportation, Inc., a California
corporation ("PTI"), (iv) Steve Allan and Dave Koscielak (the "Shareholders")
and (v) Robert Splinter (the "Escrow Agent").
W I T N E S S E T H
WHEREAS, (i) SuperShuttle, Merger Sub, PTI and the Shareholders are
parties to a certain Amended and Restated Agreement and Plan of Reorganization
and Merger (the "Merger Agreement"), pursuant to which SuperShuttle is acquiring
all of the outstanding capital stock of PTI (the "PTI Shares") in consideration
for, among other things, shares of common stock of SuperShuttle (the
"SuperShuttle Shares");
WHEREAS, the PTI Shares and the SuperShuttle Shares are to be placed in
escrow with the Escrow Agent to secure the rights of the parties in accordance
with the terms of the Merger Agreement, and the PTI Shares and the SuperShuttle
Shares are to be released in accordance with the terms and conditions of this
Escrow Agreement; and
WHEREAS, SuperShuttle, Merger Sub, PTI and the Shareholders are desirous
of having the Escrow Agent serve as the escrow agent for the PTI Shares and the
SuperShuttle Shares, and the Escrow Agent is desirous of serving in such
capacity, in accordance with the terms and conditions contained hereinafter.
NOW, THEREFORE, in consideration of the mutual premises set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Establishment and Termination of Escrow. The parties hereto hereby
agree that the PTI Shares will be delivered by the Shareholders and the
SuperShuttle Shares will be delivered by SuperShuttle to the Escrow Agent in
accordance with the terms and conditions of the Merger Agreement, and the Escrow
Agent shall hold said PTI Shares and SuperShuttle Shares in accordance with the
terms and conditions set forth hereinafter. The Escrow Agent is hereby appointed
escrow agent for the purpose of receiving the PTI Shares and the SuperShuttle
Shares. This Escrow Agreement shall automatically terminate in accordance with
its terms upon the release of all of the PTI Shares and the SuperShuttle Shares
from escrow as provided herein.
2. Release of Shares.
A. The PTI Shares shall be released as follows:
(i) to the Shareholders, in accordance with the terms
and conditions set forth in the Merger Agreement and Schedule A
attached hereto, if
<PAGE> 2
SuperShuttle does not consummate an initial public offering of
SuperShuttle Common Stock within 130 days after the date of this
Agreement, and the Shareholders exercise their right to
repurchase, at fair market value, the PTI Common Stock transferred
to SuperShuttle;
(ii) if PTI exercises the repurchase right set forth in
A(i) above, then the SuperShuttle Shares shall be released to
SuperShuttle.
B. The SuperShuttle Shares shall be released as follows:
(i) to SuperShuttle, in accordance with the terms and
conditions of the Merger Agreement, (a) if PTI fails to obtain, by
July 31, 1998, the written approval, acceptable to SuperShuttle,
of the California Public Utilities Commission to the change in
ownership of PTI to SuperShuttle; or (b) if PTI fails to obtain,
by July 31, 1998, all consents necessary by reason of any change
of control provisions in any license, permit or third party
contract material to the business of PTI, and SuperShuttle
exercises its right within thirty (30) days following the
applicable target date referenced herein to repurchase, at fair
market value, the SuperShuttle Common Stock transferred to PTI;
(ii) if SuperShuttle exercises the repurchase right set
forth in B(i) above, then the PTI Shares shall be released to PTI.
C. If the Shareholders do not exercise the repurchase right
set forth in A(i) in accordance with any of the applicable target dates
set forth therein, and SuperShuttle does not exercise the repurchase
right set forth in B(i) in accordance with the applicable target date set
forth therein, then the PTI Shares shall be released to SuperShuttle and
the SuperShuttle Shares shall be released to PTI.
3. Rights, Duties and Responsibilities of Escrow Agent. The parties
hereto hereby acknowledge and agree that the duties of the Escrow Agent
hereunder are purely ministerial in nature. The parties hereto further agree
that:
A. During the term of the Escrow Agreement, the Escrow Agent
shall vote the SuperShuttle Shares as directed by the Shareholders and
shall vote the PTI Shares as directed by SuperShuttle.
B. The Escrow Agent shall not be responsible for the
performance by any party of its respective obligations under the Merger
Agreement.
C. The Escrow Agent shall have the right to act in reliance
upon any document, instrument or signature reasonably believed by it to
be genuine and to assume that any person purporting to give any notice or
instructions in accordance with this Escrow Agreement or in connection
with any transaction to which this Escrow Agreement relates has been duly
authorized to do so.
2
<PAGE> 3
D. In the event that the Escrow Agent shall be uncertain as to
its duties or rights hereunder or shall receive instructions with respect
to the PTI Shares or the SuperShuttle Shares, which, in its sole opinion,
are in conflict with either other instructions received by it or any
provision of this Escrow Agreement, it shall be entitled to hold the PTI
Shares or the SuperShuttle Shares, in escrow, pending the resolution of
such uncertainty to the Escrow Agent's sole satisfaction, by written
confirmation of an agreement among SuperShuttle, PTI and the
Shareholders, or by final judgment of a court or courts of competent
jurisdiction; or the Escrow Agent, at its option, may deposit the
SuperShuttle Shares or the PTI Shares, into the registry of a United
States court of competent jurisdiction in a proceeding to which all
parties in interest are joined. Notwithstanding anything contained herein
to the contrary, in the event of any dispute among the parties hereto,
the parties hereto hereby agree that the Escrow Agent shall not be deemed
to have a conflict with the representation of PTI and the Shareholders.
4. Amendment; Resignation. This Escrow Agreement may be modified or
amended only in writing and with the written consent of all of the parties
hereto. Should the parties herein attempt to change this Escrow Agreement in a
manner which, in the Escrow Agent's sole opinion, is undesirable, the Escrow
Agent may resign as Escrow Agent upon three days' written notice to the other
parties hereto; otherwise, it may resign as Escrow Agent at any time upon five
days' written notice to the parties hereto. In the case of the Escrow Agent's
resignation its only duty shall be to hold and dispose of the SuperShuttle
Shares and the PTI Shares in accordance with the original provisions of this
Escrow Agreement until a successor escrow agent shall be appointed and written
notice of the name and address of such successor escrow agent shall be given to
the Escrow Agent by SuperShuttle and/or PTI and the Shareholders; whereupon the
Escrow Agent's only duty shall be to deliver to the successor escrow agent the
SuperShuttle Shares and the PTI Shares. Any successor escrow agent shall be
appointed hereunder by SuperShuttle subject to the approval of the Shareholders,
which approval shall not be unreasonably withheld.
5. Expenses. The Escrow Agent shall be reimbursed by SuperShuttle and
the Shareholders for any and all reasonable expenses incurred in connection with
this Escrow Agreement. Any expenses to be reimbursed hereunder shall be due and
payable upon receipt of an invoice describing the same.
6. Indemnification. SuperShuttle, PTI and the Shareholders (the
"Indemnitors"), hereby agree to indemnify, jointly and severally, the Escrow
Agent against, and hold it harmless of and from, any and all loss, liability,
cost, damage and expense, including, without limitation, reasonable legal
counsel fees and court costs, which the Escrow Agent may suffer or incur by
reason of any action, claim, investigation, or proceeding brought against the
Escrow Agent, arising out of or relating in any way to this Escrow Agreement or
any transaction to which this Escrow Agreement related, other than any action,
claim or proceeding resulting from the gross negligence or willful misconduct of
the Escrow Agent. The indemnification provisions herein shall survive the
termination of this Escrow Agreement. SuperShuttle, PTI and the Shareholders,
further agree hereunder that in the event of any required indemnification
hereunder of the Escrow Agent, in the event said indemnification is the result
of any action or claim
3
<PAGE> 4
brought or asserted by either SuperShuttle, PTI or the Shareholders, the
prevailing party (either SuperShuttle, PTI and/or the Shareholders) shall be
entitled to be reimbursed in full for any damages or loss suffered as a result
of this indemnification provision and as a consequence of the other party hereto
(either SuperShuttle, PTI and/or the Shareholders) bringing such action or
asserting such claim against the Escrow Agent.
7. Miscellaneous.
A. No Waiver. Neither the failure nor any delay on the part of any
party to exercise any right, remedy, power or privilege under this Escrow
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy,
power or privilege, nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of such
right, remedy, power or privilege with respect to any other occurrence.
No waiver shall be effective unless it is in writing and is signed by the
party asserted to have granted such waiver.
B. Controlling Law. This Escrow Agreement shall be governed by the
laws of the State of Arizona, without regard to the principles of
conflict of laws thereof.
C. Notices. All notices, requests, demands and other communications
required or permitted under this Escrow Agreement shall be in writing and
shall be deemed to have been duly given, made and received only when
personally delivered, on the day received by certified mail, return
receipt requested or by overnight courier, as evidenced by the signature
on any receipt with respect to the foregoing, addressed to the addresses
set forth below, unless notice of a change in address was previously
given as aforesaid.
If to SuperShuttle: SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
FAX: (602) 243-6446
Attn: R. Brian Wier, President and CEO
With a copy to: Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004-4441
FAX: (602) 253-8129
Attn: Christopher D. Johnson, Esq.
4
<PAGE> 5
If to PTI or
the Shareholders: Preferred Transportation, Inc.
1430 South Anaheim
Anaheim, CA 92805
Attn: Steve Allan
With a copy to: Petillon & Hansen
1260 Union Bank Tower
21515 Hawthorne Boulevard
Torrance, CA 90503
Attn: Ray Seto
D. Binding Nature of Agreement; No Assignment. This Escrow
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors
and assigns, except that no party may assign or transfer its rights under
this Agreement without the prior written consent of the other parties
hereto.
E. Provisions Separable. The provisions of this Escrow Agreement
are independent of and separable from each other, and no provision shall
be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or
unenforceable in whole or in part.
F. Section Headings. The section headings in this Escrow Agreement
are for convenience only; they form no part of this Escrow Agreement and
shall not affect its interpretation.
G. Exhibits and Schedules. All Exhibits and Schedules attached
hereto are hereby incorporated by reference into, and made a part of,
this Escrow Agreement.
H. No Third-Party Beneficiaries. This Escrow Agreement shall not
confer any rights or remedies upon any person other than the parties and
their respective heirs, personal representatives, successors and
permitted assigns.
I. Entire Agreement; Amendments. This Escrow Agreement (including
the documents referred to herein) constitutes the entire agreement among
the parties and supersedes any prior understandings, agreements, or
representations by or among the parties, written or oral, that may have
related in any way to the subject matter hereof. This Escrow Agreement
may not be amended, supplemented or modified in whole or in part except
by an instrument executed by all of the parties hereto.
J. Construction. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to the rules and
regulations promulgated thereunder, unless the context requires
otherwise. This Escrow Agreement shall be
5
<PAGE> 6
neither construed against nor in favor of any of the parties hereto, but
rather in accordance with the fair meaning of its content.
K. Expenses. The parties hereto hereby agree that each party shall
bear its own legal and accounting expenses incurred in the preparation of
this Agreement and the consummation of the transactions hereunder.
IN WITNESS WHEREOF, the parties have executed and delivered this Escrow
Agreement on the date first above written.
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Thomas C. Lavoy
-------------------------------------------
Name: Thomas C. LaVoy
Title: Secretary, CFO
SUPERSHUTTLE ACQUISITION CO. I INC.,
an Arizona corporation
By: /s/ Thomas C. Lavoy
-------------------------------------------
Name: Thomas C. LaVoy
Title: Secretary
PREFERRED TRANSPORTATION, INC.
a California corporation
By: /s/ Steve Allan
-------------------------------------------
Name: Steve Allan
Title: President
6
<PAGE> 7
SHAREHOLDERS
/s/ Steve Allan
-------------------------------------------------
Steve Allan
ORANGE COUNTY SHUTTLE ASSOCIATES, INC.
/s/ Dave Koscielak
-------------------------------------------------
Dave Koscielak
ESCROW AGENT
By: /s/ Robert Splinter
----------------------------------------------
Robert Splinter
7
<PAGE> 8
SCHEDULE A
ALLOCATION OF PTI SHARES FOR
DISTRIBUTION AMONG SHAREHOLDERS UPON EXERCISE OF REPURCHASE RIGHT
Steve Allan 49.2%
Dave Koscielak 49.2%
SuperShuttle 1.6%
8
<PAGE> 1
EXHIBIT 4.7
ESCROW AGREEMENT
ESCROW AGREEMENT ("Escrow Agreement"), dated as of this 31st day of
March, 1998, by and among (i) SuperShuttle International, Inc., a Delaware
corporation ("SuperShuttle"); (ii) Southern Shuttle Services, Inc. ("Southern
Shuttle") AAA Wheelchair Wagon Services, Inc. ("Wheelchair Wagon"); Wheelchair
Ambulance of Hollywood, Inc. ("Wheelchair Ambulance"); Limousines of South
Florida, Inc. ("Limousines"); and A1A Snowbird Leasing, Inc. ("Snowbird")
(Southern Shuttle, Wheelchair Wagon, Wheelchair Ambulance, Limousines and
Snowbird are collectively referred to as the "Companies"); (iii) Mark Levitt,
Karen Caputo and Robert Siedlecki (Mark Levitt, Karen Caputo and Robert
Siedlecki are hereinafter collectively referred to as the "Sellers"), and (iv)
Akerman, Senterfitt & Eidson, P.A. (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, (i) SuperShuttle, Southern Shuttle, and the Sellers are
parties to a certain Stock Purchase Agreement, (ii) SuperShuttle, Wheelchair
Wagon, Wheelchair Ambulance, Limousines, Snowbird and Caputo are parties to a
certain Stock Purchase Agreement, and (iii) SuperShuttle and the Sellers are
parties to a certain Letter Agreement, all dated the date hereof (collectively
the "Purchase Documents"), pursuant to which SuperShuttle is acquiring all of
the outstanding capital stock of the Companies (the "Sellers' Shares") in
consideration for, among other things, shares of common stock of SuperShuttle
(the "SuperShuttle Shares");
WHEREAS, the Sellers' Shares and the SuperShuttle Shares are to be
placed in escrow with the Escrow Agent to secure the rights of the parties in
accordance with the terms of the Purchase Documents, and the Sellers' Shares and
the SuperShuttle Shares are to be released in accordance with the terms and
conditions of this Escrow Agreement; and
WHEREAS, SuperShuttle, the Companies and the Sellers are desirous of
having the Escrow Agent serve as the escrow agent for the Sellers' Shares and
the SuperShuttle Shares, and the Escrow Agent is desirous of serving in such
capacity, in accordance with the terms and conditions contained hereinafter.
NOW, THEREFORE, in consideration of the mutual premises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Establishment and Termination of Escrow. The parties hereto hereby
agree that the Sellers' Shares will be delivered by the Sellers and the
SuperShuttle Shares will be delivered by SuperShuttle to the Escrow Agent in
accordance with the terms and conditions of the Purchase Documents, and the
Escrow Agent shall hold said Sellers' Shares and SuperShuttle Shares in
<PAGE> 2
accordance with the terms and conditions set forth hereinafter. This Escrow
Agreement shall automatically terminate in accordance with its terms upon the
release of all of the Sellers' Shares and the SuperShuttle Shares from escrow as
provided herein.
2. Release of Shares.
(a) The Sellers' Shares shall be released as follows:
(i) to the Sellers, in accordance with Schedule
A hereof, upon the occurrence of any one of
the following events (collectively the
"Rescission Events") (i) if SuperShuttle
does not file a registration statement for
an initial public offering on Form S-1 with
the Securities and Exchange Commission (the
"SEC") by May 31, 1998 to register for sale
shares of SuperShuttle Common Stock (the
"S-1"); (ii) if the SEC does not declare
such registration statement effective by
July 31, 1998; (iii) if the underwritten
initial registration statement for an
initial public offering on a firm commitment
basis does not occur by August 10, 1998,
providing a per share offering price to the
public of at least $6.50; or (iv) if
Southern fails to obtain the written
approval, acceptable to SuperShuttle, of the
Aviation Department of Dade County to the
change in ownership of Southern to
SuperShuttle prior to the effective date of
the S-1;
(ii) to SuperShuttle in the event that an initial
public offering of SuperShuttle Common Stock
providing a per share offering price to the
public of at least $6.50 is completed prior
to the occurrence of any Rescission Event.
(b) The SuperShuttle Shares shall be released as follows:
(i) to SuperShuttle upon a Rescission Event;
(ii) to Sellers in the event that an initial
public offering of SuperShuttle Common Stock
providing a per share offering price to the
public of at least $6.50 is completed prior
to the occurrence of a Rescission Event;
provided however, that 25,000 of the
SuperShuttle Shares (the "Consent Shares")
shall be retained by the Escrow Agent in
accordance with Schedule B hereto if
Limousines has not received the Consent (as
defined in the Letter Agreement) at the time
of the initial public offering, and the
Consent Shares shall be delivered to Sellers
in accordance with Schedule B hereto upon
the delivery of the Consent to SuperShuttle
provided such Consent is obtained on or
before April 30, 1999. If the Consent is not
obtained on or before April
2
<PAGE> 3
30, 1999, Escrow Agent shall deliver the
Consent Shares to SuperShuttle.
3. Rights, Duties and Responsibilities of Escrow Agent. The parties
hereto hereby acknowledge and agree that the duties of the Escrow Agent
hereunder are purely ministerial in nature. The parties hereto further agree
that:
A. During the term of the Escrow Agreement, the Escrow Agent
shall vote the shares of SuperShuttle as directed by the Sellers and shall vote
the Sellers' Shares as directed by SuperShuttle.
B. The Escrow Agent shall not be responsible for the
performance by any party of its respective obligations under the Purchase
Documents.
C. The Escrow Agent shall have the right to act in reliance
upon any document, instrument or signature reasonably believed by it to be
genuine and to assume that any person purporting to give any notice or
instructions in accordance with this Escrow Agreement or in connection with any
transaction to which this Escrow Agreement relates has been duly authorized to
do so.
D. In the event that the Escrow Agent shall be uncertain as to
its duties or rights hereunder or shall receive instructions with respect to the
Sellers' Shares or the SuperShuttle Shares, which, in its sole opinion, are in
conflict with either other instructions received by it or any provision of this
Escrow Agreement, it shall be entitled to hold the Sellers' Shares or the
SuperShuttle Shares, in escrow, pending the resolution of such uncertainty to
the Escrow Agent's sole satisfaction, by written confirmation of an agreement
between SuperShuttle, the Companies and the Sellers, or by final judgment of a
court or courts of competent jurisdiction; or the Escrow Agent, at its option,
may deposit the SuperShuttle Shares or the Sellers' Shares, into the registry of
a United States court of competent jurisdiction in a proceeding to which all
parties in interest are joined. Notwithstanding anything contained herein to the
contrary, in the event of any dispute among the parties hereto, the parties
hereto hereby agree that the Escrow Agent shall not be deemed to have a conflict
with the representation of the Companies and the Sellers.
4. Amendment; Resignation. This Escrow Agreement may be modified or
amended only in writing and with the written consent of all of the parties
hereto. Should the parties herein attempt to change this Escrow Agreement in a
manner which, in the Escrow Agent's sole opinion, is undesirable, the Escrow
Agent may resign as Escrow Agent upon three days' written notice to the other
parties hereto; otherwise, it may resign as Escrow Agent at any time upon five
days' written notice to the parties hereto. In the case of the Escrow Agent's
resignation its only duty shall be to hold and dispose of the SuperShuttle
Shares and the Sellers' Shares in accordance with the original provisions of
this Escrow Agreement until a successor escrow agent shall be appointed and
written notice of the name and address of such successor escrow agent shall be
given to the Escrow Agent by SuperShuttle and/or the Companies and the Sellers;
whereupon the Escrow Agent's only duty
3
<PAGE> 4
shall be to deliver to the successor escrow agent the SuperShuttle Shares and
the Sellers' Shares. Any successor escrow agent shall be appointed hereunder by
SuperShuttle subject to the approval of two of the Sellers, which approval shall
not be unreasonably withheld.
5. Expenses. The Escrow Agent shall be reimbursed by SuperShuttle and
the Sellers for any and all reasonable expenses incurred in connection with this
Escrow Agreement. Any expenses to be reimbursed hereunder shall be due and
payable upon receipt of an invoice describing the same. Any Escrow Agent which
is a law firm or accounting firm shall be entitled to its normal hourly fees for
its services rendered as Escrow Agent, which fees shall be paid equally by
SuperShuttle and the Sellers.
6. Indemnification. SuperShuttle, the Companies and the Sellers (the
"Indemnitors"), hereby agree to indemnify, jointly and severally, the Escrow
Agent against, and hold it harmless of and from, any and all loss, liability,
cost, damage and expense, including, without limitation, reasonable legal
counsel fees and court costs, which the Escrow Agent may suffer or incur by
reason of any action, claim, investigation, or proceeding brought against the
Escrow Agent, arising out of or relating in any way to this Escrow Agreement or
any transaction to which this Escrow Agreement relates, other than any action,
claim or proceeding resulting from the gross negligence or willful misconduct of
the Escrow Agent. The indemnification provisions herein shall survive the
termination of this Escrow Agreement. SuperShuttle, the Companies and the
Sellers, further agree hereunder that in the event of any required
indemnification hereunder of the Escrow Agent, in the event said indemnification
is the result of any action or claim brought or asserted by either SuperShuttle,
the Companies and the Sellers, the prevailing party (either SuperShuttle, the
Companies and/or the Sellers) shall be entitled to be reimbursed in full for any
damages or loss suffered as a result of this indemnification provision and as a
consequence of the other party hereto (either SuperShuttle, the Companies and/or
the Sellers) bringing such action or asserting such claim against the Escrow
Agent.
7. Miscellaneous.
A. No Waiver. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this Escrow
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
B. Controlling Law. This Escrow Agreement shall be governed by
the laws of the State of Florida, without application to the principals of
conflicts of laws.
4
<PAGE> 5
C. Notices. All notices, requests, demands and other
communications required or permitted under this Escrow Agreement shall be in
writing and shall be deemed to have been duly given, made and received only when
personally delivered, or the day received by certified mail, return receipt
requested or by overnight courier, as evidenced by the signature on any receipt
with respect to the foregoing, addressed to the addresses set forth below,
unless notice of a change in address was previously given as aforesaid.
If to SuperShuttle: SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
FAX: (602) 243-6446
Attn: R. Brian Wier
With a copy to: Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004-4441
FAX: (602) 253-8129
Attn: Christopher D. Johnson, Esq.
If to Southern or the Shareholders: Southern Shuttle Services,
Inc.
2595 NW 38th Street
Miami, Florida 33142
FAX: (305) 871-8475
Attn: Mark Levitt
With a copy to: Akerman, Senterfitt &
Eidson
Sun Trust International
Center
One S.E. Third Avenue
Miami, Florida 33131
PH: (305) 374-5600
FAX: (305) 374-5095
Attn: Jonathan L. Awner
D. Binding Nature of Agreement; No Assignment. This Escrow
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns,
except that no party may assign or transfer its rights under this Agreement
without the prior written consent of the other parties hereto.
E. Provisions Separable. The provisions of this Escrow
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.
5
<PAGE> 6
F. Section Headings. The section headings in this Escrow
Agreement are for convenience only; they form no part of this Escrow Agreement
and shall not affect its interpretation.
G. Exhibits and Schedules. All Exhibits and Schedules attached
hereto are hereby incorporated by reference into, and made a part of, this
Escrow Agreement.
H. No Third-Party Beneficiaries. This Escrow Agreement shall
not confer any rights or remedies upon any person other than the parties and
their respective heirs, personal representatives, successors and permitted
assigns.
I. Entire Agreement; Amendments. This Escrow Agreement
(including the documents referred to herein) constitutes the entire agreement
among the parties and supersedes any prior understandings, agreements, or
representations by or among the parties, written or oral, that may have related
in any way to the subject matter hereof. This Escrow Agreement may not be
amended, supplemented or modified in whole or in part except by an instrument
executed by all of the parties hereto.
J. Construction. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to the rules and
regulations promulgated thereunder, unless the context requires otherwise. This
Escrow Agreement shall be neither construed against nor in favor of any of the
parties hereto, but rather in accordance with the fair meaning of its content.
K. Expenses. The parties hereto hereby agree that each party
shall bear its own legal and accounting expenses incurred in the preparation of
this Agreement and the consummation of the transactions hereunder.
IN WITNESS WHEREOF, the parties have executed and delivered this Escrow
Agreement on the date first above written.
SUPERSHUTTLE INTERNATIONAL, INC., a
Delaware corporation
By: /s/ Tom LaVoy
-----------------------------------------
Name:
-----------------------------------
Title: C.F.O.
----------------------------------
SOUTHERN SHUTTLE SERVICES, INC., a Florida
corporation
6
<PAGE> 7
By: /s/ Mark Levitt
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
AAA WHEELCHAIR WAGON SERVICES, INC.
By: /s/ Karen Caputo
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
WHEELCHAIR AMBULANCE OF HOLLYWOOD, INC.
By: /s/ Karen Caputo
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
LIMOUSINES OF SOUTH FLORIDA, INC.
By: /s/ Karen Caputo
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
A1A SNOWBIRD LEASING, INC.
By: /s/ Karen Caputo
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
7
<PAGE> 8
/s/ Mark Levitt
--------------------------------------------
MARK LEVITT
/s/ Karen Caputo
--------------------------------------------
KAREN CAPUTO
/s/ Robert Siedlecki
--------------------------------------------
ROBERT SIEDLECKI
AKERMAN, SENTERFITT & EIDSON, P.A.
By /s/ J.L. Awner
------------------------------------------
JONATHAN L. AWNER
For the Firm
8
<PAGE> 9
SCHEDULE A
ALLOCATION OF SOUTHERN SHUTTLE SHARES FOR
DISTRIBUTION AMONG SELLERS UPON RESCISSION EVENT
<TABLE>
<S> <C>
Mark Levitt 35
Karen Caputo 4.81
Robert Siedlecki 36.19
</TABLE>
9
<PAGE> 10
SCHEDULE B
ALLOCATION OF CONSENT SHARES AMONG SELLERS
<TABLE>
<S> <C>
Mark Levitt 8,334 Shares
Karen Caputo 8,333 Shares
Robert Siedlecki 8,333 Shares
</TABLE>
10
<PAGE> 1
EXHIBIT 4.7a
AMENDMENT NO. 1
TO THE
ESCROW AGREEMENT
This AMENDMENT NO. 1 TO THE ESCROW AGREEMENT (the "Escrow Agreement"),
dated as of March 31, 1998, is made as of May 27, 1998 by and among SUPERSHUTTLE
INTERNATIONAL, INC., a Delaware corporation ("SuperShuttle"); SOUTHERN SHUTTLE
SERVICES, INC., a Florida corporation ("Southern"); AAA WHEELCHAIR WAGON
SERVICES, INC., a Florida corporation ("AAA"); WHEELCHAIR AMBULANCE OF
HOLLYWOOD, INC., a Florida corporation ("Wheelchair Ambulance"); LIMOUSINES OF
SOUTH FLORIDA, INC., a Florida corporation ("LSF"); A1A SNOWBIRD LEASING, INC.,
a Florida corporation ("Snowbird"); Mark Levitt, Karen Caputo and Robert
Siedlecki (the "Shareholders"); and Akerman, Senterfitt & Eidson, P.A. (the
"Escrow Agent").
Section 2(a)(i) of the Escrow Agreement is hereby amended and restated
in its entirety as follows:
(i) to the Sellers, in accordance with Schedule A hereof, upon the
occurrence of any one of the following events (collectively the
"Recission Events"): (i) if SuperShuttle does not file a registration
statement for an initial public offering on Form S-1 with the
Securities and Exchange Commission (the "SEC") by June 8, 1998 to
register for sale shares of SuperShuttle Common Stock (the "S-1"); (ii)
if the SEC does not declare such registration statement effective by
July 31, 1998; (iii) if the underwritten initial registration statement
for an initial public offering on a firm commitment basis does not
close by August 10, 1998, providing a per share offering price to the
public of at least $6.50; or (iv) if Southern fails to obtain the
written approval, acceptable to SuperShuttle, of the Aviation
Department of Dade County to the change in ownership of Southern to
SuperShuttle prior to the effective date of the S-1;
and the following shall be added to the Escrow Agreement as Section 2(c):
(c) The Sellers' Shares and/or the SuperShuttle Shares shall be released by
the Escrow Agent only upon written notice by the parties hereto (except
the Escrow Agent) of the fulfillment or nonfulfillment of the
conditions set forth in this Section 2.
IN WITNESS WHEREOF, SuperShuttle, Southern AAA, Wheelchair Ambulance, LSF,
Snowbird, the Shareholders and Escrow Agent have caused this Amendment No. 1 to
be executed on the date first written above by their respective officers
thereunder duly authorized.
<PAGE> 2
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Thomas C. LaVoy
--------------------------------------------
Thomas C. LaVoy, Chief Financial Officer
AAA WHEELCHAIR WAGON SERVICES,
INC., a Florida corporation
By: /s/ Karen Caputo
--------------------------------------------
Karen Caputo, President
WHEELCHAIR AMBULANCE OF
HOLLYWOOD, INC., a Florida corporation
By: /s/ Karen Caputo
--------------------------------------------
Karen Caputo, President
LIMOUSINES OF SOUTH FLORIDA, INC.,
a Florida corporation
By: /s/ Karen Caputo
--------------------------------------------
Karen Caputo, President
A1A SNOWBIRD LEASING, INC.,
a Florida corporation
By: /s/ Karen Caputo
--------------------------------------------
Karen Caputo, President
<PAGE> 3
SHAREHOLDERS
/s/ Mark Levitt
-----------------------------------------------
Mark Levitt
/s/ Karen Caputo
-----------------------------------------------
Karen Caputo
/s/ Robert Siedlecki
-----------------------------------------------
Robert Siedlecki
AKERMAN, SENTERFITT & EIDSON, P.A.
By: /s/ J. L. Awner
--------------------------------------------
Name: Jonathan L. Awner
------------------------------------------
Title: Shareholder - for the Firm
-----------------------------------------
<PAGE> 4
SOUTHERN SHUTTLE SERVICES, INC.,
a Florida corporation
By: /s/ Mark Levitt
--------------------------------------------
Mark Levitt, President
<PAGE> 1
EXHIBIT 5.1
Direct Dial No.
(602)528-4000
June 3, 1998
VIA EDGAR
SuperShuttle International, Inc.
4610 S. 35th Street
Phoenix, AZ 85040
RE: SUPERSHUTTLE INTERNATIONAL, INC.
Registration Statement on Form S-1
Ladies and Gentlemen:
This firm is counsel for SuperShuttle International, Inc., a Delaware
corporation (the "Company"), with respect to the sale of up to 3,818,000 shares
of the Company's $.01 par value common stock (the "Shares"), which are the
subject of a Form S-1 Registration Statement under the Securities Act of 1933,
as amended (the "Registration Statement"). The Shares, which include an
over-allotment option granted by the Company and certain stockholders to the
Underwriters to purchase up to 498,000 additional shares of the Company's Common
Stock, are to be sold to the Underwriters by the Company and certain
stockholders of the Company as described in the Registration Statement for
resale to the public. As such counsel, we are familiar with the Certificate of
Incorporation and Bylaws of the Company, as well as resolutions adopted by its
Board of Directors authorizing the issuance and sale of the Shares. In addition,
we have examined such documents and undertaken such further inquiry as we
consider necessary for rendering the opinion set forth below:
Based upon the foregoing, it is our opinion that the shares of Common
Stock of the Company, when issued as described in the Registration Statement,
will be duly and validly issued, fully paid and nonassessable.
We acknowledge that we are referred to under the heading "Legal Matters"
of the prospectus which is part of the Registration Statement and we hereby
consent to such use of our name in such Registration Statement, including the
prospectus constituting a part thereof, and to any amendment or supplement
thereto.
Very truly yours,
/s/ SQUIRE, SANDERS & DEMPSEY L.L.P.
Squire, Sanders & Dempsey L.L.P.
<PAGE> 1
EX-10.1
Employee Stock Option Plan
SUPERSHUTTLE INTERNATIONAL, INC.
EMPLOYEE STOCK OPTION PLAN
I. PURPOSES OF THE PLAN
This Employee Stock Option Plan (1995) (the "Plan") is intended to promote
the interests of SuperShuttle International, Inc. (the "Corporation") by
providing a method whereby directors, officers and key employees of the
Corporation and its subsidiaries (which employees may also be officers or
directors of the Corporation), as well as consultants and other providers of
goods and services to the Corporation and its subsidiaries, who are largely
responsible for the management, growth, financial or business success of the
Corporation or its subsidiaries may be offered incentives and rewards which will
encourage them to acquire or increase a proprietary interest in, or otherwise
increase their interest in the performance of the Common Stock of the
Corporation and to remain in the employ of the Corporation or its subsidiaries.
It is intended that incentive stock options ("ISO") (as defined by Section
422 of the Internal Revenue Code of 1986, as amended or superseded (the
"Code")), non-qualified stock options ("NQ"), and stock appreciation rights
("SAR") may be granted under this Plan.
II. 1986 PLAN
This Plan supersedes the Company's Stock Option Plan (1986) and that plan
shall be of no further force or effect, except that all options that are
outstanding under that plan (that are not cancelled in exchange for new options
under this Plan) shall remain outstanding in accordance with their terms.
III. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Corporation's Board of Directors
(the "Board"). The Board, however, may at any time appoint a committee (the
"Committee") consisting of not less than two (2) Directors and delegate to such
Committee any or all of the administrative powers allocated to the Board under
the provisions of the Plan, except those described in Paragraphs IX, X and XIII,
including (without limitation) the power to grant options and related SARs under
the Plan.
(b) Any reference to the Board in one or more provisions of the Plan
shall', except for the references in Paragraphs IX, X and XIII mean the
Committee, if the Committee is at the time responsible for the administration of
either the Plan or those particular provisions of the Plan. The Board or the
Committee, as the case may be, is authorized to establish such rules and
1
<PAGE> 2
regulations as it may deem appropriate for the proper administration of the Plan
and to make such determinations under, and issue such interpretations of, the
Plan and any outstanding option as it may deem necessary or advisable. Decisions
of the Board shall be final and binding on all parties who have an interest in
the Plan or any outstanding option. Decisions of the Committee shall also be
final and binding upon all interested parties, unless the Board shall make a
contrary determination.
IV. ELIGIBILITY FOR OPTION GRANTS
(a) The persons who shall be eligible to receive options pursuant to the
Plan ("Optionee(s)") shall be such officers, directors and employees of, and
franchisee principals, consultants and other providers of goods and services, to
the Corporation, its parents and the subsidiaries as the Board shall select from
time to time.
(b) For the purposes of the Plan, each corporation in an unbroken chain of
corporations beginning with the Corporation shall be considered to be a
subsidiary of the Corporation, provided each such corporation other than the
last corporation in the unbroken chain owns, at the time of the option grant, a
50 percent (50%) or more beneficial interest in one of the other corporations in
such chain.
(c) For the purposes of the Plan, the term "parent" shall mean any
Corporation, other than the Corporation, in an unbroken chain of corporations
ending with the Corporation if, at the time of the granting of the Option, each
of the corporations, other than the Corporation, owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
V. STOCK SUBJECT TO THE PLAN
(a) The Stock issuable under the Plan shall be shares of the Corporation's
authorized but unissued or reacquired Class A Common Stock, $0.01 par value of
the Corporation (the "Common Stock"). The aggregate number of issuable shares of
Common Stock under this Plan and the 1986 plan shall not exceed 445,900 shares,
subject to adjustment as provided in Paragraph V(b). Should an option granted
under this Plan or the 1986 plan be terminated for any reason without being
exercised, or be cancelled, in whole or in part, the shares subject to the
portion of the option not so exercised or which is cancelled shall be available
for subsequent grants under this Plan; provided, however, that if such option is
surrendered by the Optionee by reason of the exercise of a related SAR granted
under Paragraph VIII hereof, then the shares subject to such option shall not be
available for subsequent grants under this Plan.
2
<PAGE> 3
(b) In the event any change is made to the Common Stock issuable under the
Plan, whether by reason of merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination of shares, exchange
of shares, or other change in corporate structure effected without receipt of
consideration (other than changes occurring on account of a stock issuance upon
exercise of options, rights or warrants or the conversion of convertible
securities), then unless such change results in the termination of an
outstanding option pursuant to the provisions of the related Option Agreement,
the Board (either before or after such event), shall make appropriate
adjustments to the number and/or class of shares and the exercise price per
share of the stock subject to each outstanding option and any related SAR and
with regard to the maximum number and/or class of shares issuable under the
Plan, all in order to prevent the dilution of benefits under such options and
the Plan and to provide to the extent practical after such event benefits
identical to those provided under such options and the Plan prior to such event;
provided, however, that notwithstanding the foregoing, any and all such
adjustments in connection with an ISO shall comply in all respects with Sections
422 and 424 and any other applicable provisions of the Code and the regulations
thereunder. The adjustments determined by the Board shall be final, binding and
conclusive; provided, however, that if the Board fails to consider whether an
adjustment is appropriate, then until such time, if any, as the Board may
undertake such consideration, the number and/or class of shares and the exercise
price of each outstanding option and the maximum number and/or class or shares
issuable under this Plan shall be deemed adjusted in the most reasonable manner
so as to prevent dilution of benefits under such options and this Plan and to
provide to the extent practicable benefits after such event identical to those
provided under such options and this Plan prior to such event.
(c) In the event that the Corporation acquires an interest in another
entity in a merger, consolidation, acquisition of property or stock,
reorganization or liquidation, then subject to the approval of the Board,
options of such other entity may be assumed, or options of the Corporation under
this Plan may be substituted therefor.
(d) The grant of options shall in no way restrict the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
VI. TERMS AND CONDITIONS OF OPTIONS
ISOs and NQs granted pursuant to the Plan shall be authorized by action of
the Board and shall be evidenced by separate Option
3
<PAGE> 4
Agreements in such form and containing such terms, conditions and restrictions
as the Board shall from time to time approve. Each such option, however, shall
comply with and incorporate at least the following terms and conditions:
1. Option Price.
A. The option price per shall be fixed by the Board, but in no event shall
the option price per share be less than One Hundred Percent (100%)) of the fair
market value of a share of Common Stock on the date of the option grant.
Notwithstanding the foregoing, in the case of any individual who directly or
indirectly possesses more than ten percent (10%) of the total combined voting
power or value of all classes of stock of the Corporation (or any parent or
subsidiary), the option price per share shall not be less than One Hundred Ten
Percent (110%) of the fair market value of a share of Common Stock on the date
of the option grant.
B. The option price shall become immediately due upon exercise of the
option and shall be payable as follows:
(i) full payment in cash or check;
(ii) full payment in shares of Common Stock of the Company having a
fair market value on the Exercise Date (as such term is defined below)
equal to the option price; or
(iii) a combination of shares of Common Stock valued at fair market
value on the Exercise Date and cash or check, equal in the aggregate to the
option price.
For purposes of this Plan, the Exercise Date shall be the date on which the
Corporation receives written notice of the exercise of the option, together with
payment of the option price for the purchased shares.
C. The "fair market value" of a share of Common Stock on any relevant date
for purposes of any provision of this Plan shall be the closing price of one
share of Common Stock on the date in question on the principal exchange on which
the Common Stock is then listed or admitted to trading, as such price is
officially quoted by the composite tape of transactions on such exchange, or the
closing average of the bid and asked prices, as such prices are officially
quoted in NASDAQ if the Common Stock is then traded in the over-the-counter
market. If there are no reported sales of Common Stock on the principal
exchange, or NASDAQ on such date, then the closing price on such exchange or
such average of the NASDAQ bid and asked prices, on the next preceding day for
which there do exist such quotations shall be determinative of fair market
value. If the Common Stock is not then listed or admitted to trading on an
exchange and is not then traded in the over-the-counter market, the Board shall,
in good faith, determine the fair
4
<PAGE> 5
market value based upon its consideration of the most recent sale of stock by
the Corporation, the most recent sales of stock by stockholders of the
Corporation, the financial performance of the Corporation, the book value of the
Corporation's outstanding Common Stock and other relevant factors, giving such
weight and priority to the various available data as it, in its business
judgment, shall determine.
2. ISO Value Limitation
A. Notwithstanding any contrary provision in this Plan, in the case of
ISOs, the aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which ISOs are exercisable for the first
time by an Optionee during any calendar year (under all plans of the Corporation
and its parent and subsidiary corporations) shall not exceed One Hundred
Thousand Dollars ($100,000).
3. Term and Exercise of Options. Each option granted under the Plan shall
be exercisable at such time or times during such period, and for such number of
shares as shall be determined by the Board and set forth in the instrument
evidencing such option; provided, however, that no option granted under this
Plan shall have a term in excess of ten (10) years from the grant date and no
ISO granted to any individual who directly or indirectly possesses more than ten
(10%) of the total combined voting power of all classes of stock of the
Corporation (or any parent or subsidiary) shall have a term in excess of five
(5) years from the grant date. No fractional shares shall be issued, and
fractional shares remaining in any option shall be rounded down to the next
nearest whole number of shares. During the lifetime of the Optionee, the option
shall be exercisable only by the Optionee and shall not be assignable or
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution, or pursuant to a qualified domestic relations order as defined
in the Code or Title 1 of the Federal Employee Retirement Income Security Act or
the rules thereunder.
4. Effect of Termination of Employment or Services.
A. Should an optionee cease to be an officer, director or employee of, or a
consultant or other provider or goods or services to the Corporation or its
subsidiaries for any reason other than death, then any outstanding option
granted such Optionee under this Plan shall be exercisable by the Optionee only
during the three (3) month period following the date of cessation of such status
(but not later than the specified expiration date of the option term) and only
to the extent of the number of shares for which the option is exercisable on the
date of such cessation of such status. Upon the expiration of such three (3)
month period or (if earlier) upon the expiration of the option term, any option
shall terminate and case to be exercisable. In the case of any Optionee who is
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<PAGE> 6
"disabled" (as defined by Section 422(c) of the Code), with respect to any stock
option held by such Optionee the foregoing three (3) month period shall be one
(1) year (but not later than the specified expiration date of the option term).
In the case of employees, cessation of such status shall be that date on which
the individual is no longer on the payroll; in the case of all others it shall
be that date as of which either party informs the other, in writing, that the
individual will thereafter no longer be requested to provide his or her
services, or that the individual no longer will be providing his or her
services.
B. Any option granted to an Optionee under this Plan and exercisable in
whole or in part on the date of the Optionee's death may be subsequently
exercised, but only to the extent of the number of shares for which the option
is exercisable on the date of the Optionee's death, by the personal
representative of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to the Optionee's will or in accordance with the
laws of descent or distribution, provided that such exercise must occur prior to
the specified expiration date of the option term or (if earlier) the first
anniversary of the date of the Optionee's death. Upon the occurrence of the
earlier event, the option shall terminate and cease to be exercisable.
5. Acceleration of Options. In the event that the Corporation or its
stockholders enter into an agreement to dispose of all or substantially all of
the assets or outstanding capital stock of the Corporation by means of sale,
merger, reorganization or liquidation, then each option outstanding under the
Plan shall become exercisable during the fifteen (15) days immediately prior to
the scheduled consummation of such sale, merger, reorganization or liquidation,
with respect to the full number of shares of Common Stock purchasable under such
option; provided, however, that no such acceleration of the exercise date shall
occur if the terms of the agreement require as a prerequisite for the
consummation of any such sale, merger, reorganization or liquidation that each
such outstanding option shall either be bona fidely assumed by, or be replaced
with a comparable bona fide option to purchase shares of capital stock of, the
successor corporation or parent thereof or a parent of the Corporation; and
provided further that any such exercise of an option during such fifteen (15)
day period shall be conditioned upon the consummation of such transaction and
shall be effective only immediately before such consummation, except to the
extent that an optionee may indicate, in writing, that such exercise is
unconditional with regard to all or part of the unaccelerated portion of the
option. The determination of such comparability shall be made by the Board at
least 20 days prior to the consummation of such transaction, and its
determination shall be final, binding and conclusive. Upon consummation of the
sale, merger, reorganization or liquidation contemplated by the agreement, all
outstanding options, whether or not accelerated, shall terminate and cease to be
exercisable, unless assumed by the
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<PAGE> 7
successor corporation or parent thereof or a parent of the Corporation.
6. Stockholder Rights. An option holder shall have none of the rights of a
stockholder with respect to any shares subject to the option until such
individual shall have validly exercised the option and paid the option price in
full.
VII. CANCELLATION OR EXCHANGE AND NEW GRANT OF OPTIONS
(a) The Board shall have the authority to effect, at any time and from time
to time, with the consent of the affected Optionees, the cancellation of any or
all outstanding options under the Plan and its predecessor (1986) plan and to
grant in substitution therefor new options under this Plan covering the same or
different numbers of shares of Common Stock but having an option price per share
not less than that called for on the new grant date, in accordance with
Paragraph VI of this Plan.
VIII. STOCK APPRECIATION RIGHTS
(a) Any option granted or to be granted under this Plan may, in the
discretion of the Board, include a related SAR. An SAR may be granted either at
the time the related option is granted or at any time thereafter prior to
exercise, termination or cancellation of such related option; provided, however,
that no SAR may be granted in connection with an ISO which was granted prior to
the grant of such SAR. Optionees receiving an SAR may exercise the SAR by
surrendering to the Corporation the option or any portion thereof which is then
exercisable, and the obligation of the Corporation in respect of the option to
which the SAR relates (or such portion thereof) will be discharged by payment of
the SAR so exercised.
(b) Upon the exercise of an SAR, the Corporation shall pay to the Optionee
an amount equal to the difference between (1) 100 percent of the then fair
market value (as defined in Paragraph VI(1)(C) hereof as of the date of
exercise) of the shares of Common Stock subject to the option or portion thereof
surrendered by the Optionee, and (2) the aggregate option exercise price of such
shares. The Optionee may elect to receive such payment in cash or in shares of
Common Stock valued at fair market value (as defined in Paragraph VI (1) (C)
hereof as of the date of exercise), or in any combination thereof; provided,
however, that the Corporation may, in its discretion, consent to or disapprove
the election of the Optionee to receive cash in full or partial payment to the
SAR. Notwithstanding any contrary provision hereof, if the Optionee is then a
person subject to the filing requirements imposed under Section 16(a) of the
Securities Exchange Act of 1934 (the "Act") with respect to the Corporation (a
"Reporting Person") then (absent any available exemption under the Act) any
election by the Optionee to receive cash in full or partial payment of the SAR,
as well as
7
<PAGE> 8
any exercise by the optionee of such SAR for cash, shall be made to take effect
as of and shall occur during the Ten-Day Window Period beginning on the third
business day following the date of the "release of the financial data" (as
defined below) and ending on the twelfth business day following such date. As
used herein the term "release of the financial data" means the publication of
quarterly and annual summary statements of the Corporation's revenues and
earnings either on a wire service, in a financial news service, or in a
newspaper of general circulation or the making of such financial information
otherwise publicly available.
(c) SARs granted under this Plan shall be subject to all of the terms,
conditions and restrictions as the Board shall provide in the Option Agreement
evidencing the option to which such SAR relates, and shall further be subject to
the following:
(i) SARs shall expire upon expiration of the option to which such SAR
relates.
(ii) SARs shall be transferable only when the option to which such SAR
relates is transferable, and shall be subject to the terms, conditions and
restrictions regarding transferability provided in this Plan and any
separate instruments evidencing such option.
(iii) SARs shall be exercisable only when and to the extent the option
to which such SAR relates is then exercisable.
(iv) In the case of any SAR related to an ISO granted hereunder, said
SAR shall be exercisable only when the then fair market value (as defined
in Paragraph VI(l)(C) hereof) of the shares of Common Stock subject to the
option (or the portion thereof) surrendered by the Optionee exceeds the
exercise price of such option (or such portion thereof).
(d) References in this Plan to the term "option" shall, where appropriate,
include an SAR.
(e) In the event of the exercise of an SAR, the obligation of the
Corporation in respect of the option to which such SAR relates (or such portion
thereof) will be discharged by payment of the SAR so exercised.
IX. AMENDMENT OF THE PLAN
(a) Except as set forth herein, the Board shall have complete and exclusive
power and authority to amend or modify the Plan in any or all respects
whatsoever; provided, however, that no such amendment or modification shall
adversely affect rights and obligations with respect to options at the time
outstanding under the Plan.
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<PAGE> 9
(b) The Board hereby expressly reserves the right to amend or modify the
terms and provisions of the Plan and of any outstanding options under the Plan
to the extent necessary to qualify any or all options under the Plan for such
favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded employee stock options under amendments to the
Internal Revenue Code or other statutes or regulations which become effective
after the effective date of this Plan.
(c) Notwithstanding the provisions of Paragraphs IX(a) and (b), the Board
shall not, without the approval of the Corporation's stockholders, (i)
materially increase the maximum number of shares issuable under the Plan, except
for permissible adjustments under Paragraph V(b), or (ii) materially modify the
eligibility requirements for the grant of options under the Plan.
(d) With respect to persons who are then Reporting Persons, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Act. To the extent any provision of the Plan
or action by the Plan administrators fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the plan
administrators. Moreover, in the event the Plan does not include a provision
required by said Rule 16b-3 to be stated therein, such provision (other than one
relating to eligibility requirements, or the price and amount of grants) shall
be deemed automatically to be incorporated by reference into the Plan insofar as
such Reporting Persons are concerned.
X. EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan became effective when adopted by the Board on September 7,
1995, but no option granted under the Plan shall become exercisable unless and
until the Plan shall have been approved by the Corporation's stockholders, which
approval shall be by the affirmative vote of a majority of a quorum of
shareholders at a meeting of stockholders, or by such other method as may be
proper under applicable law. If stockholders approval is not obtained within
twelve (12) months after the date of the Board's adoption of the Plan, then any
options previously granted under the Plan shall terminate and no further options
shall be granted. Subject to such limitation, options may be granted under the
Plan at any time after the effective date and before the date fixed herein for
termination of the Plan.
(b) Unless sooner terminated, the Plan shall terminate upon the earlier of
(i) September 6, 2005, or (ii) the date on which all shares available for
issuance under the Plan shall have been issued pursuant to the exercise of
options granted hereunder. If the date of termination is determined under (i)
above, then options outstanding on such date shall continue to have force and
effect in
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accordance with the provisions of the instruments evidencing such options.
XI. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of shares pursuant
to options granted under the Plan shall be used for general corporate purposes.
XII. WITHHOLDING
The Corporation's obligation to deliver shares or cash upon the exercise of
any option (or related SAR) granted under the Plan shall be subject to the
Optionee's satisfaction of all applicable federal, state and local income,
excise and employment tax withholding requirements (collectively "Tax
Requirements").
An Optionee may satisfy this withholding obligation, in whole or in part,
by electing either to have withheld from the shares otherwise issuable to the
Optionee shares of Common Stock, or to deliver to the Company already-owned
shares of Common Stock, having a fair market value (as defined in Paragraph
VI.C. hereof) sufficient to satisfy the Tax Requirements, subject to the
following conditions or restrictions: (i) such election shall be made in writing
and prior to the date that the exercise of the option (or related SAR) becomes
taxable (the "Tax Date"); (ii) such election shall be irrevocable, (iii) such
election shall be subject to the disapproval of the Corporation in its sole
discretion; (iv) if the Optionee is then a Reporting Person, such election may
not be made within six months of the grant of the option or the later grant of a
related SAR, as the case may be; and (v) if the Optionee is then a Reporting
Person, such election shall (absent any available exemption under the Act) be
made either (a) six months or more prior to the Tax Date, or (b) during a
Ten-Day Window Period. In the event that upon or prior to the exercise of the
option or related SAR, the Optionee elects to have a portion of the shares of
Common Stock otherwise issuable to the Optionee withheld to satisfy applicable
Tax Requirements, the amount of withholding shall be based on the fair market
value of shares of the Common Stock (as defined in Paragraph VI.C hereof) on the
date of exercise. If the number of shares withheld is insufficient to satisfy
the Tax Requirements determined as of the Tax Date, the Optionee shall fully
comply with all arrangements required by the Corporation for the satisfaction of
the deficiency. If the number of shares withheld at the time of exercise is in
excess of the amount necessary to satisfy the Tax Requirements determined as of
the Tax Date, the Corporation shall nonetheless pay over the actual withheld
amount to the Internal Revenue Service.
10
<PAGE> 11
XIII. REGULATORY APPROVALS AND RELATED MATTERS
(a) The implementation of the Plan, the granting of any option hereunder,
and the issuance of stock upon the exercise of any such option shall be subject
to the Corporation's procurement of all material approvals and permits required
by regulatory authorities and stock exchanges having jurisdiction over this
Plan, the options granted under it and the stock issued pursuant to it;
provided, however, that the failure to obtain any such approval or permit shall
not invalidate any options granted hereunder, unless in the opinion of counsel
for the Corporation, that result is required as a matter of law to protect the
Corporation from significant damages. All stock issued upon exercise of options
under the Plan shall bear legends evidencing restrictions on transferability,
unless and until, in the opinion of counsel for the Corporation, such
restrictions and legends are not required. The Corporation may delay the
issuance of stock upon exercise of options if, in the opinion of counsel for the
Corporation, registration of such stock with the Securities and Exchange
Commission is then required, in which event such delay may extend until such
time as the Board of Directors deems it to be in the best interests of the
Corporation to proceed with such registration.
(b) The Board may require any Optionee who will be accepting an option to
represent and agree for himself and his transferees that, unless a registration
statement under the Securities Act of 1933 is in effect as to the shares that
may be received upon exercise of the option, any and all shares of Common Stock
so received shall be acquired for his own account and not for resale or
distribution, and each notice of the exercise of any portion of the option shall
be accompanied by a representation and warranty in writing signed by the person
entitled to exercise same, that such shares of Common Stock are being acquired
in good faith for his own account and not for resale or distribution, and such
other representations and warranties as may be required by the Board or the
Optionee's Stock Option Agreement.
(c) At any time that an Optionee contemplates the disposition (whether by
sale, exchange, gift or other form of transfer) of any shares of Common Stock
acquired pursuant to an option granted hereunder, he shall first notify the
Corporation in writing of such proposed disposition and shall thereafter
cooperate with the Corporation in complying with all applicable requirements of
law which, in the judgment of the Corporation, must be satisfied prior to the
making of such disposition. Before consummating such disposition, the
Corporation may require such Optionee to provide to the Corporation an opinion
of such Optionee's counsel, of which both the opinion and such counsel shall be
satisfactory to the Corporation, that such disposition will not result in a
violation of any state or federal securities laws or regulations.
11
<PAGE> 12
XIV. INDEMNIFICATION
The Board and the Committee members shall have the benefit of all rights to
indemnification in connection with actions taken or not taken under this Plan as
are available to them as a matter of law and under the Corporation's Certificate
of Incorporation, By-laws, and insurance policies.
12
<PAGE> 1
EXHIBIT 10.2
SUPERSHUTTLE INTERNATIONAL INC.
1998 STOCK OPTION PLAN
This is the 1998 Stock Option Plan (the "Plan") of SuperShuttle
International, Inc., a Delaware corporation (the "Company"), effective as of
February 20, 1998.
1. Purpose of the Plan. The purposes of the Plan are to advance the
interests of the Company and its Stockholders by inducing persons of outstanding
ability and potential to remain with the Company and its subsidiaries, by
encouraging, motivating and enabling employees and directors to acquire options
or increase stock ownership in the Company and its subsidiaries, and by
providing the employees and directors with an additional incentive to promote
the success of the Company under the Plan. Options granted under the Plan may be
either options which are intended to qualify as "incentive stock options," as
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
or any successor provision (hereinafter referred to as "Incentive Stock
Options), or "Nonstatutory Stock Options," at the discretion of the Board or a
Committee appointed by the Board and as reflected in the terms of the written
option agreement ("Option Agreement").
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Company or the
Committee, if one has been appointed.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
(c) "Common Stock" shall mean the common stock of the Company
described in the Company's Certificate of Incorporation, as amended.
(d) "Company" shall mean SuperShuttle International, Inc., a
Delaware corporation, and shall include any parent or subsidiary corporation of
the Company as defined in Sections 424(e) and (f), respectively, of the Code.
(e) "Committee" shall mean the Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan, if one is appointed.
(f) "Employee" shall mean any person, including officers, employed
by the Company.
(g) "Exchange Act" shall mean the Securities and Exchange Act of
1934, as amended.
<PAGE> 2
(h) "Fair Market Value" on a particular date shall mean (i) if there
is a public market for the Common Stock, the Fair Market Value per Share shall
be the average of the bid and asked prices of the Common Stock for such day if
the Common Stock is then included for quotation on the NASDAQ SmallCap Market
or, the Fair Market Value per Share shall be the closing price of the Common
Stock for such day if the Common Stock is then included on the NASDAQ National
Market or listed on the New York, American or Pacific Stock Exchange, or (ii) if
there is no public market for the Common Stock, the Value of the Common Stock
determined in good faith by the board or Committee in such manner as it may deem
equitable for Plan purposes. The Board or a Committee appointed by the Board may
rely upon published quotations in The Wall Street Journal or a comparable
publication for purposes of the calculation of the Fair Market Value per Share
as set forth above.
(i) "Incentive Stock Option" shall mean an Option which is intended
to qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(j) "Option" shall mean a stock option granted under the Plan.
(k) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(l) "Optionee" shall mean an Employee of the Company who has been
granted one or more Options.
(m) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(n) "Plan" shall mean this 1998 Employee Stock Option Plan.
(o) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(p) "Subsidiary" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
(q) "Tax Date" shall mean the date an Optionee is required to pay
the Company an amount with respect to tax withholding obligations in connection
with the exercise of an option.
3. Common Stock Subject to the Plan. The shares of stock subject to any
Option granted under this Plan shall be Shares of Common Stock. The Maximum
aggregate number of Shares which may be subject to, and issued under, Options
granted pursuant to the Plan shall not exceed 1,000,000 Shares, subject to
adjustment as provided in Section 11(9) of the Plan. Any Shares issued upon the
exercise of Options granted under the Plan may be authorized, but unissued, or
previously issued Shares acquired or to be acquired by the Company and held in
its treasury. In the event that an outstanding Option under the Plan expires, is
terminated or
<PAGE> 3
(with the consent of the Optionee) is canceled, those Shares allocable to the
unused portion of such option may thereafter be subject to new options granted
pursuant to the Plan.
4. Administration of the Plan.
(a) Procedure.
(1) The Plan shall be administered by the Board in accordance
with Securities and Exchange Commission Rule 16b-3 ("Rule 16b-3"); provided,
however, that the Board may appoint a Committee to administer the Plan at any
time or from time to time and, provided further, that if members of the Board
are not "disinterested" within the meaning of Securities and Exchange Commission
Rule 16b-3, then any participation by directors in the Plan must be administered
by a Committee appointed by the Board.
(2) The Committee shall consist of at least two (2) members of
the Board, each of whom is "disinterested" within the meaning of Securities and
Exchange Commission Rule 16b-3 to administer the Plan on behalf of the Board,
subject to such terms and conditions as the Board may prescribe. Once appointed,
the Committee shall continue to serve until otherwise directed by the Board.
From time to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause), and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee and thereafter directly administer the Plan;
provided, however, that at no time may any director who is not "disinterested"
within the meaning of Securities and Exchange Commission Rule 16b-3 serve on the
Committee nor shall a Committee of less than two (2) members administer the
Plan.
(b) Powers of the Board. Subject to the provisions of the Plan, the
Board or a Committee appointed by the Board shall have the authority, in its
discretion: (i) to grant options which are intended to be Incentive Stock
Options, in accordance with Section 422 of the Code, and to grant "nonstatutory
stock options;" (ii) to determine, upon review of relevant information and in
accordance with Section 2(h) of the Plan, the Fair Market Value of the Common
Stock; (iii) to determine the exercise price per share of Shares for each Option
to be granted, which exercise price shall be determined in accordance with
Section 8(a) of the Plan; (iv) to determine the Employees and members of the
Board to whom, and the time or times at which Options shall be granted and the
number of Shares to be represented by each Option; (v) to interpret the Plan;
(vi) to prescribe, amend and rescind rules and regulations relating to the Plan;
(vii) to determine the terms and provisions of each Option granted (which need
not be identical) and, with the consent of the Optionee thereof, modify or amend
each Option; (viii) to accelerate or defer (with the consent of the Optionee)
the exercise date of any Option; (ix) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option previously granted by the Board or a Committee appointed by the Board;
(x) to accept or reject the election made by an Optionee pursuant to Section 18
of the Plan; and (xi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
<PAGE> 4
(c) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board or a Committee appointed by the Board, shall be
final and binding on all Optionees and any other holders of any Options granted
under the Plan.
5. Eligibility.
(a) Consistent with the Plan's purposes, Options may be granted only
to Employees of the Company and members of the Board as determined by the Board
or a Committee appointed by the Board. An Employee or Director who has been
granted an Option may, if he is otherwise eligible, be granted an additional
Option or Options.
(b) With respect to Incentive Stock Options granted under the Plan,
the aggregate fair market value (determined at the time the Incentive Stock
Option is granted) of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by any individual during any calendar year
(under this Plan and any other plan of the Company and its parent and subsidiary
corporations) shall not exceed One Hundred Thousand Dollars ($100,000).
6. Effective Date and Term of Plan. The Plan shall become effective as of
February 20, 1998, the date on which the Board approved the Plan, subject to
approval hereto by the Stockholders of the Company no later than March 19, 1998.
If such approval is not obtained, then any Options issued under the Plan which
are intended to be Incentive Stock Options will be nonstatutory stock options.
Except as just provided, the failure to obtain such approval shall not effect
the effectiveness of the Plan. No Option may be granted after February 19, 2008
(ten years from the effective date of the Plan); provided, however, that the
Plan and all outstanding Options shall remain in effect until such Options have
expired or until such Options are canceled.
7. Term of Option. Unless otherwise provided in the Option Agreement, the
term of each Incentive Stock Option shall be ten (10) years from the date of
grant thereof. Unless otherwise provided in the Option Agreement, the term of
each Option which is not an Incentive Stock Option shall be eleven (11) years
from the date of grant. Notwithstanding the above, in the case of an Incentive
Stock Option granted to an Employee who, at the time the Incentive Stock Option
is granted, is deemed for purposes of Section 422 of the Code to own Stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of Stock of the Company or its parent or subsidiary
corporation ("Ten Percent Shareholder"), the term of the Incentive Stock Option
shall be five (5) years from the date of grant thereof or such shorter time as
may be provided in the Option Agreement.
8. Exercise Price and Payment.
(a) Exercise Price. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the Board or
a Committee appointed by the Board, but in the case of an Incentive Stock Option
shall be no less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant; provided, further, that
<PAGE> 5
in the case of an Incentive Stock Option granted to an Employee who, at the time
of the grant of such Incentive Stock Option, is a Ten Percent Shareholder, the
per Share exercise price shall be no less than one hundred ten percent (110%) of
the Fair Market Value per Share on the date of grant. In no event may the
exercise price in the case of a nonstatutory stock option be less than
eighty-five (85%) of the Fair Market Value per share on the date of grant.
The Company will pay any documentary stamp taxes, handling or
certificate issuance fees attributable to the initial issuance of shares of
Common Stock upon the exercise of any Option under the Plan; provided, however,
that the Company shall not be required to pay any fees or taxes which may be
payable with respect to any transfer involved in the issuance or delivery of any
certificates for shares in a name other than that of the holder of an Option.
(b) Payment. Upon exercise of an Option, the full exercise price of
the Shares being purchased, and any taxes attributable to the delivery of Common
Stock under the Plan, or portion thereof, shall be paid:
(1) In United States dollars in cash or by check, bank draft
or money order payable to the order of the Company; or
(2) At the discretion of the Board or a Committee appointed by
the Board, through the delivery of shares of Common Stock, with an aggregate
Fair Market Value, equal to the full exercise price; or
(3) By a combination of (1) and (2) above.
The Board or a Committee appointed by the Board shall determine
acceptable methods for tendering Common Stock as payment upon exercise of an
Option and may impose such limitations and prohibitions on the use of Common
Stock to exercise an Option as it deems appropriate. With respect to
nonstatutory options, at the election of the Optionee pursuant to Section 18,
the Company may satisfy its withholding obligations by retaining such number of
shares of Common Stock subject to the exercised Option which have an aggregate
Fair Market Value on the exercise date equal to the Company's aggregate federal,
state, local and foreign tax withholding and FICA and FUTA obligations with
respect to income generated by the exercise of the Option by Optionee.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board or a Committee appointed by the Board, including
performance criteria with respect to the Company and/or the Optionee, and as
shall be permissible under the terms of the Plan. Unless otherwise determined by
the Board or a Committee appointed by the Board at the time of grant, an Option
may be exercised in whole or in part, but in no case may any option be
<PAGE> 6
exercised as to less than One Hundred (100) Shares at any one time (or the
remaining Shares covered by the option if less than One Hundred (100) Shares)).
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company at its principal office to the
attention of the Secretary of the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board or a Committee appointed
by the Board, consist of any consideration and method of payment allowable under
Section 8(b) of the Plan. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in Section 11 of
the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option by the number of Shares as to which the
Option is exercised.
Notwithstanding anything contained in this Plan to the
contrary, the Board or a Committee appointed by the Board may establish certain
restrictions on the times at which an Option may be exercised after a number of
elapsed years together with cumulative exercise rights and may retain certain
rights with respect to a fixed repurchase price for the Optioned Stock if the
Employee voluntarily terminates his employment with the Company within a certain
period of time after exercising the Option or whose employment is involuntarily
terminated for gross misconduct, fraud, embezzlement, theft, breach of any
fiduciary duty owed to the Company or for nonperformance of duties.
(b) Termination of Status as an Employee.
(1) Termination of Employment. Unless otherwise provided in an
Option Agreement relating to an Option that is not an Incentive Stock Option,
except as otherwise provided in this Section 9(b), the Option, to the extent not
exercised, shall cease on the date on which Employee's employment by the Company
is terminated for any reason. For purposes of this Section 9, an employee who
leaves the employ of the Company to become an employee of a subsidiary or parent
corporation of the Company or a corporation which has assumed the option of the
Company as a result of a corporate reorganization, etc., shall not be considered
to have terminated his employment. For purposes of this Section 9, the
employment relationship of an employee of the Company or of a subsidiary
corporation of the Company will be treated as continuing intact while he is on
military or sick leave or other bona fide leave of absence (such as temporary
employment by the government) if such leave does not exceed ninety
<PAGE> 7
(90) days, or, if longer, so long as his right to reemployment is guaranteed
either by statute or by contract.
(2) Retirement. Unless otherwise provided in an Option
Agreement relating to an Option that is not an Incentive Stock Option, if an
Employee retires pursuant to a pension or retirement plan adopted by the Company
or at the normal retirement date prescribed from time to time by the Company,
then the Employee may, but only within ninety (90) days after the date he ceases
to be an Employee of the Company, exercise his Option to the extent that he was
entitled to exercise it at the date of such termination. To the extent that he
was not entitled to exercise the Option at the date of such termination, or if
he does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.
(3) Disability. Unless otherwise provided in an Option
Agreement relating to an Option that is not an Incentive Stock Option,
notwithstanding the provisions of Section 9(b) above, in the event an Employee
is unable to continue his employment with the Company as a result of his
permanent and total disability (as defined in Section 22(e)(3) of the Code), he
may, but only within one (1) year from the date of termination, exercise his
Option to the extent he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of termination, or if he does not exercise such Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(4) Death of Optionee. Unless otherwise provided in an Option
Agreement relating to an Option that is not an Incentive Stock Option, if
Optionee dies during the term of the Option and is at the time of his death an
Employee of the Company who shall have been in continuous status as an Employee
since the date of grant of the Option, the Option may be exercised at any time
within one (1) year following the date of death (or such other period of time as
is determined by the Board or a Committee appointed by the Board), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent that Optionee was entitled to
exercise the Option on the date of death. To the extent that decedent was not
entitled to exercise the Option on the date of death, or if the Optionee's
estate, or person who acquired the right to exercise the Option by bequest or
inheritance, does not exercise such Option (which he was entitled to exercise)
within the time specified herein, the Option shall terminate.
10. Non-Transferability of Option. Unless otherwise provided in an Option
Agreement relating to an Option that is not an Incentive Stock Option, an Option
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in
any manner other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Optionee, only by the Optionee.
<PAGE> 8
11. Adjustments Upon Changes in Capitalization or Reorganization or
Merger.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellations or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the common stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board or
a Committee appointed by the Board, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no issuance
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class shall affect, and no adjustment by reason thereof,
shall be made with respect to the number or price of shares of Common Stock
subject to an Option.
(b) Reorganization or Merger. In the event of the proposed
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Board or a Committee appointed by the Board. The Board or a Committee
appointed by the Board may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of a date fixed by the
Board or a Committee appointed by the Board and give each Optionee the right to
exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. In the event
that outstanding Shares of Common Stock are hereafter changed into or exchanged
for a different number or kind of Shares of Stock or securities of another
Corporation, whether as a result of a reorganization, recapitalization,
reclassification, merger consolidation or otherwise, as in the event of a
proposed sale of all or substantially all of the assets of the Company, the
Option shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board or a Committee appointed by the Board determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
that the Optionee shall have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable. If the Board or a Committee appointed by the Board makes an Option
fully exercisable in lieu of assumption or substitution in the event of a merger
or sale of assets, the Board or a Committee appointed by the Board shall notify
the Optionee that the Option shall be fully exercisable for a period of thirty
(30) days from the date of such notice (but not later than the expiration of the
term of the Option under the Option Agreement), and the Option will terminate
upon the expiration of such period.
<PAGE> 9
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Board or a Committee appointed by the
Board makes the determination granting such Option. Notice of the determination
shall be given to each Employee to whom an Option is so granted within a
reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respect as the Board may deem advisable;
provided, however, that the following revisions or amendments shall require
approval of the holders of a majority of the outstanding Shares of the Company
entitled to vote:
(1) Any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 11 of the Plan;
(2) Any change in the designation of the class of employees
eligible to be granted Options; or
(3) If the Company has a class of equity security registered
under Section 12 of the Exchange Act at the time of such revision or amendment,
any material increase in the benefits accruing to participants under the Plan.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Optionee unless the exercise of such Option and
the issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
In the case of an Incentive Stock Option, any Optionee who disposes
of Shares of Common Stock acquired on the exercise of an Option by sale or
exchange (a) either within
<PAGE> 10
two (2) years after the date of the grant of the Option under which the Common
Stock was acquired or (b) within one (1) year after the acquisition of such
Shares of Common Stock shall notify the Company of such disposition and of the
amount realized upon such disposition.
Stock certificates evidencing unregistered shares acquired upon the
exercise of Options shall bear a restrictive securities legend substantially as
follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES
MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND APPLICABLE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
15. Change in Control. Each Option that is outstanding on a Control Change
Date, as hereinafter defined, shall be exercisable in whole or in part on that
date and thereafter during the remainder of the Option period stated in the
Option Agreement. A "Change in Control" occurs if, after the date of the initial
Agreement, (1) any person, including a "group" as defined in Section 13(d)(3) of
the Exchange Act, becomes the owner or beneficial owner of the Company's
securities having 20% or more of the combined voting power of the then
outstanding Company's securities that may be cast for the election of the
Company's directors (other than as a result of an issuance of securities
initiated by the Company, or open market purchases approved by the Board of
Directors as long as a majority of the Board of Directors approving the
purchases is in the majority at the time the purchases are made); or (2) as the
direct or indirect result of, or in connection with, a cash tender or exchange
offer, a merger or other business combination, a sale of assets, a contested
election, or any combination of these transactions, the persons who were
directors of the Company before such transactions ceased to constitute a
majority of the Company's Board of Directors or any successor's board, within
two years of the last of such transactions. For purposes of this Section, the
"Control Change Date" is the date on which an event described in (1) or (2)
occurs. If a Change of Control occurs on account of a series of transactions,
the Control Change Date is the date of the last of such transactions.
16. Reservation of Shares; Issuance and Sale of Shares. The Company,
during the term of this Plan, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve
<PAGE> 11
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
17. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
18. Withholding Taxes. Subject to Section 4(b)(x) of the Plan and prior to
the Tax Date, the Optionee may make an irrevocable election to have the Company
withhold from those Shares that would otherwise be received upon the exercise of
any nonstatutory stock option, a number of Shares having a Fair Market Value
equal to the minimum amount necessary to satisfy the Company's federal, state,
local and foreign tax withholding obligations and FICA and FUTA obligations with
respect to the exercise of such Option by the Optionee.
An Optionee who is also an officer of the Company must make the
above-described election:
(a) at least six months after the date of grant of the Option
(except in the event of death or disability); and
(b) either:
(1) six months prior to the Tax Date, or
(2) prior to the Tax Date and during the period beginning on
the third business day following the date of the Company releases its quarterly
or annual statement of sales and earnings and ending on the twelfth business day
following such date.
19. Miscellaneous Provisions.
(a) Not a Contract of Employment. Nothing contained in the Plan or
in any Option Agreement executed pursuant to the Plan shall be deemed to confer
upon any individual to whom an Option may be granted hereunder any right to
remain in the employ or service of the Company or a parent or subsidiary
corporation of the Company.
(b) Plan Expenses. Any expenses of administering this Plan shall be
borne by the Company.
(c) Use of Exercise Proceeds. The payment received from Optionees
from the exercise of Options shall be used for the general corporate purposes of
the Company.
(d) Unfunded Plan. This Plan shall be unfunded and the Company shall
be under no obligation to segregate or reserve any Shares, funds or other assets
for purposes relative to this Plan and no Optionee shall have any rights
whatsoever in or with respect to any Stock, funds or assets of the Company.
<PAGE> 12
(e) Construction of Plan. The place of administration of the Plan
shall be in the State of Arizona, and the validity, construction,
interpretation, administration and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined in accordance
with the laws of the State of Arizona and where applicable, in accordance with
the Code.
(f) Taxes. The Company shall be entitled if necessary or desirable
to pay or withhold the amount of any tax attributable to the delivery of Common
Stock under the Plan from other amounts payable to the Employee after giving the
person entitled to receive such Common Stock notice as far in advance as
practical, and the Company may defer making delivery of such Common Stock if any
such tax may be pending unless and until indemnified to its satisfaction.
(g) Indemnification. In addition to such other rights of
indemnification as they may have as members of the Board or a Committee
appointed by the Board, the members of the Board or a Committee shall be
indemnified by the Company against all costs and expenses reasonably incurred by
them in connection with any action, suit or proceeding to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Option, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except a judgment based upon a finding
of bad faith; provided that upon the institution of any such action, suit or
proceeding a Board or Committee member shall, in writing give the Company notice
thereof and an opportunity, at its own expense, to handle and defend the same
before such Board or Committee member undertakes to handle and defend it on her
or his own behalf.
(h) Gender. For purposes of this Plan, words used in the masculine
gender shall include the feminine and neuter, and the singular shall include the
plural and vice versa, as appropriate.
<PAGE> 1
EX-10.3
Preferred Stock Purchase Agreement
SUPERSHUTTLE INTERNATIONAL, INC.
PREFERRED STOCK PURCHASE AGREEMENT
June 15, 1995
This Preferred Stock Purchase Agreement ("Agreement") is made and entered
into as of the 15th day of June, 1995, by and between SUPERSHUTTLE
INTERNATIONAL, INC., a Delaware corporation (the "Company") and ULLICO, INC., a
Maryland corporation (the "Purchaser").
SECTION 1
AUTHORIZATION AND SALE OF PREFERRED STOCK
1.1 Authorization of Preferred Stock. The Company shall adopt and file with
the Secretary of State of Delaware, prior to the Closing Date (as defined below)
a Certificate of Designation of Preferences of Series B Convertible Preferred
Stock (the "Certificate of Designation") in the form attached to this Agreement
as Exhibit A, and incorporated herein by this reference, to create and authorize
a new Series B Convertible Preferred Stock ("Convertible Preferred") consisting
of Four Hundred Seventy-nine Thousand Four Hundred Seventy-seven (479,477)
shares.
1.2 Sale of Convertible Preferred Stock and Warrants. Subject to the terms
and conditions hereof, the Company will issue and sell to the Purchaser, and the
Purchaser shall purchase from the Company, Three Hundred Thirty-three Thousand
(339,477) shares of Convertible Preferred, at a purchase price of $8.8371 per
share, or a total of Two Million Nine Hundred Ninety-nine Thousand Nine Hundred
Ninety-two Dollars and Twenty Cents ($2,999,992.20) (the "Purchase Price"). In
addition, the Company will issue to the Purchaser a warrant, in the form
attached hereto as Exhibit B and incorporated herein by this reference, to
purchase Fifty-six Thousand Three Hundred Fifty-six (56,356) shares of Common
Stock at a purchase price of Six Dollars ($6) per share (the "Warrant").
SECTION 2
CLOSING DATE; DELIVERY
2.1 Closing Date. Subject to the conditions to closing set forth herein,
closing of the purchase and sale of the Convertible Preferred hereunder (the
"Closing") shall be held at 11:00 A.M. at the offices of Stein, Kahan &
Rosenberg, A Law Corporation, 1299 Ocean Avenue, 4th Floor, Santa Monica,
California, on June 15, 1995 or at such other time and place as the Company and
the Purchaser
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may agree (the date of the Closing is hereinafter referred to as the "Closing
Date").
2.2 Delivery. At the Closing, the Company will deliver to the Purchaser (i)
a certificate or certificates representing Three Hundred Thirty-nine Thousand
Four Hundred Seventy-seven (339,477) shares of Convertible Preferred, against
payment of the Purchase Price therefor by wire transfer or in other immediately
available funds, and (ii) the Warrant in the form attached as Exhibit B.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on Exhibit C hereto, the Company hereby represents and
warrants to each Purchaser as follows:
3.1 Organization and Standing; Articles and By-Laws. Each of the Company
and its wholly-owned subsidiaries ("Subsidiaries") is a corporation duly
organized and existing under the laws of its respective state of incorporation,
and is in good standing under such laws; has requisite corporate power to own
and operate its properties and assets, and to carry on its business as presently
conducted and as proposed to be conducted; and is qualified to do business as a
foreign corporation in each jurisdiction where the ownership or leasing of its
properties or where the conduct of its business requires such qualification,
except where the failure to qualify would not have a material adverse effect on
its business, operations or financial condition of the Company, taken as a
whole. The Company has previously furnished Purchaser with copies of its
Certificate of Incorporation and By-Laws, as amended, as well as those for its
Subsidiaries. Said copies are true, correct and complete and contain all
amendments through the Closing Date.
3.2 Corporate Power. The Company will have at the Closing Date all
requisite legal and corporate power to execute and deliver this Agreement, to
sell and issue the Convertible Preferred hereunder, to issue the Common Stock
issuable upon conversion of the Convertible Preferred and to carry out and
perform its obligations under the terms of this Agreement.
3.3 Subsidiaries. The Company owns all of the outstanding capital stock of
its Subsidiaries, which are listed on Exhibit C.
3.4 Capitalization. The authorized capital stock of the Company consists or
will, upon the filing of the Certificate of Designation, consist of 4,000,000
shares of Common Stock, of which 1,738,284 shares are issued and outstanding,
and 1,000,000 Preferred Shares, of which 83,505 are currently issued and
outstanding, designated Convertible A Preferred Stock (the "Series A
Preferred"). It is currently anticipated that Lambda III, L.P.
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and Lambda CFD '87, L.P. (collectively, "Lambda"), being the holders of at least
82,678 shares of the issued and outstanding Series A Preferred Stock will, in a
transaction concurrent with the Closing hereof, exchange such shares for shares
of Convertible Preferred, at the rate of l.6933 shares of Convertible Preferred
for each one (1) share of Series A Preferred Stock. In addition, prior to the
Closing, the Company will file with the Secretary of State of the State of
Delaware, a Certificate of Designation, authorizing an additional series of
Preferred Stock, designated Series B Convertible Preferred Stock, and consisting
of 479,477 shares of such stock. All such issued and outstanding shares of the
Common Stock and Convertible Preferred Stock have been duly authorized and
validly issued, are fully paid and nonassessable, were issued in compliance with
all applicable state and federal laws concerning the issuance of securities and
are not subject to any pre-emptive rights or rights of first refusal. The
Convertible Preferred Stock will have the rights, preferences, privileges and
restrictions at the Closing Date set forth in the Certificate of Designation.
In addition, the Company has granted options and warrants for the purchase
of shares of its Common Stock, including warrants issued in connection or
concurrently with this transaction, as set forth on Exhibit C.
The Company has reserved 339,477 shares of Convertible Preferred Stock for
issuance hereunder, 339,477 shares of Common Stock for issuance upon conversion
of the authorized Convertible Preferred Stock. In addition, the Company has
reserved 56,356 shares of Common Stock for issuance upon exercise of the
Warrant. Except as set forth on Exhibit C hereto, there are no options,
warrants, conversion privileges or other rights presently outstanding to
purchase any authorized but unissued shares of its capital stock or other
securities of the Company.
3.5 Authorization. All corporate action on the part of the Company, its
directors and shareholders necessary for the sale, issuance and delivery of the
Convertible Preferred (and the Common Stock issuable upon conversion thereof)
and the performance of the Company's obligations hereunder has been taken or
will be taken prior to the Closing. This Agreement is a valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief of
debtors. The Convertible Preferred (and the Common Stock issuable upon
conversion thereof), and the Common Stock issuable upon exercise of the Warrant,
when issued in compliance with the provisions of this Agreement, will be validly
issued and will be fully paid and nonassessable, will be free of any liens or
encumbrances; and will be free of any preemptive rights provided, however, that
the Convertible Preferred (and the Common Stock issuable upon conversion
thereof) and the
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Common Stock issuable upon exercise of the Warrant may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein.
3.6 Financial Statements. The Company has delivered to each Purchaser (a)
its balance sheets as of September 30, 1992 and 1993, together with the related
statements of income, shareholders' equity and changes in financial position for
the fiscal years then ended, with the related opinions of Arthur Andersen & Co.,
independent public accountants (the "Audited Financials"), and (b) its unaudited
balance sheet dated September 30, 1994 and the related unaudited statements of
income and retained earnings for the year then ended (the "Unaudited
Financials") (collectively the "Financial Statements"). The Financial Statements
were prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods indicated, are correct and complete
and fairly present the financial position of the Company at the dates thereof
and the results of operations of the Company for the periods covered thereby;
provided, however, that the Unaudited Financials are subject to year-end audit
adjustments and do not contain all footnotes required under generally accepted
accounting principles.
3.7 Changes. Since December 31, 1994 there has not been, except as
disclosed in Exhibit C attached hereto:
(a) Any change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Unaudited Financials,
except changes in the ordinary course of business which have not been,
either in any case or in the aggregate, materially adverse;
(b) Any change, except in the ordinary course of business, in the
contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(c) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties or business of
the Company;
(d) Any extraordinary increases in the compensation of any of the
Company's employees, officers or directors;
(e) Any declaration or payment of any divided, any repurchase or
redemption of any securities, or any other distribution of the assets of
the Company;
(f) Any issuance or sale by the Company of any shares of its Common
Stock or other securities (other than issuances pursuant to the exercise of
options outstanding on the date hereof);
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(g) Any other event or condition of any character which has materially
and adversely affected the Company's business or prospects.
3.8 Title to Properties and Assets; Liens, etc. Except as disclosed in the
Financial Statements or on Exhibit C hereto, each of the Company and its
Subsidiaries has good and marketable title to its properties and assets, and has
good title to all its leasehold interests, in each case subject to no mortgage,
pledge, lien, lease, encumbrance or charge, other than (i) the lien of current
taxes not yet due and payable, and (ii) possible minor liens and encumbrances
which do not in any case materially impair its operations, and which have not
arisen otherwise than in the ordinary course of business.
3.9 Material Liabilities. Each of the Company and its Subsidiaries has no
material liability or obligation, absolute or contingent (individually or in the
aggregate), which is not shown or provided for in the Unaudited Financials,
except (i) obligations and liabilities incurred after September 30, 1994 in the
ordinary course of business which either individually or in the aggregate do not
materially or adversely affect it or its business prospects, (ii) obligations
under contracts made in the ordinary course of business and which are not
required to be reflected in the Unaudited Financials in accordance with
generally accepted accounting principles; and (iii) items disclosed on Exhibit C
hereto.
3.10 Trademarks. The Company owns the service mark "Supershuttle," with no
known infringement of or conflict with the rights of others.
3.11 Material Contracts and Commitments. All the material contracts,
agreements an instruments to which each of the Company and its Subsidiaries is a
party are valid, binding and in full force and effect in all material respects.
3.12 Compliance with Other Instruments. Each of the Company and its
Subsidiaries is not in violation of any term of its Certificate of
Incorporation, or By-Laws, or in any material mortgage, indenture, contract,
agreement, instrument, judgment, or decree, and, to the best of its knowledge,
is not in violation of any order, statute, rule or regulation applicable to it.
The execution, delivery and performance of, and compliance with, this Agreement,
and the issuance of the Convertible Preferred and the Common Stock issuable upon
conversion thereof, will not result in any Violation or be in conflict with or
constitute a default, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company.
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<PAGE> 6
3.13 Litigation. There are no actions, suits, proceedings or investigations
pending against the Company or any of its Subsidiaries or their properties known
to the Company or any of its Subsidiaries, which, either in any case or in the
aggregate, might result in any material adverse change in their business or
financial condition or any of their properties or assets, or in any material
impairment of their right or ability to carry on their business as conducted or
proposed to be conducted, or in any material liability on their part.
3.14 Insurance. Each of the Company and its Subsidiaries has liability
insurance policies in amounts customary in the industry in which the Company
operates.
3.15 Registration Rights. Except as set forth in (i) this Agreement, (ii)
the agreement dated as of September 24, 1987, between the Company and certain
investors, entitled "Sale of 83,505 Shares of Convertible Preferred Stock," (the
"Lambda Agreement"), and (iii) the Registration Rights Agreement dated October
14, 1985, the Company is not under any obligation to register (as defined in
Section 7.2 below) any of its presently outstanding securities or any of its-
securities which may hereafter be issued.
3.16 Governmental Consent. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of this Agreement, or the offer, sale or issuance of the Convertible Preferred
(and the Common Stock issuable upon conversion thereof) or the consummation of
any other transaction contemplated hereby, except the filing of the Certificate
of Designation with the Delaware Secretary of State, which filing shall have
been made and be effective prior to the Closing Date.
3.17 Taxes. Except as set forth on Exhibit C hereto, the Company has
accurately prepared and timely filed all income tax returns and other tax
returns which are required to be filed, and has paid, or made provisions for the
payment of, all taxes which have or may have become due pursuant to said returns
or pursuant to any assessment which has been or may be received from the taxing
authority up to the date of this Agreement.
3.18 Employees. To the best of the Company's knowledge, no employee of the
Company is in violation of any term of any employment contract, patent
disclosure agreement or any other such contract or agreement, and the continued
employment of any such employee by the Company will not result in any such
violation.
3.19 Loans to Affiliates. Except as disclosed in Exhibit C, there are no
loans outstanding from the Company to any officer, director or shareholder of
the Company.
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3.20 Rights of Lambda. The rights granted to or retained by Lambda pursuant
to Sections 2.1, 2.2 and 2.3 of the Preferred Stock Exchange Agreement, of even
date herewith, do not (i) adversely impact or impair any rights granted to
ULLICO hereunder, or (ii) adversely impact the ability of the Company to operate
its business.
SECTION 4
INVESTMENT REPRESENTATIONS
The Purchaser hereby represents and warrants to the Company as follows:
4.1 Experience. It is experienced in evaluating and investing in emerging
companies such as the Company.
4.2 Investment. It is acquiring the Convertible Preferred for investment
for its own account and not with the view to, or for resale in connection with,
any distribution thereof. It understands that the Convertible Preferred has not
been registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent as expressed herein.
4.3 Rule 144. It acknowledges that the Convertible Preferred (and the
Common Stock issuable upon conversion thereof) must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available. It is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things the existence of a public market for the shares, the
availability of certain current public information about the Company, the resale
occurring not less than two years after a party has purchased and paid for the
security to be sold, the sale being through a "broker's transaction" or in
transactions directly with a "market maker" (as provided by Rule 144(f)) and the
number of shares being sold during any three-month period not exceeding
specified limitations.
4.4 No Public Market. It understands that no public market now exists for
any of the securities issued by the Company and that it is unlikely that a
public market will exist for the Common or the Convertible Preferred in the
future.
4.5 Access to Data. It has received a copy of the Financial Statements, and
has had an opportunity to discuss the Company's business, management and
financial affairs with its management and has had the opportunity to review the
Company's operations and
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facilities. It understands that such discussions, as well as any written
information issued by the Company, were intended to describe the aspects of the
Company's business and prospects which it believes to be material but were not
necessarily a thorough or exhaustive description.
4.6 Investment Sophistication of Purchaser; Due Diligence. The Purchaser
(i) is represented by independent, experienced counsel in connection with the
negotiation of this transaction and the preparation, execution and delivery of
this Agreement and the documents contemplated hereby, (ii) is sophisticated and
knowledgeable concerning business and financial matters generally, (iii) has
substantial experience in investments, and (iv) has the knowledge and ability to
evaluate the risks and merits of an investment in the Company. The Purchaser has
performed extensive due diligence regarding the Company, its assets and
business, and has obtained all information, documents and materials it has
requested, has had the opportunity to interview the employees and officers of
the Company responsible for the management and operation of the Company's
business, and has satisfied itself regarding the Company's value, finances,
business and business prospects.
SECTION 5
CONDITIONS TO CLOSING
The Purchaser's obligation to purchase the Convertible Preferred at the Closing
is subject to the fulfillment on or prior to the Closing Date of the following
conditions:
5.1 Conditions to Purchaser's Obligations. The Purchaser's obligation to
purchase the Convertible Preferred at the Closing is subject to the fulfillment
on or prior to the Closing Date of the following conditions:
(a) The representations and warranties made by the Company in Section
3 shall be true and correct in all material respects when made, and shall
be true and correct in all material respects on the Closing Date with the
same force and effect as if they had been made on and as of said date.
(b) All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
(c) The Company shall have delivered to Purchaser a certificate,
executed by the President of the Company, dated the Closing Date, and
certifying (d) to the fulfillment of the conditions specified in Section
5.1 of this Agreement, and (e) the
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attached resolutions as resolutions duly adopted by the Board of Directors
of the Company with respect to the transaction contemplated by this
Agreement.
(f) The Board of Directors of the Company shall have approved the
Certificate of Designation as required under the Delaware Corporation Law.
The Certificate of Designation shall have been filed with the Delaware
Secretary of State.
(g) The purchasers who acquired the Company's Series A Preferred Stock
under the Lambda Agreement shall, concurrently with the Closing hereof,
have exchanged not less than 82,678 shares of such Series A Preferred Stock
for shares of the Convertible Preferred, at the rate of 1.6933 shares of
Convertible Preferred for each one (1) share of Series A Preferred Stock.
(h) Mitchell Rouse, Wilmington Cab Company of California, and the
additional shareholders of the Company who are parties thereto shall have
executed and delivered to Purchaser the Co-Sale Agreement in the form
attached hereto as Exhibit D.
5.2 Conditions to the Company's Obligations. The Company's obligation to
sell and issue the Convertible Preferred at the Closing is subject to the
fulfillment of the following conditions:
(a) The representations made by Purchaser in Section 4 hereof shall be
true and correct when made, and shall be true and correct on the Closing
Date.
(b) The Board of Directors of the Company shall have approved the
Certificate of Designation as required under the Delaware General
Corporation Law. The Certificate of Designation shall have been filed with
the Delaware Secretary of State.
SECTION 6
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company hereby covenants and agrees that, until the occurrence of a
"Triggering Event," as defined in Section 6.9 hereof, the Company shall do the
following:
6.1 Financial Information. The Company will furnish the following reports
to the Purchaser for so long as such Purchaser is a holder of any of the
Convertible Preferred purchased by such person pursuant to this Agreement (or
the Common Stock issued upon conversion of the Convertible Preferred):
(a) As soon as practicable after the end of each fiscal year, and in
any event within 120 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, as of the end
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of such fiscal year, and consolidated statements of income and surplus and
consolidated statements of changes in financial position of the Company and
its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in
reasonable detail and certified by independent public accountants of
recognized national standing selected by the Company. In addition, the
Company will provide a narrative management analysis of the business and
financial results for such fiscal year.
(b) Within thirty (30) days following the close of each calendar
month, a monthly financial report reflecting profit and loss and cash flow
for such month.
(c) Within forty-five (45) days following the end of each calendar
quarter, a narrative management analysis of the business and financial
results for such quarter.
6.2 Inspection. The Company shall permit the Purchaser, at the Purchaser's
expense, to visit and inspect the Company's properties, to examine its books of
account and records and to discuss the Company's affairs, finances and accounts
with its officers, all at such reasonable times as may be requested by the
Purchaser; provided, however, that the Company shall not be obligated pursuant
to this Section 6.2 to provide any information which it reasonably considers to
be a trade secret or similar confidential information.
6.3 Election of Directors; Committees; Meetings.
(a) Concurrently with the Closing, the Company shall cause to be nominated
and elected to the Board of Directors two (2) individuals to be selected by the
Purchaser. At each meeting of the shareholders of the Company thereafter at
which directors are elected, the Purchaser shall have the right to cause to be
nominated and to elect two (2) individuals to the Board of Directors of the
Company. The initial director nominees designated by the Purchaser are Frank R.
Kline, Jr. and Llewellyn C. Werner. Further, if and to the extent that any
director nominated and elected by the Purchaser shall, at any time in the
future, resign or be unable to serve in such capacity, the Purchaser shall
designate the replacement for such director. Purchaser agrees and acknowledges
that, in order to fulfill any regulatory or disclosure obligations of the
Company, the Company may require any such prospective nominee to complete and
return a questionnaire, in form and substance suitable to the Company.
(b) The Purchaser acknowledges and agrees that the Certificate of
Designation of the Convertible Preferred provides that the holders of the
Convertible preferred will have the right to elect a total of three (3) persons
to the Board of Directors of
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the Company. The Purchaser further acknowledges and agrees that Lambda will have
the right to designate and elect one (1) of these three directors, and the
Purchaser will have the right to designate and elect two (2) of these three
directors. No consultation or agreement between or among the Purchaser and
Lambda shall be necessary prior to the nomination or election by either party of
such directors, and the right of the Purchaser to nominate and elect two (2)
directors and the right of Lambda to nominate and elect one (1) director shall
be independent.
(c) The Company shall use its best efforts to cause the Board of Directors
to establish an Audit Committee and a Compensation Committee. At least one
designee of the Purchaser shall serve on the Audit Committee. The Compensation
Committee shall consist of three directors, one of whom will be a designee of
the Purchaser, one shall be a representative of a non-management shareholder,
and the third will be a member of senior management.
(d) Meetings of the Board of Directors will be held not less often than
once each calendar quarter.
6.4 Compensation of Directors; Insurance. The Company agrees to reimburse
all directors for the reasonable expenses incurred by such director in attending
meetings of the Board of Directors, including, travel and lodging. To the extent
that the Board of Directors elects to compensate directors for attendance at
meetings of the Board of Directors, the designees of the Purchaser shall receive
compensation on the same basis as any other director. The Company shall
investigate and, to the extent feasible, obtain a policy or policies of
directors' and officers' liability insurance, in such policy amounts as the
Board of Directors of the Company shall deem appropriate. In addition, the
Company shall enter into indemnification agreements with each director,
providing for indemnification of such director to the maximum extent permitted
by applicable law.
6.5 Use of Proceeds. The Company shall use the proceeds of the sale of the
Convertible Preferred in substantially the manner described on Exhibit E
attached hereto and incorporated herein by this reference. Pending application
of such proceeds as so provided, the Company will invest such funds in
short-term federal government debt securities and/or federally-insured
certificates of deposit.
6.6 Notice of Events. The Company shall provide the Purchaser with prompt
written notice of the occurrence of any material pending or threatened
litigation and any labor disputes involving the Company.
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6.7 Insurance. The Company shall at all times maintain in effect liability
insurance policies in amounts customary in the industry in which the Company
operates.
6.8 Purchase of Vehicles. All vans and similar vehicles purchased by the
Company and its affiliates for use in the operation of its business shall be
made by manufacturers organized by a union affiliated with the AFL/CIO.
6.9 "Triggering Event" Defined. As used in this Section 6, and in Section
7, below, "Triggering Event" shall mean and include the first to occur of any of
the following events:
(a) the successful completion of a public offering by the Company of
securities of the Company pursuant to a Registration Statement filed with
the Securities and Exchange Commission (other than a registration on Form
S-8 of a similar form contemplating the registration of securities for an
employee equity or benefit plan); or
(b) the completion of a merger of the Company with or into any other
corporation or entity (other than a merger with a wholly-owned subsidiary
of the Company, or a merger solely for the purpose of changing the domicile
and state of incorporation of the Company); or
(c) the completion of a sale of all or substantially all of the assets
of the Company in a single transaction or a series of related transactions;
or
(d) the completion of a sale of all or substantially all of the
outstanding securities of the Company by the holders thereof in a single
transaction or a series of related transactions; or
(e) any transaction or event, expressly including but not limited to
one or more sales or transfers by the Purchaser, as a result of which the
Purchaser is no longer the holder of Common Stock (or Convertible Preferred
Stock convertible into Common Stock) equal to at least Five Percent (5%) of
the total number of shares of Common Stock of the Company outstanding, on a
fully-diluted basis.
SECTION 7
NEGATIVE COVENANTS OF THE COMPANY
The Company hereby covenants and agrees that, except as hereinafter
expressly provided, until the occurrence of a "Triggering Event," as defined in
Section 6.9 hereof, the Company shall not, without the affirmative vote or
approval of a majority
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of the directors of the Company who are not officers of the Company, do or cause
to occur any of the following:
7.1 Non-Opposition to Labor Activities. The Company shall not, directly or
indirectly, oppose any attempt by any union or collective bargaining group to
organize or seek to represent the employees of the Company employed at any new
location at which the Company may conduct its business after the date hereof.
The Company further agrees that it shall advise all employees in such locations
that the Company supports unionization and collective bargaining representation
of employees. The Company agrees and covenants that it will consult with the
Purchaser with respect to any labor issues arising after the date of this
Agreement. Notwithstanding any other term or provision of this Agreement, the
Company hereby expressly agrees and covenants that the obligations of the
Company pursuant to this Section 7.1 shall survive the occurrence of a
Triggering Event unless, in connection with such Triggering Event, the
underwriter or investment banker representing the Company in connection with
such Triggering Event shall have advised the Company that, in the opinion of
such underwriter or investment banker, the continuation of this covenant would
materially adversely impact the ability of the Company to successfully complete
such transaction, or would materially adversely affect the price or terms of
such transaction to the Company.
7.2 Amendment to Articles or Bylaws. The Company shall not amend, restate
or otherwise alter its Certificate of Incorporation or Bylaws, other than
amendments which (i) may be required pursuant to changes in applicable law, or
(ii) changes which do not adversely impact the rights or interests of the
Purchaser and which the Board of Directors reasonably believes are in the best
interests of the Company.
7.3 Dividends. Declare or pay any dividends or other distributions with
respect to the Common Stock of the Company, or otherwise effect any transaction
relating to stock dividends pursuant to Section 305 of the Internal Revenue Code
of 1986, as amended.
7.4 Sale of Assets. Sell, pledge or exchange any material part of the
assets of the Company in a single transaction or series of related transaction,
other than in the ordinary course of the Company's business.
7.5 Incurring Indebtedness. Other than (i) debt outstanding or contemplated
as of the date of this Agreement pursuant to existing agreements of the Company
(which agreements are disclosed in the Financial Statements or in Exhibit C, or
(ii) debt incurred for working capital purposes in the ordinary course of the
Company's business, or (iii) debt incurred in the ordinary course
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of the Company's business in connection with the acquisition of new vehicles, or
(iv) customary trade debt incurred by the Company in the ordinary course of its
business, the Company shall not incur any debt or pledge any assets.
7.6 Change in Management. Other than in the ordinary course of business,
the Company shall not, for a period of ninety (90) days from the date of this
Agreement, terminate or remove any existing officer of the Company, or hire or
retain any new officer. Further, the Company shall not add any new or additional
directors to the Board of Directors, except as expressly provided in Section 6.3
hereof.
7.7 Change in Business. The Company shall not enter into any material
non-transportation business or activity not engaged in by the Company as of the
date hereof, other than computer dispatching or similar businesses.
7.8 Reorganization Dissolution. The Company shall not enter into or
undertake any merger or reorganization (other than a merger with a wholly-owned
subsidiary of the Company, or a merger solely for the purpose of changing the
domicile and state of incorporation of the Company); commence proceedings for
any liquidation or dissolution of the Company.
7.9 Issuance of Securities. Other than the Convertible Preferred issued
pursuant to this Agreement, the Company shall not authorize or issue any class
or series of securities senior to or having rights greater than the Common Stock
of the Company.
7.10 Limitations on Management Directors. At no time after the Closing
shall more than four members of the Board of Directors be current or former
employees or officers of the Company or any affiliate of the Company, or members
of the families of any such individuals ("Inside Directors") (hereinafter,
members of the Board of Directors that are not Inside Directors shall be deemed
"Outside Directors")
7.11 Rouse Stock Issuances. The Company shall not issue any shares of
capital stock of the Company, or any options, warrants or other rights to
purchase such shares to Mitch Rouse, any member of the Rouse family, or any
affiliate of Mitch Rouse unless such issuance is approved by a majority of the
Outside Directors.
SECTION 8
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
COMPLIANCE WITH SECURITIES ACT
8.1 Restrictions on Transferability. The Convertible Preferred and the
Common Stock issuable upon conversion of the
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Convertible Preferred shall not be transferable except upon the conditions
specified in this Section 8, which conditions are intended to insure compliance
with the provisions of the Securities Act, or, in the case of Section 8.14
hereof, to assist in an orderly distribution. Each Purchaser will cause any
proposed transferee of such securities held by a Purchaser to agree to take and
hold such securities subject to the provisions and upon the conditions specified
in this Section 8.
8.2 Certain Definitions. As used in this Section 8, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 8.3 hereof.
"Registrable Securities" means (i) shares of the Convertible
Preferred, (ii) shares of Common Stock issuable upon conversion of the
Convertible Preferred, and (iii) shares of Common Stock issued pursuant to
the exercise of the Warrant.
The terms "registered," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement with
the Commission in compliance with the Securities Act, and the declaration
or ordering of the effectiveness of such registration statement by the
Commission.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying Sections 8.5 and 8.6 hereof, including, without
limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company,
blue sky fees and expenses, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company which shall be paid in any event by the
Company).
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale and all fees and disbursements of
counsel for any Holder.
"Holder" shall mean any holder of Registrable Securities.
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"Initiating Holders" shall mean any Holders requesting registration of
any Registrable Securities pursuant to Sections 8.5 and 8.6 hereof.
8.3 Restrictive Legend. Each certificate representing (i) the Convertible
Preferred, (ii) shares of the Company's Common Stock issued upon conversion of
the Convertible Preferred, and (iii) any shares of Common Stock issued upon
exercise of the Warrant, shall (unless otherwise permitted by the provisions of
Section 8.4 below) be stamped or otherwise imprinted with a legend substantially
in the following form (in addition to any legend required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF
THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING
THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION.
8.4 Notice of Proposed Transfers. The Holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 8.4. Prior to any proposed transfer
of any Restricted Securities, unless (a) there is in effect a registration
statement under the Securities Act covering the proposed transfer, or (b) the
Board of Directors of the Company excuses compliance with this Section 8.4 in
writing, the Holder thereof shall give written notice to the Company of such
Holder's intention to effect such transfer. Each such notice shall describe the
manner and circumstances of the proposed transfer in sufficient detail, and
shall be accompanied (except in pro rata distributions by the Holder to its
partners or shareholders or transactions in compliance with Rule 144) by either
(i) an unqualified written opinion of legal counsel who shall be reasonably
satisfactory to the Company addressed to the Company and reasonably satisfactory
in form and substance to the Company's counsel, to the effect that the proposed
transfer of the Restricted Securities may be effected without registration under
the Securities Act or any applicable state securities laws, or (ii) a "no
action" letter from the Commission to the effect that the distribution of such
securities without registration will not result in a recommendation by the staff
of the Commission that action be taken with respect thereto (and an equivalent
letter or interpretive opinion from the agency or agencies administering any
applicable state securities laws),
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whereupon the Holder of such Restricted Securities shall be entitled to transfer
such Restricted Securities in accordance with the terms of the notice delivered
by the holder to the Company. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear the appropriate restrictive
legend set forth in Section 8.3 above, except that such certificate shall not
bear such restrictive legend if in the opinion of counsel for the Company such
legend is not required in order to establish compliance with any provisions of
the Securities Act.
8.5 Demand Registration.
(a) Request for Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect any registration
with respect to all or a part of the Registrable Securities, the Company will,
on one (1) occasion only (except with respect to registrations on Form S-3, if
registration on such Form is available, which registrations may, subject to the
restrictions set forth below in this Section 8.5(a), be requested at any time
and from time to time):
(i) promptly give written notice of the proposed registration to all
other Holders; and
(ii) as soon as practicable, use its diligent best efforts to effect
such registration, qualification or compliance (including, without
limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other
state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all
or such portion of the Registrable Securities of any Holder joining in such
request as are specified in a written request received by the Company
within 15 business days after receipt of such written notice from the
Company; provided that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance
pursuant to this Section 8.5:
(A) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the
Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act;
(B) Within six (6) months immediately following the effective
date of any registration statement pertaining to securities of the
Company (other than a registration with respect to an employee benefit
plan);
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(C) If the Holders propose to sell a number of shares of
Registrable Securities having an aggregate proposed offering price to
the public of less than $5,000,000.
Subject to the foregoing clauses (A) through (C), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, after receipt of the request or requests of
the Initiating Holders; provided, however, that if the Company shall furnish to
such Holders a certificate signed by the President of the Company stating that
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be filed on or before the date filing would be required and it is
therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer such filing for a period of not more than
120 days after receipt of the request of the Initiating Holders; provided,
however, that the Company may only exercise such right once within any 12 month
period.
The registration statement filed pursuant to the request of the Initiating
Holders may, subject to the provisions of Section 8.5 (b) below, include other
securities of the Company which are held by persons who, by virtue of agreements
entered into with the Company in connection with the issuance of securities
subsequent to the date of this Agreement, are entitled to include their
securities in such registration; provided, however, that such agreements shall
not be inconsistent with the registration priorities provided in this Agreement.
(b) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 8.5 and the Company shall include such information in the written notice
referred to in Section 8.5(a)(i). The right of any Holder to registration
pursuant to Section 8.5 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent requested (unless otherwise mutually agreed by a
majority in interest of the Initiating Holders and such Holder) to the extent
provided herein.
If, by virtue of agreements entered into subsequent to the date of this
Agreement, the holders of other securities of the Company (the "Other Holders")
request and are entitled to inclusion in such registration, the Initiating
Holders shall, on behalf of all Holders, offer to the Other Holders that such
other securities be included in the underwriting and may condition such offer on
the acceptance by such Other Holders of the further provisions of this paragraph
8.5. The Company shall (together with all Holders and
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Other Holders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such underwriting
by a majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section 8.5, if the
representative of the underwriter or underwriters advises the Initiating Holders
in writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Initiating Holders shall so advise all Holders and
Other Holders of securities which would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities and such other
securities that may be included in the registration and underwriting shall be
allocated first among the Initiating Holders and Holders thereof in proportion,
as nearly as practicable, as the respective amounts of Registrable Securities
held by the Initiating Holders and Holders bear to the total amount of
Registrable Securities. Thereafter any remaining number of shares which are not
excluded by the representative shall be allocated among the Other Holders in
such proportion as the respective number of shares each such Other Holder
requests to be included in such registration bears to the total number of shares
all Other Holders request be included. All Registrable Securities or any other
securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall not be included in such registration.
If any Holder of Registrable Securities, or Other Holder of other
securities entitled (upon request) to be included in such registration,
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the underwriter and the Initiating
Holders. The securities so withdrawn shall also be withdrawn from registration.
If the underwriter has not limited the number of Registrable Securities or other
securities to be underwritten, the Company may include its securities for its
own account in such registration if the underwriter so agrees and if the number
of Registrable Securities and other securities which would otherwise have been
included in such registration and underwriting will not thereby be limited.
8.6 Company Registration.
(a) If at any time or from time to time, the Company shall determine to
register any of its securities, either for its own account or the account of a
security holder or holders exercising their respective demand registration
rights, other than a registration relating solely to employee benefit plans, or
a registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration
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statement covering the sale of Registrable Securities, the Company will:
(i) promptly give to each Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt
to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within 20 days after receipt of such written notice from the
Company, by any Holder or Holders, except as set forth in 8.6(b) below.
(b) Underwriting. If the registration of which the Company gives notice is
or a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
8.6(a)(i). In such event the right of any Holder to registration pursuant to
Section 8.6 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 8.6, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be registered, the underwriter may limit the number of Registrable Securities
to be included in the registration and underwriting. The Company shall so advise
all Holders and any other holders of "piggyback" registration rights (the "Other
Shareholders"), and the number of shares of Registrable Securities and shares
held by Other Shareholders that may be included in the registration and
underwriting shall be allocated among all Holders and Other Shareholders thereof
in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities and shares held by Other Shareholders entitled to
inclusion in such registration held by all such Holders and Other Shareholders
at the time of filing the registration statement. If any Holder or other
Shareholder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the underwriter. Any
Registrable Securities or shares held by other Shareholders excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
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8.7 Expenses of Registration. All Registration Expenses incurred in
connection with the registration, qualification or compliance pursuant to
Section 8.5 shall be borne by the Company. Notwithstanding the above, the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 8.5 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (which Holders shall bear such
expenses); provided, however, that if at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition, business, or
prospects of the Company from that known to the Holders at the time of their
registration request, then the Holders shall not be required to pay any of such
expenses. All Registration Expenses incurred in connection with any piggyback
requests pursuant to Section 8.6 shall be borne by the Company. All Selling
Expenses shall be borne by the Holders of such securities pro rata on the basis
of the respective number of shares so registered.
8.8 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 8,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Keep such registration, qualification or compliance effective for
a period of 120 days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto,
whichever first occurs; and
(b) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request.
8.9 Termination of Registration Rights. The registration rights granted
pursuant to this Section 8 shall terminate as to each Purchaser at such time as
all shares acquired by such Purchaser pursuant to this Agreement (including
share of Convertible Preferred and shares of Common Stock issued up on
conversion of the Convertible Preferred) shall constitute less than Five Percent
(5%) of the outstanding shares of the Company.
8.10 Indemnification.
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder, with respect to
which registration, qualification or compliance has been effected pursuant to
this Section 8, and each underwriter, if any, and each person who controls any
underwriter, against all expenses, claims, losses, damages and liabilities (or
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actions in respect thereof), arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, qualification or compliance, and will reimburse each such
Holder, each of its officers, directors or partners, as the case may be, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company and the
Selling Shareholder will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by an instrument duly executed by such Holder or underwriter and stated
to be specifically for use therein.
(b} Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company and its directors and
officers, each legal counsel and independent accountant of the Company, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act, and each other such Holder, each of its officers,
directors and partners and each person controlling such Holder, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such Holders,
such directors, officers, partners, persons, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other
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document in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and stated to be
specifically for use therein.
(c) Each party entitled to indemnification under this Section 8.10 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 8, unless such failure to give prompt notice
is prejudicial to the Indemnifying Party's ability to defend such action. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. The
indemnity agreements contained in this Section 8.10 shall not apply to amounts
paid in settlement of any claim, loss, damage, liability or action if such
settlement is effected without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 8.10 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any expenses, claims, losses, damages, liabilities and actions
referred to in Section 8.10(a), then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such expenses, claims,
losses, damages, liabilities and actions in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or omissions
which resulted in such expenses, claims, losses, damages, liabilities and
actions as well as any other relevant equitable considerations. The relative
fault of the Indemnifying Party and of the Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
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(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall be
controlling.
8.11 Information by Holder. The Holder or Holders of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Section 8.
8.12 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act at all times
after 90 days after the effective date of the first registration under the
Securities Act filed by the Company for an offering of its securities to
the general public;
(b) Use its best efforts to then file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (at any
time after it has become subject to such reporting requirements);
(c) So long as Purchaser owns any Restricted Securities to furnish to
the Purchaser forthwith upon request a written statement by the Company as
to its compliance with the reporting requirements of said Rule 144 (at any
time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the
general public), and of the Securities Act and the Securities Exchange Act
(at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company as Purchaser may reasonably
request in availing itself of any rule or regulation of the Commission
allowing Purchaser to sell any such securities without registration.
8.13 Transfer of Registration Rights. The rights to cause the Company to
register securities granted Purchasers under Sections 8.5 and 8.6 may be not be
assigned or transferred by the Purchaser without the prior written consent of
the Company.
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8.14 "Market Stand-off" Agreement. Any Holder holding any outstanding
Common Stock acquired pursuant to this Agreement at such time, if requested by
the Company or an underwriter of Common Stock (or other securities) of the
Company, shall agree not to sell or otherwise transfer or dispose of any Common
Stock (or other securities) of the Company acquired pursuant to this Agreement
held by such Purchaser during the 120 day period following the effective date of
a registration statement of the Company filed under the Securities Act of 1933,
as amended, provided that all Holders holding any of the outstanding Common
Stock and all officers and directors of the Company enter into similar
agreements. Such agreement shall be in writing in the form satisfactory to the
Company and such underwriter. The Company may impose stop-transfer instructions
with respect to the shares (or securities) subject to the foregoing restriction
until the end of said 120 day period.
SECTION 9
MISCELLANEOUS
9.1 Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of California.
9.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby.
9.3 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
9.4 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
9.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be deemed given when received by the addressee, shall
be in writing and shall be mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed as follows:
(a) If to Purchaser:
ULLICO, Inc.
111 Massachusetts Ave., N.W.
25
<PAGE> 26
Washington, D.C. 20001
Attn: Michael R. Steed
Fax No. (202) 682-7970
(b) If to the Company:
SuperShuttle International, Inc.
2129 West Rosecrans Avenue
Gardena, CA 90249
Attn: Mitch Rouse
Fax No. (310) 769-6925
or at such other address as the Purchaser or the Company shall have furnished to
the other in writing.
9.6 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party hereunder, upon any breach or default under this
Agreement, shall impair any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
9.7 Agent's Fees.
(a) The Company hereby agrees to indemnify and to hold the Purchaser
harmless of and from any liability for commission or compensation in the nature
of an agent's fee to any broker or other person or firm (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company, or any of its employees or representatives, are responsible.
(b) The Purchaser (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Company harmless
of and from any liability for any commission or compensation in the nature of an
agent's fee to any broker or other person or firm (and the costs and expenses of
defending against such liability or asserted liability) for which it, or any of
its employees or representatives, are responsible.
26
<PAGE> 27
9.8 Expenses. The Company and the Purchaser shall bear their own expenses
and legal fees incurred on their behalf with respect to this Agreement and the
transactions contemplated hereby.
9.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Purchasers,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
9.10 Severability. In the event that any provision of this agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this agreement to any party.
The foregoing agreement is hereby executed as of the date first above
written.
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By:
----------------------------------
Its:
---------------------------------
By:
----------------------------------
Its:
---------------------------------
ULLICO, INC.,
a Maryland corporation
By: /s/ [ILLEGIBLE]
----------------------------------
Its: Senior VP Investment
---------------------------------
By:
----------------------------------
Its:
---------------------------------
27
<PAGE> 28
9.8 Expenses. The Company and the Purchaser shall bear their own expenses
and legal fees incurred on their behalf with respect to this Agreement and the
transactions contemplated hereby.
9.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Purchasers,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
9.10 Severability. In the event that any provision of this agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this agreement to any party.
The foregoing agreement is hereby executed as of the date first above
written.
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ [ILLEGIBLE]
----------------------------------
Its: Chairman & CEO
---------------------------------
By: /s/ [ILLEGIBLE]
----------------------------------
Its: SECRETARY
---------------------------------
ULLICO, INC.,
a Maryland corporation
By:
----------------------------------
Its:
---------------------------------
By:
----------------------------------
Its:
---------------------------------
27
<PAGE> 29
Exhibit A
Certificate of Designation
28
<PAGE> 1
EX-10.4
Convertible Preferred Stock Purchase Agreement
SUPERSHUTTLE INTERNATIONAL, INC.
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made as of September 24, 1987 among Super-Shuttle
International, Inc., a Delaware corporation (the "Company"), and the persons and
entities listed on the Schedule of Purchasers attached hereto as Exhibit A (the
"Purchasers").
SECTION 1
Authorization and Sale of Preferred Stock
1.1 Authorization. The Company will authorize the sale and issuance of up
to 83,505 shares (the "Shares") of its Convertible Preferred Stock ("Preferred"
or "Preferred Stock"), having the rights, privileges and preferences as set
forth in the Certificate of Designations, (the "Certificate") in the form
attached to this Agreement as Exhibit B.
1.2 Sale of Preferred. Subject to the terms and conditions hereof, the
Company will severally issue and sell to each of such Purchasers and the
Purchasers will severally buy from the Company the total number of shares of
Preferred specified opposite such Purchaser's name in column 2 of the Schedule
of Purchasers, at the aggregate purchase price set forth in column 3 of the
Schedule of Purchasers. The Company's agreements with each of the Purchasers are
separate agreements, and the sales of the Preferred to each of the Purchasers
are separate sales.
SECTION 2
Closing Dates; Delivery
2.1 Closing Dates. The closing of the purchase and sale of the Preferred
hereunder shall be held at the offices of Mitchell, Silberberg & Knupp, 11377
West Olympic Boulevard, Los Angeles, CA at 2:00 p.m., local time, on September
24, 1987 (the "Closing") or at such other time and place upon which the Company
and the Purchasers shall agree (the date of the Closing is hereinafter referred
to as the "Closing Date").
2.2 Delivery. At the Closing, the Company will deliver to each Purchaser a
certificate or certificates, registered in such Purchaser's name set forth on
the Schedule of Purchasers, representing the number of Shares designated in
column 2 of the Schedule
<PAGE> 2
of Purchasers to be purchased by such Purchaser, against payment of the purchase
price therefor, by cashier's check payable to the Company or wire transfer per
the Company's instructions.
SECTION 3
Representations and Warranties of the Company
Except as set forth on Exhibit C attached hereto, the Company represents
and warrants to the Purchasers as follows:
3.1 Organization and Standing; Articles and By-Laws. The Company is a
corporation duly organized and existing under, and by virtue of, the laws of the
State of Delaware and is in good standing under such laws. The Company has
requisite corporate power and authority to own and operate its properties and
assets, and to carry on its business as presently conducted and as proposed to
be conducted. The Company is qualified to do business as a foreign corporation
in every jurisdiction where such qualification is required by applicable law,
except where the failure to be so qualified would not have a material adverse
affect on the Company's business as now conducted or as now proposed to be
conducted. The Company has furnished the Purchaser's special counsel with copies
of its Certificate of Incorporation and By-Laws, as amended. Said copies are
true, correct and complete and contain all amendments through the Closing Date.
3.2 Corporate Power. The Company will have at the Closing Date all
requisite legal and corporate power and authority to execute and deliver this
Agreement, to sell and issue the Shares hereunder, to issue the Common Stock
issuable upon conversion of the Preferred and to carry out and perform its
obligations under the terms of this Agreement.
3.3 Subsidiaries. The Company has no subsidiaries or affiliated companies
and does not otherwise own or control, directly or indirectly, any equity
interest in any corporation, association or business entity.
3.4 Capitalization. The authorized capital stock of the Company consists or
will, upon the filing of the Certificate, consist of 4,000,000 shares of Common
Stock, 3,000,000 shares of which are designated Class A Common Stock (herein
"Common Shares"), of which 990,285 shares are issued and outstanding as of the
Closing Date, and 1,000,000 shares of which are designated Class B Common Stock
("Class B Common"), none of which has been issued, and 1,000,000 shares of
Preferred Stock, 100,000 shares of which have been (or will be by the Closing
Date) designated "Convertible Preferred Stock,"
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<PAGE> 3
none of which has been issued prior to the Closing. The outstanding shares have
been duly authorized and validly issued, and are fully paid and nonassessable.
Options to purchase an aggregate of 234,000 shares of Common Shares are issued
and outstanding. Warrants to purchase an aggregate of up to 178,890 shares of
Common Shares are issued and outstanding and up to an additional 250,000 shares
of Common Shares are issuable upon conversion of outstanding convertible notes.
The Company has reserved 83,505 shares of Preferred for issuance hereunder,
83,505 shares of its Common Shares for issuance upon conversion of the
Preferred, 673,890 shares of Common Shares for issuance upon the exercise of
outstanding options and warrants or options which may be granted under the
Company's non-qualified stock option plan, and upon conversion of outstanding
debt, and up to 86,900 shares of its Common Shares for issuance to employees,
consultants, or directors under stock plans or arrangements approved by the
Board of Directors. The Preferred shall have the rights, preferences, privileges
and restrictions set forth in the Certificate. Except as set forth above, there
are no options, warrants or other rights to purchase or acquire any of the
Company's authorized and unissued capital stock or other securities of the
Company. A list of all holders of the outstanding capital stock and other
securities of the Company, including, without limitation all convertible debt,
options, warrants and other rights, and, in the case of convertible debt,
options, warrants or other convertible securities, a table showing the exercise
price, term and number of shares issuable upon conversion or exercise thereof,
is attached hereto as Exhibit D.
3.5 Authorization. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of this Agreement by the Company, the authorization, sale,
issuance and delivery of the Preferred (and the Common Shares issuable upon
conversion of the Preferred) and the performance of all of the Company's
obligations hereunder has been taken or will be taken prior to the Closing. This
Agreement, when executed and delivered by the Company, shall constitute a valid
and binding obligation of the Company, enforceable in accordance with its terms,
except as the indemnification provisions of Section 8.11 hereof may be limited
by principles of public policy, and subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
The Shares, when issued in compliance with the provisions of this Agreement,
will be validly issued, fully paid and nonassessable, and will have the rights,
preferences and privileges described in the Certificate; the Common Shares
issuable upon conversion of the Shares has been duly and validly reserved and,
when issued in compliance with the provisions of this Agreement and the
Certificate, will be validly issued, fully paid and nonasses-
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<PAGE> 4
sable; and the Shares and such Common Shares will be free of any liens or
encumbrances, assuming the Purchasers take the shares with no notice thereof,
other than any liens or encumbrances created by or imposed upon the holders;
provided, however, that the Shares (and the Common Shares issuable upon
conversion thereof) may be subject to restrictions on transfer under state
and/or federal securities laws as set forth herein. The Shares are not subject
to any preemptive rights or rights of first refusal.
3.6 Financial Statements. The Company has delivered to each Purchaser the
attached financial statements for SuperShuttle, Inc. for the year ended and as
of September 30, 1986 and the ten-month period and the month ended and as of
July 31, 1987 (collectively the "Financial Statements"). The Financial
Statements are complete and correct in all material respects and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated (other than for accompanying
notes) and subject to changes for year-end audit adjustments. The Financial
Statements accurately set out and describe the financial condition and operating
results of the Company, as of the dates, and during the periods, indicated
therein. Since July 31, 1987, there has not been any change in the assets,
liabilities, financial condition or operations of the Company, from that
reflected in the Financial Statements except for changes in the ordinary course
of business which have not been, either in any case or in the aggregate,
materially adverse.
3.7 Material Liabilities. To the best of its knowledge, the Company has no
material liabilities or obligations, absolute or contingent (individually or in
the aggregate), except (i) the liabilities and obligations set forth in the
Financial Statements, (ii) liabilities and obligations which have been incurred
subsequent to July 31, 1987 in the ordinary course of business which have not
been, either in any case or in the aggregate, materially adverse, and (iii)
liabilities and obligations under a lease for its principal offices and leases
for equipment, and liabilities and obligations under sales, procurement and
other contracts and arrangements entered into in the normal course of business.
3.8 Title to Properties and Assets; Liens, etc. The Company has good and
marketable title to its properties and assets, and has good title to all its
leasehold interests, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than (i) the lien of current taxes not yet due and
payable, (ii) possible minor liens and encumbrances which do not in any case
materially detract from the value of the property subject thereto or materially
impair the operations of the Company, and which have not arisen otherwise than
in the ordinary course of business, and (iii) those listed on Exhibit C.
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<PAGE> 5
3.9 Compliance with Other Instruments, None Burdensome, etc. The Company is
not in violation of any term of its Certificate of Incorporation or By-Laws, or
in any material respect of any term or provision of any material mortgage,
indebtedness, indenture, contract, agreement, instrument, judgment or decree,
and to the best of its knowledge is not in violation of any order, statute, rule
or regulation applicable to the Company where such violation would materially
and adversely affect the Company. The execution, delivery and performance of and
compliance with this Agreement, and the issuance of the Preferred and the Common
Shares issuable upon conversion of the Preferred, have not resulted and will not
result in any material violation of, or conflict with, or constitute a material
default under, the Company's Certificate of Incorportion or By-laws or any of
its agreements (or, to the best of the Company's knowledge, any agreement
binding upon any officer, director or affiliate of the Company) nor result in
the creation of, any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company; and there is no such violation or
default which materially and adversely affects the business of the Company or
any of its properties or assets.
3.10 Litigation, etc. There are no actions, suits, proceedings or
investigations pending against the Company, its properties or any officer,
director or affiliate of the Company before any court or governmental agency
(nor, to the best of the Company's knowledge, is there any reasonable basis
therefor or threat thereof).
3.11 Employees. To the best of the Company's knowledge, no employee of the
Company is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating to the
relationship of such employee with the Company or any other party because of the
nature of the business conducted or to be conducted by the Company.
3.12 Registration Rights. Except as set forth in this Agreement and
pursuant to the Registration Rights Agreement dated October 14, 1985 by and
among the Company, Wilmington Cab Company of California, Mitchell S. Rouse,
Erwin Tomash, as Trustee of the Erwin and Adele Tomash Family Trust, David Abel,
Chester I. Lappen, Lawrence Goodman, as Trustee of the Goodman Community
Property Trust, and David Jacobs (the "Original Registration Rights Agreement"),
the Company is not under any contractual obligation to register (as defined in
Section 8.2 below) any of its presently outstanding securities or any of its
securities which may hereafter be issued.
3.13 Governmental Consent, etc. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of this Agreement, or
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<PAGE> 6
the offer, sale or issuance of the Preferred (and the Common Shares issuable
upon conversion of the Preferred), or the consummation of any other transaction
contemplated hereby, or the conduct of the Company's business as currently
contemplated, except (a) filing of the Certificate in the office of the Delaware
Secretary of State (b) qualification (or taking such action as may be necessary
to secure an exemption from qualification, if available) of the offer and sale
of the Preferred (and the Common Shares issuable upon conversion of the
Preferred) under the California Corporate Securities Law of 1968, as amended,
and other applicable Blue Sky laws, which filings and qualifications, if
required, will be accomplished in a timely manner.
3.14 Offering. Subject to the accuracy of the Purchasers' representations
in Section 4 hereof, the offer, sale and issuance of the Preferred to be issued
in conformity with the terms of this Agreement, and the issuance of the Common
Shares to be issued upon conversion of the Preferred, constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended (the "Securities Act").
3.15 Brokers or Finders; Other Offers. The Company has not incurred, and
will not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
3.16 Airport Consent. The Company has the proper and necessary authority to
conduct business in each airport facility identified on Exhibit C. This Section
3.16 is not intended to limit in any way the scope of Section 3.13 hereof.
3.17 Material Agreements. Attached hereto as Exhibit E is a list of all
agreements, contracts, indebtedness, liabilities, and other obligations to which
the Company is a party or by which it is bound and which either (i) involve or
may involve obligations on behalf of any party thereto in excess of $50,000, or
(ii) include as a party thereto any officer, director, key employee or principal
shareholder of the Company, or any individual or entity affiliated with any
officer, director, key employee or principal shareholder of the Company.
3.18 Governmental Litigation. There is no litigation pending or threatened
against the Company, nor any material complaints with state, city, or private
entities governing airport ground transportation areas for the airports the
Company and its franchise currently serve, This Section 3.18 is not intended to
limit in any way the scope of Section 3.10 hereof.
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<PAGE> 7
3.19 Disclosure. To the best of the Company's knowledge, this Agreement
with the Exhibits hereto and the Company's Business Plan dated September, 1987,
when taken as a whole, does not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained herein not misleading in light of the circumstances under which they
were made. The Business Plan and the financial projections contained in the
Business Plan were prepared in good faith; however, the Company does not warrant
that it will achieve the financial projections set forth in the Business Plan.
SECTION 4
Representations and Warranties of the Purchasers
Each Purchaser hereby severally represents and warrants to the Company with
respect to the purchase of the Shares as follows:
4.1 Experience. It has substantial experience in evaluating and investing
in private placement transactions of securities in companies similar to the
Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
4.2 Investment. It is acquiring the Preferred and the underlying Common
Shares for investment for its own account, not as a nominee or agent, and not
with a view to, or for sale in connection with, any distribution thereof. It
understands that the Preferred to be purchased and the underlying Common Shares
have not been, and will not be, registered under the Securities Act by reason of
a specific exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of such Purchaser's representations as
expressed herein.
4.3 Rule 144. It acknowledges that the Preferred and the underlying Common
Shares are subject to restrictions on transfer and must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from such registration is available. It is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not less than two years after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" and
the number of
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<PAGE> 8
shares being sold during any three-month period not exceeding specified
limitations.
4.4 No Public Market. It understands that no public market now exists for
any of the securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company's securities.
4.5 Access to Data. It has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management and the
opportunity to review the Company's facilities and Business Plan.
4.6 Authorization. This Agreement when executed and delivered by such
Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, except as the
indemnification provisions of Section 8.11 hereof may be limited by principles
of public policy, and subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies, and the
execution and performance of this Agreement will not violate the agreements
under which the non-individual Purchasers were formed or result in any material
breach in any agreement or obligation by which the Purchasers are bound.
4.7 Brokers or Finders. The Company has not, and will not, incur, directly
or indirectly, as a result of any action taken by such Purchaser, any liability
for brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement. Lambda III, L.P., will be paying a fee to
Bradford W. Allen equal to one percent of the total amount invested pursuant to
this Agreement by Lambda III, L.P., and Lambda C.F.D. '87, L.P., but such
payment shall in no way limit the proceeds to the Company hereunder or be an
obligation of the Company in any way.
4.8 Securities Law Compliance. Each of the Purchasers is an "accredited
investor" within the meaning of Rule 501 promulgated under the Securities Act of
1933, as amended. Each Purchaser which is not an individual represents that is
was not formed for the specific purpose of making this investment. Each
Purchaser's principal place of business, or residence in the case of an
individual purchaser, is as set forth on Exhibit A attached hereto.
SECTION 5
Conditions to Closing of Purchasers
The Purchasers' obligations to purchase the Shares at the Closing are, at
the option of the Purchasers, subject to the fulfillment of the following
conditions:
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<PAGE> 9
5.1 Representations and Warranties Correct. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects as of the Closing Date.
5.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
5.3 Opinion of Company's Counsel. The Purchasers shall have received from
Mitchell, Silberberg & Knupp, counsel to the Company, an opinion addressed to
them, dated the Closing Date, in a form acceptable to the Purchasers and their
special counsel.
5.4 Compliance Certificate. The Company shall have delivered to the
Purchasers a certificate of the Company in the form of Exhibit F hereto,
executed by the Executive Vice President of the Company, dated the Closing Date,
and certifying, among other things, to the fulfillment of the conditions
specified in Sections 5.1 and 5,2 of this Agreement.
5.5 Blue Sky. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or have the availability of exemptions therefrom,
required by any state for the offer and sale of the Preferred and the Common
Shares issuable upon conversion of the Preferred.
5.6 Certificate of Designations. The Certificate shall have been filed with
the Delaware Secretary of State.
5.7 Legal Matters. All material matters of a legal nature which pertain to
this Agreement and the transactions contemplated hereby, shall have been
reasonably approved by special counsel to the Purchasers.
5.8 Minimum Investment. The Purchasers at the Closing shall purchase shares
of Preferred having an aggregate purchase price of not less than $1,000,000.00.
5.9 Non-Compete Agreements. Mitchell S. Rouse, David Jacobs and James
Zebrowski shall have entered into agreements not to compete with the Company in
forms satisfactory to the Purchasers.
5.10 Board of Directors. The Board of Directors of the Company on the
Closing Date shall consist of at least eight properly authorized members.
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<PAGE> 10
SECTION 6
Conditions to Closing of Company
The Company's obligation to sell and issue the Shares at the Closing Date
is, at the option of the Company, subject to the fulfillment as of the Closing
Date of the following conditions:
6.1 Representations. The representations made by the Purchasers in Section
4 thereof shall be true and correct when made, and shall be true and correct on
the Closing Date.
6.2 Blue Sky. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or have the availability of exemptions therefrom,
required by any state for the offer and sale of the Preferred and the Common
Shares issuable upon conversion of the Preferred.
6.3 Certificate of Designations. The Certificate shall have been filed with
the Delaware Secretary of State.
6.4 Legal Matters. All material matters of a legal nature which pertain to
this Agreement, and the transactions contemplated hereby, shall have been
reasonably approved by counsel to the Company.
6.5 Minimum Investment. The Purchasers at the Closing shall purchase shares
of Preferred having an aggregate purchase price of not less than $1,000,000.00.
SECTION 7
Covenants of the Company
The Company hereby covenants and agrees as follows:
7.1 Financial Information. The Company will mail the following reports to
each Purchaser for so long as such Purchaser is a holder of any shares of
Preferred or Common Shares issued upon conversion of the Preferred:
(a) As soon as practicable after the end of each fiscal year, and in
any event within 90 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year,
and consolidated statements of income and consolidated statements of
changes in financial position of the Company and its subsidiaries, if any,
for such year, prepared in accordance with generally accepted accounting
principles and setting forth in each case in comparative form the figures
for the previous
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<PAGE> 11
fiscal year (or, at the election of the Company, setting forth in
comparative form the budgeted figures for the fiscal year then reported),
all in reasonable detail and audited by independent public accountants of
national standing selected by the Company.
(b) As soon as practicable after the end of each month (beginning
September 1987), and in any event within 45 days thereafter, a consolidated
balance sheet of the Company and its subsidiaries, if any, as of the end of
each such period, and consolidated statements of income and consolidated
statements of changes in financial condition of the Company and its
subsidiaries for such period and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles (other
than for accompanying notes), subject to changes resulting from year-end
audit adjustments, all in reasonable detail, signed and certified as
accurate by the President or Chief Financial Officer of the Company and
accompanied by a qualitative summary prepared by such individual of the
highlights of the financials and the business for the month.
7.2 Additional Information. As long as a Purchaser holds shares of
Preferred and/or Common Shares issued upon conversion of the Preferred, the
Company will deliver or provide to such Purchaser (i) prior to the beginning of
each fiscal year, an annual budget and business plan, including projected income
statements, cash flow figures and balance sheet information, on a monthly basis
for the ensuing fiscal year, together with a qualitative description of the
Company's plan prepared by the President; (ii) promptly (but in no event more
than thirty days) after the discovery of any default of the Company's material
obligations pursuant to this Agreement, or any other materially adverse event or
circumstance affecting the business or operations of the Company, a statement
outlining such default or event and the Company's proposed response thereto;
(iii) with reasonable promptness, copies of all annual federal income tax
returns and all filings made with the Securities and Exchange Commission; and
(iv) with reasonable promptness, such other information and data, including
access to books, records, officers and accountants, with respect to the Company
and its subsidiaries as any such holder may from time to time reasonably
request; provided, however, that the Company shall not be obligated to provide
any information pursuant to this Section 7.2 that it considers in good faith to
be a trade secret or to contain confidential or classified information.
7.3 Assignment of Rights to Financial Information. The rights granted
pursuant to Sections 7.1 and 7.2 may not be assigned or otherwise conveyed by
any Purchaser or by any subsequent transferee of any such rights without the
prior written consent of the Company (which consent shall not be unreasonably
withheld); provided, how-
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<PAGE> 12
ever, that any Purchaser may assign to any transferee, other than a competitor
of the Company, after giving notice to the Company, the rights granted pursuant
to Section 7.1 and 7.2 to (i) a transferee who acquires at least 5,000 shares of
Preferred and/or Common Shares issued upon conversion of the Preferred,
appropriately adjusted for recapitalizations, stock splits, stock dividends and
the like ("Recapitalizations"), or (ii) any constituent partner of a Purchaser.
7.4 Termination of Financial Information. The covenants set forth in
Sections 7.1. and 7.2 shall terminate and be of no further force or effect at
such time as the Company is required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended.
7.5 Insurance. From and after the Closing, the Company shall maintain key
man insurance (or a binder with respect thereto) in the amount of $500,000.00 on
each of David Jacobs and James Zebrowski, and $1,000,000 on Mitchell S. Rouse,
with the Company as the sole named beneficiary under each such policy.
7.6 Board of Directors. As of the Closing Date, Frank R. Kline, Jr., will
be a duly authorized and appointed member of the Board of Directors of the
Company. At no time after the Closing Date shall more than four members of the
Board of Directors be current or former employees or officers of the Company or
of any affiliate of the Company, or members of the families of any such
individuals ("Inside Directors") (hereinafter, members of the Board of Directors
that are not Inside Directors shall be termed "Outside Directors"). The
following individuals shall constitute Outside Directors as of the Closing Date:
Erwin Tomash, David Abel, Chester I. Lappen and Frank R. Kline, Jr.
7.7 Change of Business Direction. Without the prior written consent of at
least a majority of the Outside Directors of the Company, which consent shall
have been obtained without any special consideration having been rendered to any
such Outside Director or any affiliate of such director ("Outside Board
Consent"), the Company shall not enter into any activity or business unrelated
to transportation services.
7.8 Rouse Stock Issuances. The Company shall not issue any shares of
capital stock or any options, warrants or other rights to purchase such shares
to any member of the Rouse family or any affiliate of such individual unless
Outside Board Consent has been obtained and the securities are issued and sold
at a price which is determined to be fair (to the Company) either (a) by a third
party (such as an investment banker or nationally recognized accounting firm)
mutually agreed upon by both the Company and a majority of the holders of the
Registrable Securities (as defined below) or (b) by a majority
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of the disinterested members of the Board of Directors and by holders of a
majority of the disinterested shares of outstanding capital stock of the
Company.
7.9 Executive Salaries. The annual salary (including bonuses) paid to
Mitchell S. Rouse, David Jacobs and James Zebrowski shall not be increased at a
rate of greater than fifteen percent (15%) per annum without Outside Board
Consent, and in no event shall the salary level (excluding bonuses) of any such
individuals exceed $200,000.
7.10 Termination of Covenants. The covenants set forth in Sections 7.5,
7.6, 7.7, 7.8 and 7.9 shall terminate and shall be of no further force or effect
at such time as the Company has completed a firm commitment underwritten public
offering of its securities pursuant to the Securities Act of 1933, as amended.
SECTION 8
Restrictions on Transferability of Securities;
Compliance with Securities Act; Registration Rights
8.1 Restrictions of Transferability. The Preferred and the Conversion Stock
(as defined below) shall not be sold, assigned, transferred or pledged except
upon the conditions specified in this Section 8, which conditions are intended
to ensure compliance with the provisions of the Securities Act. Each Purchaser
will cause any proposed purchaser, assignee, transferee, or pledgee of the
Preferred or such Common Shares held by a Purchaser to agree to take and hold
such securities subject to the provisions and upon the conditions specified in
this Section 8.
8.2 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Conversion Stock" means the Common Shares issued or issuable pursuant
to conversion of the Preferred.
"Holder" shall mean any Purchaser holding Registrable Securities
(including Preferred) and any person holding Registrable Securities to whom
the rights under this Section 8 have been transferred in accordance with
Section 8.14 hereof.
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"Initiating Holders" shall mean any Purchasers or transferees of
Purchasers under Section 8.14 hereof who in the aggregate are Holders of
greater than 30% of the Registrable Securities.
"Registrable Securities" means (i) the Conversion Stock; and (ii) any
Common Shares of the Company issued or issuable in respect of the
Conversion Stock or other securities issued or issuable pursuant to the
conversion of the Preferred upon any stock split, stock dividend,
recapitalization, or similar event, or any Common Shares otherwise issued
or issuable with respect to the Preferred, provided, however, that shares
of Common Shares or other securities shall only be treated as Registrable
Securities if and so long as they have not been (A) sold to or through a
broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold or are available for sale in the
opinion of counsel to the Company in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so
that all transfer restrictions and restrictive legends with respect thereto
are removed upon the consummation of such sale.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 8.5, 8.6
and 8.7 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company) and the reasonable
fees and disbursements of one counsel for all Holders participating in the
registration.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 8.3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities
registered by the Holders and, except as set forth above, all fees and
disbursements of counsel for any Holder.
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<PAGE> 15
"Other Registrable Securities" shall mean securities of the same class
as the Registrable Securities for which the Company has received a request
for registration under Section 8.5(a) hereof, held by holders who have
contractual rights to participate in such registration.
8.3 Restrictive Legend. Each certificate representing (i) the Preferred,
(ii) the Conversion Stock and (iii) any other securities issued in respect of
the Preferred or the Conversion Stock upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of Section 8.4 below) be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933.
Each Purchaser and Holder consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Preferred or the
Common Shares in order to implement the restrictions on transfer established in
this Section 8.
8.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 8.4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
transfer not involving a change in beneficial ownership or (ii) in transactions
involving the distribution without consideration of Restricted Securities by any
of the Purchasers to any of its partners, or retired partners, or to the estate
of any of its partners or retired partners; provided that any such transfer or
transaction is effected in accordance with applicable state and federal
securities laws), unless there is in effect a registration statement under the
Securities Act covering the proposed transfer, the holder thereof shall give
written notice to the Company of such holder's intention to effect such
transfer, sale, assignment or pledge. Each such notice shall describe the manner
and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail, and shall be accompanied, at such holder's expense by either
(i) an unqualified written opinion of legal counsel who shall, and whose legal
opinion shall be, reasonably satisfactory to the Company addressed to the
Company, to the effect that the proposed transfer of the Restricted Securities
may be ef-
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<PAGE> 16
fected without registration under the Securities Act, or (ii) a "no action"
letter from the Commission to the effect that the transfer of such securities
without registration will not result in a recommendation by the staff of the
Commission that action be taken with respect thereto, whereupon the holder of
such Restricted Securities shall be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered by the holder to
the Company. Each certificate evidencing the Restricted Securities transferred
as above provided shall bear, except if such transfer is made pursuant to Rule
144, the appropriate restrictive legend set forth in Section 8.3 above, except
that such certificate shall not bear such restrictive legend if in the opinion
of counsel for such holder and the Company such legend is not required in order
to establish compliance with any provision of the Securities Act.
8.5 Requested Registration.
(a) Request for Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect any registration,
qualification or compliance with respect to not less than 25,000 shares
(appropriately adjusted for stock splits, recapitalizations, and the like) of
Registrable Securities, the Company will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation,
appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations
issued under the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the
sale and distribution of all or such portion of such Registrable Securities
as are specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request as
are specified in a written request received by the Company within 20 days
after receipt of such written notice from the Company;
Provided, however, that it is understood and agreed that holders of Other
Registrable Securities may participate in such registration in proportion, as
nearly as practicable, to the respective amounts of securities held by the
Holders and such holders at the time of filing the registration statement; and
Provided further, however, that the Company shall not be obligated to take
any action to effect any such registration, qualification, or compliance
pursuant to this Section 8.5:
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<PAGE> 17
(A) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(B) Prior to January 1, 1989;
(C) During the period starting with the date sixty (60) days prior to
the Company's estimated date of filing of, and ending on the date ninety
(90) days immediately following the effective date of, any registration
statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to
become effective;
(D) After the Company has effected one such registration pursuant to
this Section 8.5(a), and such registration has been declared or ordered
effective (provided that, if prior to the effectiveness of a registration
statement, the number of Holders participating or the number of shares of
Registrable Securities would not be sufficient to initiate a registration
pursuant to this Section 8.5(a), the Company may withdraw its registration
statement and, unless such insufficiency resulted from shares of
Registrable Securities being withdrawn as a result of a materially adverse
event or circumstance relating to the Company which was not known to the
Initiating Holders at the time of their request for demand registration,
the Company will be deemed to have satisfied its obligation to register
Registrable Securities for purposes of this Section 8.5(a)(ii)(D); and
provided further that, if the Holders that join in a registration under
this Section 8.5(a) are unable to sell all of the Registrable Securities
sought to be registered by them due to the participation of other holders
having contractual rights to participate (other than Holders), then the
Company shall be obligated to effect one additional registration if so
requested, and if in such registration the participating Holders are again
unable to sell all of the Registrable Securities sought to be registered
for the same reason, the Company shall be obligated to effect yet another
final registration under this Section 8.5(a), if so requested);
(E) If the Company shall furnish to such Holders a certificate signed
by the President of the Company stating that in the good faith judgment of
the Board of Directors it would be seriously detrimental to the Company or
its shareholders for a registration statement to be filed in the near
future, then the Company's obligation to use its best efforts to register,
qualify
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<PAGE> 18
or comply under this Section 8.5 shall be deferred for a period not to
exceed 90 days from the date of receipt of written request from the
Initiating Holders.
Subject to the foregoing clauses (A) through (E), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to Section 8.5
is for a registered public offering involving an underwriting, the Company shall
so advise the Holders as part of the notice given pursuant to Section 8.5(a)(i)
(provided that it is understood that in no event shall the Company be obligated
to find any such underwriter). In such event, the right of any Holder to
registration pursuant to Section 8.5 shall be conditioned upon such Holder's
participation in the underwriting arrangements required by this Section 8.5, and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent requested shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by a
majority in interest of the Initiating Holders, but subject to the Company's
reasonable approval. Notwithstanding any other provision of this Section 8.5, if
the managing underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all holders of Registrable
Securities and holders of Other Registrable Securities and the number of shares
of Registrable Securities and Other Registrable Securities that may be included
in the registration and underwriting shall be allocated among all holders
thereof in proportion, as nearly as practicable, to the respective aggregate
amounts of Registrable Securities and Other Registrable Securities held by such
holders at the time of filing the registration statement. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any holder to the
nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to 90 days after the effective date
of such registration, or such other shorter period of time as the underwriters
may require.
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<PAGE> 19
8.6 Company Registration.
(a) Notice of Registration. If at any time or from time to time the Company
shall determine to register any of its securities, either for its own account or
the account of a security holder or holders, other than (i) in connection with
the Company's initial public offering, or (ii) a registration relating solely to
employee benefit plans, or (iii) a registration relating solely to a Commission
Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within 20 days after receipt of such written notice from the
Company, by any Holder.
(b) Underwriting. If the registration of which the Company gives notice is
or a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
8.6(a)(i). In such event the right of any Holder to registration pursuant to
Section 8.6 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company. Notwithstanding any other provision of
this Section 8.6, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the managing
underwriter may limit the Registrable Securities to be included in such
registration. The Company shall so advise all Holders and other holders
distributing their securities through such underwriting and the number of shares
of Registrable Securities and other securities that may be included in the
registration and underwriting shall be allocated among all Holders and such
other holders (provided that such other holders have contractual rights to
participate in such registration) in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities and other securities held by
such Holders and such other holders at the time of filing the registration
statement. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocated to any Holder
or holder to the nearest 100 shares. If any Holder or holder disapproves of the
terms of any such underwriting, he may elect to withdraw therefrom by written
notice to the Company and the managing underwriter.
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<PAGE> 20
(c) Right to Terminate Registration. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 8.6
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration.
8.7 Registration on Form S-3.
(a) If any Holder or Holders holding in the aggregate not less than 30% of
the then outstanding Registrable Securities request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $1,000,000, and the Company is a
registrant entitled to use Form S-3 (or any successor form to Form S-3), the
Company shall use its best efforts to cause such Registrable Securities to be
registered for the offering on such form and to cause such Registrable
Securities to be qualified in such jurisdictions as the Holder or Holders may
reasonably request; provided, however, that the Company shall not be required to
effect more than one registration pursuant to this Section 8.7 in any six (6)
month period. The substantive provisions of Section 8.5(b) (including those
provisions with respect to the rights of holders of Other Registrable
Securities) shall be applicable to each registration initiated under this
Section 8.7.
(b) Notwithstanding the foregoing, the Company shall not be obligated to
take any action pursuant to this Section 8.7: (i) in any particular jurisdiction
in which the Company would be required to execute a general consent to service
of process in effecting such registration, qualification or compliance unless
the Company is already subject to service in such jurisdiction and except as may
be required by the Securities Act; (ii) if the Company, within ten (10) days of
the receipt of the request of the initiating Holders, gives notice of its bona
fide intention to effect the filing of a registration statement with the
Commission within ninety (90) days of receipt of such request (other than with
respect to a registration statement relating to a Rule 145 transaction, an
offering solely to employees or any other registration which is not appropriate
for the registration of Registrable Securities); (iii) during the period
starting with the date sixty (60) days prior to the Company's estimated date of
filing of, and ending on the date ninety (90) days immediately following, the
effective date of any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
with respect to an employee benefit plan), provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective; or (iv) if the Company shall furnish
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to such Holder a certificate signed by the President of the Company stating that
in the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its shareholders for registration statements to be
filed in the near future, then the Company's obligation to use its best efforts
to file a registration statement shall be deferred for a period not to exceed 90
days from the receipt of the request to file such registration by such Holder.
8.8 Limitations on Subsequent Registration Rights. From and after the
Closing Date, the Company shall not, without first obtaining the written
approval of holders of a majority of the Common Shares issued or issuable upon
conversion of the Preferred, enter into any agreement granting any holder or
prospective holder of any securities of the Company registration rights with
respect to such securities unless such new registration rights, including
standoff obligations, are subordinate to the registration rights granted to
Holders hereunder. This Section 8.8 shall be of no further force or effect from
and after the date on which none of the Purchasers own securities of the Company
that are treated as Registrable Securities pursuant to Section 8.2 hereof.
8.9 Expenses of Registration. All Registration Expenses incurred in
connection with (i) all registrations pursuant to Section 8.5 (limited to one
registration, except as expressly provided in the parenthetical in Section
8.5(a)(ii)(D)), (ii) all registrations pursuant to Section 8.6 and (iii) all S-3
registrations pursuant to Section 8.7, shall be borne by the Company. Unless
otherwise stated, all Selling Expenses relating to securities registered on
behalf of the Holders and all other Registration Expenses shall be borne by the
Holders of such securities pro rata on the basis of the number of shares so
registered.
8.10 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 8,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one
hundred eighty (180) days or until the distribution described in the
Registration Statement has been completed;
(b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number
of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents
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as such underwriters may reasonably request in order to facilitate the
public offering of such securities.
8.11 Indemnification.
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 8, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use therein
or the preparation thereby.
(b) Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising Out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular
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or other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such Holders, such
directors, officers, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein or the preparation thereby. Notwithstanding the
foregoing, the liability of each Holder under this subsection (b) shall be
limited in an amount equal to the initial public offering price of the shares
sold by such Holder, unless such liability arises out of or is based on willful
conduct by such Holder.
(c) Each party entitled to indemnification under this Section 8.11 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 8 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
8.12 Information by Holder. The Holder or Holders of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders, the Registrable Securities held by them and
the distribution proposed by such Holder or Holders as the Company may request
in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 8.
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8.13 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Shares of the Company, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended.
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (at any
time after it has become subject to such reporting requirements);
(c) So long as a Purchaser owns any Restricted Securities to furnish
to the Purchaser forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 (at
any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the
general public), and of the Securities Act and the Securities Exchange Act
of 1934 (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company and other
information in the possession of or reasonably obtainable by the Company as
a Purchaser may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Purchaser to sell any such
securities without registration.
8.14 Transfer of Registration Rights. The rights to cause the Company to
register securities granted Purchasers under Sections 8.5, 8.6 and 8.7 may be
assigned to a transferee or assignee reasonably acceptable to the Company in
connection with any transfer or assignment of Registrable Securities by a
Purchaser provided that: (i) such transfer may otherwise be effected in
accordance with applicable securities laws, and (ii) such assignee or transferee
acquires at least 5,000 shares of Preferred and/or Common Shares issued upon
conversion thereof (appropriately adjusted for stock splits and
recapitalizations). Notwithstanding the foregoing, the rights to cause the
Company to register securities may be assigned to any constituent partner of a
Purchaser, without compliance with item (ii) above, provided written notice
thereof is promptly given to the Company.
8.15 Standoff Agreement. Each Holder agrees, so long as such Holder holds
at least five percent (5%) of the Company's outstanding voting equity
securities, in connection with the Company's initial
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<PAGE> 25
public offering of the Company's securities that, upon request of the Company or
the underwriters managing any underwritten offering of the company's securities,
not to sell, make any short sale of, loan, grant any option for the purchase of,
or otherwise dispose of any Registrable Securities (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred twenty (120) days) from the effective date of such registration as may
be requested by the underwriters; provided, that the officers and directors of
the Company who own stock of the Company also agree to such restrictions.
SECTION 9
Purchasers' Right of First Refusal
9.1 Right of First Refusal. The Company hereby grants to Purchasers
(provided such Purchasers are then current holders of shares of the Preferred or
other equity securities issued in exchange for or upon conversion of the
Preferred) the right to purchase a pro rata share of securities (hereinafter the
"Preemptive Securities"), which are of the same type, class and series as the
New Securities (as defined in Section 9.1(a)), in the event the Company sells
New Securities. The amount of Preemptive Shares which each Purchaser may
purchase shall be equal to the number of New Securities to be sold and issued by
the Company multiplied by a fraction, the numerator of which is the sum of the
number of shares of Common Shares then held by each Purchaser and the number of
shares of Common Shares issuable upon conversion of the Preferred then held by
such Purchaser and the denominator of which is the sum of the total number of
shares of Common Shares then outstanding and the number of shares of Common
Shares issuable upon conversion of the then outstanding Preferred.
(a) Except as set forth below, "New Securities" shall mean any shares of
capital stock of the Company including Common Shares and Preferred Stock
(however designated), whether now authorized or not, and rights, options or
warrants to purchase said shares of Common Shares or Preferred Stock and
securities of any type whatsoever that are, or may become, convertible into said
shares of Common Shares or Preferred Stock. Notwithstanding the foregoing, "New
Securities" does not include (i) the Preferred purchased under this Agreement,
including Common Shares issuable upon conversion of the Preferred, and
securities issued to the Purchasers or their successors and assigns pursuant to
this Section 9.1, (ii) securities offered to the public generally pursuant to a
registration statement under the Securities Act, (iii) securities issued
pursuant to the acquisition of another corporation by the Company by merger,
purchase of substantially all of the assets or other reorganization whereby the
Company or its shareholders own not less than fifty-one percent (51%) of the
voting power of the surviving or successor corporation, (iv) up to 86,900 shares
of the Company's
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<PAGE> 26
Common Shares or options convertible into such number of shares issued to
employees, officers and directors of, and consultants, customers, and vendors
to, the Company, pursuant to any arrangement approved by the Board of Directors
of the Company, (v) up to 662,890 shares of the Company's Common Shares issued
upon the exercise of warrants or the conversion of debt issued and outstanding
on or before the Closing Date, or upon the exercise of options, (vi) stock
issued pursuant to any rights or agreements granted after the date hereof
including without limitation convertible securities, options and warrants,
provided that the rights of first refusal established by this Section 9.1 apply
with respect to the initial sale or grant by the Company of such rights or
agreements, (vii) securities issued to Union Venture Corporation or its
successors and assigns pursuant to Section 6.2 of the Purchase Agreement dated
as of July 3, 1986 by and between the Company and Union Venture Corporation or
to Stanchart Equities, Inc. or its successors and assigns pursuant to Section
6.2 of the Purchase Agreement dated as of September 1, 1987 by and among the
Company and Stanchart Equities, Inc., or (viii) stock issued in connection with
any stock split, stock dividend or recapitalization by the Company.
(b) In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Purchaser twenty (20) days prior written notice
of its intention, describing the type of New Securities, and the price and terms
upon which the Company proposes to issue the same. Each Purchaser (provided such
Purchaser is then a current holder of shares of the Preferred or other equity
securities issued in exchange for or upon conversion of the Preferred) shall
have twenty (20) days from the date of receipt of any such notice to agree to
purchase up to their respective pro rata shares of the Preemptive Securities for
the price and upon the terms specified in the notice by giving written notice to
the Company and stating therein the quantity of Preemptive Securities to be
purchased.
(c) If any Purchaser fails to agree to purchase Preemptive Securities
within said twenty (20)-day period, it shall be deemed to have waived said right
with respect to the New Securities then being offered by the Company, provided
that the Company shall have ninety (90) days thereafter to sell or enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within sixty (60) days from the date of said agreement) to
sell the New Securities at the price and upon the terms no more favorable to the
purchasers of such securities than specified in the Company's notice. In the
event the Company has not sold the New Securities or entered into an agreement
to sell the New Securities within said ninety (90) day period (or sold and
issued New Securities in accordance with the foregoing within sixty (60) days
from the date of said agreement), the Company shall not thereafter issue or sell
any New Securities, without again offering the rights described in this Section
9. The Company shall have no obligation to consummate the sale of Preemptive
Securities to Purchasers in
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<PAGE> 27
the event the Company does not consummate the sale of New Securities as
described in the notice given Purchasers pursuant to Section 9.1(b) hereof.
(d) The rights granted under this Section 9 shall expire upon the closing
of a Public Offering (as defined in Section 10.1(d)) below.
(e) The rights granted under this Section 9 are not assignable except by a
Purchaser to any wholly-owned subsidiary or constituent partner of such
Purchaser who acquires at least 5,000 Shares (appropriately adjusted for stock
splits, recapitalizations and the like).
SECTION 10
Right of Co-Sale
Mitchell S. Rouse and Wilmington Cab Company of California ("Wilmington
Cab") (hereinafter, individually, a "Management Shareholder") each hereby agrees
as follows:
10.1 Right of Co-Sale.
(a) In the event a Management Shareholder proposes to sell or otherwise
transfer any of his shares of the Company's Common Shares (or equity securities
issued in exchange therefor or as a dividend thereon), the Management
Shareholder will notify each Purchaser, provided such Purchaser is then a
current holder of shares of the Preferred or other equity securities issued in
exchange for or upon conversion of such Preferred (a "Co-Selling Party"), in
writing at least thirty (30) days in advance of such proposed sale (specifying
the number of shares or equity securities to be sold, the date of sale, the
sales price, the proposed purchaser and other terms of sale) and will permit
each Co-Selling Party (at such Co-Selling Party's option) to participate in such
sale and to sell the number of shares or equity securities each Co-Selling Party
desires to sell together with the number of shares and equity securities of the
Company which the Management Shareholder desires to sell, subject to the
following limitations. If the total number of shares or equity securities to be
sold in such transaction does not allow the Management Shareholder and each
Co-Selling Party to sell all the shares and equity securities each such party
desires to sell, then each participating Co-Selling Party ("Participating
Co-Selling Party") shall be entitled to sell his or its pro rata share of the
total number of shares or equity securities to be sold, and the Management
Shareholder will be entitled to sell only the number of shares or equity
securities of such total which are not to be sold by the Participating
Co-Selling Parties. A pro rata share for purposes of this right of Co-Sale is
the ratio that the sum of the number of shares of Common Shares then held by
each Purchaser and the number of shares of Common Shares issuable upon
conversion of the Preferred
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<PAGE> 28
then held by such Purchaser bears to the sum of the total number of shares of
Common Shares then outstanding and the number of shares of Common Shares
issuable upon conversion of the then outstanding Preferred.
(b) Within ten (10) days after receipt of the Management Shareholder's
notice, each Co-Selling Party shall notify the Management Shareholder in writing
of the number of shares which it desires to sell, if any. The Management
Shareholder shall keep each Participating Co-Selling Party fully informed of the
progress of such sale and shall use his best efforts to assist each
Participating Co-Selling Party in completing such sale, provided that nothing
herein shall obligate any Participating Co-Selling Party to complete such sale
after giving notice of intention to participate if the Participating Co-Selling
Party elects not to do so.
(c) In the event the proposed purchaser in any transaction giving rise to a
right of co-sale pursuant to this Section 10.1 chooses for any reason not to
consummate the purchase of the shares or equity securities of the Management
Shareholder and the Participating Co-Sellinq Parties on substantially the terms
set forth in the written notice and as provided in Section 10.l(a), then the
Management Shareholder agrees to provide prompt written notice to each
Co-Selling Party. Each Co-Selling Party shall have the right for ten (10) days
from the date of receipt of any such notice to purchase its proportionate share
of the shares or equity securities which the Management Shareholder originally
intended to sell to the proposed purchaser on the terms and at the price set
forth in the original written notice. For purposes of this Section 10.1(c), a
proportionate share is the ratio that the sum of the number of shares of Common
Shares then held by the Co-Selling Party and the number of shares of Common
Shares issuable upon conversion of the Preferred then held by such Co-Selling
Party bears to the sum of the total number of shares of then outstanding shares
of Common Shares issued upon prior conversions of Preferred Stock and the number
of shares of Common Shares issuable upon conversion of the then outstanding
Preferred Stock.
(d) The right of co-sale described in Sections lO.l(a) and (b), and the
right of purchase described in Section lO.l(c), shall expire upon the closing of
a firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Shares of the Company for the account of the
Company to the public at an initial offering price per share (prior to
underwriting commissions and offering expenses) of not less than $19.76 per
share (appropriately adjusted for splits and the like) and an aggregate initial
offering price to the public of not less than $7,500,000 (a "Public Offering").
The rights set forth in Sections 10.l(a), (b) and (c) shall not apply to
proposed transfers (i) pursuant to an effective registration statement under the
Securi-
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<PAGE> 29
ties Act, or in connection with any acquisition or reorganization of the
Company, (ii) by operation of law, (iii) by Wilmington Cab of up to 35,000
shares of Common Shares to John Goss and up to 20,000 shares of Common Stock to
James Zebrowski, (iv) which does not result in a change of the beneficial
ownership of the shares, (v) to a Management Shareholder's successors (by merger
or acquisition), ancestors, descendents or spouse (or a trust for their
benefit), or (vi) made pursuant to Rule 144 under the Securities Act after the
closing of the first firm commitment underwritten public offering of the
Company's securities pursuant to an effective registration statement under the
Securities Act.
SECTION 11
Miscellaneous
11.1 Governing Law. This Agreement shall be governed in all respects by the
internal laws of the State of California.
11.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby.
11.3 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of a Purchaser to purchase the Preferred
shall not be assignable without the consent of the Company.
11.4 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto at the Closing constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no Party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that holders of a majority of the Common Shares issued or
issuable upon conversion of the Preferred may, with the Company's prior written
consent, waive, modify or amend on behalf of all holders, any provisions hereof.
11.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to a Purchaser, at such Purchaser's address set forth in
Exhibit A, or at such other
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<PAGE> 30
address as such Purchaser shall have furnished to the Company in writing, or (b)
if to any other holder of any Shares, at such address as such holder shall have
furnished the Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder of such
Shares who has so furnished an address to the Company, or (c) if to the Company,
one copy should be sent to its address set forth on the cover page of this
Agreement and addressed to the attention of the President, or at such other
address as the Company shall have furnished to the Purchasers.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.
11.6 Delays or Omissions. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any holder of any
Shares, upon any breach or default of the Company under this Agreement, shall
impair any such right, power or remedy of such holder nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
11.7 Specific Performance. Each party's obligation under this Agreement is
unique. If any party should default in its obligations under this Agreement, the
parties each acknowledge damages would be inadequate and difficult to compute;
accordingly, the nondefaulting party, in addition to other available rights or
remedies, may sue in equity for specific performance, and the parties each
expressly waive the defense that a remedy in damages will be adequate.
11.8 California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF TEE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS
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<PAGE> 31
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
11.9 Expenses. The Company shall bear the reasonable fees and expenses of
Wilson, Sonsini, Goodrich & Rosati, P.C., special counsel to the Purchasers,
incurred with respect to this Agreement and the transactions contemplated
hereby, up to a maximum of $20,000.
11.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Purchasers,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
11.11 Severability. In the event that any provision of this Agreement is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
11.12 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not considered in construing or
interpreting this Agreement.
The foregoing agreement is hereby executed as of the date first above
written.
"MANAGEMENT SHAREHOLDERS"' "COMPANY"
(As to Section 10 only) SUPERSHUTTLE INTERNATIONAL, INC.
a Delaware corporation
/s/ Mitchell S. Rouse By: /s/ M S Rouse
- ------------------------------- -----------------------------------
Mitchell S. Rouse Mitchell S. Rouse, President
Wilmington Cab Company of
California
By: /s/ [ILLEGIBLE]
-------------------------------
Title: President
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<PAGE> 32
"PURCHASERS"
--------------------------------------
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: V.P. Lambda Capital Corp.
--------------------------------
General Partner
--------------------------------------
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: V.P. Lambda Capital Corp.
--------------------------------
General Partner
for Lambdac FD '87 LP
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
--------------------------------------
95RDC-664
9/18/87
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<PAGE> 33
"PURCHASERS"
--------------------------------------
By: /s/ Bradford W. Allen
-----------------------------------
Title: BRADFORD W. ALLEN
--------------------------------
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
--------------------------------------
95RDC-664
9/18/87
-32-
<PAGE> 34
EXHIBIT A
Schedule of Purchasers
Number of Shares of
Convertible Purchase
Name and Address Preferred Stock Price
---------------- --------------- -----
Lambda III, L.P. 78,741 $1,000,010.70
c/o Drexel Burnham Lambert
Incorporated
Attn: Frank R. Kline, Jr.
55 Broad Street
New York, NY 10004
Lambda CFD '87, L.P. 3,937 49,999.90
c/o Drexel Burnham Lambert
Incorporated
Attn: Alexa Mahnkeri
55 Broad Street
New York, NY 10004
Mr. Bradford W. Allen 827 10,502.90
2956 Rounsevel Terrace
Laguna Beach, CA 92651
Totals ------ -------------
83,505 $1,060,513.50
95RDC-664 Ex.A
9/18/87
<PAGE> 1
EX-10.5
Preferred Stock Exchange Ageement
Exhibit 10.5
PREFERRED STOCK EXCHANGE AGREEMENT
THIS PREFERRED STOCK EXCHANGE AGREEMENT ("Agreement") is entered into as of
the 15th day of June, 1995, by and among LAMBDA III, L.P., a limited partnership
("Lambda III") and LAMBDA CFD `87, L.P., a limited partnership ("Lambda CFD")
(Lambda III and Lambda CFD being sometimes hereinafter collectively referred to
as "Lambda"), and SUPERSHUTTLE INTERNATIONAL, INC., a Delaware corporation
("SSI"), with reference to the following facts:
WHEREAS, Lambda III currently owns 78,741 shares of SSI's Series A
Convertible Preferred Stock (the "Series A Preferred"), having an aggregate
liquidation value of approximately $1,000,000, and Lambda CFD currently owns
3,937 shares of Series A Preferred, having an aggregate liquidation value of
approximately $60,000; and
WHEREAS, pursuant to Section 5 of the Certificate of Designation for the
Series A Preferred, Lambda has certain rights to require the redemption of the
Series A Preferred; and
WHEREAS, SSI desires that Lambda extend its investment in SSI; and
WHEREAS, SSI has designated a new series of preferred stock, designated
"Series B Convertible Preferred Stock" (the "Series B Preferred") and ULLICO,
Inc., a Maryland corporation ("ULLICO"), proposes to purchase a total of 339,477
shares of Series B Preferred, at a purchase price of Eight and 8371/10,000
Dollars ($8.8371) per share, pursuant to that certain Stock Purchase Agreement,
dated as of June ___, 1995 (the "Stock Purchase Agreement"); and
WHEREAS, SSI has agreed to provide Lambda with certain information
requested by Lambda, as more fully set forth in that certain letter from Lambda
to SSI dated April 28, 1995 (except items 1, 6 and & of such letter); and
WHEREAS, Lambda and SSI have agreed on the terms and conditions pursuant to
which Lambda will exchange the shares of Series A Preferred currently held by
Lambda for shares of Series B Preferred;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereby agree as follows:
1. Exchange of Preferred Stock. Concurrently with the closing of the
purchase of Series B Preferred by ULLICO pursuant to the Stock Purchase
Agreement, Lambda will exchange all of its shares of Series A Preferred for
shares of Series B Preferred, at the rate of 1.6933 shares of Series B Preferred
for each one (1) share of Series A Preferred, with any fractional shares which
would have been issuable being paid in cash at the rate of Eight and 8371/10,000
Dollars ($8.8371) per share.
2. Rights of Lambda. The rights of Lambda as a holder of Series B Preferred
shall be as determined by the Certificate of
<PAGE> 2
Designation for the Series B Preferred; provided, however, that all rights of
Lambda under that certain Convertible Preferred Stock Purchase Agreement, dated
as of September 24, 1987 (the "Lambda Agreement") shall continue in full force
and effect, except as hereinafter expressly provided:
2.1. Registration Rights; Restrictions on Transferability. All rights
and obligations of Lambda under Section 8 of the Lambda Agreement are
hereby superseded in their entirety by the following:
(a) Restrictions on Transferability. The Convertible Preferred
and the Common Stock issuable upon conversion of the Convertible
Preferred shall not be transferable except upon the conditions
specified in this Section 2.1, which conditions are intended to insure
compliance with the provisions of the Securities Act. Lambda will
cause any proposed transferee of such securities held by Lambda to
agree to take and hold such securities subject to the provisions and
upon the conditions specified in this Section 2.1.
(b) Certain Definitions. As used in this Section 2.1, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended or any similar federal statute and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Restricted Securities" shall mean the securities of SSI
required to bear the legend set forth in Section 2.1(c) hereof.
"Registrable Securities" means (i) shares of the Convertible
Preferred, whether issued to Lambda or to ULLICO pursuant to the
Stock Purchase Agreement, (ii) shares of Common Stock issuable
upon conversion of the Series B Preferred, and (iii) shares of
Common Stock issued pursuant to the exercise of the Warrants
issued to ULLICO pursuant to the Stock Purchase Agreement.
The terms "registered," "registered" and "registration"
refer to a registration effected by preparing and filing a
registration statement with the Commission in compliance with the
Securities Act, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
"Registration Expenses" shall mean all expenses incurred by
SSI in complying Sections 2.1(e) and 2.1(f) hereof, including,
without limitation, all registration, qualification and filing
fees, printing expenses, escrow fees, fees and disbursements of
counsel for SSI, blue sky fees and expenses, and the expense of
any special audits incident to or required by any such
registration (but excluding the
<PAGE> 3
compensation of regular employees of SSI which shall be paid in
any event by SSI).
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale and all fees and
disbursements of counsel for any Holder.
"Holder" shall mean any holder of Registrable Securities
subject to this Agreement, or issued pursuant to the Stock
Purchase Agreement.
"Initiating Holders" shall mean any Holders requesting
registration of any Registrable Securities pursuant to Sections
2.1 (e) and 2.1(f) hereof, or pursuant to the provisions of the
Stock Purchase Agreement.
(c) Restrictive Legend. Each certificate representing (i) the
Series B Preferred, and (ii) shares of SSI's Common Stock issued upon
conversion of the Series B Preferred, shall (unless otherwise
permitted by the provisions of Section 2.1(d) below) be stamped or
otherwise imprinted with a legend substantially in the following form
(in addition to any legend required under applicable state securities
laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION.
(d) Notice of Proposed Transfers. The Holder of each certificate
representing Restricted Securities by acceptance thereof agrees to
comply in all respects with the provisions of this Section 2.1(d).
Prior to any proposed transfer of any Restricted Securities, unless
(i) there is in effect a registration statement under the Securities
Act covering the proposed transfer, or (ii) the Board of Directors of
SSI excuses compliance with this Section 2.1(d) in writing, the Holder
thereof shall give written notice to SSI of such Holder's intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall
be accompanied (except in pro rata distributions by the Holder to its
partners or shareholders or transactions in compliance with Rule 144)
by either (1) an unqualified written opinion of legal counsel who
shall be reasonably satisfactory to 551 addressed to SSI and
reasonably satisfactory in form and substance to SSI's counsel, to the
effect that the proposed transfer of the Restricted Securities may be
effected without registration under the Securities Act or any
applicable state securities laws, or
<PAGE> 4
(2) a "no action" letter from the Commission to the effect that the
distribution of such securities without registration will not result
in a recommendation by the staff of the Commission that action be
taken with respect thereto (and an equivalent letter or interpretive
opinion from the agency or agencies administering any applicable state
securities laws), whereupon the Holder of such Restricted Securities
shall be entitled to transfer such Restricted Securities in accordance
with the terms of the notice delivered by the holder to SSI. Each
certificate evidencing the Restricted Securities transferred as above
provided shall bear the appropriate restrictive legend set forth in
Section 8.3 above, except that such certificate shall not bear such
restrictive legend if in the opinion of counsel for SSI such legend is
not required in order to establish compliance with any provisions of
the Securities Act.
(e) Demand Registration.
(i) Request for Registration. In case SSI shall receive from
Initiating Holders a written request that SSI effect any registration
with respect to all or a part of the Registrable Securities, SSI will,
on one (1) occasion only (except with respect to registrations on Form
S-3, if registration on such Form is available, which registrations
may, subject to the restrictions set forth below in this Section
2.l(e)(i), be requested at any time and from time to time):
(1) promptly give written notice of the proposed
registration to all other Holders; and
(2) as soon as practicable, use its diligent best efforts to
effect such registration, qualification or compliance (including,
without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under
the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of
such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities
of any Holder joining in such request as are specified in a
written request received by SSI within 15 business days after
receipt of such written notice from SSI; provided that SSI shall
not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this
Section 2.1(e):
(a) In any particular jurisdiction in which SSI would
be required to execute a general consent to service of
process in effecting such registration, qualification or
compliance unless SSI is already subject to service in such
jurisdiction and except as may be required by the Securities
Act;
(b) Within six (6) months immediately following the
effective date of any registration statement pertaining
<PAGE> 5
to securities of SSI (other than a registration with respect
to an employee benefit plan);
(c) If the Holders propose to sell a number of shares
of Registrable Securities having an aggregate proposed
offering price to the public of less than $5,000,000.
Subject to the foregoing clauses (a) through (c), SSI shall file a
registration statement covering the Registrable Securities so requested to
be registered as soon as practicable, after receipt of the request or
requests of the Initiating Holders; provided, however, that if SSI shall
furnish to such Holders a certificate signed by the President of SSI
stating that in the good faith judgment of the Board of Directors of SSI,
it would be seriously detrimental to SSI and its shareholders for such
registration statement to be filed on or before the date filing would be
required and it is therefore essential to defer the filing of such
registration statement, SSI shall have the right to defer such filing for a
period of not more than 120 days after receipt of the request of the
Initiating Holders; provided, however, that SSI may only exercise such
right once within any 12 month period.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Section 2.1(e) (ii)
below, include other securities of SSI which are held by persons who, by
virtue of agreements entered into with SSI in connection with the issuance
of securities subsequent to the date of this Agreement, are entitled to
include their securities in such registration; provided, however, that such
agreements shall not be inconsistent with the registration priorities
provided in this Agreement.
(ii) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise SSI as a part of their request made
pursuant to Section 2.1(e) and SSI shall include such information in the
written notice referred to in Section 2.1(e) (i) (1). The right of any
Holder to registration pursuant to Section 2.1(e) shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent requested
(unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein.
If, by virtue of agreements entered into subsequent to the date of
this Agreement, the holders of other securities of SSI (the "Other
Holders") request and are entitled to inclusion in such registration, the
Initiating Holders shall, on behalf of all Holders, offer to the Other
Holders that such other securities be included in the underwriting and may
condition such offer on the acceptance by such Other Holders of the further
provisions of this paragraph 2.1(e). SSI shall (together with all Holders
and Other Holders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with
the representative of
<PAGE> 6
the underwriter or underwriters selected for such underwriting by a
majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section 2.l(e), if the
representative of the underwriter or underwriters advises the Initiating
Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Initiating Holders shall so
advise all Holders and Other Holders of securities which would otherwise be
underwritten pursuant hereto, and the number of shares of Registrable
Securities and such other securities that may be included in the
registration and underwriting shall be allocated first among the Initiating
Holders and Holders thereof in proportion, as nearly as practicable, as the
respective amounts of Registrable Securities held by the Initiating Holders
and Holders bear to the total amount of Registrable Securities. Thereafter
any remaining number of shares which are not excluded by the representative
shall be allocated among the Other Holders in such proportion as the
respective number of shares each such Other Holder requests to be included
in such registration bears to the total number of shares all Other Holders
request be included. All Registrable Securities or any other securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall not be included in such registration.
If any Holder of Registrable Securities, or Other Holder of other
securities entitled (upon request) to be included in such registration,
disapproves of the terms of the underwriting, such person may elect to
withdraw therefrom by written notice to SSI, the underwriter and the
Initiating Holders. The securities so withdrawn shall also be withdrawn
from registration. If the underwriter has not limited the number of
Registrable Securities or other securities to be underwritten, SSI may
include its securities for its own account in such registration if the
underwriter so agrees and if the number of Registrable Securities and other
securities which would otherwise have been included in such registration
and underwriting will not thereby be limited.
(f) SSI Registration.
(i) If at any time or from time to time, SSI shall determine to
register any of its securities, either for its own account or the account
of a security holder or holders exercising their respective demand
registration rights, other than a registration relating solely to employee
benefit plans, or a registration on any registration form which does not
permit secondary sales or does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities, SSI will:
(1) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which SSI intends to
attempt to qualify such securities under the applicable blue sky or
other state securities laws); and
<PAGE> 7
(2) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a
written request or requests, made within 20 days after receipt of such
written notice from SSI, by any Holder or Holders, except as set forth
in 2.1(f) (ii) below.
(ii) Underwriting. If the registration of which SSI gives notice is or
a registered public offering involving an underwriting, SSI shall so advise
the Holders as a part of the written notice given pursuant to Section
2.1(e) (i). In such event the right of any Holder to registration pursuant
to Section 2.1(f) shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with
SSI and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by SSI.
Notwithstanding any other provision of this Section 2.1(f), if the
underwriter determines that marketing factors require a limitation of the
number of shares to be registered, the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting.
SSI shall so advise all Holders and any other holders of "piggyback"
registration rights (the "Other Shareholders"), and the number of shares of
Registrable Securities and shares held by Other Shareholders that may be
included in the registration and underwriting shall be allocated among all
Holders and Other Shareholders thereof in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and shares
held by Other Shareholders entitled to inclusion in such registration held
by all such Holders and Other Shareholders at the time of filing the
registration statement. If any Holder or other Shareholder disapproves of
the terms of any such underwriting, he may elect to withdraw therefrom by
written notice to SSI and the underwriter. Any Registrable Securities or
shares held by other Shareholders excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
(g) Expenses of Registration. All Registration Expenses incurred in
connection with the registration, qualification or compliance pursuant to
Section 2.1(e) shall be borne by SSI. Notwithstanding the above, SSI shall
not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 2.1(e) if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (which Holders shall bear such
expenses); provided, however, that if at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition,
business, or prospects of SSI from that known to the Holders at the time of
their registration request, then the Holders shall not be required to pay
any of such expenses. All Registration Expenses incurred in
<PAGE> 8
connection with any piggyback requests pursuant to Section 2.1(f) shall be
borne by SSI. All Selling Expenses shall be borne by the Holders of such
securities pro rata on the basis of the respective number of shares so
registered.
(h) Registration Procedures. In the case of each registration,
qualification or compliance effected by SSI pursuant to this Section 2.1,
SSI will keep each Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion
thereof. At its expense SSI will:
(i) Keep such registration, qualification or compliance effective
for a period of 120 days or until the Holder or Holders have completed
the distribution described in the registration statement relating
thereto, whichever first occurs; and
(ii) Furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request.
(i) Termination of Registration Rights. The registration rights
granted pursuant to this Section 2.1 shall terminate as to each Purchaser
at such time as all shares acquired by such Purchaser pursuant to this
Agreement (including share of Series B Preferred and shares of Common Stock
issued upon conversion of the Series B Preferred) shall constitute less
than Three Percent (3%) of the outstanding shares of SSI.
(j) Indemnification.
(i) SSI will indemnify each Holder, each of its officers and directors
and partners, and each person controlling such Holder, with respect to
which registration, qualification or compliance has been effected pursuant
to this Section 2.1, and each underwriter, if any, and each person who
controls any underwriter, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus, offering circular or other
document (including any related registration statement, notification or the
like) incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, or any violation by SSI of any rule or regulation promulgated
under the Securities Act applicable to SSI and relating to action or
inaction required of SSI in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of
its officers, directors or partners, as the case may be, and each person
controlling such Holder, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that SSI and the Selling
Shareholder
<PAGE> 9
will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to SSI by an
instrument duly executed by such Holder or underwriter and stated to be
specifically for use therein.
(ii) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification
or compliance is being effected, indemnify SSI and its directors and
officers, each legal counsel and independent accountant of SSI, each
underwriter, if any, of SSI's securities covered by such a registration
statement, each person who controls SSI or such underwriter within the
meaning of the Securities Act, and each other such Holder, each of its
officers, directors and partners and each person controlling such Holder,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement
prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse SSI, such Holders, such directors, officers, partners,
persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to SSI
by an instrument duly executed by such Holder and stated to be specifically
for use therein.
(iii) Each party entitled to indemnification under this Section 2.1(j)
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Section 2.1, unless such failure to give prompt notice is prejudicial to
the Indemnifying Party's ability to defend such action. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with
the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement-which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. The
indemnity agreements contained in this Section 2.1(j) shall not apply to
amounts
<PAGE> 10
paid in settlement of any claim, loss, damage, liability or action if such
settlement is effected without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
(iv) If the indemnification provided for in this Section 2.1(j) is
held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any expenses, claims, losses, damages,
liabilities and actions referred to in Section 2.1(j) (i), then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party
thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such expenses, claims, losses, damages,
liabilities and actions in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or
omissions which resulted in such expenses, claims, losses, damages,
liabilities and actions as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(v) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall be controlling.
(k) Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to SSI such
information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as SSI may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 2.1.
(1) Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time
permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common
Stock of SSI, SSI agrees to:
(i) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act at all
times after 90 days after the effective date of the first registration
under the Securities Act filed by SSI for an offering of its
securities to the general public;
(ii) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of SSI under
the Securities Act and the Securities Exchange Act of 1934,
<PAGE> 11
as amended (at any time after it has become subject to such reporting
requirements);
(iii) So long as Purchaser owns any Restricted Securities to
furnish to the Purchaser forthwith upon request a written statement by
SSI as to its compliance with the reporting requirements of said Rule
144 (at any time after 90 days after the effective date of the first
registration statement filed by SSI for an offering of its securities
to the general public), and of the Securities Act and the Securities
Exchange Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly
report of SSI, and such other reports and documents of SSI as
Purchaser may reasonably request in availing itself of any rule or
regulation of the Commission allowing Purchaser to sell any such
securities without registration.
(m) Transfer of Registration Rights. The rights to cause SSI to
register securities granted Purchasers under Sections 2.1(e) and 2.1(f) may
be not be assigned or transferred by the Purchaser without the prior
written consent of SSI.
(n) "Market Stand-off" Agreement. Any Holder holding any outstanding
Common Stock acquired pursuant to this Agreement at such time, if requested
by SSI or an underwriter of Common Stock (or other securities) of SSI,
shall agree not to sell or otherwise transfer or dispose of any Common
Stock (or other securities) of SSI acquired pursuant to this Agreement
held by such Purchaser during the 120 day period following the effective
date of a registration statement of SSI filed under the Securities Act of
1933, as amended, provided that all Holders holding any of the outstanding
Common Stock and all officers and directors of SSI enter into similar
agreements. Such agreement shall be in writing in the form satisfactory to
SSI and such underwriter. SSI may impose stop-transfer instructions with
respect to the shares (or securities) subject to the foregoing restriction
until the end of said 120 day period.
2.2. Other Rights of Lambda. The other rights of Lambda as provided in the
Lambda Agreement shall continue in full force and effect, except as follows:
(a) Reporting. In lieu of the information and reports to which Lambda
is entitled pursuant to Sections 7.1 through 7.5, inclusive, of the Lambda
Agreement, Lambda shall be entitled to receive the reports given to ULLICO
pursuant to Section 6.1 of the Stock Purchase Agreement.
(b) Covenants Waived. Lambda hereby waives the provisions of Sections
7.5, 7.6, 7.7 of the Lambda Agreement, and further agrees that the
provisions of Section 7.9 shall apply only to Mitch Rouse.
(c) Termination of Covenants. Notwithstanding any other term or
provision hereof, or of the Lambda Agreement, all rights of Lambda and
covenants of SSI, excepting only those provided in Section 2.1 of this
Agreement, and expressly including those provided in
<PAGE> 12
Section 9 and 10 of the Lambda Agreement, shall terminate upon the
occurrence of a "Triggering Event." As used herein, "Triggering Event"
shall mean and include the first to occur of any of the following events:
(i) the successful completion of a public offering by SSI of
securities of SSI pursuant to a Registration Statement filed with the
Securities and Exchange Commission (other than a registration on Form
S-8 of a similar form contemplating the registration of securities for
an employee equity or benefit plan), at an offering price (after
giving effect to any adjustments to the common stock of SSI after the
date hereof) of not less than Twelve Dollars ($12) per share of common
stock (prior to underwriting commissions and offering expenses) and an
aggregate initial offering price to the public of not less than Seven
Million Five Hundred Thousand Dollars ($7,500,000); or
(ii) the completion of a merger of SSI with or into any other
corporation or entity (other than a merger with a wholly-owned
subsidiary of SSI, or a merger solely for the purpose of changing the
domicile and state of incorporation of SSI); or
(iii) the completion of a sale of all or substantially all of the
assets of SSI in a single transaction or a series of related
transactions; or
(iv) the completion of a sale of all or substantially all of the
outstanding securities of SSI by the holders thereof in a single
transaction or a series of related transactions; or
(v) any transaction or event, expressly including but not
limited to one or more sales or transfers by Lambda, as a result of
which Lambda is no longer the holder of Common Stock (or Series B
Preferred Stock convertible into Common Stock) equal to at least Three
Percent (3%) of the total number of shares of Common Stock of SSI
outstanding, on a fully-diluted basis.
2.3. Election of Directors. As soon as is practicable after the exchange
provided for herein, and at each meeting of the shareholders of SSI thereafter
at which directors are elected, Lambda shall have the right to nominate and
elect to the Board of Directors one (1) individual to be selected by Lambda;
provided, however, that at any meeting of shareholders for the purpose of
electing persons to the Board of Directors, the holders of Series B Preferred
Stock shall have the right to nominate and elect only a total of three (3)
individuals selected by all holders of Series B Preferred, including any such
persons who are already directors. Lambda agrees and acknowledges that, SSI may
require any such prospective nominee to complete and return a questionnaire, in
form and substance suitable to SSI. Lambda further agrees and acknowledges that
the Certificate of Designation of the Series B Preferred provides that the
holders of the Series B Preferred will have the right to elect a total of three
(3) persons to the Board of Directors of SSI. Lambda further acknowledges and
agrees that Lambda will have the right to designate and elect one (1) of these
three directors, and ULLICO will have the right to designate and
<PAGE> 13
elect two (2) of these three directors. No consultation or agreement between or
among ULLICO and Lambda shall be necessary prior to the nomination or election
by either party of such directors, and the right of ULLICO to nominate and elect
two (2) directors and the right of Lambda to nominate and elect one (1) director
shall be independent.
SSI agrees to reimburse all directors for the reasonable expenses incurred
by such director in attending meetings of the Board of Directors, including
travel and lodging. To the extent that the Board of Directors elects to
compensate directors for attendance at meetings of the Board of Directors, the
designees of Lambda shall receive compensation on the same basis as any other
director. SSI shall investigate and, to the extent feasible, obtain a policy or
policies of directors' and officers' liability insurance, in such policy amounts
as the Board of Directors of SSI shall deem appropriate. In addition, SSI shall
enter into indemnification agreements with each director, providing for
indemnification of such director to the maximum extent permitted by applicable
law.
SECTION 3.
MISCELLANEOUS
3.1. Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of California.
3.2. Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby.
3.3. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
3.4. Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
3.5. Notices, etc. All notices and other communications required or
permitted hereunder shall be deemed given when received by the addressee, shall
be in writing and shall be mailed by registered or certified mail, postage
prepaid, or otherwise' delivered by hand or by messenger, addressed as follows:
<PAGE> 14
(a) If to Lambda:
Lambda Fund Management, Inc.
380 Lexingtion Avenue
54th Floor
New York, NY 10068
Attn: Tony Lamport
(b) If to SSI:
SuperShuttle International, Inc.
2129 West Rosecrans Avenue
Gardena, CA 90249
Attn: Mitch Rouse
or at such other address as the Purchaser or SSI shall have furnished to the
other in writing.
3.6. Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party hereunder, upon any breach or default under this
Agreement, shall impair any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, or by law or otherwise
afforded to any party, shall, be cumulative and not alternative.
3.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Purchasers,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
3.8. Severability. In the event that any provision of this agreement
becomes or is declared by a court of competent jurisdiction
<PAGE> 15
to be illegal, unenforceable or void, this agreement shall continue in full
force and effect without said provision; provided that no such severability
shall be effective if it materially changes the economic benefit of this
agreement to any party.
The foregoing agreement is hereby executed as of the date first above
written.
LAMBDA III, L.P.,
a limited partnership
By: Lambda III Capital Partners, L.P.,
General Partner
By: Lambda Management, L.P.,
General Partner
By:
-----------------------------------
General Partner
LAMBDA CFD '87, L.P.,
a limited partnership
By: Lambda Managment, L.P.,
General Partner
By:
-----------------------------------
General Partner
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ [ILLEGIBLE]
-----------------------------------
Its: Chairman & CEO
-----------------------------------
<PAGE> 16
to be illegal, unenforceable or void, this agreement shall continue in full
force and effect without said provision; provided that no such severability
shall be effective if it materially changes the economic benefit of this
agreement to any party.
The foregoing agreement is hereby executed as of the date first above
written.
LAMBDA III, L.P.,
a limited partnership
By: Lambda III Capital Partners, L.P.,
General Partner
By: Lambda Management, L.P.,
General Partner
By: /s/ [ILLEGIBLE]
-----------------------------------
General Partner
LAMBDA CFD '87, L.P.,
a limited partnership
By: Lambda Managment, L.P.,
General Partner
By: /s/ [ILLEGIBLE]
-----------------------------------
General Partner
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ [ILLEGIBLE]
-----------------------------------
Its: Chairman & CEO
-----------------------------------
<PAGE> 1
EXHIBIT 10.6
EXECUTIVE COMPENSATION AGREEMENT
BY THIS EXECUTIVE COMPENSATION AGREEMENT (the "Agreement") made and
entered into this 1st day of March, 1998, SUPERSHUTTLE INTERNATIONAL, INC., a
Delaware corporation (the "Company") and R. BRIAN WIER ("Executive"), state,
confirm and agree as follows:
I. RECITALS
1.1 The Company is engaged in the business of providing transportation
services to airports and travelers in various cities in the United States ("the
Business"). The Company anticipates that its Business may be conducted on a
nationwide basis in the future. All locations in which material portions of the
Company's Business are, or may during the term of Executive's employment by the
Company be, conducted are hereinafter collectively referred to as the "Market
Area."
1.2 Executive is a key employee of the Company, having substantial
knowledge and expertise in, and having personal relationships affecting, the
operations, business contacts, trade secrets, marketing strategies and other
confidential matters of critical significance to the conduct of the Company's
Business and its future prospects (the "Trade Secrets"). The loss of Executive
during the term of this Agreement, or the aid or assistance to any competitor of
the Company by Executive or direct competition of Executive respecting the
Company's Business within the Market Area would materially and irreparably
injure the Company.
1.3 The Company desires to hire Executive, and Executive desires to accept
such employment, on the terms and conditions hereinafter set forth.
II. AGREEMENTS
2.1 Employment. the Company hereby employs Executive, and Executive hereby
accepts such employment from the Company, on the terms and conditions set forth
in this Agreement.
2.2 Term. The term of this Agreement shall commence on March 1, 1998, and
shall continue, unless sooner terminated, until February 28, 2001.
2.3 Duties. Executive agrees to serve the Company in his present capacity
as President and Chief Executive Officer during the term of this Agreement.
Executive further agrees to use his best efforts, and apply his skill and
experience, to the proper performance of his duties hereunder and to the
business and affairs of the Company. Executive agrees to serve the Company
faithfully, diligently and to the best of his ability. The principal location
from which Executive will serve the Company and perform his duties hereunder
shall be Phoenix, Arizona.
<PAGE> 2
2.4 Compensation. For all services rendered by Executive in any capacity
during his employment under this Agreement, including, without limitation,
services as a director, officer or member of any committee of the Board of
Directors (the "Board") of the Company or any subsidiary or affiliate of the
Company, the Company shall compensate Executive as follows:
(a) Base Compensation. Commencing upon March 1, 1998, the Company
shall pay Executive an annual base salary of not less than $175,000 (the "Base
Salary") during the term hereof. Executive's Base Salary may be increased by the
Company during the term of this Agreement based upon the Executive's and the
Company's performance. Notwithstanding the foregoing, in the case of substantial
and persistent deterioration of the Company's performance the Company may reduce
Executive's Base Salary consistent with similar salary reductions of other
Company officers until the Company's performance improves. Executive's Base
Salary shall be paid by the Company in bi-weekly installments commensurate with
the Company's normal employee pay days.
(b) Incentive Compensation. Executive shall be entitled to
participate in any incentive compensation plan either currently in effect or as
may be established from time to time by the Board of Directors of the Company,
for which Executive, as an officer of the Company, may be eligible to
participate.
(c) Additional Benefits. Executive shall have the right as an
employee of the Company to participate in all employee benefit and welfare
programs, plans and arrangements (including, without limitation, pension,
profit-sharing, supplemental pension and other retirement plans, insurance,
hospitalization, medical and disability benefits, travel or accident insurance
plans) and any other fringe benefits offered by the Company to its employees as
set forth in the Company's employee handbook, and compensation received by
Executive hereunder shall be in addition to the foregoing.
2.5 Termination.
(a) Death. In the event of the Executive's death during the term of
this Agreement, this Agreement shall thereupon terminate and the Company shall
pay to the Executive's beneficiary or estate, as that term is hereinafter
defined, the pro rata portion of the Executive's salary which was earned but
unpaid at the date of the Executive's death. In addition, all of the Executive's
vested unexercised stock options for the purchase of the Company's capital stock
shall be exercisable by Executive's beneficiary or estate in accordance with the
terms of the plans and agreements pursuant to which such options were granted.
As used herein, the term "beneficiary or estate" means the person or
persons designated by the Executive in the last written notice delivered to the
Company during his lifetime, or in the absence of such written notice, such
person or persons designated by the Executive in his last will and testament
specifically to receive Executive's benefits under the terms of this Agreement,
or, in the absence of both written notice and such a designation, the
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Executive's estate. In the event that the Executive should during his lifetime
designate a person or persons other than his wife as beneficiary or
beneficiaries in such written notice, such notice to be valid must contain the
signed consent of the Executive's spouse.
(b) Permanent Disability. In the event the Executive should become
permanently disabled during the term of this Agreement, then this Agreement
shall terminate. For the purposes hereof, "permanent disability" shall mean that
disability resulting from injury, disease or other cause, whether mental or
physical, which incapacitates the Executive from performing his normal duties as
an employee, which appears to be permanent in nature and contemplates the
continuous, necessary and substantially complete loss of all professional
activities.
(c) Partial Disability. If the Executive should become partially
disabled, the Company shall be entitled to his salary as provided herein for a
period of ninety (90) days following the commencement of such disability. At the
end of such ninety (90) day period, if the Executive remains partially disabled,
his salary shall be reduced according to the amount of time Executive is able to
devote to the Company's business.
(d) Temporary Disability. In the event the Executive should become
disabled, and such disability is not partial, as defined above, such disabled
Executive shall be entitled to his salary for a period of ninety (90) days. If
such temporary disability continues longer than such ninety (90) day period,
then Executive shall be deemed to have become permanently disabled for the
purposes of this Agreement at the end of said ninety (90) day period.
(e) Voluntary Withdrawal. The Executive may voluntarily terminate
his employment hereunder by giving at least thirty (30) days prior written
notice to the Board of his intention to withdraw. Such notice shall specify the
end of a calendar month as the termination date. Any unexplained absence for a
period of 30 consecutive days shall be deemed to be a voluntary termination of
employment. In the event Executive voluntarily terminates his employment
hereunder, he shall be entitled to a severance payment equal to the lesser of
$60,000 or the remaining Base Salary due under this Agreement. Notwithstanding
the foregoing, if Executive voluntarily terminates his employment hereunder for
Good Reason (as defined below) Executive shall be entitled to the severance
benefits payable under Subsection (f) below. "Good Reason" shall mean, without
Executive's express written consent, the failure of the Board of Directors of
the Company to elect Executive as President and Chief Executive Officer of the
Company or the assignment to Executive of any duties inconsistent with
Executive's status as an executive officer of the Company or a substantial
adverse alteration in the nature or status of Executive's responsibilities from
those in effect upon the date hereof.
(f) Dismissal. The Company may terminate Executive's employment
under this Agreement at any time for any reason whatsoever by giving at least
thirty (30) days written notice to the Executive at his address as listed on the
Company's records specifying the effective date of termination. In the event of
dismissal, payments for compensation and charges for
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expenses shall be prorated to the date of termination. Upon the termination of
Executive's employment following Executive's conviction of a crime constituting
a felony, Executive shall not be entitled to any severance benefits. Upon the
termination of Executive's employment if such termination is other than for
Disability or for the reason stated in the immediately preceding sentence,
Executive shall be entitled to the benefits below:
(i) The Company shall pay Executive's full base salary through
the Termination Date (as defined below) at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which Executive
is entitled under any compensation or benefit plan of the Company, at the
time such payments are due, including a lump sum cash payment for all
unused vacation time which Executive has accrued as of the Termination
Date;
(ii) In lieu of any further salary payments to Executive for
periods subsequent to the Termination Date, the Company shall pay to
Executive as severance pay a lump sum severance payment (the "Severance
Payment") equal to two (2) times either (i) the Annual Compensation (as
defined below) which was payable to Executive by the Company for the year
immediately preceding the Termination Date, or (ii) the average of the
Annual Compensation which was payable to Executive by the Company for the
two (2) years preceding the Termination Date, whichever is greater. Annual
Compensation is Executive's Base Salary and any annual bonus that was paid
to Executive by the Company and the amount of income from Executive's
exercise of non-qualified stock options, if any, determined without any
reduction for any deferrals of such salary or such bonus under any
deferred compensation plan (qualified or unqualified) and without any
reduction for any salary reductions used for making contributions to any
group insurance plan of the Company or its affiliates;
(iii) All of the Executive's stock options for the purchase of
the Company's capital stock that are presently vested and exercisable
shall be exercisable by Executive for period of one (1) year following the
effective date of termination of Executive's employment; and
(iv) If Executive's employment shall be terminated as above
set forth then, for a twenty-four (24) month period after such
termination, the Company shall arrange to provide Executive with life,
disability, accident and health insurance benefits substantially similar
to those which Executive is received immediately prior to the Notice of
Termination. Benefits otherwise receivable by Executive pursuant to this
Subsection (iv) shall be reduced to the extent comparable benefits are
actually received by Executive during the twenty-four (24) month period
following Executive's termination, and any such benefits actually received
by Executive shall be reported by Executive to the Company.
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The payments provided for in this subparagraph (f) shall
be made not later than the fifth day following the Termination date;
provided, however, that if the amount of such payment cannot be finally
determined on or before such day, the Company shall pay to Executive on
such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such
payments as soon as the amount thereof can be determined but in no event
later than the thirtieth day after the Date of Termination. In the event
that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the
Company to Executive payable on the fifth day after demand by the Company.
Notwithstanding the foregoing, the Company may elect to pay any amounts
due under Subsection (f)(ii) in monthly installments for the two (2) year
period in accordance with the Company's normal pay days;
(g) Change in Control. In the event the Company terminates
Executive's employment or Executive voluntarily terminates his employment
following a Change in Control (as defined below), Executive shall be entitled to
the benefits set forth in Section 2.5(f)(i) and (ii). In addition, all of
Executive's stock options for the purchase of the Company's capital stock shall
vest, to the extent not already vested, and shall be exercisable by Executive
for a period of ninety (90) days following the effective date of termination of
Executive's employment. "Change in Control" shall mean and shall be deemed to
have occurred if, after the date of this Agreement, any "person" (as such term
is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or any successor provision thereto) shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act or
any successor provision thereto) in a single transaction or series of related
transactions of securities of the Company resulting in a fifty-one percent (51%)
or more change in the combined voting power of the Company's outstanding
securities as of the date of this Agreement.
2.6 Covenant Not to Compete.
(a) Non-Compete. Executive shall during the term or extended term of
this Agreement, and for a period of two (2) years thereafter, exercise his best
good faith efforts to pursue and protect the Trade Secrets from disclosure or
access to, or use by, any competitor or potential competitor of the Company and
its subsidiaries. Executive shall not during the term or extended term of this
Agreement, and for a period of two (2) years thereafter, (a) induce or encourage
any other employee of the Company or its subsidiaries to become employed by or
to provide any Trade Secrets to any competitor or potential competitor of the
Company or its subsidiaries; (b) during the term or extended term of this
Agreement, and or a period of two (2) years thereafter, own, directly or
indirectly, manage, serve as an officer, director or partner of, or otherwise
(whether actively or by passive investment) become associated with any person or
entity engaged in a business in competition with the Company's business in the
Market Area. The foregoing covenants by Executive shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the
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Executive against the Company whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of said
covenants. If any of the covenants of Executive set forth in this paragraph
shall be deemed too broad to be enforceable by judicial process, then such
covenants shall be reduced to such levels as shall be so enforceable and shall
be enforced as reduced. Notwithstanding the foregoing, in the event this
Agreement expires by its terms, Executive shall not be subject to the two (2)
year non-compete provisions hereof.
(b) Remedies. Executive expressly agrees and acknowledges that this
covenant not to compete is necessary for the Company's and its affiliates'
protection because of the nature and scope of their business and his position
with the Company. Further, Executive acknowledges that, in the event of his
breach of his covenant not to compete, money damages will not sufficiently
compensate the Company for its injury caused thereby, and he accordingly agrees
that, in addition to such money damages, he may be restrained and enjoined from
any continuing breach of this covenant not to compete without any bond or other
security being required of any court. Executive acknowledges that any breach of
this covenant not to compete would result in irreparable damage to the Company.
Executive acknowledges that the remedy at law for any breach or threatened
breach of Section 2.6 will be inadequate and, accordingly, that the Company
shall, in addition to all other available remedies (including, without
limitation, seeking such damages as it can show it has sustained by reason of
such breach), be entitled to injunctive relief or specific performance.
2.7 Representations and Warranties. The Executive hereby represents and
warrants that the execution of this Agreement and the discharge of his
obligations hereunder will not breach or conflict with any other contracts,
agreements, covenants or understandings, either oral or written, between the
Executive and any other party or parties.
2.8 Assignment. This Agreement and the rights, interests and benefits
shall not be assigned, transferred, pledged or hypothecated in any way and shall
not be subject to execution, attachment or similar process. Any attempt to
assign, transfer, pledge or hypothecate or make any other disposition of this
Agreement or of such rights, interests and benefits contrary to the foregoing
provision or the levy of any attachment or similar process thereupon, shall be
null and void and without effect and shall relieve the Company and Executive of
any and all liability hereunder.
2.9 Attorneys' Fees. In the event either party hereto institutes an action
or other proceeding to enforce any rights arising under this Agreement, the
party prevailing in such action or other proceeding shall be paid all reasonable
costs and attorneys' fees by the other party, such fees to be set by court and
not by the jury.
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2.10 Notices. Any notice or communication to be given under the terms of
this Agreement ("Notice") shall be in writing and delivered in person or
deposited, certified or registered, in the United States mail, postage prepaid,
addressed as follows:
If to the Company: SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
Attn: Chairman of the Board
If to Executive: R. Brian Wier
-----------------------------------------
-----------------------------------------
or at such other address as either party may from time to time designate by
Notice hereunder. Notices shall be effective upon delivery in person, or if
mailed at midnight on the third business day after the date of mailing.
2.11 Modifications and Amendments. This Agreement shall not be altered or
amended except by a written agreement signed by the parties hereto.
2.12 Entire Agreement. This Agreement constitutes and embodies the full
and complete understanding and agreement of the parties hereto and supersedes
all prior understandings or agreements whether oral or in writing.
2.13 Benefit and Binding Effect. Except as herein otherwise expressly
provided, this Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns, including any corporation, person or
other entity which may acquire all or substantially all of the assets of the
business of the Company or any other corporation with or into which the Company
is consolidated or merged, and the Executive and his heirs, executors,
administrators and legal representatives; provided, however, that the
obligations of Executive hereunder may not be delegated or assigned.
2.14 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona without regard to the conflicts
of laws principles thereof.
2.15 Headings; Interpretation; Gender. The paragraph headings used herein
are for convenience and reference only and are not intended to define, limit or
describe the scope or intent of any provision of this Agreement. When used in
this Agreement, the term "including" shall mean without limitation by reason of
enumeration. Words used herein in the singular shall include the plural and
words used herein in the masculine gender shall include the feminine in all
cases where such would apply.
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2.16 Waiver. The failure of either party to insist, in any one or more
instances, upon strict performance of any of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition, but the obligations of either party with respect thereto shall
continue in full force and effect.
2.17 Severability. In the event that any portion of this Agreement may be
held to be invalid or unenforceable for any reason whatsoever, it is agreed that
said invalidity or unenforceability shall not affect the other portions of this
Agreement and that the remaining covenants, terms and conditions, or portions
thereof, shall remain in full force and effect, and any court of competent
jurisdiction may so modify the objectionable provisions as to make it valid,
reasonable and enforceable.
2.18 Entire Agreement. This Agreement constitutes and embodies the full
and complete agreement and understandings of the parties with respect to the
Executive's employment with the Company and supersedes any and all other
agreements, either oral or written, between the parties hereto with respect to
the subject matter hereof.
2.19 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed a duplicate original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
_____ day of March, 1998.
SUPERSHUTTLE INTERNATIONAL, INC.
BY___________________________________
Its_______________________________
COMPANY
_____________________________________
R. Brian Wier
EXECUTIVE
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Exhibit 10.7
EXECUTIVE COMPENSATION AGREEMENT
BY THIS EXECUTIVE COMPENSATION AGREEMENT (the "Agreement") made and
entered into this 1st day of March, 1998, SUPERSHUTTLE INTERNATIONAL, INC., a
Delaware corporation (the "Company") and THOMAS C. LaVOY ("Executive"), state,
confirm and agree as follows:
I. RECITALS
1.1 The Company is engaged in the business of providing transportation
services to airports and travelers in various cities in the United States ("the
Business"). The Company anticipates that its Business may be conducted on a
nationwide basis in the future. All locations in which material portions of the
Company's Business are, or may during the term of Executive's employment by the
Company be, conducted are hereinafter collectively referred to as the "Market
Area."
1.2 Executive is a key employee of the Company, having substantial
knowledge and expertise in, and having personal relationships affecting, the
operations, business contacts, trade secrets, marketing strategies and other
confidential matters of critical significance to the conduct of the Company's
Business and its future prospects (the "Trade Secrets"). The loss of Executive
during the term of this Agreement, or the aid or assistance to any competitor of
the Company by Executive or direct competition of Executive respecting the
Company's Business within the Market Area would materially and irreparably
injure the Company.
1.3 The Company desires to hire Executive, and Executive desires to
accept such employment, on the terms and conditions hereinafter set forth.
II. AGREEMENTS
2.1 Employment. the Company hereby employs Executive, and Executive
hereby accepts such employment from the Company, on the terms and conditions set
forth in this Agreement.
2.2 Term. The term of this Agreement shall commence on March 1, 1998,
and shall continue, unless sooner terminated, until February 28, 2001.
2.3 Duties. Executive agrees to serve the Company in his present
capacity as Chief Financial Officer during the term of this Agreement. Executive
further agrees to use his best efforts, and apply his skill and experience, to
the proper performance of his duties hereunder and to the business and affairs
of the Company. Executive agrees to serve the Company faithfully, diligently and
to the best of his ability. The principal location from which Executive will
serve the Company and perform his duties hereunder shall be Phoenix, Arizona.
2.4 Compensation. For all services rendered by Executive in any
capacity during his employment under this Agreement, including, without
limitation, services as a director, officer
<PAGE> 2
or member of any committee of the Board of Directors (the "Board") of the
Company or any subsidiary or affiliate of the Company, the Company shall
compensate Executive as follows:
(a) Base Compensation. Commencing upon March 1, 1998, the
Company shall pay Executive an annual base salary of not less than $140,000 (the
"Base Salary") during the term hereof. Executive's Base Salary may be increased
by the Company during the term of this Agreement based upon the Executive's and
the Company's performance. Notwithstanding the foregoing, in the case of
substantial and persistent deterioration of the Company's performance the
Company may reduce Executive's Base Salary consistent with similar salary
reductions of other Company officers until the Company's performance improves.
Executive's Base Salary shall be paid by the Company in bi-weekly installments
commensurate with the Company's normal employee pay days.
(b) Incentive Compensation. Executive shall be entitled to
participate in any incentive compensation plan either currently in effect or as
may be established from time to time by the Board of Directors of the Company,
for which Executive, as an officer of the Company, may be eligible to
participate.
(c) Additional Benefits. Executive shall have the right as an
employee of the Company to participate in all employee benefit and welfare
programs, plans and arrangements (including, without limitation, pension,
profit-sharing, supplemental pension and other retirement plans, insurance,
hospitalization, medical and disability benefits, travel or accident insurance
plans) and any other fringe benefits offered by the Company to its employees as
set forth in the Company's employee handbook, and compensation received by
Executive hereunder shall be in addition to the foregoing.
2.5 Termination.
(a) Death. In the event of the Executive's death during the
term of this Agreement, this Agreement shall thereupon terminate and the Company
shall pay to the Executive's beneficiary or estate, as that term is hereinafter
defined, the pro rata portion of the Executive's salary which was earned but
unpaid at the date of the Executive's death. In addition, all of the Executive's
vested unexercised stock options for the purchase of the Company's capital stock
shall be exercisable by Executive's beneficiary or estate in accordance with the
terms of the plans and agreements pursuant to which such options were granted.
As used herein, the term "beneficiary or estate" means the
person or persons designated by the Executive in the last written notice
delivered to the Company during his lifetime, or in the absence of such written
notice, such person or persons designated by the Executive in his last will and
testament specifically to receive Executive's benefits under the terms of this
Agreement, or, in the absence of both written notice and such a designation, the
Executive's estate. In the event that the Executive should during his lifetime
designate a person
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or persons other than his wife as beneficiary or beneficiaries in such written
notice, such notice to be valid must contain the signed consent of the
Executive's spouse.
(b) Permanent Disability. In the event the Executive should
become permanently disabled during the term of this Agreement, then this
Agreement shall terminate. For the purposes hereof, "permanent disability" shall
mean that disability resulting from injury, disease or other cause, whether
mental or physical, which incapacitates the Executive from performing his normal
duties as an employee, which appears to be permanent in nature and contemplates
the continuous, necessary and substantially complete loss of all professional
activities.
(c) Partial Disability. If the Executive should become
partially disabled, Executive shall be entitled to his salary as provided herein
for a period of ninety (90) days following the commencement of such disability.
At the end of such ninety (90) day period, if the Executive remains partially
disabled, his salary shall be reduced according to the amount of time Executive
is able to devote to the Company's business.
(d) Temporary Disability. In the event the Executive should
become disabled, and such disability is not partial, as defined above, such
disabled Executive shall be entitled to his salary for a period of ninety (90)
days. If such temporary disability continues longer than such ninety (90) day
period, then Executive shall be deemed to have become permanently disabled for
the purposes of this Agreement at the end of said ninety (90) day period.
(e) Voluntary Withdrawal. The Executive may voluntarily
terminate his employment hereunder by giving at least thirty (30) days prior
written notice to the Board of his intention to withdraw. Such notice shall
specify the end of a calendar month as the termination date. Any unexplained
absence for a period of 30 consecutive days shall be deemed to be a voluntary
termination of employment. Notwithstanding the foregoing, if Executive
voluntarily terminates his employment hereunder for Good Reason (as defined
below) Executive shall be entitled to the severance benefits payable under
Subsection (f) below. "Good Reason" shall mean, without Executive's express
written consent, the failure of the Board of Directors of the Company to elect
Executive as Chief Financial Officer of the Company or the assignment to
Executive of any duties inconsistent with Executive's status as an executive
officer of the Company or a substantial adverse alteration in the nature or
status of Executive's responsibilities from those in effect upon the date
hereof.
(f) Dismissal. The Company may terminate Executive's
employment under this Agreement at any time for any reason whatsoever by giving
at least thirty (30) days written notice to the Executive at his address as
listed on the Company's records specifying the effective date of termination. In
the event of dismissal, payments for compensation and charges for expenses shall
be prorated to the date of termination. Upon the termination of Executive's
employment following Executive's conviction of a crime constituting a felony,
Executive shall not be entitled to any severance benefits. Upon the termination
of Executive's employment if
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such termination is other than for Disability or for the reason stated in the
immediately preceding sentence, Executive shall be entitled to the benefits
below:
(i) The Company shall pay Executive's full base
salary through the termination date ("Termination Date") at the rate in
effect at the time notice of termination is given, plus all other
amounts to which Executive is entitled under any compensation or
benefit plan of the Company, at the time such payments are due,
including a lump sum cash payment for all unused vacation time which
Executive has accrued as of the Termination Date;
(ii) In lieu of any further salary payments to
Executive for periods subsequent to the Termination Date, the Company
shall pay to Executive as severance pay a lump sum severance payment
(the "Severance Payment") equal to two (2) times either (i) the Annual
Compensation (as defined below) which was payable to Executive by the
Company for the year immediately preceding the Termination Date, or
(ii) the average of the Annual Compensation which was payable to
Executive by the Company for the two (2) years preceding the
Termination Date, whichever is greater. Annual Compensation is
Executive's Base Salary and any annual bonus that was paid to Executive
by the Company and the amount of income from Executive's exercise of
non-qualified stock options, if any, determined without any reduction
for any deferrals of such salary or such bonus under any deferred
compensation plan (qualified or unqualified) and without any reduction
for any salary reductions used for making contributions to any group
insurance plan of the Company or its affiliates.
(iii) All of the Executive's stock options for the
purchase of the Company's capital stock that are presently vested and
exercisable shall be exercisable by Executive for period of one (1)
year following the effective date of termination of Executive's
employment; and
(iv) If Executive's employment shall be terminated as
above set forth then, for a twenty-four (24) month period after such
termination, the Company shall arrange to provide Executive with life,
disability, accident and health insurance benefits substantially
similar to those which Executive is received immediately prior to the
notice of termination. Benefits otherwise receivable by Executive
pursuant to this Subsection (iv) shall be reduced to the extent
comparable benefits are actually received by Executive during the
twenty-four (24) month period following Executive's termination, and
any such benefits actually received by Executive shall be reported by
Executive to the Company.
The payments provided for in this
subparagraph (f) shall be made not later than the fifth day following
the Termination date; provided, however, that if the amount of such
payment cannot be finally determined on or
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before such day, the Company shall pay to Executive on such day an
estimate, as determined in good faith by the Company, of the minimum
amount of such payments and shall pay the remainder of such payments as
soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the
Company to Executive payable on the fifth day after demand by the
Company. Notwithstanding the foregoing, the Company may elect to pay
any amounts due under Subsection (f)(ii) in monthly installments for
the two (2) year period in accordance with the Company's normal pay
days.
(g) Change in Control. In the event the Company terminates
Executive's employment or Executive voluntarily terminates his employment
following a Change in Control (as defined below), Executive shall be entitled to
the benefits set forth in Section 2.5(f)(i) and (ii). In addition, all of
Executive's stock options for the purchase of the Company's capital stock shall
immediately vest, to the extent not already vested, and shall be exercisable by
Executive for a period of ninety (90) days following the effective date of
termination of Executive's employment. Executive also shall have the right to
put all shares of capital stock available upon exercise of said options to the
Company for a per share purchase price equal to the per share purchase price
received or to be received by the Company's shareholders in connection with the
Change of Control, or if the change occurs on a sale of assets basis or other
basis wherein the Company's shareholders do not receive direct compensation,
then for the price per share determined by dividing the total compensation
received by the Company by the number of then outstanding shares of capital
stock of the Company. "Change in Control" shall mean and shall be deemed to have
occurred if, after the date of this Agreement, any "person" (as such term is
used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or any successor provision thereto) shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act or
any successor provision thereto) in a single transaction or series of related
transactions of securities of the Company resulting in a fifty-one percent (51%)
or more change in the combined voting power of the Company's outstanding
securities as of the date of this Agreement.
2.6 Covenant Not to Compete.
(a) Non-Compete. Executive shall during the term or extended
term of this Agreement, and for a period of two (2) years thereafter, exercise
his best good faith efforts to pursue and protect the Trade Secrets from
disclosure or access to, or use by, any competitor or potential competitor of
the Company and its subsidiaries. Executive shall not during the term or
extended term of this Agreement, and for a period of two (2) years thereafter,
(a) induce or encourage any other employee of the Company or its subsidiaries to
become employed by or to provide any Trade Secrets to any competitor or
potential competitor of the Company or its subsidiaries; (b) during the term or
extended term of this Agreement, and or a period of two (2) years thereafter,
own, directly or indirectly, manage, serve as an officer, director or partner
of,
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or otherwise (whether actively or by passive investment) become associated with
any person or entity engaged in a business in competition with the Company's
business in the Market Area. The foregoing covenants by Executive shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of the Executive against the
Company whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of said covenants. If any of the
covenants of Executive set forth in this paragraph shall be deemed too broad to
be enforceable by judicial process, then such covenants shall be reduced to such
levels as shall be so enforceable and shall be enforced as reduced.
Notwithstanding the foregoing, in the event this Agreement expires by its terms,
Executive shall be not subject to the two (2) year non-compete provisions
hereof.
(b) Remedies. Executive expressly agrees and acknowledges that
this covenant not to compete is necessary for the Company's and its affiliates'
protection because of the nature and scope of their business and his position
with the Company. Further, Executive acknowledges that, in the event of his
breach of his covenant not to compete, money damages will not sufficiently
compensate the Company for its injury caused thereby, and he accordingly agrees
that, in addition to such money damages, he may be restrained and enjoined from
any continuing breach of this covenant not to compete without any bond or other
security being required of any court. Executive acknowledges that any breach of
this covenant not to compete would result in irreparable damage to the Company.
Executive acknowledges that the remedy at law for any breach or threatened
breach of Section 2.6 will be inadequate and, accordingly, that the Company
shall, in addition to all other available remedies (including, without
limitation, seeking such damages as it can show it has sustained by reason of
such breach), be entitled to injunctive relief or specific performance.
2.7 Representations and Warranties. The Executive hereby represents and
warrants that the execution of this Agreement and the discharge of his
obligations hereunder will not breach or conflict with any other contracts,
agreements, covenants or understandings, either oral or written, between the
Executive and any other party or parties.
2.8 Assignment. This Agreement and the rights, interests and benefits
shall not be assigned, transferred, pledged or hypothecated in any way and shall
not be subject to execution, attachment or similar process. Any attempt to
assign, transfer, pledge or hypothecate or make any other disposition of this
Agreement or of such rights, interests and benefits contrary to the foregoing
provision or the levy of any attachment or similar process thereupon, shall be
null and void and without effect and shall relieve the Company and Executive of
any and all liability hereunder.
2.9 Attorneys' Fees. In the event either party hereto institutes an
action or other proceeding to enforce any rights arising under this Agreement,
the party prevailing in such action or other proceeding shall be paid all
reasonable costs and attorneys' fees by the other party, such fees to be set by
court and not by the jury.
6
<PAGE> 7
2.10 Notices. Any notice or communication to be given under the terms
of this Agreement ("Notice") shall be in writing and delivered in person or
deposited, certified or registered, in the United States mail, postage prepaid,
addressed as follows:
If to the Company: SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
Attn: Chairman of the Board
If to Executive: Thomas C. LaVoy
---------------------------------
---------------------------------
or at such other address as either party may from time to time designate by
Notice hereunder. Notices shall be effective upon delivery in person, or if
mailed at midnight on the third business day after the date of mailing.
2.11 Modifications and Amendments. This Agreement shall not be altered
or amended except by a written agreement signed by the parties hereto.
2.12 Entire Agreement. This Agreement constitutes and embodies the full
and complete understanding and agreement of the parties hereto and supersedes
all prior understandings or agreements whether oral or in writing.
2.13 Benefit and Binding Effect. Except as herein otherwise expressly
provided, this Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns, including any corporation, person or
other entity which may acquire all or substantially all of the assets of the
business of the Company or any other corporation with or into which the Company
is consolidated or merged, and the Executive and his heirs, executors,
administrators and legal representatives; provided, however, that the
obligations of Executive hereunder may not be delegated or assigned.
2.14 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arizona without regard to the
conflicts of laws principles thereof.
2.15 Headings; Interpretation; Gender. The paragraph headings used
herein are for convenience and reference only and are not intended to define,
limit or describe the scope or intent of any provision of this Agreement. When
used in this Agreement, the term "including" shall mean without limitation by
reason of enumeration. Words used herein in the singular shall include the
plural and words used herein in the masculine gender shall include the feminine
in all cases where such would apply.
7
<PAGE> 8
2.16 Waiver. The failure of either party to insist, in any one or more
instances, upon strict performance of any of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition, but the obligations of either party with respect thereto shall
continue in full force and effect.
2.17 Severability. In the event that any portion of this Agreement may
be held to be invalid or unenforceable for any reason whatsoever, it is agreed
that said invalidity or unenforceability shall not affect the other portions of
this Agreement and that the remaining covenants, terms and conditions, or
portions thereof, shall remain in full force and effect, and any court of
competent jurisdiction may so modify the objectionable provisions as to make it
valid, reasonable and enforceable.
2.18 Entire Agreement. This Agreement constitutes and embodies the full
and complete agreement and understandings of the parties with respect to the
Executive's employment with the Company and supersedes any and all other
agreements, either oral or written, between the parties hereto with respect to
the subject matter hereof.
2.19 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed a duplicate original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this day of March, 1998.
SUPERSHUTTLE INTERNATIONAL, INC.
BY
------------------------------------
Its
---------------------------------
COMPANY
-----------------------------------
Thomas C. LaVoy
EXECUTIVE
8
<PAGE> 1
Exhibit 10.8
EMPLOYMENT AGREEMENT
BY THIS EMPLOYMENT AGREEMENT (the "Agreement") made and entered into
this 31st day of March, 1998, SuperShuttle International, Inc., a Delaware
corporation ("Employer") and Steve Allan ("Employee"), state, confirm and agree
as follows:
I. RECITALS
1.1 Employer is engaged in the business of providing transportation,
over land, to passengers for hire, including, by way of example, transportation
to and from airports, ports or stations of embarkation for travel, but excluding
the operation of taxis ("Employer's Business"). For purposes of this Agreement,
Employer's Business is that which is conducted in the counties set forth on
Exhibit "A" hereto (the "Market Area").
1.2 Employer has acquired substantially all of the assets of Preferred
Transportation, Inc. ("PTI"), pursuant to an Amended and Restated Agreement and
Plan of Merger, dated as of March 31, 1998, by and among Employer, PTI and the
stockholders of PTI.
1.3 Employee is now a key employee of Employer, having substantial
knowledge and expertise in, and having personal relationships affecting, the
operations, business contacts, trade secrets, customer lists, marketing
strategies and other confidential matters of critical significance to the
conduct of Employer's Business and its future prospects (the "Trade Secrets").
The loss of Employee during the term of this Agreement, or the aid or assistance
to any competitor of Employer by Employee or direct competition of Employee
respecting Employer's Business within the Market Area would materially and
irreparably injure Employer.
1.4 Employer desires to hire Employee, and Employee desires to accept
such employment, on the terms and conditions hereinafter set forth.
II. AGREEMENTS
2.1 Employment. Employer hereby employs Employee, and Employee hereby
accepts such employment from Employer, on the terms and conditions set forth in
this Agreement.
2.2 Term. Subject to the provisions for termination and extension as
hereinafter provided, the term of this Agreement shall commence on March 31,
1998, and shall continue until March 31, 2001.
2.3 Duties and Positions with Employer. During the term of this
Agreement, it is intended that Employee will serve as President of Employer's
subsidiary, PTI, and in such other additional positions as the Board may from
time to time determine. Employee will faithfully and diligently perform all
duties commensurate with such positions, including those duties directed by the
Board of Directors of Employer, as well as those set forth in the Bylaws of
Employer which relate to such positions.
<PAGE> 2
2.4 Service as Director. If the Employee is elected or appointed as a
Director of Employer during all or any portion of the term of this Agreement,
the Employee shall serve in such capacity without additional compensation.
2.5 Compensation. Employee will receive the following compensation for
his services during his term of employment:
(a) A minimum base salary of $125,000 per year, which, after
withholding and other required deductions, shall be paid in equal
installments in accordance with such salary payment policies as may be
established by Employer from time to time;
(b) An incentive bonus tied to the pre-tax earnings of PTI or
its successor organization;
(c) Participation in any pension or profit-sharing plan, stock
purchase plan, group benefit plan, medical plan, bonus plan and/or
other benefit plans, either currently in effect or as may be
established from time to time by the Board of Directors of Employer,
for which Employee, as an officer of Employer, may be eligible to
participate; and
(d) Such other compensation or allowances as may from time to
time be granted to Employee by the Board of Directors of Employer,
including any bonuses if recommended by the Compensation Committee of
the Board of Directors and approved by the Board of Directors.
2.6 Fringe Benefits. In addition to all other compensation provided
herein, the Employee shall be reimbursed for all out of pocket expenses related
to the performance of his duties hereunder in accordance with Employer's
reimbursement policies and shall be entitled to receive or participate in such
additional fringe benefits as the Board of Directors of Employer may from time
to time establish for its salaried personnel, including pension or profit
sharing plan contributions, life, health, medical or disability insurance
coverage, vacation and sick leave benefits.
2.7 Termination.
(a) Death. In the event of the Employee's death during the
term of this Agreement, this Agreement shall thereupon terminate and
Employer shall pay to the Employee's beneficiary or estate, as that
term is hereinafter defined, the pro rata portion of the Employee's
salary which was earned but unpaid at the date of the Employee's death.
In addition, Employer shall pay to the Employee's beneficiary or estate
a death benefit in an amount to be determined by the Employer's Board
of Directors.
2
<PAGE> 3
As used herein, the term "beneficiary or estate" means the
person or persons designated by the Employee in the last written notice
delivered to the Employer during his lifetime, or in the absence of
such written notice, such person or persons designated by the Employee
in his last will and testament specifically to receive Employee's
benefits under the terms of this Agreement, or, in the absence of both
written notice and such a designation, the Employee's estate. In the
event that the Employee should during his lifetime designate a person
or persons other than his spouse as beneficiary or beneficiaries in
such written notice, such notice to be valid must contain the signed
consent of the Employee's spouse.
(b) Permanent Disability. In the event the Employee should
become permanently disabled during the term of this Agreement, then
this Agreement shall terminate. For the purposes hereof, "permanent
disability" shall mean that disability resulting from injury, disease
or other cause, whether mental or physical, which incapacitates the
Employee from performing his normal duties as an employee, which
appears to be permanent in nature and contemplates the continuous,
necessary and substantially complete loss of all professional
activities.
(c) Partial Disability. If the Employee should become
partially disabled, Employee shall be entitled to his salary as
provided herein for a period of ninety (90) days following the
commencement of such disability. At the end of such ninety (90) day
period, if the Employee remains partially disabled, his salary shall be
reduced according to the amount of time Employee is able to devote to
the Employer's business.
(d) Temporary Disability. In the event the Employee should
become disabled, and such disability is not partial, as defined above,
such disabled Employee shall be entitled to his salary for a period of
ninety (90) days. If such temporary disability continues longer than
such ninety (90) day period, then Employee shall be deemed to have
become permanently disabled for the purposes of this Agreement at the
end of said ninety (90) day period.
(e) Voluntary Withdrawal. The Employee may voluntarily
terminate his employment hereunder by giving at least sixty (60) days
prior written notice to the Board of Directors of the Employer of his
intention to withdraw. Such notice shall specify the end of a calendar
month as the termination date.
(f) Dismissal. Employer may terminate Employee's employment
under this Agreement at any time with or without cause (defined below)
by giving at least thirty (30) days written notice to the Employee at
his address as listed on the Employer's records specifying the
effective date of termination (the
3
<PAGE> 4
"Termination Date"). In the event of dismissal, payments for
compensation and charges for expenses shall be prorated to the date of
termination.
2.8 Termination for Cause. This Agreement may be terminated for cause
in the event that (a) Employee refuses to follow a reasonable and lawful order
or direction, consistent with Employee's duties hereunder, of the Chief
Executive Officer of Employer or the Board of Directors of Employer, (b) in the
course of Employee's duties under this Agreement, Employee engages in willful
misconduct, dishonesty or reckless disregard of Employee's responsibilities; or
(c) Employee is convicted of a felony. Termination for cause will also include
Employee's disability rendering Employee unable to perform his duties hereunder
for a period of ninety (90) consecutive days. Upon any termination under this
Paragraph 2.8, Employee or Employee's estate, as the case may be, will be
entitled to receive only that compensation due Employee through the date of
termination.
2.9 Termination Other than for Cause. In the event that Employee is
terminated for any reason other than as set forth in Paragraph 2.8 above or
Employee's death:
(a) Employee will receive a severance payment equal to one
times his annual base salary in effect immediately prior to his
termination and the continuation of health care benefits for the one
(1) year period following the effective date of termination of
employment or until Employee obtains new employment, net of
with-holding and other deductions required by law; and
(b) Employee will have the right at any time within ninety
(90) days of the date of termination to exercise all unexercised vested
options granted to Employee under Employer's 1998 Stock Option Plan.
The payments provided for in Section 2.9(a) shall be made
not later than the fifth day following the termination date. Notwithstanding the
foregoing, Employer may elect to pay any amounts hereunder in monthly
installments for the one (1) year period in accordance with Employer's normal
pay days.
2.10 Covenant Not to Compete. Employee shall during the term or
extended term of this Agreement, and for a period of three (3) years thereafter,
exercise his best good faith efforts to pursue and protect the Trade Secrets
from disclosure or access to, or use by, any competitor or potential competitor
of Employer and its subsidiaries. Employee shall not during the term or extended
term of this Agreement, and for a period of three (3) years thereafter, (a)
induce or encourage any other employee of Employer or its subsidiaries to become
employed by or to provide any Trade Secrets to any competitor or potential
competitor of Employer or its subsidiaries; (b) during the term or extended term
of this Agreement, and for a period of three (3) years thereafter, own (directly
or indirectly), manage, serve as an officer, director or partner of, or
otherwise (whether actively or by passive investment) become associated with any
person or entity engaged in a business in competition with Employer's Business
in the Market Area.
4
<PAGE> 5
The foregoing covenants by Employee shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of the Employee against the Employer whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Employer of said covenants. If any of the covenants of
Employee set forth in this paragraph shall be deemed too broad to be enforceable
by judicial process, then such covenants shall be reduced to such levels as
shall be so enforceable and shall be enforced as reduced.
2.11 Representations and Warranties. The Employee hereby represents and
warrants that the execution of this Agreement and the discharge of his
obligations hereunder will not breach or conflict with any other contracts,
agreements, covenants or understandings, either oral or written, between the
Employee and any other party or parties.
2.12 Assignment. This Agreement and the associated rights, interests
and benefits shall not be assigned, transferred, pledged or hypothecated in any
way and shall not be subject to execution, attachment or similar process. Any
attempt to assign, transfer, pledge or hypothecate or make any other disposition
of this Agreement or of such rights, interests and benefits contrary to the
foregoing provision or the levy of any attachment or similar process thereupon,
shall be null and void and without effect and shall relieve the Employer and
Employee of any and all liability hereunder.
2.13 Attorneys' Fees. In the event either party hereto institutes an
action or other proceeding to enforce any rights arising under this Agreement,
the party prevailing in such action or other proceeding shall be paid all
reasonable costs and attorneys' fees by the other party, such fees to be set by
court and not by the jury.
2.14 Notices. Any notice or communication to be given under the terms
of this Agreement ("Notice") shall be in writing and delivered in person or
deposited, certified or registered, in the United States mail, postage prepaid,
addressed as follows:
If to Employer: SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
Attn: R. Brian Wier, President
and Chief Executive Officer
If to Employee: Steve Allan
Preferred Transportation, Inc.
1430 South Anaheim
Anaheim, CA 92805
5
<PAGE> 6
or at such other address as either party may from time to time designate by
Notice hereunder. Notices shall be effective upon delivery in person or three
business days after the date of mailing.
2.15 Modifications and Amendments. This Agreement shall not be altered
or amended except by a written agreement signed by the parties hereto.
2.16 Entire Agreement. This Agreement constitutes and embodies the full
and complete understanding and agreement of the parties hereto and supersedes
all prior understandings or agreements whether oral or in writing.
2.17 Benefit and Binding Effect. Except as herein otherwise expressly
provided, this Agreement shall be binding upon and inure to the benefit of the
Employer and its successors and assigns, including any corporation, person or
other entity which may acquire all or substantially all of the assets of the
business of Employer or any other corporation with or into which Employer is
consolidated or merged, and the Employee and his heirs, executors,
administrators and legal representatives; provided, however, that the
obligations of Employee hereunder may not be delegated or assigned.
2.18 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without regard to the
conflict of laws principles thereof.
2.19 Headings; Interpretation; Gender. The paragraph headings used
herein are for convenience and reference only and are not intended to define,
limit or describe the scope or intent of any provision of this Agreement. When
used in this Agreement, the term "including" shall mean without limitation by
reason of enumeration. Words used herein in the singular shall include the
plural and words used herein in the masculine gender shall include the feminine
in all cases where such would apply.
2.20 Waiver. The failure of either party to insist, in any one or more
instances, upon strict performance of any of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition, but the obligations of either party with respect thereto shall
continue in full force and effect.
2.21 Severability. In the event that any portion of this Agreement may
be held to be invalid or unenforceable for any reason whatsoever, it is agreed
that said invalidity or unenforceability shall not affect the other portions of
this Agreement and that the remaining covenants, terms and conditions, or
portions thereof, shall remain in full force and effect, and any court of
competent jurisdiction may so modify the objectionable provisions as to make it
valid, reasonable and enforceable.
6
<PAGE> 7
2.22 Entire Agreement. This Agreement constitutes and embodies the full
and complete agreement and understandings of the parties with respect to the
Employee's employment with Employer and supersedes any and all other agreements,
either oral or written, between the parties hereto with respect to the subject
matter hereof.
2.23 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed a duplicate original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 31st day of March, 1998.
SUPERSHUTTLE INTERNATIONAL, INC.
BY /s/ Tom LaVoy
-----------------------------------
Tom LaVoy
Its
--------------------------------
EMPLOYER
/s/ Steve Allan
--------------------------------------
Steve Allan
EMPLOYEE
7
<PAGE> 8
EXHIBIT "A"
Orange County
Los Angeles County
Riverside County
San Diego County
Any County Contiguous to the Above Named Counties
8
<PAGE> 1
Exhibit 10.9
EMPLOYMENT AGREEMENT
BY THIS EMPLOYMENT AGREEMENT (the "Agreement") made and entered into
this 31st day of March 1998, SuperShuttle International, Inc., a Delaware
corporation ("Employer") and Gene Hauck ("Employee"), state, confirm and agree
as follows:
I. RECITALS
1.1 Employer is engaged in the business of providing transportation,
over land, to passengers for hire, including, by way of example, transportation
to and from airports, ports or stations of embarkation for travel, but excluding
the operation of taxis ("Employer's Business"). For purposes of this Agreement,
Employer's Business is that which is conducted in the counties set forth on
Exhibit "A" hereto (the "Market Area").
1.2 Employer has acquired substantially all of the assets of Tamarack
Transportation, Inc. ("Tamarack"), pursuant to an Amended and Restated Agreement
and Plan of Merger, dated as of March 31, 1998, by and among Employer, Tamarack
and the stockholders of Tamarack.
1.3 Employee is now a key employee of Employer, having substantial
knowledge and expertise in, and having personal relationships affecting, the
operations, business contacts, trade secrets, customer lists, marketing
strategies and other confidential matters of critical significance to the
conduct of Employer's Business and its future prospects (the "Trade Secrets").
The loss of Employee during the term of this Agreement, or the aid or assistance
to any competitor of Employer by Employee or direct competition of Employee
respecting Employer's Business within the Market Area would materially and
irreparably injure Employer.
1.4 Employer desires to hire Employee, and Employee desires to accept
such employment, on the terms and conditions hereinafter set forth.
II. AGREEMENTS
2.1 Employment. Employer hereby employs Employee, and Employee hereby
accepts such employment from Employer, on the terms and conditions set forth in
this Agreement.
2.2 Term. Subject to the provisions for termination and extension as
hereinafter provided, the term of this Agreement shall commence on March 31,
1998, and shall continue until March 31, 2001.
2.3 Duties and Positions with Employer. During the term of this
Agreement, it is intended that Employee will serve as President of Employer's
subsidiary, Tamarack, and in such other additional positions as the Board may
from time to time determine. Employee will faithfully and diligently perform all
duties commensurate with such positions, including those duties directed by the
Board of Directors of Employer, as well as those set forth in the Bylaws of
Employer which relate to such positions.
<PAGE> 2
2.4 Service as Director. If the Employee is elected or appointed as a
Director of Employer during all or any portion of the term of this Agreement,
the Employee shall serve in such capacity without additional compensation.
2.5 Compensation. Employee will receive the following compensation for
his services during his term of employment:
(a) A minimum base salary of $125,000 per year, which, after
withholding and other required deductions, shall be paid in equal
installments in accordance with such salary payment policies as may be
established by Employer from time to time;
(b) An incentive bonus tied to the pre-tax earnings of
Tamarack or its successor organization;
(c) Participation in any pension or profit-sharing plan, stock
purchase plan, group benefit plan, medical plan, bonus plan and/or
other benefit plans, either currently in effect or as may be
established from time to time by the Board of Directors of Employer,
for which Employee, as an officer of Employer, may be eligible to
participate; and
(d) Such other compensation or allowances as may from time to
time be granted to Employee by the Board of Directors of Employer,
including any bonuses if recommended by the Compensation Committee of
the Board of Directors and approved by the Board of Directors.
2.6 Fringe Benefits. In addition to all other compensation provided
herein, the Employee shall be reimbursed for all out of pocket expenses related
to the performance of his duties hereunder in accordance with Employer's
reimbursement policies and shall be entitled to receive or participate in such
additional fringe benefits as the Board of Directors of Employer may from time
to time establish for its salaried personnel, including pension or profit
sharing plan contributions, life, health, medical or disability insurance
coverage, vacation and sick leave benefits.
2.7 Termination.
(a) Death. In the event of the Employee's death during the
term of this Agreement, this Agreement shall thereupon terminate and
Employer shall pay to the Employee's beneficiary or estate, as that
term is hereinafter defined, the pro rata portion of the Employee's
salary which was earned but unpaid at the date of the Employee's death.
In addition, Employer shall pay to the Employee's beneficiary or estate
a death benefit in an amount to be determined by the Employer's Board
of Directors.
2
<PAGE> 3
As used herein, the term "beneficiary or estate" means the
person or persons designated by the Employee in the last written notice
delivered to the Employer during his lifetime, or in the absence of
such written notice, such person or persons designated by the Employee
in his last will and testament specifically to receive Employee's
benefits under the terms of this Agreement, or, in the absence of both
written notice and such a designation, the Employee's estate. In the
event that the Employee should during his lifetime designate a person
or persons other than his spouse as beneficiary or beneficiaries in
such written notice, such notice to be valid must contain the signed
consent of the Employee's spouse.
(b) Permanent Disability. In the event the Employee should
become permanently disabled during the term of this Agreement, then
this Agreement shall terminate. For the purposes hereof, "permanent
disability" shall mean that disability resulting from injury, disease
or other cause, whether mental or physical, which incapacitates the
Employee from performing his normal duties as an employee, which
appears to be permanent in nature and contemplates the continuous,
necessary and substantially complete loss of all professional
activities.
(c) Partial Disability. If the Employee should become
partially disabled, Employee shall be entitled to his salary as
provided herein for a period of ninety (90) days following the
commencement of such disability. At the end of such ninety (90) day
period, if the Employee remains partially disabled, his salary shall be
reduced according to the amount of time Employee is able to devote to
the Employer's business.
(d) Temporary Disability. In the event the Employee should
become disabled, and such disability is not partial, as defined above,
such disabled Employee shall be entitled to his salary for a period of
ninety (90) days. If such temporary disability continues longer than
such ninety (90) day period, then Employee shall be deemed to have
become permanently disabled for the purposes of this Agreement at the
end of said ninety (90) day period.
(e) Voluntary Withdrawal. The Employee may voluntarily
terminate his employment hereunder by giving at least sixty (60) days
prior written notice to the Board of Directors of the Employer of his
intention to withdraw. Such notice shall specify the end of a calendar
month as the termination date.
(f) Dismissal. Employer may terminate Employee's employment
under this Agreement at any time with or without cause (defined below)
by giving at least thirty (30) days written notice to the Employee at
his address as listed on the Employer's records specifying the
effective date of termination (the
3
<PAGE> 4
"Termination Date"). In the event of dismissal, payments for
compensation and charges for expenses shall be prorated to the date of
termination.
2.8 Termination for Cause. This Agreement may be terminated for cause
in the event that (a) Employee refuses to follow a reasonable and lawful order
or direction, consistent with Employee's duties hereunder, of the Chief
Executive Officer of Employer or the Board of Directors of Employer, (b) in the
course of Employee's duties under this Agreement, Employee engages in willful
misconduct, dishonesty or reckless disregard of Employee's responsibilities; or
(c) Employee is convicted of a felony. Termination for cause will also include
Employee's disability rendering Employee unable to perform his duties hereunder
for a period of ninety (90) consecutive days. Upon any termination under this
Paragraph 2.8, Employee or Employee's estate, as the case may be, will be
entitled to receive only that compensation due Employee through the date of
termination.
2.9 Termination Other than for Cause. In the event that Employee is
terminated for any reason other than as set forth in Paragraph 2.8 above or
Employee's death:
(a) Employee will receive a severance payment equal to one
times his annual base salary in effect immediately prior to his
termination and the continuation of health care benefits for the one
(1) year period following the effective date of termination of
employment or until Employee obtains new employment, net of
with-holding and other deductions required by law; and
(b) Employee will have the right at any time within ninety
(90) days of the date of termination to exercise all unexercised vested
options granted to Employee under Employer's 1998 Stock Option Plan.
The payments provided for in Section 2.9(a) shall be
made not later than the fifth day following the termination date.
Notwithstanding the foregoing, Employer may elect to pay any amounts hereunder
in monthly installments for the one (1) year period in accordance with
Employer's normal pay days.
2.10 Covenant Not to Compete. Employee shall during the term or
extended term of this Agreement, and for a period of three (3) years thereafter,
exercise his best good faith efforts to pursue and protect the Trade Secrets
from disclosure or access to, or use by, any competitor or potential competitor
of Employer and its subsidiaries. Employee shall not during the term or extended
term of this Agreement, and for a period of three (3) years thereafter, (a)
induce or encourage any other employee of Employer or its subsidiaries to become
employed by or to provide any Trade Secrets to any competitor or potential
competitor of Employer or its subsidiaries; (b) during the term or extended term
of this Agreement, and for a period of three (3) years thereafter, own (directly
or indirectly), manage, serve as an officer, director or partner of, or
otherwise (whether actively or by passive investment) become associated with any
person or entity engaged in a business in competition with Employer's Business
in the Market Area.
4
<PAGE> 5
The foregoing covenants by Employee shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of the Employee against the Employer whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Employer of said covenants. If any of the covenants of
Employee set forth in this paragraph shall be deemed too broad to be enforceable
by judicial process, then such covenants shall be reduced to such levels as
shall be so enforceable and shall be enforced as reduced.
2.11 Representations and Warranties. The Employee hereby represents and
warrants that the execution of this Agreement and the discharge of his
obligations hereunder will not breach or conflict with any other contracts,
agreements, covenants or understandings, either oral or written, between the
Employee and any other party or parties.
2.12 Assignment. This Agreement and the associated rights, interests
and benefits shall not be assigned, transferred, pledged or hypothecated in any
way and shall not be subject to execution, attachment or similar process. Any
attempt to assign, transfer, pledge or hypothecate or make any other disposition
of this Agreement or of such rights, interests and benefits contrary to the
foregoing provision or the levy of any attachment or similar process thereupon,
shall be null and void and without effect and shall relieve the Employer and
Employee of any and all liability hereunder.
2.13 Attorneys' Fees. In the event either party hereto institutes an
action or other proceeding to enforce any rights arising under this Agreement,
the party prevailing in such action or other proceeding shall be paid all
reasonable costs and attorneys' fees by the other party, such fees to be set by
court and not by the jury.
2.14 Notices. Any notice or communication to be given under the terms
of this Agreement ("Notice") shall be in writing and delivered in person or
deposited, certified or registered, in the United States mail, postage prepaid,
addressed as follows:
If to Employer: SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
Attn: R. Brian Wier, President
and Chief Executive Officer
If to Employee: Gene Hauck
Tamarack Transportation, Inc.
531 Van Ness Avenue
Torrance, CA 90501
5
<PAGE> 6
or at such other address as either party may from time to time designate by
Notice hereunder. Notices shall be effective upon delivery in person or three
business days after the date of mailing.
2.15 Modifications and Amendments. This Agreement shall not be altered
or amended except by a written agreement signed by the parties hereto.
2.16 Entire Agreement. This Agreement constitutes and embodies the full
and complete understanding and agreement of the parties hereto and supersedes
all prior understandings or agreements whether oral or in writing.
2.17 Benefit and Binding Effect. Except as herein otherwise expressly
provided, this Agreement shall be binding upon and inure to the benefit of the
Employer and its successors and assigns, including any corporation, person or
other entity which may acquire all or substantially all of the assets of the
business of Employer or any other corporation with or into which Employer is
consolidated or merged, and the Employee and his heirs, executors,
administrators and legal representatives; provided, however, that the
obligations of Employee hereunder may not be delegated or assigned.
2.18 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without regard to the
conflict of laws principles thereof.
2.19 Headings; Interpretation; Gender. The paragraph headings used
herein are for convenience and reference only and are not intended to define,
limit or describe the scope or intent of any provision of this Agreement. When
used in this Agreement, the term "including" shall mean without limitation by
reason of enumeration. Words used herein in the singular shall include the
plural and words used herein in the masculine gender shall include the feminine
in all cases where such would apply.
2.20 Waiver. The failure of either party to insist, in any one or more
instances, upon strict performance of any of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition, but the obligations of either party with respect thereto shall
continue in full force and effect.
2.21 Severability. In the event that any portion of this Agreement may
be held to be invalid or unenforceable for any reason whatsoever, it is agreed
that said invalidity or unenforceability shall not affect the other portions of
this Agreement and that the remaining covenants, terms and conditions, or
portions thereof, shall remain in full force and effect, and any court of
competent jurisdiction may so modify the objectionable provisions as to make it
valid, reasonable and enforceable.
6
<PAGE> 7
2.22 Entire Agreement. This Agreement constitutes and embodies the full
and complete agreement and understandings of the parties with respect to the
Employee's employment with Employer and supersedes any and all other agreements,
either oral or written, between the parties hereto with respect to the subject
matter hereof.
2.23 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed a duplicate original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 31st day of March, 1998.
SUPERSHUTTLE INTERNATIONAL, INC.
BY /s/ Tom LaVoy
-------------------------------------
Tom LaVoy
Its
----------------------------------
EMPLOYER
/s/ Gene Hauck
---------------------------------------
Gene Hauck
EMPLOYEE
7
<PAGE> 8
EXHIBIT "A"
Orange County
Los Angeles County
Riverside County
San Diego County
Any County Contiguous to the Above Named Counties
8
<PAGE> 1
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
BY THIS EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as
of the 31st day of March, 1998, Southern Shuttle Services, Inc., a Florida
corporation ("Employer") and Mark Levitt ("Employee"), state, confirm and agree
as follows:
I. RECITALS
1.1 Employer is currently engaged in the business of providing
transportation services to airports and travelers in various cities in the Dade,
Broward and Palm Beach counties in the State of Florida ("Employer's Business").
All locations in Dade, Broward, Palm Beach and Orange Counties in which material
portions of Employer's Business are, or may during the term of Employee's
employment by Employer be, conducted are hereinafter collectively referred to as
the "Market Area."
1.2 SuperShuttle International, Inc. ("SuperShuttle") has agreed to
acquire all of the outstanding Stock of Employer pursuant to a Share Exchange
Agreement (the "Share Exchange Agreement") dated as of March 31, 1998 by and
among (i) SuperShuttle and (ii) Employer and the Shareholders named therein
(collectively, the Sellers).
1.3 Employee is now a key employee of Employer, having substantial
knowledge and expertise in, and having personal relationships affecting, the
operations, business contacts, trade secrets, customer lists, marketing
strategies and other confidential matters of critical significance to the
conduct of Employer's Business and SuperShuttle's business and its future
prospects (the "Trade Secrets"). The loss of Employee during the term of this
Agreement, or the aid or assistance to any competitor of Employer by Employee or
direct competition of Employee respecting Employer's Business within the Market
Area would materially and irreparably injure Employer.
1.4 Employer desires to hire Employee, and Employee desires to accept
such employment, on the terms and conditions hereinafter set forth.
II. AGREEMENTS
2.1 Employment. Employer hereby employs Employee, and Employee hereby
accepts such employment from Employer, on the terms and conditions set forth in
this Agreement.
2.2 Term. Subject to the provisions for termination and extension as
hereinafter provided, the term of this Agreement shall commence on March 31,
1998, and shall continue until March 31, 2001.
2.3 Automatic Renewal. Upon expiration of the term, unless either party
delivers written notice to the other ninety (90) days prior to the expiration of
the term, or any extension period, if applicable, this Agreement shall
automatically renew for successive one (1) year periods
<PAGE> 2
upon the same terms and conditions set forth herein, except that Employee's
salary shall be reviewed by the Board of Directors of Employer prior to each
such renewal period.
2.4 Duties and Positions with Employer. During the term of this
Agreement, it is intended that you will serve as President of Employer, and in
such other additional positions as the Board may from time to time determine.
You will faithfully and diligently perform all duties commensurate with such
positions, including those duties directed by the Board of Directors of
Employer, as well as those set forth in the Bylaws of Employer which relate to
such positions.
2.5 Service as Director. If the Employee is elected or appointed as a
Director of Employer during all or any portion of the term of this Agreement,
the Employee shall serve in such capacity without additional compensation.
2.6 Compensation. Employee will receive the following compensation for
his services during his term of employment:
(a) A minimum base salary of $125,000 per year, which, after
withholding and other required deductions, shall be paid in equal
installments in accordance with such salary payment policies as may be
established by Employer from time to time;
(b) Employer will continue to lease for the benefit and sole
use of Employee the 1998 Jaguar currently being leased by Employer, or
upon the expiration of such lease, Employer shall lease a comparable
automobile of Employee's choice for the benefit and sole use of
Employee.
(c) SuperShuttle shall grant Employer the option to purchase
10,000 shares of SuperShuttle common stock at an exercise price equal
to the offering price per share of SuperShuttle common stock in an
initial public offering of SuperShuttle common stock. One-Third of such
options shall vest and become exercisable by Employee upon each
anniversary of the date of this Agreement.
(d) Participate in any incentive compensation plan, pension or
profit-sharing plan, stock purchase plan, group benefit plan, medical
plan, bonus plan and/or other benefit plans, either currently in effect
or as may be established from time to time by the Board of Directors of
Employer, for which Employee, as an officer of Employer, may be
eligible to participate; and
(e) Receive such other compensation as may from time to time
be granted to Employee by the Board of Directors of Employer, including
any bonuses if recommended by the Compensation Committee of the Board
of Directors and approved by the Board of Directors.
<PAGE> 3
2.7 Fringe Benefits. In addition to all other compensation provided
herein, the Employee shall be entitled to receive or participate in such
additional fringe benefits as the Board of Directors of Employer may from time
to time establish for its salaried personnel, including pension or profit
sharing plan contributions, life, health, medical or disability insurance
coverage, vacation and sick leave benefits.
2.8 Termination.
(a) Death. In the event of the Employee's death during the
term of this Agreement, this Agreement shall thereupon terminate and
Employer shall pay to the Employee's beneficiary or estate, as that
term is hereinafter defined, the pro rata portion of the Employee's
salary which was earned but unpaid at the date of the Employee's death.
In addition, Employer shall pay to the Employee's beneficiary or estate
a death benefit in an amount to be determined by the Employer's Board
of Directors; provided, however, that such amount shall not exceed an
amount to be determined from time to time by the Board of Directors of
the Employer.
As used herein, the term "beneficiary or estate" means the
person or persons designated by the Employee in the last written notice
delivered to the Employer during his lifetime, or in the absence of
such written notice, such person or persons designated by the Employee
in his last will and testament specifically to receive Employee's
benefits under the terms of this Agreement, or, in the absence of both
written notice and such a designation, the Employee's estate. In the
event that the Employee should during his lifetime designate a person
or persons other than his wife/husband as beneficiary or beneficiaries
in such written notice, such notice to be valid must contain the signed
consent of the Employee's spouse.
(b) Permanent Disability. In the event the Employee should
become permanently disabled during the term of this Agreement, then
this Agreement shall terminate. For the purposes hereof, "permanent
disability" shall mean that disability resulting from injury, disease
or other cause, whether mental or physical, which incapacitates the
Employee from performing his normal duties as an employee, which
appears to be permanent in nature and contemplates the continuous,
necessary and substantially complete loss of all professional
activities.
(c) Partial Disability. If the Employee should become
partially disabled, Employee shall be entitled to his salary as
provided herein for a period of ninety (90) days following the
commencement of such disability. At the end of such ninety (90) day
period, if the Employee remains partially disabled, his salary shall be
reduced according to the amount of time Employee is able to devote to
the Employer's business.
<PAGE> 4
(d) Temporary Disability. In the event the Employee should
become disabled, and such disability is not partial, as defined above,
such disabled Employee shall be entitled to his salary for a period of
ninety (90) days. If such temporary disability continues longer than
such ninety (90) day period, then Employee shall be deemed to have
become permanently disabled for the purposes of this Agreement at the
end of said ninety (90) day period.
(e) Voluntary Withdrawal. The Employee may voluntarily
terminate his employment hereunder by giving at least sixty (60) days
prior written notice to the Board of Directors of the Employer of his
intention to withdraw. Such notice shall specify the end of a calendar
month as the termination date.
(f) Recision of Share Exchange Agreement. In the event that
the Sellers exercise their rights to rescind under the Share Exchange
Agreement, this Agreement shall automatically terminate and all rights
and obligations of Employee, Employer and SuperShuttle hereunder,
including but not limited to the rights and obligations set forth in
Section 2.11 (but excluding Employee's right to be compensated through
the date of termination) shall automatically terminate and be of no
further effect.
2.9 Termination for Cause. This Agreement may be terminated for cause
in the event that (a) Employee refuses to follow a lawful order or a direction
of the Board of Directors of Employer, (b) in the course of Employee's duties
under this Agreement, Employee engages in willful misconduct, dishonesty or
reckless disregard of Employee's responsibilities; or (c) Employee is convicted
of a felony. Termination for cause will also include Employee's death,
disability rendering Employee unable to perform his duties hereunder, breach of
the terms of this Agreement by Employee or failure to perform his duties
hereunder to the reasonable satisfaction of Employer's Board of Directors. Upon
any termination under this Paragraph 2.9, Employee or Employee's estate, as the
case may be, will be entitled to receive only that compensation due Employee
through the date of termination.
2.10 Termination Other than for Cause. In the event that Employee is
terminated for any reason other than as set forth in Paragraph 2.9 above or is
terminated by Employee for "Good Reason" as defined below:
(a) Employee will receive a severance payment equal to one
times his base salary in effect immediately prior to his termination,
net of with-holding and other deductions required by law; and
(b) Employee will have the right at any time within ninety
(90) days of the date of termination to exercise all unexercised vested
options granted to Employee under Employer's 1998 Stock Option Plan.
<PAGE> 5
"Good Reason" shall mean the occurrence of any of the following: (i) a
material change in Employee's authority, duties or responsibilities which would
cause Employee's position with Employer (or SuperShuttle) to become of
materially less responsibility and importance, (ii) a material breach of this
Agreement by Employer which such breach is not cured within fifteen (15) days of
written notice to Employer or (iii) the Employer (or SuperShuttle) requires that
the Employee relocate outside of the Market Area or assigns duties to the
Employee which cannot reasonably be performed without relocating or spending
unreasonable periods of time outside of the Market Area. For purposes of this
Section 2.10, the term "Market Area" shall not include Orange County, Florida.
The payments provided for in Section 2.10(a) shall be made not later
than the fifth day following the termination date; provided, however, that if
the amount of such payment cannot be finally determined on or before such day,
the Company shall pay to Employee on such day an estimate, as determined in good
faith by the Company, of the minimum amount of such payments and shall pay the
remainder of such payments as soon as the amount thereof can be determined but
in no event later than the thirtieth day after the date of termination. In the
event that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the Company
to Employee payable on the fifth day after demand by the Company.
Notwithstanding the foregoing, the Company may elect to pay any amounts
hereunder in monthly installments for the one (1) year period in accordance with
the Company's normal pay days.
2.11 Covenant Not to Compete. Employee shall during the term or
extended term of this Agreement, and for a period of three (3) years thereafter,
exercise his best good faith efforts to pursue and protect the Trade Secrets
from disclosure or access to, or use by, any competitor or potential competitor
of Employer and its affiliates. Employee shall not during the term or extended
term of this Agreement, and for a period of three (3) years thereafter, (a)
induce or encourage any other employee of Employer or its affiliates to become
employed by or to provide any Trade Secrets to any competitor or potential
competitor of Employer or its affiliates; (b) during the term or extended term
of this Agreement, and or a period of three (3) years thereafter, own, directly
or indirectly, manage, serve as an officer, director or partner of, or otherwise
(whether actively or by passive investment) become associated with any person or
entity engaged in a business in competition with Employer's Business in the
Market Area. In addition, until the expiration of five (5) years following the
consummation of the Exchange transactions the Employee shall not enter into any
agreement with a party currently doing business with Employer, SuperShuttle or
any affiliate of either of them for the provisions of services substantially
similar to those provided currently. The foregoing covenants by Employee shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of the Employee
against the Employer whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Employer of said covenants.
If any of the covenants of Employee set forth in this paragraph shall be deemed
too broad to be
<PAGE> 6
enforceable by judicial process, then such covenants shall be reduced to such
levels as shall be so enforceable and shall be enforced as reduced.
2.12 Representations and Warranties. The Employee hereby represents and
warrants that the execution of this Agreement and the discharge of his
obligations hereunder will not breach or conflict with any other contracts,
agreements, covenants or understandings, either oral or written, between the
Employee and any other party or parties.
2.13 Assignment. This Agreement and the rights, interests and benefits
shall not be assigned, transferred, pledged or hypothecated in any way and shall
not be subject to execution, attachment or similar process except that Employer
may assign this Agreement to SuperShuttle upon consummation of an Initial Public
Offering of SuperShuttle Common Stock. Any attempt to assign, transfer, pledge
or hypothecate or make any other disposition of this Agreement or of such
rights, interests and benefits contrary to the foregoing provision or the levy
of any attachment or similar process thereupon, shall be null and void and
without effect and shall relieve the Employer and Employee of any and all
liability hereunder.
2.14 Attorneys' Fees. In the event either party hereto institutes an
action or other proceeding to enforce any rights arising under this Agreement,
the party prevailing in such action or other proceeding shall be paid all
reasonable costs and attorneys' fees by the other party, such fees to be set by
court and not by the jury.
2.15 Notices. Any notice or communication to be given under the terms
of this Agreement ("Notice") shall be in writing and delivered in person or
deposited, certified or registered, in the United States mail, postage prepaid,
addressed as follows:
If to Employer: Southern Shuttle Services, Inc.
c/o SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
Attn: R. Brian Wier, President
and Chief Executive Officer
If to Employee: Mark Levitt
6740 SW 56 Ct
Davie, Fl 33314
or at such other address as either party may from time to time designate by
Notice hereunder. Notices shall be effective upon delivery in person, or if
mailed at midnight on the third business day after the date of mailing.
<PAGE> 7
2.16 Modifications and Amendments. This Agreement shall not be altered
or amended except by a written agreement signed by the parties hereto.
2.17 Entire Agreement. This Agreement constitutes and embodies the full
and complete understanding and agreement of the parties hereto and supersedes
all prior understandings or agreements whether oral or in writing.
2.18 Benefit and Binding Effect. Except as herein otherwise expressly
provided, this Agreement shall be binding upon and inure to the benefit of the
Employer and its successors and assigns, including any corporation, person or
other entity which may acquire all or substantially all of the assets of the
business of Employer or any other corporation with or into which Employer is
consolidated or merged, and the Employee and his heirs, executors,
administrators and legal representatives; provided, however, that the
obligations of Employee hereunder may not be delegated or assigned.
2.19 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida without regard to the
conflict of laws principals thereof.
2.20 Headings; Interpretation; Gender. The paragraph headings used
herein are for convenience and reference only and are not intended to define,
limit or describe the scope or intent of any provision of this Agreement. When
used in this Agreement, the term "including" shall mean without limitation by
reason of enumeration. Words used herein in the singular shall include the
plural and words used herein in the masculine gender shall include the feminine
in all cases where such would apply.
2.21 Waiver. The failure of either party to insist, in any one or more
instances, upon strict performance of any of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition, but the obligations of either party with respect thereto shall
continue in full force and effect.
2.22 Severability. In the event that any portion of this Agreement may
be held to be invalid or unenforceable for any reason whatsoever, it is agreed
that said invalidity or unenforceability shall not affect the other portions of
this Agreement and that the remaining covenants, terms and conditions, or
portions thereof, shall remain in full force and effect, and any court of
competent jurisdiction may so modify the objectionable provisions as to make it
valid, reasonable and enforceable.
2.23 Entire Agreement. This Agreement constitutes and embodies the full
and complete agreement and understandings of the parties with respect to the
Employee's employment with Employer and supersedes any and all other agreements,
either oral or written, between the parties hereto with respect to the subject
matter hereof.
<PAGE> 8
2.24 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed a duplicate original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 31st day of March, 1998.
SOUTHERN SHUTTLE SERVICES, INC.
BY /s/ Mark Levitt
-------------------------------------
Its
EMPLOYER
/s/ Mark Levitt
----------------------------------------
Mark Levitt
EMPLOYEE
<PAGE> 1
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
BY THIS EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as
of the 31st day of March, 1998, AAA Wheelchair Wagon Services, Inc. and
Limousines of South Florida, Inc., each a Florida corporation (collectively,
"Employer") and Karen Caputo ("Employee"), state, confirm and agree as follows:
I. RECITALS
1.1 Employer is currently engaged in the business of providing
transportation services to airports and paratransit for disabled and
disadvantaged persons and travelers in various cities in the Dade, Broward and
Palm Beach Counties in the State of Florida ("Employer's Business"). All
locations in Dade, Broward, Palm Beach and Orange Counties in which material
portions of Employer's Business are, or may during the term of Employee's
employment by Employer be, conducted are hereinafter collectively referred to as
the "Market Area."
1.2 SuperShuttle International, Inc. ("SuperShuttle") has agreed to
acquire all of the outstanding capital stock of Employer pursuant to a Share
Exchange Agreement (the "Share Exchange Agreement") dated as of March 31, 1998
by and among (i) SuperShuttle and (ii) Employer, Wheelchair Ambulance of
Hollywood, Inc., A1A Snowbird Leasing, Inc. and the Shareholders named therein
(collectively, the Sellers).
1.3 Employee is now a key employee of Employer, having substantial
knowledge and expertise in, and having personal relationships affecting, the
operations, business contacts, trade secrets, customer lists, marketing
strategies and other confidential matters of critical significance to the
conduct of Employer's Business and SuperShuttle's business and its future
prospects (the "Trade Secrets"). The loss of Employee during the term of this
Agreement, or the aid or assistance to any competitor of Employer by Employee or
direct competition of Employee respecting Employer's Business within the Market
Area would materially and irreparably injure Employer.
1.4 Employer desires to hire Employee, and Employee desires to accept
such employment, on the terms and conditions hereinafter set forth.
II. AGREEMENTS
2.1 Employment. Employer hereby employs Employee, and Employee hereby
accepts such employment from Employer, on the terms and conditions set forth in
this Agreement.
2.2 Term. Subject to the provisions for termination and extension as
hereinafter provided, the term of this Agreement shall commence on March 31,
1998, and shall continue until March 31, 2001.
<PAGE> 2
2.3 Automatic Renewal. Upon expiration of the term, unless either party
delivers written notice to the other ninety (90) days prior to the expiration of
the term, or any extension period, if applicable, this Agreement shall
automatically renew for successive one (1) year periods upon the same terms and
conditions set forth herein, except that Employee's salary shall be reviewed by
the Board of Directors of Employer prior to each such renewal period.
2.4 Duties and Positions with Employer. During the term of this
Agreement, it is intended that you will serve as President of Employer, and in
such other additional positions as the Board may from time to time determine.
You will faithfully and diligently perform all duties commensurate with such
positions, including those duties directed by the Board of Directors of
Employer, as well as those set forth in the Bylaws of Employer which relate to
such positions.
2.5 Service as Director. If the Employee is elected or appointed as a
Director of Employer during all or any portion of the term of this Agreement,
the Employee shall serve in such capacity without additional compensation.
2.6 Compensation. Employee will receive the following compensation for
her services during her term of employment:
(a) A minimum base salary of $125,000 per year, which, after
withholding and other required deductions, shall be paid in equal
installments in accordance with such salary payment policies as may be
established by Employer from time to time;
(b) Participate in any incentive compensation plan, pension or
profit-sharing plan, stock purchase plan, group benefit plan, medical
plan, bonus plan and/or other benefit plans, either currently in effect
or as may be established from time to time by the Board of Directors of
Employer, for which Employee, as an officer of Employer, may be
eligible to participate; and
(c) Receive such other compensation as may from time to time
be granted to Employee by the Board of Directors of Employer, including
any bonuses if recommended by the Compensation Committee of the Board
of Directors and approved by the Board of Directors.
2.7 Fringe Benefits. In addition to all other compensation provided
herein, the Employee shall be entitled to receive or participate in such
additional fringe benefits as the Board of Directors of Employer may from time
to time establish for its salaried personnel, including pension or profit
sharing plan contributions, life, health, medical or disability insurance
coverage, vacation and sick leave benefits.
<PAGE> 3
2.8 Termination.
(a) Death. In the event of the Employee's death during the
term of this Agreement, this Agreement shall thereupon terminate and
Employer shall pay to the Employee's beneficiary or estate, as that
term is hereinafter defined, the pro rata portion of the Employee's
salary which was earned but unpaid at the date of the Employee's death.
In addition, Employer shall pay to the Employee's beneficiary or estate
a death benefit in an amount to be determined by the Employer's Board
of Directors; provided, however, that such amount shall not exceed an
amount to be determined from time to time by the Board of Directors of
the Employer.
As used herein, the term "beneficiary or estate" means the
person or persons designated by the Employee in the last written notice
delivered to the Employer during her lifetime, or in the absence of
such written notice, such person or persons designated by the Employee
in her last will and testament specifically to receive Employee's
benefits under the terms of this Agreement, or, in the absence of both
written notice and such a designation, the Employee's estate. In the
event that the Employee should during her lifetime designate a person
or persons other than her husband as beneficiary or beneficiaries in
such written notice, such notice to be valid must contain the signed
consent of the Employee's spouse.
(b) Permanent Disability. In the event the Employee should
become permanently disabled during the term of this Agreement, then
this Agreement shall terminate. For the purposes hereof, "permanent
disability" shall mean that disability resulting from injury, disease
or other cause, whether mental or physical, which incapacitates the
Employee from performing her normal duties as an employee, which
appears to be permanent in nature and contemplates the continuous,
necessary and substantially complete loss of all professional
activities.
(c) Partial Disability. If the Employee should become
partially disabled, Employee shall be entitled to her salary as
provided herein for a period of ninety (90) days following the
commencement of such disability. At the end of such ninety (90) day
period, if the Employee remains partially disabled, her salary shall be
reduced according to the amount of time Employee is able to devote to
the Employer's business.
<PAGE> 4
(d) Temporary Disability. In the event the Employee should
become disabled, and such disability is not partial, as defined above,
such disabled Employee shall be entitled to her salary for a period of
ninety (90) days. If such temporary disability continues longer than
such ninety (90) day period, then Employee shall be deemed to have
become permanently disabled for the purposes of this Agreement at the
end of said ninety (90) day period.
(e) Voluntary Withdrawal. The Employee may voluntarily
terminate her employment hereunder by giving at least sixty (60) days
prior written notice to the Board of Directors of the Employer of her
intention to withdraw. Such notice shall specify the end of a calendar
month as the termination date.
(f) Recision of Stock Purchase Agreement. In the event that
the Sellers exercise their rights to rescind under the Share Exchange
Agreement, this Agreement shall automatically terminate and all rights
and obligations of Employee, Employer and SuperShuttle hereunder,
including but not limited to the rights and obligations set forth in
Section 2.11 (but excluding Employee's right to be compensated through
the date of termination) shall automatically terminate and be of no
further effect.
2.9 Termination for Cause. This Agreement may be terminated for cause
in the event that (a) Employee refuses to follow a lawful order or a direction
of the Board of Directors of Employer, (b) in the course of Employee's duties
under this Agreement, Employee engages in willful misconduct, dishonesty or
reckless disregard of Employee's responsibilities; or (c) Employee is convicted
of a felony. Termination for cause will also include Employee's death,
disability rendering Employee unable to perform her duties hereunder, breach of
the terms of this Agreement by Employee or failure to perform her duties
hereunder to the reasonable satisfaction of Employer's Board of Directors. Upon
any termination under this Paragraph 2.9, Employee or Employee's estate, as the
case may be, will be entitled to receive only that compensation due Employee
through the date of termination.
2.10 Termination Other than for Cause. In the event that Employee is
terminated for any reason other than as set forth in Paragraph 2.9 above or is
terminated by Employee for "Good Reason" as defined below:
(a) Employee will receive a severance payment equal to one
times her base salary in effect immediately prior to her termination,
net of with-holding and other deductions required by law; and
(b) Employee will have the right at any time within ninety
(90) days of the date of termination to exercise all unexercised vested
options granted to Employee under Employer's 1998 Stock Option Plan.
<PAGE> 5
"Good Reason" shall mean the occurrence of any of the following: (i) a
material change in Employee's authority, duties or responsibilities which would
cause Employee's position with Employer (or SuperShuttle) to become of
materially less responsibility and importance, (ii) a material breach of this
Agreement by Employer which such breach is not cured within fifteen (15) days of
written notice to Employer or (iii) the Employer (or SuperShuttle) requires that
the Employee relocate outside of the Market Area or assigns duties to the
Employee which cannot reasonably be performed without relocating or spending
unreasonable periods of time outside of the Market Area. For purposes of this
Section 2.10, Market Area shall not include Orange County, Florida.
The payments provided for in Section 2.10(a) shall be made not later
than the fifth day following the termination date; provided, however, that if
the amount of such payment cannot be finally determined on or before such day,
the Company shall pay to Employee on such day an estimate, as determined in good
faith by the Company, of the minimum amount of such payments and shall pay the
remainder of such payments as soon as the amount thereof can be determined but
in no event later than the thirtieth day after the date of termination. In the
event that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the Company
to Employee payable on the fifth day after demand by the Company.
Notwithstanding the foregoing, the Company may elect to pay any amounts
hereunder in monthly installments for the one (1) year period in accordance with
the Company's normal pay days.
2.11 Covenant Not to Compete. Employee shall during the term or
extended term of this Agreement, and for a period of three (3) years thereafter,
exercise her best good faith efforts to pursue and protect the Trade Secrets
from disclosure or access to, or use by, any competitor or potential competitor
of Employer and its affiliates. Employee shall not during the term or extended
term of this Agreement, and for a period of three (3) years thereafter, (a)
induce or encourage any other employee of Employer or its affiliates to become
employed by or to provide any Trade Secrets to any competitor or potential
competitor of Employer or its affiliates; (b) during the term or extended term
of this Agreement, and or a period of three (3) years thereafter, own, directly
or indirectly, manage, serve as an officer, director or partner of, or otherwise
(whether actively or by passive investment) become associated with any person or
entity engaged in a business in competition with Employer's Business in the
Market Area. In addition, until the expiration of five (5) years following the
consummation of the Exchange transactions the Employee shall not enter into any
agreement with a party currently doing business with Employer, SuperShuttle or
any affiliate of either of them for the provisions of services substantially
similar to those provided currently. The foregoing covenants by Employee shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of the Employee
against the Employer whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Employer of said covenants.
If any of the covenants of Employee set forth in this paragraph shall be deemed
too broad to be
<PAGE> 6
enforceable by judicial process, then such covenants shall be reduced to such
levels as shall be so enforceable and shall be enforced as reduced.
2.12 Representations and Warranties. The Employee hereby represents and
warrants that the execution of this Agreement and the discharge of her
obligations hereunder will not breach or conflict with any other contracts,
agreements, covenants or understandings, either oral or written, between the
Employee and any other party or parties.
2.13 Assignment. This Agreement and the rights, interests and benefits
shall not be assigned, transferred, pledged or hypothecated in any way and shall
not be subject to execution, attachment or similar process except that Employer
may assign this Agreement to SuperShuttle upon consummation of an Initial Public
Offering of SuperShuttle Common Stock. Any attempt to assign, transfer, pledge
or hypothecate or make any other disposition of this Agreement or of such
rights, interests and benefits contrary to the foregoing provision or the levy
of any attachment or similar process thereupon, shall be null and void and
without effect and shall relieve the Employer and Employee of any and all
liability hereunder.
2.14 Attorneys' Fees. In the event either party hereto institutes an
action or other proceeding to enforce any rights arising under this Agreement,
the party prevailing in such action or other proceeding shall be paid all
reasonable costs and attorneys' fees by the other party, such fees to be set by
court and not by the jury.
2.15 Notices. Any notice or communication to be given under the terms
of this Agreement ("Notice") shall be in writing and delivered in person or
deposited, certified or registered, in the United States mail, postage prepaid,
addressed as follows:
If to Employer: AAA Wheelchair Wagon Services, Inc.
c/o SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
Attn: R. Brian Wier, President
and Chief Executive Officer
If to Employee: Karen Caputo
2631 Garfield Street
Hollywood, Florida 33020
or at such other address as either party may from time to time designate by
Notice hereunder. Notices shall be effective upon delivery in person, or if
mailed at midnight on the third business day after the date of mailing.
<PAGE> 7
2.16 Modifications and Amendments. This Agreement shall not be altered
or amended except by a written agreement signed by the parties hereto.
2.17 Entire Agreement. This Agreement constitutes and embodies the full
and complete understanding and agreement of the parties hereto and supersedes
all prior understandings or agreements whether oral or in writing.
2.18 Benefit and Binding Effect. Except as herein otherwise expressly
provided, this Agreement shall be binding upon and inure to the benefit of the
Employer and its successors and assigns, including any corporation, person or
other entity which may acquire all or substantially all of the assets of the
business of Employer or any other corporation with or into which Employer is
consolidated or merged, and the Employee and her heirs, executors,
administrators and legal representatives; provided, however, that the
obligations of Employee hereunder may not be delegated or assigned.
2.19 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida without regard to the
conflict of laws principals thereof.
2.20 Headings; Interpretation; Gender. The paragraph headings used
herein are for convenience and reference only and are not intended to define,
limit or describe the scope or intent of any provision of this Agreement. When
used in this Agreement, the term "including" shall mean without limitation by
reason of enumeration. Words used herein in the singular shall include the
plural and words used herein in the masculine gender shall include the feminine
in all cases where such would apply.
2.21 Waiver. The failure of either party to insist, in any one or more
instances, upon strict performance of any of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition, but the obligations of either party with respect thereto shall
continue in full force and effect.
2.22 Severability. In the event that any portion of this Agreement may
be held to be invalid or unenforceable for any reason whatsoever, it is agreed
that said invalidity or unenforceability shall not affect the other portions of
this Agreement and that the remaining covenants, terms and conditions, or
portions thereof, shall remain in full force and effect, and any court of
competent jurisdiction may so modify the objectionable provisions as to make it
valid, reasonable and enforceable.
2.23 Entire Agreement. This Agreement constitutes and embodies the full
and complete agreement and understandings of the parties with respect to the
Employee's employment with Employer and supersedes any and all other agreements,
either oral or written, between the parties hereto with respect to the subject
matter hereof.
<PAGE> 8
2.24 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed a duplicate original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 31st day of March, 1998.
AAA WHEELCHAIR WAGON SERVICE, INC.
BY /s/ Karen Caputo
-------------------------------------
Its
---------------------------------
EMPLOYER
LIMOUSINES OF SOUTH FLORIDA, INC.
BY /s/ Karen Caputo
-------------------------------------
Its
---------------------------------
/s/ Karen Caputo
----------------------------------------
Karen Caputo
EMPLOYEE
<PAGE> 1
Exhibit 10.12
AGREEMENT NO. 73527
CITY OF PHOENIX
EXCLUSIVE TIME SCHEDULED VAN SERVICE
between
CITY OF PHOENIX
a municipal corporation
and
SUPERSHUTTLE ARIZONA, INC.
a Arizona corporation, as Operator
<PAGE> 2
TABLE OF CONTENTS
Article 1 Time Scheduled Van Service ................................. 1
Article 2 Access To Airport .......................................... 2
Article 3 Term ....................................................... 2
Article 4 Service Locations .......................................... 2
Article 5 Operational Requirements ................................... 2
Article 6 Permit Fee ................................................. 3
Article 7 Automated Vehicle Identification System .................... 4
Article 8 Fares ...................................................... 5
Article 9 Vehicle Authorization ...................................... 5
Article 10 Fleet Size Adjustments ..................................... 6
Article 11 Vehicle Specifications ..................................... 6
Article 12 Appearance ................................................. 9
Article 13 Van Driver Requirements .................................... 11
Article 14 Driver Training Program .................................... 12
Article 15 Vehicle Maintenance Program ................................ 16
Article 16 Operations Plan ............................................ 17
Article 17 Customer Service Plan ...................................... 17
Article 18 Performance Bond ........................................... 18
Article 19 Assignment ................................................. 18
Article 20 Damage or Destruction ...................................... 19
Article 21 Cancellation By City ....................................... 19
Article 22 Force Majeure .............................................. 20
Article 23 Indemnity And Liability Insurance .......................... 20
Article 24 Compliance With Environmental Laws ......................... 23
Article 25 Surrender of Possession .................................... 29
Article 26 Inspection By City ......................................... 30
Article 27 Taxes ...................................................... 31
<PAGE> 3
Article 28 Notice ..................................................... 31
Article 29 Paragraph Headings ......................................... 31
Article 30 Invalid Provision .......................................... 32
Article 31 Successors And Assigns Bound By Covenants .................. 32
Article 32 Approvals, Consents And Notices ............................ 32
Article 33 Affirmative Action Requirements ............................ 33
Article 34 Employee Recruitment ....................................... 33
Article 35 Exclusive Agreement ........................................ 34
Article 36 Rules And Regulations ...................................... 34
Article 37 Conflict Of Interest ....................................... 36
Exhibits:
"A" Fares & Service Areas
"B" Federal Grant Assurance Contractual Provisions
"C" Vehicle Identification Form Phoenix SuperShuttle
"D" Service Area & Sector Map Description
<PAGE> 4
PHOENIX SKY HARBOR INTERNATIONAL AIRPORT
EXCLUSIVE TIME SCHEDULED VAN SERVICE
AGREEMENT NO.73527
This Agreement, executed this 31 day of May, 1996, between the CITY OF PHOENIX,
an Arizona municipal corporation, hereafter referred to as "City", and
SUPERSHUTTLE ARIZONA, INC., a Arizona corporation, 4610 S. 35th Street, Phoenix,
Arizona, 85040, hereafter referred to as "Operator".
WITNESSETH
WHEREAS, the Phoenix City Council on December 6, 1995 passed Formal Action,
F-1757 authorizing the City Manager to enter into a Agreement; with SuperShuttle
Arizona, Inc. to operate an Exclusive Time Scheduled Van Service at Phoenix Sky
Harbor International Airport subject to the following terms and conditions.
ARTICLE 1
TIME SCHEDULED VAN SERVICE
"Time-Scheduled Van Service" means the operation of a fleet of
multi-passenger vans connected and controlled by radio dispatch to pickup and
deliver to the Airport one or more passengers from described sectors of a
general service area, and to pickup arriving passengers for delivery to their
curbside destinations, when such passenger or passengers have contracted or made
prior arrangements for the van service prior to the van arriving on the Airport.
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<PAGE> 5
ARTICLE 2
ACCESS TO AIRPORT
City grants Operator an exclusive agreement to use designated airport
roadways and loading access on the airport pursuant to performance requirements
under this agreement.
ARTICLE 3
TERM
Subject to earlier termination as hereinafter provided, the term of this
Agreement shall be for a period of five (5) years commencing June 1, 1996 and
terminating May 31, 2001. The City's exercise of said option for up to five
years, will be based upon but not limited to: (1) the operators overall contract
performance during the preceding years (2) determination as to the condition or
necessary upgra4e of the fleet vehicles and (3) adjustment if any to the fare
for insurance and gasoline cost factors.
ARTICLE 4
SERVICE LOCATIONS
Operator shall provide Time Scheduled Van Service from Phoenix Sky Harbor
International Airport at specific loading points as may be designated by the
Aviation Director.
ARTICLE 5
OPERATIONAL REOUIREMENTS
Operator shall operate its Time Scheduled Van service on a twenty-four (24)
hour basis, seven (7) days per week. The established minimum for the time
schedule will be a minimum of
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one (1) pickup per terminal, per hour and per sector during the hours of
operation of Midnight to 6:00 a.m., two (2) pickups between the hours of 6:00
a.m. to 9:00 a.m., four (4) pickups between the hours of 9:00 a.m. to 9:00 p.m.,
and three (3) pickups between the hours of 9:00 p.m. to Midnight. Operator must
operate its time scheduled van service in accordance with their proposed minimum
time schedule without downward adjustment for the first six (6) months of the
contract. Amendment(s) shall be filed with the Aviation Director or his designee
at least fifteen (15) days prior to requested implementation date. Amendments to
the time schedule shall be subject to the prior approval of the Aviation
Director which approval will not be unreasonable withheld. Amendments will not
be allowed where the minimum number of total movements per hour during the peak
time period of 9:00 a.m. to 9:00 p.m. falls below 20. (Movements per hour =
number of sectors times airport pick-ups per hour). The City reserves the right
to approve any changes and or adjustments to the time schedule during the term
of the contract. The service area for Metropolitan Phoenix, is defined as an
approximate thirty-five mile radius from Phoenix Sky Harbor International
Airport. Service shall be provided as defined and set forth on the Metropolitan
Phoenix Service Area Map located in Exhibit "D".
ARTICLE 6
PERMIT FEE
Operator shall pay the City, at the commencement of the
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contract, an annual permit fee in the amount of one thousand dollars ($1,000)
per van, except for the vans which are wheelchair accessible. The annual permit
fee for those vans is One Hundred dollars ($100) annually per van. The annual
permit fee shall be payable on a quarterly basis in advance for each vehicle. It
is the City's intent to review the appropriateness of this structure during the
initial five year term of this contract and adjust the fees accordingly.
Operator acknowledges and agrees that there is no vested right in and to the
continuation of the existing permit fee system described herein and the City
reserves the right to adjust said fee system at its discretion during the term
of the agreement. Operator's refusal or failure to pay in advance the applicable
prorated quarterly permit fee for any vehicle shall be considered a breach of
this agreement and subject the operator's privilege hereunder to termination
immediately.
ARTICLE 7
AUTOMATED VEHICLE IDENTIFICATION SYSTEM
The City is currently evaluating an Automated Vehicle Identification System
(AVI). This system would enable the Airport to track the number of vehicles
entering and exiting the airport and the amount of time spent by each vehicle at
the airport. This system will apply to commercial vehicles that use the airport
for providing public transportation, such as taxicabs, limousines, vans, and
buses. The AVI system will provide information that will allow the City to
determine rate
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<PAGE> 8
structures, number of trips, number of loadings, dwell time on the airport, etc.
The City reserves the right to incorporate this type of system and adjust fees
accordingly.
ARTICLE 8
FARES
Operator shall charge 1st and 2nd passenger fares no higher than as
provided in Exhibit "A". The driver of any van authorized under this Agreement
shall, upon demand by any passenger, furnish to such passenger a fare receipt.
The receipt shall state the name of the driver, the van service company name,
the amount paid by the passenger (excluding tips), and the date and time of the
transaction. For the purpose of this agreement in determining the applicable
second fare, the word "party" shall mean two (2) or more persons, regardless of
relationship, traveling together as companions to the same destination. The
second passenger in a party shall be the basis for the operator to charge the
reduced maximum second passenger fare as set forth in Exhibit "A". The reduced
fare shall be applicable to any additional passengers in the party. Operator
must inform the City in writing when fares are changed. The changed fares shall
not exceed the maximum fares established in Exhibit "A".
ARTICLE 9
VEHICLE AUTHORIZATION
Operator is hereby granted the right to operate on the airport a fleet of
eighty-five (85) vans, each with a minimum individual seating capacity of seven
(7) seats, as forth in
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Exhibit "C". Any replacement or substitution of said vehicles after the
commencement of the contract shall require the permission of the City, which
permission shall not be unreasonably withheld provided said substitute or
replacement vehicle is of like kind and quality. In connection with any
substitution or replacement of vehicles(s) Operator shall provide proof of
ownership or lease-to-purchase information for said listed vehicles.
ARTICLE 10
FLEET SIZE ADJUSTMENTS
Operator must initiate service with a minimum of eighty-five (85) vans;
however the Aviation Director, at his sole discretion, reserves the right to
increase or decrease the fleet, including the wheelchair accessible vans, as may
be necessary to meet passenger demands. Fleet size adjustments will be
accomplished by controlling the issuance of vehicle authorization decals.
ARTICLE 11
VEHICLE SPECIFICATIONS
All vehicles listed in Exhibit "C" and also all future vehicles utilized
for the term of the contract, shall comply with the following specifications:
A. Vans. Operator must be operating with 1995 model vans or newer at the
start of the contract. During the initial term of the agreement, vans must be
replaced every forty-eight months. Replacement vehicles must be acceptable to
the City, and Operator must comply with Article 9 above.
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<PAGE> 10
B. Alternative Fuel. A minimum of 51% of the vehicles must be operating on
alternative fuels, such as compressed natural gas (CNG) liquid natural gas (LPG)
or other alternative fuel which meet the emissions reduction capability and
efficiency of CNG or LPG, by the commencement date of the agreement. The
remainder of the vans must be converted within 18 months from the commencement
of the agreement.
C. Appearance. Each van shall be kept clean inside and out, free of
exterior body damage, without an excessively worn appearance, mechanically safe
and in excellent working order.
D. Vehicle Dispatch. Operator must have a dispatch system for communication
between all vans by use of a 2-way licensed radio receiver/transmitter (not
cellular). The system must be operational on a twenty-four hour basis and in
compliance with FCC Requirements set forth in 47 CFR Part 90.
E. Access. Vehicles shall have a minimum of three (3) doors for passenger
(including the driver) ingress and egress. Two (2) of the fleet vehicles shall
have the following equipment for transporting the disabled passenger:
1. Rear or side mounted V.A. approved power lift with minimum 30" x
45" platform to accommodate wheelchairs and power scooters.
2. Four-point wheelchair restraint system with seat belt and chest
strap.
3. Raised door header and or roof to provide appropriate clearance.
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<PAGE> 11
4. And any other modifications needed to be in compliance with the
American with Disabilities Act and appropriate interpretations and rulings.
F. Air Conditioning/Heating. Vehicles shall have a properly installed and
maintained air conditioner system to provide sufficient passenger comfort at all
times.
G. Headway Signs. A permanently installed illuminated headway sign mounted
on the roof of the vehicle displaying the general sector destination of the
vehicle. All figures in the headway sign must be clearly readable and formed in
a professional manner so as not to detract from the aesthetics of the vehicle.
H. Fare Display. Fares shall be permanently displayed on the exterior and
in the interior, of the vehicle in accordance with specifications promulgated by
the City. Fare signs shall be displayed on the exterior door panel. Fare
displays on the door glass are prohibited. No fares other than the fares
proposed under this agreement shall be displayed on the interior or exterior of
the vehicle. Fares shall not exceed the maximum fares proposed in Exhibit "A".
I. Inspection of Vehicles. Operator shall at all time permit the City to
inspect Operator's vehicles and related business records for purposes of
monitoring compliance with the agreement and/or with any inspection procedures
implemented by the City. Vehicles are subject to periodic inspection to assure
continued compliance with the agreement. Failure to make any
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<PAGE> 12
vehicle available for inspection without good cause or failure of any vehicle to
pass inspection, in the sole determination of the City, may result in a breach
of this agreement by Operator, resulting in a forfeiture of performance bond.
ARTICLE 12
APPEARANCE
A. General Conditions.
1. The exterior appearance of the vehicle shall be maintained in a
damage-free and clean condition. The interior of the vehicle shall be
maintained in a clean condition, free from foreign matter and offensive
odors. There shall be no litter in the vehicle or trunk and the upholstery
shall be kept clean, intact and free or rips and tears.
2. All vehicles shall be uniform in color. Uniformity shall mean a
single color or multiple color scheme for each vehicle used by the Operator
to identify the van business.
B. Specific Conditions. Vehicles shall comply with the following standards:
1. Air conditioners will be operated at all times when exterior
temperatures reach 85 degrees or upon passenger request.
2. Heaters will be operated upon passenger request and sufficiently
heat the interior of the vehicle.
3. Exterior paint of vehicle shall be maintained free of oxidation or
rust.
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4. Vehicle body shall be free of any sheet metal damage.
5. Vehicle shall be inspected at the beginning of each day of service
and assure such vehicle is free from dirt, trash, and debris.
6. The exterior of each vehicle in service shall be kept clean from
road dust, mud, and grime and shall be washed at least once each day (24
hours) of service.
7. The interior of each vehicle in service shall be swept/vacuumed
prior to beginning daily service.
8. Every van shall be structurally sound and maintained as to provide
for the safety of the public in accordance with Arizona Revised Statute
Title 28.
9. Wheel covers shall be mounted on all four wheels at all times.
C. Repair Notices. Any vehicle that is damaged must be presented to the
City for inspection immediately. Said vehicle must be repaired by the date as
specified on a repair notice to be issued by the City and displayed on the
vehicle.
D. Vehicle Maintenance Program. Operator must submit a Vehicle Maintenance
Program that is in accordance with manufacturer's warranty specifications. The
vehicle maintenance program, shall be submitted, within thirty days of the
contract commencement date. Such program shall describe maintenance facility,
equipment, number of personnel, schedule of maintenance and record keeping.
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<PAGE> 14
ARTICLE 13
VAN DRIVER REQUIREMENTS
A. General. Operator shall require all van drivers and curb coordinators,
to wear uniforms that project a professional appearance and clearly identifies
them as an employee of the Operator, such uniforms shall be approved by the
Aviation Director, and shall be neat in dress, use proper hygiene, and be
courteous and trained in dealing with passengers and the public and shall
conform to all laws and regulations affecting such service. The Operator shall
be directly responsible for the conduct of its drivers. Drivers shall not allow
a non-fare paying passenger to ride in the van, however, City officials and/or
the driver's supervisors may, on occasion, ride at no charge in said vehicle for
purpose of inspection and training.
B. Driver Identification Cards. Driver Identification cards containing, as
a minimum, the name and picture of the driver, the expiration date, driver
number to be assigned by the City, company name, company address, company
telephone number and a compliment or complaint telephone number provided by the
City shall be prominently displayed in an identification card holder inside the
vehicle on the dashboard where it is readily available for passenger review.
C. Complaint Responsibility Operator shall receive all complaints regarding
the service and record them on a customer complaint form approved by the City.
Operator shall investigate and resolve each complaint appropriately within five
(5) working
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<PAGE> 15
days of the date the complaint was received. When the complaint is resolved,
Operator shall promptly notify the person who filed the complaint, and submit a
completed copy of the complaint form to the City. Operator representatives
involved in handling customer complaints should be well versed in dealing
effectively with customers from problem identification to complaint resolution.
Emphasis should be on empathizing with the situation and assisting customers to
resolve the complaint.
ARTICLE 14
DRIVER TRAINING PROGRAM
The drivers and curb coordinators must be directly employed by the
Operator, not contracted employees. Operator shall supply evidence to the City
that all van drivers are direct employees of the Operator before driver
identification cards are issued.
The Operator shall maintain throughout the term, a training manual
developed by the Operator based upon, but not limited to, the following:
o Airport Rules and Regulations
o Vehicle Safety
o Effective Communicative Skills
o Knowledge of Traffic Laws
o Knowledge of Phoenix Metropolitan Area
The training program submitted shall consist of at least three (3)
independent methods of training.
o Training Manual - Consisting of written rules and procedures,
reference information, study material
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and outlined with quizzes for use during on-the-job training.
o Classroom Training - Including class discussions of pertinent rules
and regulations and public relations.
o On the Job Training - Under supervision, and with the guide of
predetermined lesson plan (checklist) for each position.
Drivers should have a desire as well as an ability to provide a positive
travel experience for visitors to the Airport as well as to residents of the
Valley. Providing truly friendly service to users of the system is of equal
importance to providing efficient and safe travel. The manual shall reflect a
policy toward training drivers to provide passenger assistance, offer a helping
hand, answering questions of concerns and either provide a solution, explanation
or direction to another source for resolution.
All drivers must pass a non-driving written examination given by Phoenix
Sky Harbor International Airport, Operations Division. The written examination
is comprised of six sections testing knowledge of the Phoenix metro area, use of
directions (North, South, East, West), map reading, fare calculations, airport
rules, and passenger assistance scenarios. The City reserves the right to audit
the training program at any time during the term of this agreement. Operator
shall also provide
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the City with proof of the following qualifications for van drivers in order to
obtain a drivers identification card:
1. Driver shall be at least 19 years of age.
2. Driver shall be a legal resident of the U.S.
3. Driver shall hold a valid and appropriate Arizona Operator's
license issued by the State of Arizona which license is not suspended or
revoked.
4. Driver background check that is consistent with the Federal Motor
Carrier Safety Regulations and Arizona State Statutes.
5. Driver shall not have criminal convictions pending for an offense
for driving while intoxicated or reckless driving.
6. Driver shall not be addicted to the use of alcohol or narcotics.
7. Driver shall not be subject to outstanding warrants.
8. Driver shall have successfully completed a defensive driving course
approved by the City, within the last twenty-four months and be able to
present proof of completion.
9. Provide a medical evaluation statement by a licensed physician,
which certified that the physician has examined the driver and that in the
physician's professional opinion, the driver is qualified to operate a
commercial vehicle.
B. Curb Coordinator. The Operator shall provide a Curb Coordinator at each
terminal curb location. There are five (5)
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terminal curb locations. Curb Coordinator's responsibilities shall include, but
are not limited to the following:
1. Calling vans to the curb from the designated staging area.
2. Arranging passengers by service area.
3. Assisting passengers with luggage and loading the van.
4. Enforcement of contract terms and all applicable airport rules and
regulations.
5. No solicitation or fare negotiations are to take place at the
Airport, between the curb coordinator and the traveling public.
The City reserves the right to recommend that the Operator remove any Curb
Coordinator who has performed in an unsatisfactory manner in the opinion of the
City.
C. Safety. Vehicle and operator safety standards shall be as provided in
Arizona Revised Statute Title 28, Article 7, entitled Motor Carrier Safety and
any rules or regulations promulgated thereunder by the Motor Vehicle Division of
the State of Arizona and the Phoenix City Manager or his designee. All vehicles
shall be and remain in compliance with these safety standards upon commencement
of operations on the Airport.
D. Specific Driver Attire.
1. Shirts or blouses worn by male/female drivers shall have collars
and be of a solid color.
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2. Pants worn by male/female drivers shall be of full length and solid
color.
3. Skirts worn by female drivers shall be no more than 2 inches above
the knee and be of a solid color.
4. Dress-type shoes will be worn at all times with socks, if
appropriate, by all drivers.
5. Shorts worn by male/female drivers shall be no more than 2 inches
above the knee and be of a solid color.
E. Specific Hygiene Requirements.
1. Facial hair (beards, moustaches, sideburns ,etc.) shall be
acceptable only if kept in a clean and trimmed manner acceptable to airport
management and the public.
2. Hair shall be kept clean and trim at all times.
3. Body odor shall be controlled so as not to be offensive.
4. Proper oral hygiene shall be used.
5. Face and body shall be kept free of dirt.
ARTICLE 15
VEHICLE MAINTENANCE PROGRAM
Operator shall submit to the City a vehicle maintenance program which is in
accordance with the vehicle manufacturer's warranty specifications. The vehicle
maintenance program, shall be submitted within thirty days of the contract
commencement date. Such program shall describe the maintenance facility,
equipment, number of personnel, schedule of maintenance and maintenance record
keeping. The City will have the right to
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<PAGE> 20
inspect Operator's books and facilities during regular business hours to audit
said program for compliance with this Agreement.
ARTICLE 16
OPERATIONS PLAN
Operator shall submit to the City an Operations Plan describing in specific
detail the strategies, policies, and procedures to be used by the Operator in
operating the Time Scheduled Van Service at the Airport. Specifically, the plan
should include experience in operating in compliance with Americans With
Disabilities Act (ADA) and other innovative customer service practices or
marketing strategies envisioned by the Operator. Including procedures for
transporting unrelated parties within the same trip and a time line for
implementation.
ARTICLE 17
CUSTOMER SERVICE PLAN
Operator must submit a Customer Service Plan, listing the frequency and
time frame for conducting customer service training for its employees. The
customer service plan, shall be submitted within thirty days of the contract
commencement date. The plan shall include a training manual which defines
employee conduct, appearance, and how employees should handle customer
complaints. The City requests that customer complaints be responded to within
(5) five calendar days and the City be notified.
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<PAGE> 21
ARTICLE 18
PERFORMANCE BOND
The Operator shall provide and maintain, during the term of the contract, a
cash performance bond guaranteeing the faithful performance of the contract
payable to the City. The amount of the performance bond for this contract is
Twenty Thousand Dollars ($20,000.00). A certificate of deposit payable only to
the City of Phoenix without restrictions, will be considered a valid substitute
for a cash bond. The Certificate of Deposit must be at a local financial
institution of the City's choice. Operator shall increase the performance bond
upon the written demand of the Aviation Director. In the event the Operator's
contract is terminated with cause, as provided in this Agreement, the entire
$20,000 bond shall become the property of the City, not as a forfeit or a
penalty but as liquidated damages.
ARTICLE 19
ASSIGNMENT
Operator shall not assign, transfer or hypothecate all or any portion of
its interest under this Agreement, nor permit any other person, firm or
corporation to occupy the Premises without the prior written consent of the
Aviation Director.
City as a condition of approval may require that any transferee submit
biographical and financial information and the Aviation Director shall have
thirty (30) days from the date he receives a completed request to approve or
deny same.
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ARTICLE 20
DAMAGE OR DESTRUCTION
If any improvements or trade fixtures constructed or installed by Operator
at the Premises are damaged or destroyed by fire, explosion, Act of God, the
public enemy or other casualty, Operator may repair or replace the same, with
due diligence, at its own cost and expense.
ARTICLE 21
CANCELLATION BY CITY
Except as otherwise provided herein, the City may cancel this agreement, in
whole or in part, and without liability, to the Operator as follows:
A. With Cause. For any violation of the provisions of this agreement, the
City reserves the right to terminate this agreement immediately.
B. Without Cause. The City may terminate this agreement without cause upon
ten (10) days written notice. In the event of termination without cause, the
Operator shall be entitled solely to a pro-rated refund of any fee herein paid
plus return of Operator's performance bond.
C. Forfeiture of Decals. In addition to (a) and (b) of this paragraph, the
city may demand and the Operator shall permanently forfeit one (1) vehicle
authorization decal for each driver whose driver's identification card is
suspended or revoked by the City. Nothing herein shall be construes to limit the
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<PAGE> 23
City's ability to impose further sanctions for violation of the provisions of
this agreement.
D. No waiver by City of default by Operator in performance of any
requirements of this Agreement shall be construed to be or act as a waiver of
any subsequent default in performance of the same or any other requirement.
E. City and Operator acknowledge that this Agreement is subject to
cancellation by the City of Phoenix pursuant to the provisions of Section
38-511, Arizona Revised Statutes.
ARTICLE 22
FORCE MAJEURE
In the event either party shall be prevented or unable to perform any act
required by this Agreement by reason of acts or determinations of Federal,
State, or Local Governments, or fire, earthquake or similar acts of God,
strikes, labor disputes or any other reason of a like nature beyond their
control, then performance of such act shall be extended for a period equivalent
to the period of delay.
ARTICLE 23
INDEMNITY AND LIABILITY INSURANCE
A. Indemnity. Operator hereby agrees to indemnify and hold harmless the
City and its elected or appointed officials, agents, boards, commission,
employees and representatives, hereinafter referred to as the City, from all
suits, including attorneys' fees and costs of litigation, actions, loss, damage,
expense, cost or claims, of any character or any nature arising
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<PAGE> 24
out of or in connection with any act or omission of Operator, its agents and
employees, and of any subcontractor, its agents and employees, in any way
arising out of or resulting from any activity of Operator on the Airport which
results directly or indirectly in the injury to or death of any person or
persons, or on account of any act, claim or amount arising or recovered under
Worker's Compensation law, or arising out of the failure of Operator or those
acting under Operator to conform to any statute, ordinance, regulation, law or
court decree. It is the intent of Operator and the City that the City shall, in
all instances, except for loss or damage resulting from the sole negligence of
the City, be indemnified by Operator against all liability, losses and damages
of any nature whatever for or on account of any injuries to or death of persons
or damages to or destruction of property belonging to any person arising out of
or in any way connected with Operator's activity on the Airport. The parties
shall give each other prompt notice of any claim made or suit instituted which
in any way directly or indirectly affects or might affect each other, and each
party shall have the right to compromise and defend the same to the extent of
its own interest. The City shall have the right, but not the duty, to
participate in the defense of any claim or litigation with attorneys of the
City's selection without relieving Licensee of any obligations hereunder.
Operator's obligations hereunder shall survive any termination of this agreement
or Operator's activities on the Airport. In addition, Operator shall hold City
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harmless against all mechanic's, materialman's liens and/or liens of a like
nature, and against all reasonable attorneys' fees and other costs arising by
reason of any such liens or claims.
B. Liability Insurance. Operator shall deliver to the City prior to
conducting any business at the Airport a certificate of insurance acceptable to
the Aviation Director showing liability insurance coverage for the benefit of
the City with a combined single limit of liability for bodily injury, property
damage, personal injury, contractual liability and automobile liability coverage
with a limit of at least One Million Dollars ($1,000,000) as the result of any
single occurrence. This coverage should be provided under a Comprehensive
General Liability Form (CGL). Contractual liability coverage may be provided by
a broad form CGL endorsement or separate endorsement to provide required
coverage not automatically included in the CGL form. Said policy(s) shall also
contain a provision that a written notice of cancellation or of any material
change in the policy shall be delivered to the City thirty (30) days in advance
of the effective date thereof. Any enumeration of specific insurance coverage
and amounts shall not limit or restrict Operator's indemnity covenant set forth
in this agreement.
C. City Listed as Additional Insured. All insurance policies provided for
in this Agreement shall list the City as an additional insured and current
certificates thereof shall be deposited with the City. Operator's coverage shall
be primary as
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<PAGE> 26
respects Operator's sole negligence and contributory all other times for any and
all losses arising out of the performance of this Agreement.
D. Agent Certification. Operator is required to furnish a certification
stating that the agent signing the Certificate is an authorized agent.
E. City/State Minimum Insurance Requirements. The Operator shall provide
the City with evidence of current insurance coverage in a form satisfactory to
the City, and in compliance with state law requirements. In accordance with
current State of Arizona financial responsibility requirements each of the
Operator's vehicles shall carry minimum insurance coverage in the amount of
Seven Hundred and Fifty Thousand Dollars ($750,000) and Uninsured Motorist
Coverage in the amount of at least Three Hundred Thousand Dollars ($300,000).
F. Decals will not be issued until all insurance requirements set forth
above are satisfied in the City's sole determination.
ARTICLE 24
COMPLIANCE WITH ENVIRONMENTAL LAWS
Operator shall, at Operator's own expense, comply with all present and
hereinafter enacted Environmental Laws, and any amendments thereto, affecting
Operators's operation on the Premises.
A. Definitions
1. "Environmental Laws" shall mean those laws promulgated for the
protection of human health or the
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<PAGE> 27
environment, including but not limited to the following as the same are
amended from time to time: the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq.; the Clean Water Act, 33
U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et
seq.; the Arizona Environmental Quality Act, A.R.S. Section 49-201 et seq.;
the Arizona Hazardous Waste Management Act, A.R.S. Section 49-921 et seq.;
the Arizona Underground Storage Tank Regulation statute, A.R.S. Section
49-1001 et seq.; Arizona Solid Waste Act, Law 1991, Ch. 315, effective July
3, 1991; the Occupational Safety and Health Act of 1970, as amended, 84
Stat. 1590, 29 U.S.C. Sections 651-678, and the regulations promulgated
thereunder and any other laws, regulations and ordinances (whether enacted
by the local, state or federal government) now in effect or hereinafter
enacted that deal with the regulation or protection of human health and the
environment, including the ambient air, ground water, surface water, and
land use, including substrata soils.
2. As used herein, the term "regulated substances" includes:
a. Those substances identified or listed as a hazardous
substance, pollutant, hazardous material, or petroleum in the
Comprehensive Environmental Response, Compensation and
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<PAGE> 28
Liability Act, 42 U.S.C. Section 9601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq.; and in the
regulations promulgated thereto; and Underground Storage Tanks, U.S.C.
Sections 6991 to 6991i.
b. Those substances identified or listed as a hazardous
substance, pollutant, toxic pollutant, petroleum, or as a hazardous
special or solid waste in the Arizona Environmental Quality Act,
A.R.S. Section 49-201 et seq.; including, but not limited to, the
Water Quality Assurance Revolving Fund Act, A.R.S. Section 49-281 et
seq.; the Solid Waste Management Act, A.R.S. Section 49-701 et seq.;
the Underground Storage Tank Regulation Act, A.R.S. Section 49-1001 et
seq.; and A.R.S. Section 49-851 to 49-868.
c. All substances, materials and wastes that are, or that become,
regulated under, or that are classified as hazardous or toxic under
any Environmental Law during the term of this Agreement.
3. The term "release" shall mean any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing, or dumping.
B. Compliance
1. Operator shall not cause or permit any regulated substance to be
used, generated, manufactured, produced, stored, brought upon, or released
on, or under the Premises, or transported to or from the Premises, by
Licensee, its agents,
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<PAGE> 29
employees, contractors, invitees or a third party in a manner that would
constitute or result in a violation of any Environmental Law or that would
give rise to liability under an Environmental Law.
Operator may provide for the treatment of certain discharges regulated
under the City's pretreatment ordinances pursuant to Chapter 28 of the
Phoenix City Code or such other ordinances as may be promulgated and the
Federal Clean Water Act, 33 U.S.C. Section 1251 et seq.
Operator shall indemnify, defend and hold harmless, on demand, the
City of Phoenix, its successors and assigns, its elected and appointed
officia1s, employees, agents, boards, commissions, representatives, and
attorneys, for, from and against any and all liabilities, obligations,
damages, charges and expenses, penalties, suits, fines, claims, legal and
investigation fees or costs, arising from or related to any claim or action
for injury, liability, breach of warranty or representation, or damage to
persons, the environment or Premises and any and all claims or actions
brought by any person, entity or governmental body, alleging or arising in
connection with contamination of, or adverse effects on, human health or
the environment pursuant to any Environmental Law, the common law, or other
statute, ordinance, rule, regulation, judgment or order of any governmental
agency or judicial entity, which are incurred or assessed as a result, of
any use of the Premises by Operator during the term of this Agreement.
Regardless of the date of
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<PAGE> 30
termination of this Agreement, Operator's obligations and liabilities under
this Article shall continue so long as the City of Phoenix bears any
liability or responsibility under the Environmental Laws for any condition
caused by Operator during the term of this Agreement. This indemnification
of the City by Operator includes, without limitation, costs incurred in
connection with any investigation of site conditions or any cleanup,
remedial actions, removal or restoration work required or conducted by any
federal, state or local governmental agency or political subdivision
because of regulated substances brought on the Premises by Operator or
present in the soil or ground water on, or under the Premises as a result
of Operator's activities under this License. The parties agree that the
City's right to enforce Operator's covenant to indemnify is not an adequate
remedy at law for Licensee's violation of any provision of this Article;
the City of Phoenix shall also have all other rights and remedies provided
by law or otherwise provided for in this Agreement.
2. Without limiting the forgoing, if the presence of any regulated
substance on, or under the Premises, caused by Operator's activities under
this Agreement, results in any contamination of the demised or any adjacent
Premises during the term of this Agreement, Operator shall promptly take
all actions at its sole cost and expense as are necessary to mitigate any
immediate threat to human health or the environment. Operator shall then
undertake any further action necessary to return the
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<PAGE> 31
Premises to the condition existing prior to the introduction by Operator of
any regulated substance to the Premises; provided that the City's approval
of such actions shall first be obtained. Operator shall undertake such
actions without regard to the potential legal liability of any other
person; however, any remedial activities by Operator shall not be construed
to impair Licensee's rights, if any, to seek contribution or indemnity from
another person.
3. Operator shall, at Operator's own cost and expense, make all tests,
reports, studies and provide all information to any appropriate government
agency as may be required pursuant to the Environmental Laws pertaining to
Operator's use of the Premises. This obligation includes but is not limited
to any requirements 4for a site characterization, site assessment and/or a
cleanup plan that may be necessary due to any actual or potential spills or
discharges of regulated substances on, or under the Premises, during the
term of this Agreement. At no cost or expense to the City, Operator shall
promptly provide all information requested by the City pertaining to the
applicability of the Environmental Laws to the Premises, to respond to any
government investigation, or to respond to any claim of liability by third
parties which is related to environmental contamination.
In addition, the City shall have the right to access, within ten (10)
days of Operator's receipt of written request, and copy any and all
records, test results, studies and/or other
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<PAGE> 32
documentation, other than trade secrets, regarding environmental
conditions relating to the use, storage, or treatment of regulated
substances by the Licensee on, or under the Premises.
4. Operator shall immediately notify the Aviation Director of any of
the following: (a) any correspondence or communication from any government
agency regarding the application of Environmental Laws to the Premises or
Operator's use of the Premises, (b) any change in Operators's use of the
Premises that will change or has the potential to change Operator's or the
City's obligations or liabilities under Environmental Laws, and (c) any
assertion of a claim or other occurrence for which Licensee may incur an
obligation under this Article.
5. Operator shall insert the provisions of this Article in any lease
agreement or contract by which it grants a right or privilege to any
person, firm or corporation related to this Agreement.
6. Operator shall at its own expense obtain and comply with any
permits or approvals that are required or may become required as result of
any use of the Premises by the Operator, its agents, employees,
contractors, invitees and assigns.
ARTICLE 25
SURRENDER OF POSSESSION
Upon the expiration or other termination of this Agreement, or any
extension of it, Operator's right to occupy the Premises
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<PAGE> 33
and exercise the privileges herein granted shall cease, and it shall surrender
the same and leave the Premises in a clean condition. Unless otherwise provided,
all equipment, and other personal property installed or placed by Operator on
the Premises shall remain the property of Operator.
ARTICLE 26
INSPECTION BY CITY
City may enter upon the Premises at reasonable times for any purpose
necessary, incidental to, or connected with the exercise of its governmental
functions, or security purposes, subject to Operator's security precautions.
The Operator shall maintain adequate books and records at or in reasonable
proximity to the Airport. Access and/or copies of said books and records shall
be provided to the City upon request. Books and records should contain at least
the following information:
A. Number of trips made to each sector area served, time and date of
service from the Airport.
B. Total passenger traffic and gross revenues on a monthly and annual
basis.
C. Total number of passengers carried to/from the Airport to/from the
individual sector areas.
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ARTICLE 27
TAXES
Operator shall pay any sales tax, transaction privilege tax or other
exaction assessed or assessable as the result of its conduct of business at the
Airport under authority of the Agreement, including any such tax payable by
City.
ARTICLE 28
NOTICE
Notices to City are sufficient if hand delivered or sent by certified mail,
postage prepaid, addressed to:
City of Phoenix Aviation Department
3400 Sky Harbor Boulevard
Phoenix, Arizona 85034-4420
Attn: Aviation Director
And notices to Operator are sufficient if sent by the same means to:
SuperShuttle Arizona, Inc.
4610 5. 35th Street
Phoenix, AZ 85040
Attn: R. Brian Wier
or to such other respective addresses as the parties may later designate to each
other in writing.
ARTICLE 29
PARAGRAPH HEADINGS
All paragraph and subparagraph headings of this Agreement were inserted for
reference only and shall not be considered to define or limit the scope of any
provision.
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ARTICLE 30
INVALID PROVISION
Should any provision of this Agreement be declared invalid by a court
of competent jurisdiction, the remaining terms shall nonetheless remain
effective, provided that elimination of the invalid provision does not
materially prejudice either City or Operator with regard to their respective
rights and obligations.
ARTICLE 31
SUCCESSORS AND ASSIGNS BOUND BY COVENANTS
All provisions of this Agreement shall bind the legal representatives,
successors and assigns of the respective parties.
ARTICLE 32
APPROVALS, CONSENTS AND NOTICES
All approvals, consents and notices called for in this Agreement must be in
writing and may not be established by oral testimony.
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<PAGE> 36
ARTICLE 33
AFFIRMATIVE ACTION REOUIREMENTS
Operator was required to submit an Affirmative Action Requirements document
and a written Affirmative Action Plan to the Equal Opportunity Department. In
addition to the above requirement, the Operator will be required to comply with
the following:
1. Title 49, Code of Federal Regulations, Department of
Transportation, Subtitle A, Office of the Secretary, Part 21,
Nondiscrimination in Federally-Assisted Programs of the Department of
Transportation - Effectuation of the Civil Rights Act of 1964, (42 U.S.C.
SS 2000 d-1 et seq.).
2. Title 14, code of Federal Regulations Parte 152, Subpart E,
Non-discrimination in Airport Aid Program.
3. City of Phoenix Article IV or V of Chapter 18 of the City Code
entitled Affirmative Action Requirements.
ARTICLE 34
EMPLOYEE RECRUITMENT
Operator shall use its best efforts to maximize hiring employees from
within the city of Phoenix and will undertake aggressive outreach efforts within
the local community. Operator shall actively recruit from the community and will
emphasize recruitment efforts within the City of Phoenix Enterprise Zone Areas.
Operator shall submit an annual report on employees hired from within the
designated enterprise zone boundaries. The
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report shall be submitted by December 1st, of each year of the contract term.
ARTICLE 35
EXCLUSIVE AGREEMENT
Operator acknowledges that the rights and privileges authorized herein are
exclusive to the transportation category of Time Scheduled Van Service. Nothing
herein shall be construed to limit the city's ability to issue permits for other
Ground Transportation services at Sky Harbor International Airport in accordance
with the Phoenix City Code.
ARTICLE 36
RULES AND REGULATIONS
A. General. Operator shall observe and comply with all laws, ordinances,
rules and regulations of the United States Government, the State of Arizona, the
County of Maricopa, and the City of Phoenix and all agencies thereof which may
be applicable to its operations or to the operation, management, maintenance or
administration of the Airport now in effect or hereafter promulgated; and,
further, Operator will display to City any permits, licenses, or other evidence
of compliance with such laws upon request. The City, by and through its Aviation
Director, reserves the right to promulgate such operating rules and regulations
as deemed necessary to maintain a safe, adequate and efficient van service to
the traveling public. Operator agrees to abide by the rules and regulations upon
notification thereof.
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<PAGE> 38
B. Federal Requirements. Without limiting any other conditions set forth
elsewhere in this Agreement, Operator shall comply with the specific
requirements more particularly set forth in Exhibit "B" attached hereto and
incorporated herein by this reference.
C. Compliance with the Immigration Reform and Control Act of 1986 (IRCA)
required. Operator understands and acknowledges the applicability of the IRCA to
him. Operator agrees to comply with the IRCA in performing under this Agreement
and to permit the city inspection of his personnel records to verify such
compliance.
D. Security Plan. City reserves the right to implement an Airport Security
Plan in a form acceptable to the Federal Aviation Administration limiting
access of person, vehicles, and aircraft in and around the Airport and to modify
that plan from time to time as it deems necessary to accomplish its purposes.
Operator shall at all times comply with the Airport Security Plan.
E. Right to Amend. In the event that the federal Government, acting through
The Federal Aviation Administration or any other agency requires modification of
the Agreement as a condition to the grant of funds for airport improvement,
Operator agrees to such modification and will execute any document reasonably
required to provide evidence of such agreement.
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ARTICLE 37
CONFLICT OF INTEREST
Operator hereby represents that it is familiar with the provisions of the
Phoenix Charter and Arizona Revised Statute 38-511 and certifies that it knows
of no facts which constitute a violation of said Charter. Operator further
certifies that it has made a complete disclosure to the City of all facts
bearing upon any member of the City council or other officer or employee of the
City presently has or will have in the agreement or in the performance hereof or
any portion of the profits hereof. Willful concealment of such facts by Operator
shall constitute a material breach of this agreement and shall be grounds for
termination by the City.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
CITY OF PHOENIX
a municipal corporation
FRANK A. FAIRBANKS, City Manager
By /s/ Neilson A. Bertholf, Jr.
--------------------------------
Neilson A. Bertholf, Jr.
Aviation Director
ATTEST:
/s/Vicky Miel
- ---------------------------
City Clerk
APPROVED AS TO FORM: /s/DPW
/s/Michael D. Houn
- ---------------------------
City Attorney
ACTING
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<PAGE> 40
SuperShuttle Arizona, Inc.
a Arizona corporation
By /s/ R. Brian Wier
--------------------------------
R. Brian Wier (Operator)
Title Vice President
Date 5/9/96
STATE OF ARIZONA )
)
COUNTY OF MARICOPA)
The foregoing instrument was acknowledged before me this 9th day of May, 1996 by
Name: R. Brian Wier Title: Vice President of SuperShuttle Arizona, Inc., a
Delaware corporation, on behalf of the corporation.
/s/M. Carol Greve
--------------------------------
Notary Public
My Commission Expires:
7-31-99
- ----------------------
==================================
[SEAL] "Official Seal"
M. Carol Greve
Notary Public-Arizona
Maricopa County
My Commission Expires
==================================
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<PAGE> 1
Exhibit 10.13
VAN SERVICE AGREEMENT
SACRAMENTO METROPOLITAN AIRPORT
<PAGE> 2
VAN SERVICE AGREEMENT
SACRAMENTO METROPOLITAN AIRPORT
Page
----
1.01 Definitions ....................................................... 2
2.01 Operating Rights .................................................. 2
A. Access to Airport ......................................... 2
B. Limitations on Operating Right ............................ 3
C. Prohibition ............................................... 4
D. Acceptance ................................................ 4
3.01 Scope of Services ................................................. 5
A. Management and Access ..................................... 5
B. Airport Van Service(s) .................................... 8
4.01 Fees and Rates .................................................... 11
5.01 Right to Nonexclusive Use of Airport .............................. 13
6.01 Term .............................................................. 14
7.01 Termination ....................................................... 15
8.01 Indemnification and Insurance ..................................... 15
A. Indemnification ........................................... 15
B. Insurance ................................................. 16
9.01 Nonwaiver of Rights ............................................... 18
10.01 Headings .......................................................... 19
11.01 Nuisance and Waste ................................................ 19
12.01 Signs and Advertising ............................................. 19
13.01 Notice of Claims and Suit ......................................... 20
14.01 Notices ........................................................... 20
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<PAGE> 3
Page
----
15.01 Amendment Required by FAA ......................................... 21
16.01 Federal Grant Agreement Assurances ................................ 21
17.01 Assignment and Subcontracting ..................................... 22
18.01 Taxes ............................................................. 22
A. Possessory Interest and Property Taxation ................. 22
B. Right to Contest Taxes .................................... 22
19.01 Independent Contractor ............................................ 23
20.01 Applicable Law .................................................... 24
21.01 County Right to Repair Facilities ................................. 24
22.01 Right to Develop Airport .......................................... 25
23.01 Invalid Provisions - Severability ................................. 25
24.01 Successors ........................................................ 25
25.01 Force Majeure ..................................................... 25
26.01 Authority of Director ............................................. 26
27.01 Performance Bond .................................................. 26
28.01 Judicial or Administrative Determination .......................... 26
29.01 Exclusion from Permit Requirements of SCC Chapter 11.09 ........... 26
-ii-
<PAGE> 4
VAN SERVICE AGREEMENT
SACRAMENTO METROPOLITAN AIRPORT
THIS VAN SERVICE AGREEMENT, hereinafter referred to as the "Agreement", is
made and entered into this ___ day of _________________, 1995, by and between
the COUNTY OF SACRAMENTO, a political subdivision of the State of California,
hereinafter referred to as "COUNTY", and SuperShuttle of San Francisco, Inc., a
Delaware corporation authorized to do business in the State of California,
hereinafter referred to as "Contractor".
RECITALS
WHEREAS, County is the owner and operator of the Sacramento Metropolitan
Airport, hereinafter referred to as "Airport", located in the County of
Sacramento; and
WHEREAS, ground transportation of passengers arriving at or departing from
the Airport is an essential service to such users of the Airport; and
WHEREAS, pursuant to Government Code Section 50474, the County is
authorized to regulate the use of the Airport and facilities and means of
transportation at the Airport; and
WHEREAS, Contractor is ready, willing and able to provide the Airport Van
Service required by the County at the Airport, and is authorized by the City of
Sacramento, County of Sacramento and all other applicable governing public
entities to engage in the business of transporting passengers for hire; and
WHEREAS, the Board of Supervisors of County has determined that it is in
the interests of the health, safety and general welfare of the public which uses
the Airport to enter into this Agreement;
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<PAGE> 5
NOW, THEREFORE, in consideration of mutual promises, the parties hereby
agree that Contractor's activities at Airport for the period stated herein shall
be governed by the following terms and conditions:
1.01 Definitions.
A. "van" means the vehicle utilized by Contractor to provide Airport Van
Service at the Airport. Such van shall have the capacity to transport not less
than six (6) nor more than fourteen (14) passengers.
B. "Airport Van Service" means using a van to provide ground transportation
services to any member of the public requiring such services for transportation
of any person(s) or baggage either to or from the Airport regardless of whether
the services are prearranged or not.
C. "Director" means the Director of Airports of County, or his or her
designated representative(s).
2.01 Operating Rights.
Contractor shall have the below-described privileges, uses, and rights, all
of which shall be subject to the terms, conditions and covenants herein set
forth.
For the sole purpose of providing Airport Van Service, County grants to
Contractor the right, license and privilege to provide such Service to the
public at the Airport.
A. Access to Airport. In operating the Airport, the Director shall
designate areas on the Airport commonly available to ground transportation
providers authorized to use the Airport, including both passenger stage and
taxicab operations. Such designated areas are subject to modification and
relocation, at any time, by the Director. For the staging and pick-
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<PAGE> 6
up/discharge of van passengers, Contractor shall have a permit to use areas
specified by the Director. The current locations for van staging and
pick-up/discharge are specified in Exhibit A, attached hereto and by this
reference incorporated herein. However, there is no intent to grant, through
this Agreement, any tenancy or use rights in the areas identified in said
Exhibit, and the Director shall have sole discretion to, from time to time,
alter the number of, reconfigure, or relocate any or all of said van staging and
pick-up/discharge areas.
B. Limitations on Operating Right.
(1) Nothing herein contained shall be construed as preventing the
Director from permitting any other ground transportation business using
van(s) to provide:
(a) ground transportation services to or from the Airport premises
from or to any non-Airport location so long as the ground
transportation services being provided are "prearranged" as that term
is defined in Sacramento County Code Section 11.09.009, as that
Section may be amended from time to time; or
(b) ground transportation services that are not prearranged so long as
the services, in the sole determination of the Director, are not being
provided to or from any location specified in Exhibit C.
(2) Nothing herein contained shall be construed as preventing the
Director from permitting any ground transportation businesses from
providing ground transportation services other than Airport Van Services to
or from the Airport premises, including, but not limited to, such services
as taxicabs, charter party or passenger stage operations, limousines, or
courtesy vehicles.
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(3) The Director may, at such times as Contractor fails to provide an
adequate number of vans at Airport as required herein, utilize the services
of other ground transportation businesses to provide Airport Van Service(s)
for such period of time as the Director determines is appropriate. Such
other ground transportation businesses may, during such period of time, use
the areas designated herein or such other areas as the Director determines
are appropriate. The Director shall make reasonable efforts to notify
Contractor by telephone prior to any such utilization of any other ground
transportation business to provide Airport Van Service(s). However, where
such failure to provide an adequate number of vans occurs more than twice
in any three month time frame, the Director shall be forever excused from
this prior notification by telephone requirement provided such failure was
not for reasons beyond SuperShuttle's control.
C. Prohibition. Contractor shall not perform any service at Airport other
than the Airport Van Services authorized in this Paragraph 2.01.
D. Acceptance. Contractor shall perform the services and obligations
described herein pursuant and subject to all of the terms, conditions, and
covenants contained in this Agreement and in Sections 3 and 4 of the Ground
Transportation Rules and Regulations promulgated by the Director pursuant to
Sacramento County Code Chapter 11.09, as those Rules and Regulations may be
amended from time to time. A copy of the Ground Transportation Rules and
Regulations to become effective October 9, 1995, is attached to this Agreement
as Exhibit B. In addition, Contractor shall provide Airport Van Service(s) to
and from each of the Designated Service Areas listed in Exhibit C, as such areas
may be added to
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or deleted from time to time as determined solely by the Director to
be necessary to accommodate public demand for such Airport Van
Service(s) and as determined solely by the Director to be within sound
business practices.
3.01 Scope of Services
A. Management and Access.
1. Contractor shall manage and operate the Airport Van Service(s)
required by this Agreement in an orderly, proper, professional and
first-class manner. In this regard, one primary purpose for the County
entering into this Agreement is to assure that Airport Van Services are
provided promptly to arriving passengers. This means that arriving
passengers seeking Airport Van Service to areas within 25 miles of the
Airport will, under normal operating conditions, not have to wait more than
15 minutes for a van to begin the trip taking them to their destination.
Arriving passengers seeking Airport Van Service to areas more than 25
miles, but less than 50 miles from the Airport, will, under normal
operating conditions, not have to wait more than 45 minutes for a van to
begin the trip taking them to their destination. Arriving passengers
seeking Airport Van Service to areas more than 50 miles from the Airport,
will, under normal operating conditions, not have to wait more than 90
minutes for a van to begin the trip taking them to their destination. These
time constraints shall be utilized by the Director in determining whether
the Contractor is providing an adequate number of vans as required by this
Agreement.
a. The Director shall be the one to determine what constitutes
"normal operating conditions" as used in this Paragraph.
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b. Contractor understands and acknowledges that Airport Van
Services constitute an essential element of the available ground
transportation services at the Airport and that an inefficient,
unprofessional van operation will have a detrimental impact on the
comfort, safety, and convenience of the users of the Airport and will
detract from the Airport's attractiveness for tourism and commerce.
c. If, in the Director's opinion, the Airport Van Services
authorized under this Agreement are not being managed or provided in a
professional manner, the Director may recommend the termination of the
Agreement to the Board of Supervisors of the County.
(i) The Director shall give Contractor written notice of the
proposed recommendation and reasons therefor and Contractor shall
have no more than thirty (30) days after receipt thereof to
provide a written response to the Director.
(ii) Any determination of the Board of Supervisors of the
County that the Airport Van Services authorized under this
Agreement are not being managed or provided in a professional
manner shall be conclusive and shall be grounds for the immediate
termination of this Agreement.
2. In providing the Airport Van Services authorized herein, the
vehicles used by Contractor shall be kept in a first-class condition in
accordance with the requirements
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of Sections 3 and 4 of Exhibit B and as those Sections may be amended from
time to time. Contractor shall cause all vans to be operated via the most
direct and safest route(s).
3. Contractor shall submit to the Director within twenty (20) days
following the last day of each month of operation, a written statement
accurately setting forth the actual number of trips made by Contractor's
vehicles in performing under this Agreement.
4. Contractor shall have full and complete responsibility for the
conduct and behavior of its van operators and shall operate its Airport Van
Services in accordance with the requirements of this Agreement, State and
federal laws, County ordinances, and Sections 3 and 4 of Exhibit B, as any
of these requirements may be amended from time to time.
a. Any other provision of this Agreement notwithstanding, the
Director shall have authority to deny access to the Airport to any van
operator or other employee of Contractor who, as determined by the
Director, has violated State or federal laws, Sections 3 or 4 of the
Ground Transportation Rules and Regulations set forth in Exhibit B as
those Sections may be amended from time to time, the requirements of
this Agreement, or has otherwise engaged in conduct which is
detrimental to the best interests of the public or the safe and
effective operation of the Airport by the County.
b. Although the Director shall have the authority to exclude, for
cause, individual employees or equipment, from participating in
Airport Van Services
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provided by Contractor under this Agreement, it is not the intent of
the parties that the Director shall thereby assume any management
responsibility for the Airport Van Services authorized herein.
5. The Director may direct concerns or complaints pertaining to
Airport Van Services provided by Contractor under this Agreement to
Contractor for investigation. Upon written demand by the Director, by a
date and time specified by the Director, Contractor shall provide a written
report responding to any issues presented by the Director with regard to
any concern or complaint, and specifying any necessary remedial action
taken, or to be taken, by Contractor. Upon written demand of the Director,
Contractor shall submit all of its written records, including those
pertaining to personnel matters, relating to such concern or complaint.
B. Airport Van Service(s).
1. Contractor shall obtain all permits, approvals, licenses and
certificates and other authorization necessary for the conduct and
operation of the Airport Van Services required by this Agreement.
2. Contractor shall also obtain qualified drivers, dispatchers, and
such other employees, in such numbers as are necessary for the adequate
operation of the services required of Contractor by this Agreement.
Throughout the term of this Agreement, all Contractor's employees shall
possess, and shall furnish on demand of the Director, all valid permits,
licenses, California driver's licenses, approvals and certificates required
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by applicable laws and regulations. All such permits, licenses, approvals
and certificates shall be obtained and furnished by Contractor or by said
van operators or other employees without expense to County.
3. The use by any employee of Contractor of radios, amplification or
other sound-emitting devices for use in any manner in which sounds produced
from such devices will be heard in the terminal areas, the Airport parking
facilities, the Airport roadways, the sidewalks, or any other public common
area is prohibited.
4. All of Contractor's van operators and other employees, while
rendering services or on duty at the Airport, shall be neat and clean in
appearance, and shall conduct themselves with courtesy and respect for
others and in a manner associated with an orderly, proper, professional and
first-class public service.
5. Contractor shall retain, at its own expense, qualified, competent,
and experienced supervisors and other management personnel as may be
necessary for the adequate operation of the Airport Van Services to be
provided under this Agreement.
a. Such supervisors and other management personnel shall be
authorized to represent and act for Contractor at all times.
b. Unless otherwise approved by the Director in writing,
Contractor shall retain at Airport one such supervisor or manager
between 6:00 a.m. and last incoming flight of each day. A supervisor
or manager shall be available at all other hours by telephone.
c. Contractor shall notify the Director of the persons who are
authorized to act as supervisors and managers.
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6. Contractor, either through its employees or otherwise, shall not
solicit (except by standing and waiting of vehicles).
7. Contractor shall, as a minimum service requirement, provide not
less than two vans during all the hours during which commercial airline
flights arrive at the Airport. The minimum service requirements may be
changed from time to time by the Director on ten (10) days' prior written
notice to Contractor, based upon the Director's sole judgment as to the
public demand for van transportation and what is adequate to meet such
demand.
8. Except as otherwise approved in writing by the Director, Contractor
agrees to provide Airport Van Service(s) to any location served by
Contractor to any disabled person(s) arriving at the Airport by commercial
aircraft by utilizing lift equipped vehicles.
9. The authority of the Contractor to provide the Airport Van Services
under this Agreement may be temporarily suspended by the Director any time
the Director determines, in his or her sole discretion, that such a
suspension is necessary to protect against a serious and immediate threat
to public health, safety or welfare. In the event the Director orders a
temporary suspension, the notice of suspension shall contain the following:
a. The factual basis for the temporary suspension;
b. The time and date on which the temporary suspension commences;
and
c. The time, date and place at which the Contractor may appear
for the purpose of responding to allegations contained in the notice
which time, date
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and place shall be no later than twenty-four (24) hours following
notice of suspension.
For purposes of giving notice under this paragraph, the Director
shall cause such notice to be hand delivered to the principal
Sacramento County office of the Contractor or to any van operator, or
other employee of Contractor if the principal Sacramento County office
is unknown to the Director.
10. All of Contractor's vehicles shall be marked with such
identification as the Director may require and Contractor shall
furnish to the Director the registration certificates and all
pertinent information relating to the vehicles used in providing
Airport Van Services prior to using any vehicle in providing those
services. Contractor shall permit the inspection by the officers,
employees, and representatives of the County of any vehicle or other
equipment used by Contractor in performance of this Agreement.
4.01 Fees and Rates
1. A Per Trip Rental shall be assessed by the County upon
Contractor for and during the term of this Agreement.
a. The term "Per Trip Rental" means that amount to be paid
for each trip by a van departing the Airport for purposes of
providing Airport Van Service(s) pursuant to this Agreement.
Intra-Airport trips, and trips made to the Airport solely to
discharge passengers, shall not be considered as "trips" for
rental purposes.
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b. Such Per Trip Rental shall be the amount established by
the Board of Supervisors of County, and may be amended from time
to time as deemed appropriate by the Board of Supervisors.
c. As of the effective date of this Agreement, the Per Trip
Rental shall be One Dollar and 25/100 Cents ($1.25) per trip.
d. The parties agree that the Director shall establish a
procedure whereby the Per Trip Rental is collected by the County
directly from Contractor.
2. The rates charged by Contractor to passengers for the
furnishing of Airport Van Service shall be the amount established in a
Maximum Rate Schedule.
a. The Maximum Rate Schedule, as thus fixed, shall be
binding upon Contractor.
b. As of the effective date of this Agreement, the Maximum
Rate Schedule is as specified in Exhibit D. This Maximum Rate
Schedule may be amended by the Director as determined solely by
the Director to be consistent with the County's purposes for
entering into this Agreement and as determined solely by the
Director to be necessary for Contractor to provide Airport Van
Services to and from the Airport in an orderly, proper,
professional and first class manner.
c. The Maximum Rate Schedule, including charges for carriage
of baggage shall be posted in conspicuous places at the Airport
by the Director and by Contractor in and on each of its vans, in
a manner approved by the Director in writing.
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3. Contractor is obligated to, as a condition of operating on
Airport premises, pay the required Per Trip Rental fee in the manner
required by Director and to not charge rates in excess of those
established under the Maximum Rate Schedule.
a. County shall give notice to Contractor of any
circumstance where County has or receives a complaint or evidence
that Contractor has failed to pay the required fee or has charged
rates in excess of those set forth in the Maximum Rate Schedule.
b. In addition to any other action taken by Contractor or
the Director, Contractor shall be obligated to pay the required
fee or refund an excessive charge where the Director finds that
such complaint is valid after an investigation of the
circumstances, including any written response of the Contractor.
Such payment or refund shall be made within ten (10) days or
receipt of the Director's written finding.
4. All fees, rentals and other payments required by this
Agreement shall be paid without diminution or abatement, regardless of
the existence or creation of any mode of transportation which serves
the general public, whether or not such service is operated by public,
quasi-public and/or private parties and whether or not such service
includes the Airport.
5.01 Right to Nonexclusive Use of Airport
A. Contractor throughout the term hereof, shall have the right to the
nonexclusive use, in common with others so authorized, to use common areas of
the Airport, including roadways and other conveniences, which right shall extend
to Contractor's employees, guests,
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invitees and patrons. However, neither Contractor nor Contractor's employees,
guests, invitees and patrons shall, under any circumstances, impair ingress or
egress to any leased or public areas of the Airport;
B. The privilege of ingress and egress shall be subject to the rules and
regulations of the County now in effect and which may hereinafter be promulgated
for the safe and efficient operation of the Airport. The Director may, at any
time, temporarily or permanently, close any roadway and any other area at the
Airport presently or hereinafter used as such, so long as a reasonable
alternative means of ingress and egress remains available to Contractor. The
Director may, at any time, temporarily or permanently close, change, or alter
the use of any pedestrian routing through any part or parts of the Airport and
its terminal building areas. Such adjustments or changes may directly or
indirectly affect the amount and flow of potential customer traffic for
Contractor. However, in entering into this Agreement, Contractor recognizes and
agrees that such changes are within the sole operational control and
responsibility of the County and that Contractor shall have no claim against
County for any such action.
6.01 Term.
The term of this Agreement shall commence at 12:0 1 a.m. on October 9,
1995, and, unless sooner terminated pursuant to the terms of this Agreement,
shall end at 11:59 p.m. on June 30, 2000, or, at the sole option of the County
Board of Supervisors, may end on the Date of Beneficial Occupancy of the East
Terminal, whichever ending date occurs first in time. The Date of Beneficial
Occupancy of the East Terminal means the date the East Terminal is open and used
by the public for travel, as given by written notice of the Director.
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7.01 Termination.
Either party may terminate this Agreement for any reason by providing at
least sixty (60) days advance written notice of termination to the other party.
The County also shall have the right to immediately terminate this Agreement
without providing sixty (60) days advance written notice if the County
determines that the Airport Van Services provided by Contractor pursuant to this
Agreement are not being provided in a professional, first class manner or
otherwise jeopardize the health, safety, or general welfare of the public.
8.01 Indemnification and Insurance.
A. Indemnification. Contractor shall indemnify, defend, and hold County and
its elected representatives, officers, agents, and employees harmless from and
against all liabilities, losses, costs, suits, claims, judgments, expenses,
fines or demands of any kind (including, but not limited to, costs of
investigation, attorney fees, court costs, and expert fees), resulting from any
injury, damage or death to any person or any property, of any nature whatsoever,
and arising out of, alleged to arise out of, or in any way, shape, manner or
form related to, either directly or indirectly, the Airport Van Services
provided by Contractor, or any of its officers, agents, employees, contractors,
subcontractors, licensees, or invitees, pursuant to this Agreement, regardless
of where the injury, damage, or death may occur.
Contractor shall not be liable for any injuries, death, or damage to the
extent that such injury, death or damage is caused by the negligence of County,
its elected representatives, officers, agents or employees. Further, it is the
intent of the parties that where the negligence of the County, its elected
representatives, officers, agents or employees is determined to have been
contributory, the principles of comparative negligence as applied in the State
of
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California shall be followed and each party shall bear the proportionate cost of
any loss, damage, or liability attributable to that party's negligence.
The provisions of Paragraph 8.01(A) shall survive the expiration or
termination of this Agreement.
B. Insurance.
(1) Throughout the term of this Agreement, Contractor shall maintain
in full force and effect the forms of insurance specified by Subparagraphs
(i), (ii) and (iii) of this Paragraph 8.01(B)(1). Contractor acknowledges
that the minimum liability limit set forth, respectively, under
Subparagraphs (3) and (4) of this Paragraph 8.0 1(B) are the minimum
insurance policy liability limits which County currently requires for
commercial ground transportation operators on the Airport. Contractor
further understands and agrees that the minimum limits of insurance herein
required may become inadequate during the term of this Agreement, and
Contractor agrees that it will increase the minimum limits by reasonable
amounts requested by the Director. In such event, Contractor shall, in
consideration of the rights and privileges granted to it hereunder,
increase its insurance coverage accordingly, upon thirty (30) days advance
written notice from the Director. Within thirty (30) days following the
date of such notice, Contractor shall submit evidence of such increased
insurance coverage to the satisfaction of the Director, in accordance with
all provisions herein relating to the submittal of evidence of insurance.
Contractor shall maintain all insurance hereunder with insurance
underwriters authorized to do business in the State of California. All
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liability insurance policies shall be amended to include the following
wording or wording which has the same substance or effect as the following
wording:
(i) "The County of Sacramento and each of its elected
representatives, officers, agents, and employees, in their respective
capacities as such, are added as insureds hereunder with respect to
the products, premises, and operations of the Contractor."
(ii) "It is agreed that any insurance and/or self-insurance as
may be maintained by the County of Sacramento or its officers, agents,
and employees shall apply in excess of and shall not contribute with
insurance provided by this policy."
(iii) "This insurance shall not be cancelled, limited, or
non-renewed until after thirty (30) days advance written notice has
been given to the County of Sacramento."
(2) Each such policy shall include severability of interest wording
specifying the coverage afforded thereunder applies separately to each
insured thereunder. At least ten (10) days prior to the effective date of
this Agreement, Contractor shall furnish the Director with evidence of all
insurance policies required by Subparagraph (1) and (2) of this Paragraph
8.0 1(B). All such evidence for each policy shall be in the form of
certificates of insurance, and/or binders, and/or endorsements,
satisfactory to the Director, containing the language required by
Subparagraphs (i), (ii) and (iii) of this Paragraph 8.01 (B). Upon request
by the Director, Contractor shall furnish the County with a true copy of
each such insurance policy. The obligations of Contractor under
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the insurance provisions contained herein shall remain in effect and shall
survive, without limitation, the expiration or termination of this
Agreement with respect to any occurrence or claims arising during the term
of or in connection with this Agreement.
(3) Contractor shall maintain commercial general liability insurance
covering bodily injury, property damage, personal injury, cross-liability
with a liability limit of not less than One Million Dollars ($1,000,000)
combined single limit for each occurrence on an occurrences form policy.
(4) Contractor shall maintain motor vehicle liability insurance
covering personal injury and property damage, with a liability limit of not
less than One Million Five Hundred Thousand and No/l00 Dollars
($1,500,000).
(5) Contractor shall, upon request, furnish to County adequate
evidence of provisions for employers' liability insurance, workers'
compensation insurance, and social security and unemployment compensation,
to the extent such provisions are applicable to Contractor's operations
hereunder.
9.01 Nonwaiver of Rights.
No waiver or default by either party hereto of any of the terms, promises,
covenants, or conditions hereof to be performed, kept, and observed by the other
parties shall be construed as, or shall operate as, a waiver of any subsequent
default of any of the terms, promises, covenants or conditions herein contained,
to be performed, kept, and observed by the other party.
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10.01 Headings.
The headings of the articles in paragraphs of this Agreement are inserted
only as a matter of convenience and for reference, and do not define or limit
the scope or intent of any provisions of this Agreement and shall not be
construed to affect in any manner the terms and provisions hereof or the
interpretation or construction thereof.
11.01 Nuisance and Waste.
Contractor shall not erect nor permit to be erected any nuisance on the
designated areas or premises of the Airport or permit any waste thereof.
Contractor shall not permit its van operators and other employees to litter on
or off Airport premises and shall take all necessary steps to prohibit all of
its employees from littering.
12.01 Signs and Advertising.
Except to the extent required by law, Contractor shall not erect, maintain,
or display a sign of any kind on its vehicles used in the performance of the
Airport Van Services required by this Agreement, or used elsewhere on Airport
premises, without the prior written consent of the Director. Contractor shall
submit drawings, sketches, designs and dimensions of any proposed sign to the
Director when requesting such approval. All such signs shall be consistent with
County's general sign policy for Airport. Any condition, restriction, or
limitation as to use or appearance of such signs as may be stated by the
Director in writing shall become a part of this Agreement, as if specifically
set forth herein.
The parties hereto agree that Contractor shall not permit any advertising
of any kind on its vehicles. However, Contractor may advertise its Airport Van
Services on Airport
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premises provided the Director approves in writing the locations of such
advertisements and the form and content of all such advertisements.
13.01 Notice of Claims and Suit
County and Contractor shall each give the other prompt and timely written
notice of any personal injury or other accident claim and of any lawsuit coming
to its knowledge when either such claim or lawsuit arises out of or is in any
way connected with the use of the Airport, the operations of Contractor
hereunder, or the construction or operation of Airport by County, and which in
any way, directly or indirectly, contingently or otherwise, might reasonably
affect the parties' relationship under this Agreement. Such notice shall be
deemed prompt and timely if given within thirty (30) calendar days following the
date of receipt of such claim by an officer, agent, or employee or either party,
and if given within ten (10) calendar days following the date of service of
process upon either party with respect to any such lawsuit.
14.01 Notices.
Any notice, demand, request, consent, or approval that either party hereto
may be or is required to give the other, shall be in writing, and shall be
either personally delivered or sent by certified mail in a postage paid envelope
addressed as follows:
TO COUNTY: TO CONTRACTOR:
Director of Airports SuperShuttle of San Francisco, Inc.
County of Sacramento 700 Sixteenth Street
6900 Airport Boulevard San Francisco, CA 94107
Sacramento, CA 95837-1109
Either party hereto shall have the right by giving fifteen (15) days
advance notice to the other, to change the address of which it will receive such
communications.
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Such communications shall be deemed received upon delivery, if personally
delivered, or on the third day following deposit in the mail, if sent by mail.
15.01 Amendment Required by FAA.
This Agreement may be amended without further consideration for the
purposes of satisfying FAA requirements.
16.01 Federal Grant Agreement Assurances.
Those certain seventeen (17) numbered provisions set forth within Section B
of Exhibit E, entitled "Assurances Required by the Federal Aviation
Administration," attached hereto and made a part hereof, are those specific
provisions required by the FAA to be appropriately included within all
agreements (including, without limitation, leases, licenses, permits, and
contracts) between County and any and all persons and/or entities who use or
perform work or conduct activities on County-owned Airport premises for
aeronautical or non-aeronautical purposes. Contractor, by its signature(s)
hereunto affixed, acknowledges that it has reviewed the aforesaid Exhibit, in
its entirety, and fully understands the meaning, purpose, and intent thereof.
Contractor expressly agrees that, throughout the term of this Agreement, it
shall fully and faithfully comply with, abide by and/or adhere to, as applicable
and appropriate, each and every one of the numbered provisions contained within
Section B of said Exhibit (as said numbered provisions are reflected herein or
as same may be amended, from time to time, during the life hereof, by County, as
and when the FAA's requirements thereon imposed may so dictate), which, pursuant
to the guidelines established within paragraphs 2 through 4 of Section A of said
Exhibit, shall either be applicable to Contractor on the start date of the term
hereof or which, as a result of changes and/or circumstances,
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shall subsequently become applicable to Contractor, hereunder, during the term
of this Agreement.
17.01 Assignment and Subcontracting.
Except as requested in writing by Contractor and authorized in writing by
the Director, Contractor's rights and obligations under this Agreement are not
assignable or delegable, and Contractor agrees not to subcontract any Airport
Van Service authorized by this Agreement.
18.01 Taxes.
Contractor shall, at its sole cost and expense, pay any and all taxes for
which it is responsible.
A. Possessory Interest and Property Taxation. Under this Agreement a
possessory interest subject to property taxation may be created. Pursuant to
California Revenue and Taxation Code Section 107.6 and Government Code Section
53340.1, notice is hereby given that such property interest may be subject to
property taxation and special taxation pursuant to Chapter 2.5, Division 2, of
the Government Code (Mello Roos Community Facility Act of 1982), and that
Contractor may be subject to the payment of property taxes and special taxes
levied on such interest. Contractor shall pay all taxes of whatsoever character
that may be levied or charged upon Contractor's interest as herein may be
created, improvements or operations hereunder and upon Contractor's right to use
the Airport pursuant to this Agreement.
B. Right to Contest Taxes. Contractor shall have the right to contest in
its own name, or, to the extent reasonably necessary, in County's name, in good
faith and by all appropriate proceedings, the amount, applicability, or validity
of any tax assessment
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pertaining to the surface of Airport property and Contractor's operations
thereon. In the event Contractor initiates such contest, County shall reasonably
cooperate with Contractor provided that such contest will not subject any part
of the surface of Airport property to forfeiture or loss; and provided, further,
that if Contractor contests any assessment made by the Assessor of County, such
contest shall not be initiated in the name of County, and County shall not be
obligated to cooperate therewith. If at any time payment of any tax or
assessment becomes necessary to prevent any forfeiture or loss, Contractor shall
timely pay such tax or assessment to prevent such forfeiture or loss.
19.01 Independent Contractor.
A. It is understood and agreed that Contractor (including contractor's
employees) is an independent contractor and that no relationship of
employer-employee exists between the parties hereto. Contractor's assigned
personnel shall not be entitled to any benefits payable to employees of County.
County is not required to make any deductions or withholdings from the
compensation payable to Contractor under the provisions of this Agreement; as an
independent contractor, Contractor hereby indemnifies and holds County harmless
from any and all claims that may be made against County based upon any
contention by any third party that an employer-employee relationship exists by
reason of this Agreement.
B. It is further understood and agreed by the parties hereto that
Contractor in the performance of its obligation hereunder is subject to control
or direction of County as to the designation of tasks to be performed, the
results to be accomplished by the services hereunder agreed to be rendered and
performed, and not the means, methods, or sequence used by Contractor for
accomplishing the results.
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C. If, in the performance of this Agreement, any third persons are employed
by Contractor, such person shall be entirely and exclusively under the
direction, supervision, and control of Contractor. All terms of employment,
including hours, wages, working conditions, discipline, hiring, and discharging,
or any other terms of employment or requirements of law, shall be determined by
Contractor.
D. It is further understood and agreed that as an independent contractor
and not an employee of County, neither the Contractor nor Contractor's assigned
personnel shall have any entitlement as a County employee, right to act on
behalf of County in any capacity whatsoever as agent, nor to bind County to any
obligation whatsoever.
E. It is further understood and agreed that Contractor must issue W-2 Forms
for income and employment tax purposes, for all of Contractor's assigned
personnel under the terms and conditions of this Agreement.
20.01 Applicable Law.
The language of this Agreement shall be construed according to its fair
meaning and not strictly for or against the County or Contractor. This Agreement
shall be construed and the performance thereof shall be in accordance with the
laws of the State of California. Venue for any action between the County and the
Contractor arising out of or in connection with this Agreement shall be in the
County of Sacramento, California.
21.01 County Right to Repair Facilities.
Any portion of this Agreement to the contrary notwithstanding, the County
shall have the absolute right to make any repairs, alterations, and additions to
Airport terminal buildings or any other Airport facilities, free from any and
all liability to Contractor herein for loss of
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business or damage of any nature whatsoever sustained by Contractor during the
making of such repairs, alterations, and additions.
22.01 Right to Develop Airport
The County reserves the right to further develop or improve the Airport and
all landing areas, taxiways, and terminal areas. The staging and
pick-up/discharge areas, and any other part of the ground transportation
facilities and operations at the Airport, may be altered or relocated at the
discretion of the County.
23.01 Invalid Provisions - Severability.
In the event any term, covenant or condition contained herein is held to be
invalid by any court, such invalidity shall not affect any other term, covenant
or condition contained herein, unless the invalidity materially prejudices
either the Contractor or the County in their respective rights and obligations
hereunder in which case this Agreement may be voided by the party prejudiced
upon written notice to the other party.
24.01 Successors.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and personal representatives of the parties
hereto.
25.01 Force Majeure.
In the event the Director determines that Contractor is unable to provide
ground transportation service, at any time, by reason of force majeure,
including disruption caused by any strike, work stoppage or slowdown, or the
Director notifies Contractor in writing that such force majeure is affecting
Contractor's obligation to provide Airport Van Services as required herein,
then, in such an event, notwithstanding any provisions in this Agreement
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<PAGE> 29
provided to the contrary, the County may itself provide, or authorize any other
person to provide, Airport Van Services on any terms and conditions which the
County may require.
26.01 Authority of Director
The Director shall administer this Agreement on behalf of the County.
Unless otherwise provided herein or required by applicable law, the Director
shall be vested with all rights, powers, and duties of County hereunder; except
that any early termination of this Agreement shall be pursuant to authorization
of the Board of Supervisors. With respect to matters hereunder subject to the
approval, satisfaction or discretion of County or the Director, the decision of
the Director in such matters shall be final.
27.01 Performance Bond.
Throughout the term of this Agreement, Contractor shall provide and
maintain a cash performance bond in the amount of Ten Thousand Dollars
($10,000.00). A certificate of deposit payable to the County of Sacramento
without restrictions or a bank guaranteed letter of credit with the County as
first lien holder and unrestricted right to the Contractor's credit line will be
considered a valid substitute for a cash bond. No other form of bond will be
accepted.
28.01 Judicial or Administrative Determination.
In the event that federal or state courts having judicial jurisdiction, or
regulating agencies having administrative jurisdiction, declare or deem the
rights and privileges granted by this Agreement to Contractor to be invalid,
unenforceable, or void, or in the event that such courts or agencies determine
that access to the Airport by other users may not be
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<PAGE> 30
restricted as contemplated by this Agreement, then, the County may comply with
any such judicial or administrative determinations without being deemed in
violation of this Agreement.
29.01 Exclusion from Permit Requirements of SCC Chapter 11.09
Notwithstanding anything in this Agreement to the contrary, Contractor is
expressly excluded from the requirements of SCC Chapter 11.09 except that those
provisions of SCC Chapter 11.09 relating to the authority of the Director and to
appeals of denial of access to the Airport for ground transportation business
purposes shall apply to Contractor, its officers, agents, employees,
contractors, subcontractors, licensees and invitees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COUNTY OF SACRAMENTO, a political
subdivision of the State of California
By /s/Muriel L. Johnson
Chairperson, Board of Supervisors of
Sacramento County, California
"COUNTY"
In accordance with Section
25103 of the Government Code
of the State of California a
copy of this document has been
delivered to the Chairman of
the Board of Supervisors,
County of Sacramento on
SEP 05 1995
[SEAL-COUNTY OF SACRAMENTO, CALIFORNIA]
ATTEST:
/s/Cindy Holloway /s/Jennifer Auld
------------------------- ----------------------------------
Clerk of the Board Deputy Clerk, Board of Supervisors
of Supervisors
SUPERSHUTTLE OF SAN FRANCISCO, INC.
By /s/Ray MacIntyre
----------------------------------
Ray MacIntyre, General Manager
SuperShuttle of San Francisco, Inc.
"CONTRACTOR"
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<PAGE> 31
APPROVED AS TO TERMS AND
CONDITIONS:
/s/Thomas P. Engel
- ---------------------------------
Thomas P. Engel, Director
Department of Airports
APPROVED AS TO FORM:
/s/Steven M. Basha
- ---------------------------------
Steven M. Basha
Deputy County Counsel
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<PAGE> 1
Exhibit 10.14
DOOR-TO-DOOR SHUTTLE
UPPER LEVEL ONLY
COMMERCIAL GROUND TRANSPORTATION OPERATING PERMIT
AIRPORTS COMMISSION
CITY AND COUNTY OF SAN FRANCISCO
DIRECTOR OF AIRPORTS EXECUTIVE ACTION NO. 2816
Permittee is hereby authorized and permitted by the City and County of San
Francisco, a municipal corporation, hereinafter referred to as "City", acting by
and through its Director of Airports, hereinafter referred to as "Director", to
operate its business or a phase thereof at the San Francisco International
Airport, hereinafter referred to as "Airport", for the following purposes only
and subject to the terms and conditions hereinafter set forth. Whenever the word
"Commission" is used herein it refers to the Airports Commission of the City and
County of San Francisco.
The following specific terms and conditions are hereby mutually agreed to
between City and SuperShuttle, (hereafter referred to as "Permittee"):
1. Use Purpose Defined
Provide Door-to-Door Shuttle ground transportation service to airline
passengers whose flights are arriving at or departing from the San Francisco
International Airport. Passenger pick-ups in conjunction with the providing of
such services, may be made only at the BLUE LOADING zones on the Upper Level of
the Terminal Roadways, only by authorized vehicles
<PAGE> 2
bearing a valid Airport identification decal and automatic vehicle
identification device (transponder) issued by Director.
Charter transportation passenger pick-up service provided in conjunction
with Door-to-Door Service may be provided with a proper waybill only in the
lower level courtyards provided for such purpose.
Passenger drop-offs may be made at the white terminal curb zones on the
Upper Level of the Terminal Roadways, only by authorized vehicles bearing a
valid identification decal and automatic vehicle identification device issued by
Director.
2. Term of Permit
This Permit shall become effective on January 15, 1994, and shall continue
in force on a thirty (30) day, month-to-month basis, until revoked or mutually
cancelled as hereinafter provided.
3. Uses Permitted
Permittee shall be limited to the number of shuttle vans as authorized by
the Director which may be used for active passenger loading on the upper level
center islands in each of the North, South and International Terminal curb
loading zones.
Permittee shall provide, door-to-door shuttle van service from the
Airport's upper level center island to at least one (1) of the following six (6)
Bay Area geographic areas:
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<PAGE> 3
1. San Francisco, City and County;
2. San Mateo County;
3. Santa Clara County;
4. Alameda County;
5. Contra Costa County;
6. Marin County.
Permittee shall provide the Airport with the most current price of fares to
be charged for its services from the Airport to and within each county served.
4. Operation
Permittee shall have on file with the Director a copy of driver training
program, curb coordinator program, vehicle maintenance program, customer
relations program, disability program and reservation program prior to
commencement of operations under this Permit. All drivers, Curb Coordinators,
and Independent Contractors, shall receive a certificate to be issued by
Permittee verifying completion of training program prior to commencing
on-Airport operations.
Permittee shall operate, or have under contract or within Permittee's
control, shuttle vans which are available to provide door-to-door shuttle
service pursuant to this Permit, some of which shall be accessible to passengers
in accordance with the Americans with Disabilities Act of 1990 (ADA) or as may
be revised. Shuttle vans shall be designated to carry not less than six (6)
passengers and not more than eleven (11) passengers for the transportation of
airline passengers and the public between the Airport and other points outside
the limits of Airport at posted rates. All shuttle vans shall have commercial
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<PAGE> 4
license plates and the California public Utilities Commission's Transportation
Charter Party and/or Passenger Stage Corporation number displayed.
A. Each shuttle van operated under this Permit shall be clean inside and
out, free of exterior body damage, without an excessively-worn appearance on
the inside, mechanically safe and in excellent working order, as required under
the California Vehicle Code. Director reserves the right to object to any of
Permittee's vehicles and further require that the vehicle be cleaned, or
repaired or removed from service.
B. Permittee shall have all vehicles operating under this Permit equipped
with a two way radio system.
C. Permittee shall be permitted to utilize employees, or independent
contractors to achieve its full complement of vehicles and drivers. The Airport
reserves the right to approve in advance the form and content of any agreement
to be used between Permittee and its independent contractors. Permittee
covenants herein that it will accept full responsibility for its employees,
independent contractors and representatives.
D. Each shuttle van operated under this Permit shall be affixed with an
Airport decal and a transponder for auditing and controlling purposes. The
removal and/or loss of any transponder must be reported to the Airport Police
within twenty four (24) hours of its occurrence and all new vehicles put into
service must have decals and transponders installed before operating at the
Airport. All Airport decals and transponders must be returned to Airport if
vehicle is not being used in
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<PAGE> 5
providing service to and from the Airport.
E. Permittee shall be responsible for each transponder issued under this
Permit until such time that transponder is reported lost or stolen or is
returned to Airport.
F. Permittee shall require its employees, independent contractors and
drivers to wear uniforms which project a professional appearance and clearly
identify the wearer as an employee or representative of Permittee. Employees,
independent contractors and representatives of Permittee shall further be
required to wear at all times and clearly display photo I.D. badges issued by
Permittee, which identifies the bearer as an employee, independent contractor or
representative of Permittee. Upon termination of an employee, independent
contractor or representative, Permittee shall be responsible for the timely
return of said badges, and uniform identifications. Permittee shall be solely
responsible for returning all transponders issued to independent contractors
operating under Permit held by Permittee upon termination of contract.
G. All drivers, independent contractors, and employees of Permittee are
prohibited from entering into the terminals for any reason.
H. All drivers including independent contractors must remain in their
vehicles except when actively loading passengers and luggage.
I. Permittee shall require all drivers to inform passengers of the number
of stops to be made and estimated time of arrival to their destinations or the
duration of the entire
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<PAGE> 6
trip.
J. No shuttle van passenger to San Francisco shall be required to wait
longer than fifteen (15) minutes from the time they first board the vehicle and
the time they depart the Airport. No shuttle van passenger going to other
destinations shall be required to wait longer than thirty (30) minutes from the
time they first board the vehicle and the time they depart the Airport.
K. Permittee shall meet, upon request, the transportation needs of disabled
Airport passengers in accordance with the American's with Disabilities Act of
1990, or as may be revised. In no instance shall the pick-up time be longer than
thirty (30) minutes from the time of initial request.
L. Permittee may reduce the hours of service only with prior written
consent of Director.
M. Permittee understands and agrees that its operation under this Permit is
a service to airline passengers and the users of Airport, and that Permittee
shall conduct its operation in a first-class, business-like, efficient,
courteous, and accommodating manner. "First class service" shall mean that
Permittee covenants to fulfill, and in fact does perform all the promises,
conditions and terms of this Permit in an exemplary and accommodating manner.
Superior service to the passengers of the Airport shall be the foremost goal of
Permittee its employees and independent contractors at all times. This
particularly includes the maintenance of vehicles and the appearance and
performance of personnel.
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<PAGE> 7
N. Director shall have the right to make reasonable objections to the
quality and character of the service rendered the public, the fares charged, and
the appearance and condition of curb space and staging area used. Permittee
agrees to promptly discontinue or remedy any such objectionable practice.
Failure to comply with the foregoing shall constitute a material breach of this
Permit.
0. Permittee shall maintain an adequate staff and use the utmost skill and
diligence in the conduct of Permittee's business. All employees, independent
contractors and representatives of Permittee shall be courteous and helpful to
the public.
P. Permittee shall respond promptly to all inquiries and complaints. In no
instance shall a response take longer than two (2) weeks.
Q. Permittee shall require all drivers to take the most direct route to
each passengers destination. Passengers from discontinuous areas shall not be
mixed in the same shuttle van.
4.01. Curb Coordinator
In conjunction with all other Door-to-Door Shuttle operators, Permittee
shall be required to participate in providing curb coordinating service in the
staging area (Lot) and at each terminal curb location. Curb coordinators shall
be provided between the hours of 7:30 a.m. and 12:30 a.m., seven (7) days per
week including holidays or all hours of operation. No shuttle van shall wait or
park in loading zones unless actively
7
<PAGE> 8
loading passengers between the hours of 12:30 a.m. and 7:30 a.m. or any other
time a curb coordinator is not present.
During the time that a curb coordinator is present in a zone, one shuttle
van may be in that particular zone. A second shuttle van may be called up to
that zone by the curb coordinator only if specifically requested by a passenger.
If a zone's curb coordinator fails to adhere to these guidelines, the loading
zones at all three (3) terminals shall revert to active loading Section 1.4.6(F)
of the Airports Rules and Regulations.
Curb Coordinators' responsibilities shall include but not be limited to the
following:
a) Call vans to curb;
b) Sort passengers by service/district area;
c) Supervise drivers;
d) Assist passengers with luggage when walkway is congested; and
e) Enforce terms and conditions of Permit as necessary and enforce
compliance with all applicable Airport Rules and Regulations.
f) Discourage solicitation of shuttle customers by any/all individuals.
4.02. Reservation System
Permittee shall maintain a reservation system in full operation seven (7)
days per week from 6:00 a.m. until midnight.
4.03. Representative of Permittee
Permittee shall at all reasonable times retain not more than one qualified
representative authorized to represent and act for Permittee in matters
pertaining to its on-Airport operation even if Permittee is a partnership or
joint venture. Permittee shall keep Director informed in writing of the identity
of each
8
<PAGE> 9
such person.
5. Consideration for Permit
As consideration for this Permit, Permittee agrees:
A. To pay City, a monthly fee determined by the number of monthly
trips conducted by Permittee under this Permit. For the purposes of this
Permit, a trip shall be defined as each time one of Permittee's vehicles
passes in front of Airport's International Terminal Building. The per trip
fee payable shall be established in the Airport's Rules and Regulations,
and may be amended from time to time.
Payments shall be made in lawful money of the United States, free from
all claims, demands, set-offs, or counter-claims of any kind against City.
Payments not paid when due shall be subject to interest thereon at the rate
of one and one-half percent (1-1/2%) per month.
B. To allow City to permanently affix a transponder to the roof of
Permittee's vehicles so that City may monitor Permittee's operation of its
vehicles on the Terminal Roadways and automatically record the number of
monthly vehicle trips Permittee conducts under this Permit.
In the event of an Automatic Vehicle Identification System (AVI) failure,
City shall determine Permittee's monthly fee based upon the number of vehicle
trips made in the same month prior year, or if less than one full year of
operation, Permittee's fee shall be based upon an average of the number of
vehicle trips for the total number of months in operation under
9
<PAGE> 10
this Permit.
City will provide the first transponder for each of Permittee's vehicles.
Permittee shall pay for replacement of any lost or stolen transponders. City, or
its agent or employees, shall attach the transponder to the roof of each
vehicle. City shall not drill, rivet or otherwise puncture the body of
Permittee's vehicles in the course of installing the transponder unit and shall
install the transponders in a workmanlike manner so as to avoid unnecessary
damage to the roofs of Permittees vehicles.
Permittee agrees to waive all and any claims against the City for any and
all incidental damage caused to Permittee's vehicles by the ordinary process of
installing or removing the transponder.
6. Books and Records
Permittee shall maintain for a period of four years or, in the event of a
claim by City, until such claim of City for payments hereunder shall have been
fully ascertained, fixed and paid, separate and accurate daily records of gross
revenues derived from ground transportation operations and trip activity as
herein defined, and in accordance with generally accepted accounting principles,
showing in detail all business done or transacted in, on, about or from or
pertaining to Permittee's operations at Airport, and Permittee shall enter all
receipts arising from such business in regular books of account, and all entries
in any such records or books shall be made at or about
10
<PAGE> 11
the time the transactions respectively occur. In addition, Permittee shall
maintain monthly and annual reports of gross revenues and trip activity derived
from its operation under this Permit, using a form and method as is determined
by Director. Such forms and methods shall be employed by Permittee throughout
the term of this Permit. Such books and records shall be maintained at
Permittee's principal place of business unless otherwise permitted by Director
in writing. Upon Director's written request, Permittee shall make available
immediately at Airport any and all books, records and accounts pertaining to its
operations under this Permit. The intent and purpose of the provisions of this
section are that Permittee shall keep and maintain records which will enable
City and City's Controller to ascertain, determine and audit, if so desired by
City, clearly and accurately, the gross revenues and trip activity of Permittee,
and that the form and method of Permittee's reporting of gross revenues and trip
activity will be adequate to provide a control and test check of all revenues
derived by Permittee under this Permit.
Should any examination, inspection, and audit of Permittee's books and
records by City disclose an underpayment by Permittee in excess of five percent
(5%) of the consideration due, Permittee shall promptly pay City the amount of
such underpayment and shall reimburse City for all costs incurred in the conduct
of such examination, inspection, and audit. In the event that City deems it
necessary to utilize the services of legal counsel in connection with collecting
the reimbursement for
11
<PAGE> 12
such examination, inspection, and audit, then Permittee shall reimburse City for
reasonable attorney's fees and litigation expenses as part of the aforementioned
costs incurred.
Not later than ninety (90) days after the annual anniversary of the
commencement of this Permit, when required by Director, Permittee shall furnish
to City a report, certified by Permittee to be true and correct, of the ground
transportation gross revenues and trip activity derived by Permittee from its
operations permitted hereunder. Said report shall not be make public except as
required by law.
Permittee shall furnish City with such other financial or statistical
reports as Director, from time to time may reasonably require.
6.01. Passenger Statistics
Permittee shall provide the Airport by the 15th of each month a report
accounting for the number of passengers carried to and from the Airport by
county for the previous month.
7. Other Charges and Fees
Permittee shall pay all other charges, penalties or fees occasioned by
Permittee's operations or activities on or about the Airport.
8. Indemnity
Permittee and Permittee's independent contractors agree to defend,
indemnify and hold harmless City, Commission and its members, and all of the
officers, agents, and employees of each
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<PAGE> 13
of them, from and against all liability for injuries to or deaths of persons or
damage to property proximately caused by the actions of Permittee or Permittee's
independent contractors.
Each party hereto shall give to the other prompt and timely written notice
of any claim made or suit instituted coming to its knowledge which in any way,
directly or indirectly, contingently or otherwise, affects or might affect
either, and each shall have the right to participate in the defense of the same
to the extent of its own interest.
9. Insurance
Permittee shall procure and maintain during the term of this Operating
Agreement the following insurance:
(a) Workers' Compensation, with Employer's Liability limits not less than
$1,000,000 each accident if applicable.
(b) Comprehensive General Liability Insurance with respect to each
occurrence of bodily injury, property damage, contractual liability,
independent contractors, personal injury, products, and completed
operations with a minimum single limit of $1,000,000.
(c) Comprehensive Automobile Liability Insurance with limits not less than
those required by the California Public Utilities Commission (CPUC)
for each occurrence Combined Single Limit Bodily Injury and Property
Damage including Employer's non-
13
<PAGE> 14
ownership liability and hired auto coverages. Airport reserves the
rights to change the comprehensive automobile liability coverage
requirements in maintaining compliance with the requirements set by
the California Public Utilities Commission.
In addition to the required Comprehensive General Liability Insurance and
Comprehensive Automobile Liability insurance certificates, Permittee must
include the Airport's required Endorsement Form for each certificate.
Permittee's insurer shall provide to the Director, a list of all vehicles
covered under Permittee's General and Automobile Liability policies. All
vehicles operated by Permittee's employees must be insured under Permittee's
Automobile Liability Policy; and all employees operating vehicles under this
Permit must be covered under Permittee's General Liability and Workman's
Compensation policies. All vehicles operated by non-employees or independent
contractors under this Permit, that are not covered under Permittee's Automobile
Liability, General Liability, and Workman's Compensation policies must be
separately insured and proof of such insurance must be provided to the Director
prior to the vehicle commencing operations at the Airport. Permittee may not add
vehicles to its fleet, nor operate existing vehicles, unless such vehicles are
insured according to the limits and coverages specified in this Permit or limits
not less than those required by CPUC.
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<PAGE> 15
Comprehensive General Liability Insurance, Comprehensive Automobile
Liability Insurance, and Property Insurance policies shall be endorsed to
provide the following:
1. Name as ADDITIONAL INSUREDS the City and County of San Francisco,
the Airports Commission and its members, and all of the officers, agents,
and employees of each of them.
2. That such policies are primary insurance to any other insurance
available to the Additional Insured's, with respect to any claims arising
from operation under this Permit, and that insurance applies separately to
each insured against whom claim is made or suit is brought.
ALL POLICIES SHALL ALSO BE ENDORSED TO PROVIDE:
Thirty (30) days advance written notice to City of cancellation,
non-renewal or reduction in coverage, delivered to the following:
Deputy Director of Airports, Business and Finance
P.O. Box 8097
San Francisco International Airport
San Francisco, CA 94128
Certificates of insurance evidencing all coverages and endorsements above
shall be furnished to the City before commencing any operations under this
Permit.
Permittee agrees that the terms of these Insurance requirements may be
increased or revised upon the written demand of the City, which demand must be
based on reasonable and justifiable grounds.
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<PAGE> 16
All insurance coverage shall be with a company or companies approved by the
Airport, and in a form satisfactory to City's City Attorney.
10. Faithful Performance Bond
Permittee agrees that upon execution of this Permit, it will, at its own
expense, deliver to Director a surety bond or bonds in the amount of ONE HUNDRED
FIFTY THOUSAND EIGHT HUNDRED THIRTY EIGHT ($150,838), payable to City, naming
City as obligee and issued by a surety company or companies acceptable to and in
such form as approved by City's City Attorney, which surety bond or bonds may be
renewed annually, and shall be maintained in full force and effect during the
term of this Permit at the expense of Permittee, to insure the faithful
performance by Permittee of all the covenants, terms and conditions of this
Permit, inclusive of but not restricted to the payment of all considerations
provided herein. After twelve (12) months, Airport will amend the surety bond
amount to an amount equivalent to six (6) months average of trip fees indicated
by the AVI system. The surety company issuing said bond or bonds shall give
Director notice in writing by registered mail at least sixty (60) days prior to
an anniversary date of its intention not to renew said bond or bonds. In lieu of
such surety bond or bonds, Permittee may deposit with City an Irrevocable Letter
of Credit, Certificates of Deposit, Certified Check, Cashiers Check or Money
Order, in the agreed amounts as security for faithful performance by Permittee
as hereinabove provided, and Permittee may have the
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<PAGE> 17
right to reserve to itself interest payable on said interest bearing
instruments.
11. Right of Access
During the existence of this Permit, and subject to the Airport's Rules and
Regulations, Permittee, its independant contractors, employees, agents,
licensees and business invitees, shall possess the right of ingress to and
egress from and about the Airport by authorized vehicles bearing valid
identification decals and automatic vehicle identification devices, as required
by Permittee's operations hereunder; provided that such right shall not be
exercised in a manner and to such extent as to impede or interfere with the
operation of the Airport by City, its lessees, or other permittees, and shall be
subject to the rules and regulations of Commission at Airport.
12. Staging Area
The Director may establish and construct a staging area for commercial
vehicles providing ground transportation services. The Director may require that
all vehicles not actively loading or unloading passengers shall be parked in the
staging area, and reserves the right to charge a fee for use of the staging
area. Use of the staging area shall be limited to one hour or the posted time
limits, whichever period is shorter. Permittee shall participate in providing a
curb coordinator in the staging area between the hours of 7:30 a.m. till 12:30
a.m. seven days per week or during all hours of operation at Airport.
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<PAGE> 18
Should Permittee be provided with a staging area, all associated costs for
maintenance and upkeep shall be the sole responsibility of Permittee. Failure to
maintain staging area in a clean first class condition will result in closure of
staging area. No vans shall stage, wait or park in any other areas of the
Airport other than the designated loading/unloading zones or designated staging
area.
13. Waybills
Every charter passenger pickup shall be documented by a waybill prepared in
advance of the pickup. Waybills shall be prepared by Permittee or the driver of
Permittee's vehicle prior to the vehicle's arrival at the Airport's passenger
pickup zone. The waybill shall state the passenger's name, the number of persons
in the party, the location of the pick up, the time of the scheduled pickup, and
the airline and flight number on which the passenger has arrived. The driver of
Permittee's vehicle shall, upon request, present any/all waybills to any Airport
official for inspection. The driver of the Permittee's vehicle may prepare the
waybill based on radio or telephone communications to the driver.
14. Default by Permittee
Permittee shall be in default under this Permit if:
A. Permittee shall fail duly and punctually to pay the fees, or to
make any other payment required hereunder, when due to City; or
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<PAGE> 19
B. Permittee shall become insolvent, or shall take the benefit of any
present or future insolvency statute, or shall make a general assignment for the
benefit of creditors, or file a voluntary petition in bankruptcy, or a petition
or answer seeking an arrangement for its reorganization, or the readjustment of
its indebtedness under the Federal bankruptcy laws, or under any other law or
statute of the United States or of any State thereof, or consent to the
appointment of a receiver, trustee, or liquidator of any or substantially all of
its property; or
C. A petition under any part of the Federal bankruptcy laws, or an action
under any present or future insolvency law or statute, shall be filed against
Permittee and shall not be dismissed within thirty (30) days after the filing
thereof; or
D. The interest of Permittee under this Permit shall be transferred,
without the approval of the City, by reason of death, operation of law,
assignment, sub-lease or otherwise, to any other person, firm or corporation; or
E. Permittee shall voluntarily abandon, desert or fail to use its rights
hereunder; or
F. Permittee shall fail to keep, perform and observe each and every other
promise, covenant and agreement set forth in this Permit, including maintenance
of affirmative action and employment non-discrimination goals as set forth
herein or the submission of reports requested herein, and such failure shall
continue for a period of more than thirty (30) days after delivery by Director
of a written notice of such breach or default, except where fulfillment of its
obligation requires
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<PAGE> 20
activity over a period of time, and Permittee shall have commenced in good faith
to perform whatever may be required for fulfillment within ten (10) days after
receipt of notice and continues such performance without interruption except for
causes beyond its control; or
G. Permittee shall use or give its permission to any person to use any
portion of Airport, used by Permittee under this Permit, for any illegal
purpose.
15. City's Remedies
If default be made by Permittee in any of the covenants, terms and
conditions herein contained, City may elect to:
(A) Allow this Permit to continue in full force and effect and to
enforce all of City's rights and remedies hereunder, including, without
limitation, the right to collect fees as they become due together with
interest thereon at the rate of one and one-half percent (1-1/2%) per
month; or
(B) Terminate this Permit without prejudice to any other remedy or
right of action for arrearages of fees.
Upon such termination by City, all rights, powers and privileges of
Permittee hereunder shall cease, and Permittee shall have no claim of any kind
whatsoever against City, Commission, or the members thereof, or their employees
or agents by reason of such termination, or by reason of any act by City
incidental or related thereto. In the event of the exercise by City of such
option to terminate, Permittee shall have no right to or claim upon any
improvements or the value thereof, which may
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have been previously installed by Permittee in or on the Airport`s premises.
City will not be deemed to have terminated this Permit in the absence of
service of written notice upon Permittee to that effect.
Revocation or termination of this Permit may be appealed to Commission.
Such appeal may be initiated by Permittee filing a written request for appeal
with the Airport's Commission Secretary within ten (10) days of Permittee's
receipt of notice of termination. Permittee's request shall specifically state
the grounds upon which the appeal is based.
The exercise by City of any remedy provided in this Permit shall be
cumulative and shall in no way affect any other remedy available to City under
law or equity.
16. Monetary Damages
In the event City elects to terminate this Permit, Permittee shall pay to
City an amount equal to the sum of:
A. All amounts owing at the time of termination on account of breach
of any term, covenant or condition of this Permit including but not limited
to unpaid fees plus interest thereon on all such amounts from the date due
until paid at the rate of one and one-half percent (1-1/2%) per month;
B. Any other amount to compensate City fully for all detriment
proximately caused by Permittee's failure to perform its obligations
hereunder or which in the ordinary course would likely result therefrom.
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17. No Waiver of Subsequent Breaches or Defaults
The failure of City at any time to insist upon a strict performance of any
of the terms, conditions and covenants herein shall not be deemed a waiver of
any subsequent breach or default in the terms, conditions and covenants herein.
18. Prohibition Against Advertising
No advertising or solicitation, including the posting of room rates or
transportation fares, shall be allowed on the exterior of any of Permittee's
vehicles, unless specifically approved in writing by Director; except that a
vehicle may display Permittee's authorized common color scheme and markings and
destination signs.
19. Prohibited Conduct
The following activities by Permittee are prohibited:
(1) Bypassing a holding lot or ticket collection area;
(2) Picking up or discharging passengers or their baggage at any
terminal level or location other than those designated for such purpose;
(3) Leaving the vehicle unattended, except in designated staging
areas;
(4) Failing to give, upon a passenger's request, a receipt showing the
amount of fare paid, the driver's correct name, the name of the Permittee
and the vehicle number, if any;
(5) Failing to maintain the interior and exterior of the vehicle in a
clean condition;
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(6) Littering of the staging area;
(7) Providing false information to authorized Airport personnel;
(8) The switching or altering of staging area trip tickets or any
tickets issued by the Airport or coordinator;
(9) Displaying to an Airport official a waybill in an altered or
fictitious form;
(10) Driving in a vehicle that does not bear a valid identification
decal or an automatic vehicle identification device issued by the Airport;
(11) Solicitation of passengers on Airport property except as
otherwise provided in permit with the Airport;
(12) Recirculating on the upper level roadway;
(13) The use or possession of any alcoholic beverage while operating a
vehicle on the Airport;
(14) Failing to operate a vehicle in a safe manner as required by the
California Vehicle Code;
(15) Failing to comply with posted speed limits and traffic control
signs;
(16) Use of profane or vulgar language directed to or at the public;
(17) Any attempt to solicit payment in excess of that authorized by
law;
(18) Any solicitation for or on behalf of any hotel, motel, club or
nightclub;
(19) Any solicitation of any activity prohibited by the Penal Code of
the State of California;
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(20) Failing to maintain a neat personal appearance as determined by
the dress code set forth in Permit and Airport Rules and Regulations;
(21) Operating a vehicle which is not in a safe mechanical condition
or which lacks mandatory safety equipment as defined in the California
Vehicle Code, and by the California Bureau of Automotive Repair;
(22) Disconnecting any pollution control equipment;
(23) Use or possession of any dangerous drug or narcotic while
operating a vehicle on Airport property;
(24) Double parking;
(25) Engaging in any conduct or activity intended to or apparently
intended to ask, implore or persuade a passenger to alter his or her
previously chosen mode of ground transportation or specific ground
transportation operator, except as otherwise provided by contract or permit
with the Airport.
(26) Damaging, removing, detaching, breaking, tampering or otherwise
attempting to disable an automatic vehicle identification device.
20. Fines
Pursuant to Appendix B, Section 1.4.7 (E), of Commission's Rules and
Regulations, fines may be imposed or levied against Permittee, or the operators
of Permittee's vehicles, for engaging in prohibited conduct. Specific fines for
specific prohibited conduct are described in said Rules and Regulations.
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21. Compliance with Rules and Regulations
Permittee shall abide by and conform to all laws, governmental orders,
rules and regulations, including any future amendments thereto, controlling or
in any manner affecting the use or occupancy of Airport property. Permittee
shall abide by and conform to all Airport Rules and Regulations, operational
notices or bulletins now or hereafter in force and effect. Permittee shall
provide City with a copy of its current appropriate California Public Utilities
Commission Permit.
Permittee shall be fully responsible for the conduct of its Employees,
Drivers, Independent Contractors and Curb Coordinators covered under this
Permit.
22. Nonassignability
This Permit is not assignable, in whole or in part, without prior written
approval from the Director.
23. Revocable Permit
This Permit is revocable at any time, in the absolute discretion of the
Director. Such revocation shall be accomplished by giving reasonable prior
written notice thereto to the Permittee, but in no event shall more than 30 days
notice be required, provided that should Permittee, at any time, fail to provide
or maintain the insurance or faithful performance bond required under this
Permit or should the amount of the consideration payable by Permittee equal or
exceed the amount of the faithful performance bond, then the Director may, by
written
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notice, revoke this Permit at any time. Permittee may terminate this Permit by
giving thirty (30) days prior written notice thereof to the Director. This
Permit may be cancelled by the mutual written consent of the parties at any time
without the aforesaid written notice.
24. Federal Nondiscrimination Regulations
Permittee understands and acknowledges that City has given to the United
States of America, acting by and through the Federal Aviation Administration,
certain assurances with respect to nondiscrimination, which have been required
by Title VI of the Civil Rights Act of 1964, and by Part 15 of the Federal
Aviation Regulations as amended, as a condition precedent to the government
making grants in aid to City it is required under said Regulations to include in
every agreement or concession pursuant to which any person or persons other than
City, operates or has the right to operate any facility on Airport property
providing services to the public, the following covenant, to which Permittee
agrees:
Permittee, in its operation at and use of San Francisco International
Airport, covenants that it will not on the grounds of race, color or
national origin, discriminate or permit discrimination against any person
or group of persons in any manner prohibited by Part 15 of the Federal
Aviation Regulations, and in the
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event of such discrimination, Permittee agrees that City has the right to
take such action against Permittee as the government may direct to enforce
this covenant.
City, in response to said Act and said Regulations, covenants and agrees
with the United States of America that in the operation and use of the Airport
it will not, on the grounds of race, color, or national origin, discriminate or
permit discrimination against any person or group of persons in any manner
prohibited by Part 15 of the Federal Aviation Regulations, and that it will
include the foregoing covenant in every agreement or concession pursuant to
which any person or persons, other than City, operates or has the right to
operate any facility on Airport property providing services to the public, and
that it will also include in such agreement a provision granting to City the
right to take such action as the government may direct to enforce such covenant.
25. Federal Affirmative Action Regulations
Permittee assures that it will undertake an affirmative action program as
required by 14 CFR Part 152, Subpart E, to insure that no person shall on the
grounds of race, creed, color, national origin, or sex be excluded from
participating in any employment activities covered in 14 CFR Part 152, Subpart
E. Permittee assures that no person shall be excluded on these grounds from
participating in or receiving the services or
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benefits of any program or activity covered by this subpart. Permittee assures
that it will require that its covered sub-organizations provide assurances to
Permittee that they similarly will undertake affirmative action programs and
that they will require assurances from their sub-organizations, as required by
14 CFR Part 152, Subpart E, to the same effect.
26. City's Nondiscrimination Ordinance
Permittee acknowledges that it is familiar with San Francisco
Administrative Code Sections 12B, 12C and 12D and that it is bound by said
Sections incorporated herein by reference as "Attachment A" and made a part
hereof.
27. Conflict of Interest
Permittee states that it is familiar with the provisions of City's Charter
Section 8.105, attached hereto as "Attachment B" and certifies that it knows of
no facts in connection with this permit which constitutes a violation of said
section. It further certifies that it will make a complete disclosure to the
Director if necessary, of all facts within its reasonable knowledge bearing upon
any possible interest, direct or indirect, which it believes any member of
Commission or other officer or employee of City presently has or will have in
this Permit or in the performance. Willful failure of Permittee to make such
disclosure, if any, to Commission, shall constitute grounds for termination of
this Permit.
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28. Declaration Regarding Airport Private Roads
Permittee hereby acknowledges and agrees that all roads existing at the
date of execution hereof within the boundaries of the San Francisco
International Airport, as shown on the current official Airport Plan and as it
may be revised, are the private property and private roads of the City and
County of San Francisco, with the exception of that portion of the Old Bayshore
Highway which runs through the southern limits of the Airport: to the
intersection with the North Airport Road as shown on said Airport Plan, and
which runs from the off and on ramps of the State Bayshore Freeway to the
intersection with said Old Bayshore Highway as shown on said Airport Plan. It
further acknowledges that any and all roads hereafter constructed or opened by
City within the Airport boundaries will be the private property and road of
City, unless otherwise designated by appropriate action.
29. Prevailing Rate of Pay
Permittee agrees and covenants that it shall comply with the provisions of
San Francisco Administrative Code Chapter 6, Section 6.1-3, as amended, to the
extent to which said Ordinance is held enforceable and is applicable to the
operations authorized under this Permit. A copy of said Ordinance is attached
hereto as "Attachment C" and is incorporated herein by reference for purposes of
convenience. Such incorporation by reference shall not give rise to any rights
to enforcement of the provisions of such Ordinance not otherwise available
absent such incorporation by reference.
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30. Section Headings
The section headings contained herein are for convenience in reference and
are not intended to define or limit the scope of any provision of this Permit.
31. Severability
In the event any covenant, term or condition herein contained is held to be
invalid by any court of competent jurisdiction, such invalidity shall not affect
any other valid covenant, term or condition herein contained.
32. Applicability of Charter Provisions
All terms of this Permit shall be governed by and shall be subject to all
the provisions of City's Charter now and as may be amended from time to time.
33. Subordination to Sponsor's Assurance Agreement
This Permit shall be subordinate and subject to the terms of any "Sponsor's
Assurance Agreement" which has been furnished to the Federal Aviation
Administrator acting for the Government of the United States of America or any
other like agreement between City and the Federal government. Such agreements
shall not be considered as waivers of any claim of Permittee against the United
States of America.
34. Successors and Assigns
Each and all of the conditions and covenants of this
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Permit shall extend to and bind and inure to the benefit of City and Permittee,
and the legal representatives, successors and assigns of either or both of them.
35. Notices
All notices required to be given to Permittee hereunder shall be in writing
and given by registered mail addressed to Permittee at Airport or to Permittee
at ____________________________________________________________ or such other
address to be designated by Permittee by written notice to City. All notices
required to be given to City hereunder shall be in writing and given by
certified or registered mail addressed to Director of Airports, San Francisco
International Airport, San Francisco, California, 94128.
36. Interpretation
The language of this Permit shall be construed according to its fair
meaning, and not strictly for or against either City or Permittee. This Permit
shall be deemed to be made in the City and County of San Francisco and construed
and performed according to the laws of the State of California.
37. Integrated Agreement: Modification
This Permit contains all the agreements of the parties and cannot be
further amended or modified except by written agreement.
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If the parties hereto previously have entered into or do enter into any
other lease, license, permit or agreement covering premises or facilities at the
Airport, this Permit and the terms, conditions, provisions and covenants hereof
shall apply only to the uses herein particularly described, and this Permit or
any of the terms, conditions, provisions or covenants hereof shall not in any
way or in any respect change, amend, modify, alter, enlarge, impair or prejudice
any of the rights, privileges, duties or obligations of either of the parties
hereto under or by reason of any other said lease, permit, license or other
agreement between said parties.
//
//
//
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IN WITNESS WHEREOF, the parties hereto have executed this Permit in
duplicate by their duly authorized officers.
PERMITTEE: CITY AND COUNTY OF SAN FRANCISCO:
A Municipal Corporation
By [ILLEGIBLE] By
------------------------ -------------------------
Authorized Signature Director of Airports
Title President
---------------------
Dated 12-6-93 Dated
--------------------- ----------------------
33
<PAGE> 1
EX-10.15
Concession Contract
Exhibit 10.15
CONCESSION CONTRACT
BETWEEN
[LOGO] Maryland Department of Transportation
MARYLAND AVIATION ADMINISTRATION
AND
SUPERSHUTTLE, INC.
FOR OPERATION OF A VAN AND/OR BUS-TYPE
SCHEDULED GROUND TRANSPORTATION SERVICE AT
BALTIMORE/WASHINGTON INTERNATIONAL AIRPORT
CONTRACT NO. MAA-LC-95-020
<PAGE> 2
TABLE OF CONTENTS
SPECIAL PROVISIONS
ARTICLE PAGE
- ------- ----
I. INCORPORATION OF CONTRACTOR'S PROPOSAL ............................. 2
II. TERM ............................................................... 2
III. CONTRACTOR'S OBLIGATIONS ........................................... 3
IV. SECONDARY SERVICE .................................................. 20
V. EQUIPMENT REQUIREMENTS ............................................. 21
VI. OPERATING PREMISES ................................................. 24
VII. COMPENSATION FOR CONCESSION RIGHTS ................................. 27
VIII. INSURANCE .......................................................... 29
IX. OPERATING RIGHTS ................................................... 31
X. VEHICLE MAINTENANCE ................................................ 32
XI. UTILITIES .......................................................... 32
XII. CONTRACTS WITH GROUND TRANSPORTATION SUBCONTRACTORS ................ 33
XIII. DISADVANTAGED BUSINESS ENTERPRISE PARTICIPATION .................... 33
XIV. FINES .............................................................. 35
XV. FINANCIAL LIABILITY OF ADMINISTRATION AND CONTRACTOR ............... 35
XVI. DEFAULT AND RIGHTS AND REMEDIES UPON DEFAULT ....................... 35
XVII. REMEDIES CUMULATIVE ................................................ 41
XVIII. CONDUCT OF BUSINESS ................................................ 41
XIX. PERFORMANCE GUARANTEE .............................................. 41
XX. SURETY QUALIFICATIONS .............................................. 41
XXI. SMOKING REGULATION ................................................. 43
XXII. AUTOMATED VEHICLE IDENTIFICATION SYSTEM ............................ 44
XXIII. DEFINITIONS ........................................................ 44
XXIV. GENERAL PROVISIONS ................................................. 45
XXV. CONTINGENT APPROVALS ............................................... 45
ATTACHMENTS
Exhibit "A" - Baltimore City door-to-door service area
Exhibit "B" - Annapolis and Anne Arundel County door-to-door service area
Exhibit "C" - Baltimore County door-to-door service area
Exhibit "D" - Prince George's and Montgomery Counties Service Areas
Exhibit "E" - Washington, D.C. door-to-door service area
Exhibit "F" - Office-Space
Exhibit "G" - Ground Transportation Desk
Exhibit "H" - Ground Transportation Activity Report
Contract Affidavit Forms
CONTRACT NO. MAA-LC-95-020
<PAGE> 3
MARYLAND DEPARTMENT OF TRANSPORTATION
MARYLAND AVIATION ADMINISTRATION
CONCESSION CONTRACT
FOR OPERATION OF A VAN AND/OR BUS-TYPE
GROUND TRANSPORTATION SERVICE
AT BALTIMORE/WASHINGTON INTERNATIONAL AIRPORT
THIS CONTRACT (hereinafter referred to as "Contract") is made this 21st day
of Dec., l995, by and between the Maryland Aviation Administration, Maryland
Department of Transportation (hereinafter referred to as "Administration") and
SuperShuttle, Inc., 2100 Huntingdon Avenue, Baltimore, Maryland 21211
(hereinafter referred to as "Contractor").
WITNESSETH:
WHEREAS, the State of Maryland owns and operates Baltimore/Washington
International Airport (hereinafter referred to as "Airport"), located in Anne
Arundel County, State of Maryland; and
WHEREAS, Administration operates the Airport for the promotion,
accommodation, and development of air commerce and air transportation between
the Baltimore-Washington metropolitan area and other cities of the United States
and cities of other nations of the world; and
WHEREAS, the conduct of a scheduled van and/or bus-type ground
transportation operation from, to, and on the Airport, servicing the following
locations for passengers arriving at or departing from the Airport, is an
essential service to such passengers in the promotion, accommodation, and
development of air commence and air transportation:
(1) Baltimore City (3) Baltimore County
(2) Anne Arundel County and (4) Downtown Washington D.C.
Annapolis, Maryland and the Maryland/D.C. Suburbs
CONTRACT NO. MAA-LC-95-020
<PAGE> 4
WHEREAS, it is the intent and desire of Administration that said passengers
shall have available to them a high quality scheduled van and/or bus-type and
shared-ride on-demand ground transportation service adequate to meet the
requirements of said airline passengers and their accompanying baggage; and
WHEREAS, Contractor has submitted a proposal dated November 7, 1994 in
response to the Administration's Request for Proposals No. MAA-RFP-94-004 to
provide such ground transportation service and Administration has accepted
Contractor's proposal to do so; and
WHEREAS, Contractor's parent corporation, Yellow Holding Company, Inc. has
agreed to enter into a Guarantee of Performance Agreement with the
Administration, and the Administration has accepted such Agreement as a
condition of executing this Contract with Contractor;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained and upon the terms and conditions herein set forth, the parties hereto
agree as follows:
ARTICLE I
INCORPORATION OF CONTRACTOR'S PROPOSAL
The Contractor's proposal dated November 7, 1994 is incorporated and made a
part of this Contract by reference. The Contractor shall be obligated to meet
all specifications described in its proposal and any written clarification
thereto. Provided, however, that where an express provision of this Contract is
in conflict with any provisions of the proposal, this Contract shall control,
unless the Administration deems the provision in the proposal offers a higher
level of service than indicated in the Contract provision.
ARTICLE II
TERM
The term of this Contract shall be for an initial period of four (4) years
and shall begin January 1, 1995.
Contractor shall have the option of extending the Contract term for a
second period of four (4) years, subject to the determination by Administration
that Contractor's performance has been satisfactory for the initial term of this
Contract. All terms and conditions of the
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<PAGE> 5
Contract during the initial term, including the financial conditions, shall
remain the same for the secondary term, in the event that the Contract term is
extended. Contractor shall be required to provide Administration with written
notice, at least two hundred forty (240) days prior to the expiration of the
initial four (4) year term of the Contract, of its intent to so extend the
Contract term. In the event Contractor provides notice of its intent to extend
Contract term, the Administration shall provide the Contractor with written
notice of its concurrence, or non-concurrence along with the reasons therefor,
at least one hundred eighty (180) days prior to the expiration of the Contract's
initial four (4) year term. The Contract extension shall be accomplished by the
development and execution of a written supplemental Contract to this Contract.
ARTICLE III
CONTRACTOR'S OBLIGATIONS
The Contractor, at its sole cost and expense, shall be required to develop,
market, and manage a high-quality, well-managed, and efficiently operated van
and/or bus type ground transportation concession program, as described herein,
to and from the Airport to accommodate the travelling public and other Airport
users. At a minimum, the Contractor must, at no cost to the Administration,
either provide all or part of the following required ground transportation
services itself and/or negotiate and enter into subcontracts with third party
ground transportation providers to provide the following required services.
Contractor's scheduled route service will provide daily transportation between
the Airport and Baltimore City, Annapolis, Northern and Northwestern Baltimore
County and Washington, DC seven days a week (excluding holidays), between the
hours of 6:00 AM to 11:00 PM, according to the following parameters:
* Baltimore at least every thirty minutes, per a customer demand for
service;
* Washington, DC at least every sixty minutes, per a customer demand for
service;
* Annapolis, Hunt Valley, Towson, and Pikesville at least every two
hours, per a customer demand for service.
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For example, a Baltimore City shuttle van passenger will be required to
wait no longer than thirty minutes from the time of ticket purchase to the time
of departure from the Airport. All inbound requests for transportation will be
taken in advance.
With the exceptions of travel emergencies, express area stops and certain
holiday restrictions, Contractor guarantees door-to-door passengers a policy of
"NEVER MORE THAN THREE STOPS OR EVERYONE RIDES FREE." Contractor is required to
adhere to this policy, and shall promote this policy to the public.
A. Baltimore City Scheduled Service and Door-to-Door Service
1. At a minimum, Contractor shall provide shared-ride scheduled
ground transportation service between the Airport and the
following specific locations in Baltimore, Maryland:
Hyatt Regency Hotel Days Inn Baltimore-Inner Harbor
300 Light Street 100 Hopkins Place
Harbor Court Hotel Holiday Inn
550 Light Street 301 West Lombard Street
Sheraton Inner Harbor Hotel Baltimore Marriott Inner Harbor
300 South Charles Street Pratt and Eutaw Streets
Omni International Hotel Tremont Plaza Hotel
101 West Fayette Street 222 St. Paul Place
Brookshire Ramada Inn
120 E. Lombard Street 8 North Howard Street
Mt. Vernon Inn Stouffer Harbour Place Hotel
24 West Franklin Street Pratt and Calvert Streets
Radisson Latham Hotel
Baltimore and Hanover Streets 612 Cathedral Street
Harrison's Pier 5 Clarion
711 Eastern Avenue
This service shall be operated in a manner that will provide for
the ground transportation needs of airline passengers and others
using the
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Airport. The Administration shall reserve the right to require
Contractor to serve other existing hotels and newly developed
hotels in the Baltimore City area. Subject to the approval of the
Administration, other specific locations in Baltimore, Maryland
may be served by Contractor on an scheduled basis.
2. Contractor shall be required to provide the following frequency
of service to and from the Airport:
a. A minimum of one departure from the Airport every 30-minute
period, from 6:00 a.m. to 11:00 p.m. local time, initiated
by a customer demand for service to the locations set forth
in A. 1. of this Article, in Baltimore City. Departure time
requirements are a minimum of every one and one-half (1 1/2)
hours from 7:00 a.m. to 8:30 p.m. on Administration
designated holidays.
b. Contractor shall accept reservations from patrons for pickup
at the hotels as set forth in A. 1. of this Article for
trips to the Airport, subject to reasonable advance
notification requirements as approved by the Administration.
c. Contractor is not required to stop at a location, set forth
in A. 1 of this Article, if there are no patrons for pick-up
or delivery at that location on a scheduled trip. If there
are no patrons to pick up or deliver to any location,
Contractor is not required to conduct the trip.
d. Contractor shall conduct shared-ride door-to-door service to
the Baltimore City service area as shown on Exhibit "A",
attached hereto and made a part hereof. The door-to-door
service shall require reasonable prior reservation notice
time, as approved by the Administration. Door-to-door
service to the depicted area shall begin not later than
twenty-four (24) months from Contract commencement.
Contractor shall make its best efforts to
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<PAGE> 8
promote, market, develop, and conduct the door-to- door
service over a period of time deemed reasonable by the
Administration. In the event Contractor demonstrates to the
satisfaction of the Administration such service is
uneconomical, then the Administration shall release
Contractor of its obligations to provide such service.
B. Annapolis and Anne Arundel County Area Service and Door-to-Door
Service
1. Contractor shall provide for shared-ride ground transportation
service from BWI on a two (2) hour, or less, scheduled basis from
6:00 a.m. to 11:00 p.m. local time initiated by a customer demand
for service. Service on Administration designated holidays may be
operated on a diminished schedule with the Administration's
approval. At a minimum, Contractor shall provide for shared-ride
ground transportation service to BWI on an on-call (on-demand)
basis. The on-demand service shall require reasonable prior
reservation notice time, as approved by the Administration. At a
minimum, the following locations in the Annapolis area of Anne
Arundel County shall be served:
Ramada Inn Marriott Waterfront
173 Jennifer Road 80 Compromise Street
Annapolis, MD Annapolis, MD
Annapolis Holiday Inn Maryland Inn
210 Holiday Circle 16 Church Circle
Annapolis, MD Annapolis, MD
Marriott Courtyard Governor Calvert House
2559 Riva Road 58 State Circle
Annapolis, MD Annapolis, MD
Econo Lodge Loews Hotel
591 Revell Highway 126 West Street
Annapolis, MD Annapolis, MD
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<PAGE> 9
2. In addition, Contractor shall provide for shared-ride ground
transportation service on a scheduled or on call (on demand)
basis to and from the Airport and the United States Naval
Academy. Service personnel with a valid ID may be given a
discount fare, the amount of which shall be subject to advance
written approval of the Administration.
3. Contractor is not required to stop at a location if there are no
patrons for pickup or delivery to that location on a scheduled
trip.
4. If there are no patrons to pickup or deliver to any location,
Contractor is not required to conduct the trip.
5. Subject to the approval of the Administration, other specific
locations in Annapolis, Maryland may be served by Contractor on a
scheduled basis.
6. Contractor shall conduct shared-ride door-to-door service to the
Anne Anindel County service area as shown on Exhibit "B",
attached hereto and made a part hereof. The door-to-door service
shall require reasonable prior reservation notice time, as
approved by the Administration. Door-to-door service to the
depicted area shall begin not later than twenty-four (24) months
from Contract commencement. Contractor shall make its best
efforts to promote, market, develop, and conduct the door-to-door
service over a period of time deemed reasonable by the
Administration. In the event Contractor demonstrates to the
satisfaction of the Administration such service is uneconomical,
then the Administration shall release Contractor of its
obligations to provide such service.
C. Baltimore County Service and Door-to-Door Service
1. The Contractor shall provide for shared-ride scheduled ground
transportation service from BWI on a two (2) hour, or less
scheduled basis from 6:00 a.m. to 11:00 p.m. local time initiated
by a customer demand for service. Service on Administration
designated holidays may
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<PAGE> 10
be operated on a diminished schedule with the Administration's
approval. At a minimum, Contractor shall provide for shared-ride
ground transportation service to BWI on an on-call (on-demand) basis.
The on-demand service shall require reasonable prior reservation
notice time, as approved by the Administration. At a minimum, the
following locations in Northern and Northwestern Baltimore County,
Maryland shall be served:
Baltimore Marriott-Hunt Valley Towson Days Inn
I-83 and Shawan Road 1015 York Road
Embassy Suites Hotel Holiday Inn-Timonium
213 International Circle 2004 Green Spring Drive
at Shawan Court
Sheraton Towson Hotel Baltimore Hilton Inn-
901 Dulaney Valley Road Pikesville, Beltway Exit 20
& Reisterstown Road
Days Inn - Timonium Holiday Inn
9615 Deereco Road Cromwell Bridge
Holiday Inn - Pikesville
1726 Reisterstown Road
2. Contractor is not required to stop at a location if there are no
patrons for pickup or delivery to that location on a scheduled
trip.
3. If there are no patrons to pickup or deliver to any location, the
Contractor is not required to conduct the trip.
4. Subject to the approval of the Administration, other specific
locations in Northern and Northwestern Baltimore County may be
served by Contractor on a scheduled basis.
5. Contractor shall conduct shared-ride door-to-door service to the
Baltimore County service area as shown on Exhibit "C", attached
hereto and made a part hereof. The door-to-door service shall
require reasonable prior reservation notice time, as approved by
the
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<PAGE> 11
Administration. Door-to-door service to the depicted area shall
begin not later than twenty-four (24) months from Contract
commencement. Contractor shall make its best efforts to promote,
market, develop, and conduct the door-to-door service over a
period of time deemed reasonable by the Administration. In the
event Contractor demonstrates to the satisfaction of the
Administration such service is uneconomical, then the
Administration shall release Contractor of its obligations to
provide such service.
D. Downtown Washington. D.C. Scheduled Service and D.C./Marvland Suburbs
Door-to-Door Service
1. Contractor shall provide for primary shared-ride ground
transportation service between the Airport and the following
specific locations:
a. 1517 "K" Street, NW, Washington, D.C.
In the event the agreement the Administration has with the
lessor for use of the passenger waiting room at 1517 "K"
Street is terminated, the Administration will use its best
efforts to locate similar facilities within Washington, D.C.
b. Portions of Prince Georges and Montgomery Counties as shown
on Exhibit "D" hereto, to provide shared-ride pick-up and
delivery service (door-to-door service) to or from an
individual's home or other designated point and BWI Airport.
Contractor shall have the option to use the Greenbelt
Terminal, located at the Greenbelt, Maryland Armory, to
accommodate passengers; however, Contractor must advise the
Administration of its intent to use the terminal facility by
no later than December 31, 1995 or the Administration may
withdraw its offer to Contractor to use the Greenbelt
Terminal. All other uses would be subject to the prior
written approval of the Administration. The Greenbelt
Terminal shall be provided at no additional cost to
Contractor,
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who shall be responsible for all routine upkeep and
maintenance, including cleaning, stocking, trash removal,
grass cutting and snow removal if it opts the use of the
facility.
2. The ground transportation service shall consist of two (2) modes
of service. They are: (1) the "Downtown Service" which shall be
the shared-ride ground transportation activity operating between
the Airport and the Washington Investment Building at 1517 "K"
Street, NW, Washington, D.C. (with one interim stop permissible,
e.g. Greenbelt) or such other centrally located Washington, D.C.
location(s) as may be approved by the Administration, and (2) the
"Door-to-Door Service" which shall be the shared-ride
personalized pick-up and delivery service between an individual's
home, office or hotel and at Contractor's option, either the
Greenbelt Terminal or other location(s) acceptable to the
Administration (for connection with the Downtown Service), or the
BWI terminal building. The door-to-door service outbound from the
Airport shall be on an on-demand, shared-ride basis. The
door-to-door service must encompass those portions of Montgomery
County and Prince George's County, Maryland as shown on Exhibit
"D" hereto.
3. Contractor shall be required to provide for a minimum frequency
of service to and from the Airport as follows:
a. Downtown Service - Contractor shall be required, at a
minimum, to provide scheduled shared-ride ground
transportation from BWI to 1517 "K" Street N.W., Washington,
D.C. or such other centrally located Washington, D.C.
location(s) as may be approved by the Administration,
outbound from the Airport on a one (1) hour scheduled basis
from 6:00 a.m. to 11:00 p.m. local time, initiated by a
customer demand for service, and inbound to the Airport on a
one (1) hour on-demand basis from 7:00 a.m. to 8:00 p.m.
local time, Sunday through Friday. The on-demand
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service shall require reasonable prior reservation notice
time as approved by the Administration. If there are no
patrons to pickup or deliver to any location the Contractor
is not required to conduct the trip. Saturday, and
Administration-designated holiday; service may operate on a
diminished schedule of no less than one and one-half (1 1/2)
hours from the Airport beginning 7:00 a.m. to 7:00 p.m.
initiated by a customer demand for service.
b. Door-to-Door shared-ride Service - Contractor shall require
reasonable prior reservation notice time, as approved by the
Administration, for transportation to the Airport, or a
request at the BWI Ground Transportation Desk at the Airport
for transportation to points in Prince George's or
Montgomery Counties. Operating hours shall coincide with the
operating hours for the Washington - area Downtown Service.
4. Subject to the approval of the Administration, other specific
locations in Washington, D.C. and the D.C./Maryland suburbs may
be served by Contractor on a scheduled basis.
5. Contractor shall conduct shared-ride door-to-door service to the
Washington, D.C. service area as shown on Exhibit "E", attached
hereto and made a part hereof. The door-to-door service shall
require reasonable prior reservation notice time, as approved by
the Administration. Door-to-door service to the depicted area
shall begin not later than twenty-four (24) months from Contract
commencement. Contractor shall make its best efforts to promote,
market, develop, and conduct the door-to-door service over a
period of time deemed reasonable by the Administration. In the
event Contractor demonstrates to the satisfaction of the
Administration such service is uneconomical,
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then the Administration shall release Contractor of its
obligations to provide such service.
E. Schedule Changes
The Administration will consider changes to the minimum schedule
requirements and locations if such changes are in the best interests
of the Airport and its users. Holiday and weekend service may be
changed subject to a request by the Contractor and approved by the
Administration. Any addition or deletion to the service must be
approved in writing by the Administration prior to submission to the
PSC for approval.
The Contractor may be required, on occasion, to staff the ground
transportation desk and operate the ground transportation services, to
downtown Baltimore and Washington D.C. only, beyond the normal
scheduled hours set forth in this Article. Contractor shall be
required to provide these services only in the event of late night
flight diversions or delays due to weather conditions, emergencies,
etc.
F. Minimum Requirements Applicable to all of the above Ground
Transportation Services:
In providing the aforementioned ground transportation services, at a
minimum, Contractor and/or its subcontractors shall:
1. Provide schedule and fare information at the BWI Ground
Transportation Desk or another location designated by the
Administration and at 1517 "K" Street, N.W., Washington, D.C. (or
such other locations as may be approved by the Administration).
Contractor shall be responsible to provide schedule/rate cards
for Contractor's operations/service, at Contractor's expense, for
distribution to the traveling public. Schedule/rate cards must
conform as to the size requirements that the Administration shall
specify.
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2. Contractor and/or its subcontractors shall be required to provide
information to walk up patrons as to the name and counter
location(s) of other ground transportation services that have
contracts with the Administration when alternative choices for
price, time restraints, service area, etc. are requested by
patron (e.g., airport taxicab service, airport luxury limousine
service). Patrons who phone into the counter or Contractor's
reservation center and request service from BWI to a location not
serviced by Contractor and/or its subcontractors, or who want
alternative choices, as above, shall be given the company name
and phone number of those ground transportation services that
have contracts with the Administration. Contractor and/or its
subcontractor shall not be required to sell tickets for other
ground transportation operators.
2. Provide for the sale of both one-way and round-trip tickets, and
any special or discounted ground transportation tickets from BWI.
All fares shall be subject to the advance written approval of the
Administration. The ticket design shall be subject to the written
approval of the Administration. Payments for tickets sold at the
Ground Transportation Desk shall be accepted in cash (U.S.
Currency), travellers check or major credit card. Contractor
shall be responsible for arranging and providing for all
equipment, forms, etc. necessary for the conduct of such credit
card sales.
3. At no additional cost to the passenger, provide for the loading
and unloading of passenger baggage promptly, carefully and
courteously, at the beginning of the trip and at all passenger
pickup and drop off points. Nothing herein shall be construed as
a prohibition of tips/gratuities voluntarily given by passengers
to Contractor's personnel. However, Contractor's personnel are
prohibited from soliciting tips in any manner, without the prior
approval of the Administration, such approval not to be
unreasonably withheld.
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4. Upon written request from the Administration, conduct periodic
ground transportation passenger survey(s) to solicit passenger
comments and suggestions concerning the subject ground
transportation service at the Airport. Survey(s) shall not be
required more than two (2) times during a contract year.
5. Load and unload passengers only at those areas of the Airport
designated by the Administration.
6. Require that all drivers dress in uniforms, which shall be
subject to the prior written approval of the Administration, and
that all of Contractor's and its subcontractor(s)' management and
office personnel, located at the Airport, dress in uniforms or
acceptable business clothing approved by the Administration. In
addition, provide each of its drivers, and others who are in
contact with the public, with easily readable, large-size name
tags with company name and driver's name which are acceptable to
the Administration. Contractor shall assure that said name tags
are worn on the outer uniform clothing at all times while drivers
and other representatives of Contractor are on duty.
7. Provide a monthly report to the Administration showing the exact
number of inbound and outbound ground transportation trips, by
destination, and the number of passengers by full fare and
discounted fare arriving and departing from the Airport.
8. Provide for a baggage storage area in all vehicles used in the
service which is separated from the passengers. Also, baggage
must be secured so that under normal operations and/or during
emergency stops, passengers are protected from injury resulting
from movement of baggage. Additionally, baggage shall not block
any portion of the vehicles' windows when in service.
9. Provide adequate seating and mandatory seat belts, if required by
law, for all passengers. No passengers will be allowed on vans or
other
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ground transportation vehicles used in the service on a standing,
rather than seated, basis. In addition, Contractor shall provide
accessible service to persons with a disability.
10. Obtain all required permits and licenses necessary to conduct
said ground transportation services, prior to the start of
operations and prior to the execution of this Contract.
11. Be responsible for all matters of personnel administration
necessary to conduct said ground transportation service in an
efficient manner.
12. Be required to make all operating records relating to its Airport
ground transportation service available to the Administration for
inspection.
13. Not engage in any business at the Airport other than those
specific rights outlined in this Contract without the written
approval of the Administration.
14. Be required to pay all fees, assessments, taxes, and other
charges levied under federal, state and local statutes and
ordinances as are applicable to the services to be conducted as
outlined in this Contract.
15. Provide for the transportation of on-Airport employees (i.e.,
Administration employees, airline employees except crew personnel
not home-based in the area, employees of concessionaires and
Airport service providers, etc.) between the Airport and the
scheduled service areas at a discounted rate. Contractor is not
required to offer discounts to employees utilizing door-to-door
service. The procedure by which Airport employees are permitted
to utilize Contractor's ground transportation service, and the
proposed fees to be charged by Contractor, shall be subject to
the advance written approval of the Administration. During the
Contract term, Contractor shall be required to submit to the
Administration for advance written approval, any proposed changes
to the procedure for transporting Airport employees, or the fees
proposed to be charged to Airport employees.
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16. Submit a written listing of its proposed fares (prices) to the
Administration for the written approval of the Administration
prior to the submission of such a listing to the Maryland Public
Service Commission, the Washington Metropolitan Area Transit
Commission (WMATC) and/or any applicable regulatory authority.
All charges, fees, or prices established by Contractor for
services provided hereunder shall be reasonable and shall be
approved by the Administration. Reasonableness of charges, fees,
or prices shall be determined by comparison with charges, fees,
or prices currently charged for the same types of services
provided at comparable airports, and by financial information
provided by Contractor. During the term of this Contract, said
charges, fees, or prices may not be increased without the prior
written approval of Administration.
Any proposed change to fares must be submitted to the
Administration in writing at least 30 days prior to the effective
date. All fare changes are subject to the Administration's prior
approval.
17. Design, print, and make available to Airport patrons, a U.S.
Postal Service size post card for the recording of customer's
comments or complaints relating to service provided. Cards shall
be placed at conspicuous locations on all vehicles used in the
service, at the Airport's Ground Transportation Desk, and at all
waiting lounge locations served by Contractor, e.g. the Greenbelt
Terminal, and the Washington Investment Building Passenger
Waiting Lounge. Design and content of this card shall be subject
to prior written approval of the Administration. Proposed card
shall include a method for delivery of card to Contractor and
Administration after card has been completed (filled-in) by
customer.
18. Authorize Contractor's manager for the Airport's ground
transportation operations to respond, in writing, to customer
complaints regarding
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ground transportation services provided. Contractor's operating
procedures shall provide that the manager has primary
responsibility for responding to customer complaints, and
regardless of whether a complaint is subsequently forwarded to
Contractor's headquarters, the manager shall reply promptly and
courteously, in writing, to each customer complaint, as
appropriate.
In any event the manager shall, within five (5) calendar days of
the date that the complaint is first received, make an
appropriate response to the customer, which, if further action on
the complaint is required, may consist of an acknowledgement of
the complaint and a statement of further action to be taken by
Contractor. Contractor shall forward to the Administration a copy
of each complaint, a report prepared by Contractor, and the
written response at the same time such response is mailed or
delivered to the customer.
19. Market and promote the service in accordance with Contractor's
proposal dated November 7, 1994 unless otherwise approved or
disapproved by the Administration. Contractor's plan shall be
subject to the advance written approval of the Administration.
During the term of this Contract, Contractor shall be required to
submit semi-annual written reports as to those promotional
efforts that have been undertaken, together with reports of
expenses or costs incurred for those promotional efforts.
20. Provide that a representative of Contractor shall be stationed at
the Airport's Ground Transportation Desk, for the purpose of (1)
providing dispatching services for Contractor's and/or its
subcontractors' vehicles, (2) monitoring Contractor's and/or its
subcontractor(s) activity at the Airport, (3) responding to
unsolicited inquiries concerning Contractor's and/or its
subcontractor(s) ground transportation service, and (4) selling
one-way or round trip tickets. Said representative is
specifically
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prohibited from soliciting business at this site. Soliciting for
purposes of this Contract is defined as any action that is
contrary to the prescribed method of conducting business as
hereinabove described, and any action by Contractor's
representative to market or sell Contractor's service at the
Airport prior to initiation of a conversation by a prospective
customer with Contractor's representative.
21. Provide the personnel and expertise necessary to manage and
oversee the overall specified ground transportation concessions
program.
22. Permit representatives of the Administration to conduct a
complete inspection of the Contractor's and/or its
subcontractor's operations, that is, premises and vehicles at any
time with respect to cleanliness, state of repair, prices
charged, hours of operation, and services performed, and such
other items as the Administration may wish to review. All
operations of the Contractor and its subcontractors must comply
with all applicable federal, state, local and other governmental
laws and regulations.
23. Offer subcontracts to qualified ground transportation operators
on a nondiscriminatory basis, and at reasonable terms.
24. Agree that the Contractor and its subcontractors, and all
principals, officers, directors, employees and agents thereof,
act solely as an independent contractor in connection with the
Contract and all activities conducted thereunder, and not as
employees or agents of the Administration.
25. Comply with all applicable laws, rules, regulations and
directives promulgated by the Federal Government, the State of
Maryland and the Administration for the care, operation,
maintenance, and protection of the Airport.
26. Comply with the Administration's EWI Airport Security Plan.
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27. Ensure that its employees and/or subcontractors do not knowingly
permit any person to use the assigned Premises for any illegal or
immoral purposes.
28. Ensure that its employees and/or subcontractors shall conduct
their operations in a first-class, businesslike, efficient,
courteous, and accommodating manner.
29. Give directions and assist the public generally.
30. Maintain properly attired, well-trained customer service and/or
sales personnel at the Ground Transportation Desk and use the
utmost skill and diligence in the conduct of their business at
the Ground Transportation Desk. Contractor and its subcontractors
must have in place an active customer service training program,
and all of Contractor's and its subcontractor's employees that
have direct contact with the public shall have at least eight (8)
hours of customer service training annually, as approved by the
Administration. The Administration shall be given notice of such
training at least two (2) weeks in advance of such training. The
Administration reserves the right to send a representative(s) to
observe or provide such training.
31. Take all reasonable measures in every proper manner to maintain,
develop, and increase the business conducted by its Contractor
and subcontractors and not divert, or cause, or allow to be
diverted, any business away from the Airport.
32. Ensure that all van and/or bus drivers have at least eight (8)
hours of driver's safety training annually. Administration shall
be given notice of such training at least two (2) weeks in
advance of such training. The Administration reserves the right
to send a representative(s) to observe such training.
33. At the time any van and/or bus driver is hired or selected, and
on a continuing basis thereafter, ensure each such driver has a
valid driver's
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license and any other permit required by law to operate a van
and/or bus, as the case may be, at the Airport.
34. Maintain a record of the training and driver's license review
referenced above for each van and/or bus driver, which is subject
to review and audit by the Administration.
35. Have a substance abuse program in effect at all times. The
proposed program shall be submitted to the Administration within
30 days of Contract commencement, and whenever any changes to the
program are made.
ARTICLE IV
SECONDARY SERVICE
Contractor shall have the option to provide secondary ground transportation
service, on a nonexclusive basis, to and from the Airport for airlines, airline
passengers, and air carrier employees, or others desiring such service. All
secondary ground transportation service shall be subject to the prior written
approval of the Administration. For the right to perform any or all of the
following secondary ground transportation services, Contractor shall pay the
Administration a fixed fee of ten percent (10%) of gross receipts for such
services originating at the Airport and entered into as a result of the
Contract. Secondary services shall be limited to the following:
a. Transportation services for airline crew personnel.
b. Transportation services for lost, misplaced, or unaccompanied baggage
of airline passengers.
c. Transportation services for airline passengers arriving at the Airport
on aircraft which were diverted to the Airport from other locations,
when such transportation is arranged on a charter basis by the airline
company.
d. Transportation services on a pre-arranged charter (single destination)
basis for travel agencies, hotel associations, business organizations,
etc.
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ARTICLE V
EQUIPMENT REQUIREMENTS
A. As of the commencement date of the Contract, Contractor shall be
required to provide for the amount of equipment and seating capacity
of equipment necessary to provide the ground transportation service
proposed in Contractor's proposal dated November 7, 1994 and for any
secondary services to be operated by Contractor. Contractor shall be
required to provide a written plan as to how it will comply with the
equipment requirements set forth in items B. through F. of this
Article, within 10 days of Contract commencement. The Administration
reserves the right to require the Contractor to either increase the
number of trip frequencies, or provide additional equipment if
passenger demand exceeds the available seats on a consistent basis.
B. The following are the specific requirements relating to the type and
condition of vehicle requirements that Contractor must provide:
1. Vans - If Contractor elects to provide vans:
a. Each vehicle shall be a "top-of-the-line" quality van-type
vehicle providing not less than eight (8) passenger seats
and separate luggage space such as:
- Ford-XLT Club Wagon
- Chevrolet-Beauville
- Dodge-Royal Sportsman Maxivan
- GMC-Rally Custom
- Wayne-Transette
- or equal as determined by the Administration.
b. Suitably equipped vehicles shall be available to serve
disabled passengers.
c. Each vehicle shall have the manufacturer's standard
integrated air-conditioning and heating system and be
equipped with two-way radios or telephones.
d. Compressed Natural Gas (CNG) vehicles are permitted,
however, the Administration will not provide a fueling
facility for such
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vehicles, or any other vehicles operated by Contractor in
connection with this Contract.
2. and/or Buses If Contractor elects to provide buses:
a. Each bus shall be a "top-of-the-line" quality vehicle such
as the following:
- Eldorado National
- Bluebird Q Bus
- Thomas Citybus
- or equal, as determined by the Administration
"School bus" type vehicles shall not be permitted.
b. Buses shall be equipped with a disabled access device and a
luggage compartment.
c. Each bus shall have the manufacturer's standard integrated
air-conditioning and heating system, and be equipped with
two-way radios or telephones. On-board restrooms shall not
be required.
d. Compressed Natural Gas (CNG) vehicles are permitted,
however, the Administration will not provide a fueling
facility for such vehicles, or any other vehicles operated
by Contractor in connection with this Contract.
C. The Administration shall require that Contractor clearly mark its
vehicles used in providing service for the Airport with
Administration-approved identification symbols and markings
(lettering, etc.) to assure their easy identification by the traveling
public; that is, ground transportation vehicles must bear signs
indicating that the vehicles provide service to "Baltimore/Washington
International Airport". Contractor's use of the Airport's identifying
symbol (the "logo"), shall be in accordance with applicable Airport
Tenant Directives. Vehicles shall be identically painted and marked,
unless otherwise approved by the Administration.
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D. The Administration's prior written approval is required for all
proposed vehicle exterior markings (painting, lettering, signing,
etc.) prior to the commencement of the Contractor's operations and
during the term of this Contract.
E. All vehicles shall be maintained in a fully operational, safe, neat,
clean, well polished and presentable condition at all times both
externally and internally. Administration shall have the right to
require Contractor to clean and repair any vehicle found less than
acceptable to the Administration. Further, Administration shall
require that any equipment that is not fully operational in accordance
with all applicable state and local laws, or in safe operating
condition, that is, where all mechanical or electrical systems are not
working (i.e., the air-conditioning) or that has sustained exterior or
interior damage which adversely affects safety, appearance, comfort,
or performance, be removed from service immediately and repaired or
replaced.
F. Van-type vehicles shall be no more than two (2) model years old (1993
model year or later) and shall not have in excess of 50,000 actual
odometer miles as of the commencement of the Contract Term. Contractor
shall be required to replace any van-type vehicle which has a maximum
of two (2) years and/or 200,000 miles of service, that is, 250,000
actual odometer miles, under this contract unless the Administration
grants written approval to retain such van-type vehicle in service.
Buses shall be no more than five (5) model years old (1990 model year
or later) and shall not have in excess of 250,000 actual odometer
miles as of commencement of the Contract Term. Contractor shall be
required to replace any bus which has a maximum of four (4) years
and/or 600,000 miles of service, that is, 850,000 actual odometer
miles, under this Contract unless the Administration grants written
approval to retain such bus in service. Contractor shall be required,
during the Contract term, to maintain the minimum vehicle equipment
complement specified herein, and (Contractor shall replace any
equipment which becomes unserviceable (i.e., unsafe, poor performance
or appearance) during the Contract Term and any extension
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thereto. Title to the said equipment shall vest in Contractor (unless
leased) and there shall be no purchase or buy-back of the equipment
from Contractor by Administration, or by a successor contractor at the
end of the Contract term, or upon any earlier termination of this
Contract.
ARTICLE VI
OPERATING PREMISES
Contractor shall be assigned the following areas and premises on the
Airport for the conduct of the ground transportation services encompassed by
this Contract. The location of assigned areas and premises on the Airport is
subject to change, upon written notification from Administration.
A. Office Space
Contractor shall be provided, at no cost, one (1) air-conditioned
office of approximately 135 square feet in the Airport Terminal
Building for conduct of Contractor's operations at the Airport. The
site is depicted on Exhibit "F" hereto. Contractor may request
additional office space, which if available, will be subject to
standard Airport rental rates for such space.
B. Ground Transportation Desk.
Contractor shall, at a minimum of at least two (2) persons, provide
adequate staffing to provide schedule and fare information to the
public at the Ground Transportation Desk (Exhibit "G"), at least
sixteen (16) hours per day, between the hours of 6:00 a.m. and 11:00
p.m., seven (7) days a week, every day of the year unless otherwise
approved by the Administration. In addition, Contractor shall sell
both one-way and round trip tickets in accordance with the procedures
identified in its November 7, 1994 proposal.
The Administration reserves the right to relocate the Ground
Transportation Desk to an alternate location within the Terminal
Building. The Administration intends to have a second Ground
Transportation Desk open in the Spring of 1997 in the New
International Concourse at BWI, which will
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require Contractor operation based upon a staffing and availability
plan approved by the Administration.
C. Departure Parking Positions.
Contractor and its subcontractor(s) shall be assigned certain
nonexciusive portions of the inner curb lane of the lower level
roadway immediately adjacent to the exit/entrance doors of the
Terminal Building and other areas, as appropriate, for the loading of
its vehicles, all in a manner established by Administration. During
construction of the new International Concourse, which is scheduled to
occur during this Contract's term, approximately 250 to 300 feet of
the inner roadway will not be available. However, the Administration
assures inner roadway access will be maintained. Assigned space for
taxis, luxury limousines/sedans and bus stops will be reduced for
approximately one and one-half (1 1/2) years, beginning approximately
in the Fall, 1995. Additional space will be made available after
construction since the inner roadway will be extended.
D. Employee Parking.
Employees of Contractor and its subcontractor(s) shall be permitted to
park their personal vehicles in the Airport's employee parking areas,
subject to the same terms and conditions of use as are applicable to
employees of other tenants, air carriers, concessionaires, etc., using
the employee parking lots of the Airport. The Airport employee parking
lots shall not be used for the parking of Contractor's or its
subcontractor(s)' commercial vehicles.
E. Vehicle Staring Area.
Contractor and its subcontractor(s) will be allowed to have
nonexclusive use of a vehicle staging area at the lower level inner
roadway of the terminal at no additional cost to Contractor. The
Administration will not provide an overnight storage area for
vehicles, nor maintenance facility at the Airport. However, vehicles
used in the service of this Contract may be stored at the Greenbelt
Terminal, but only in the event that, and only so long as, Contractor
makes use
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of the Greenbelt Terminal for direct passenger accommodation.
Maintenance or exterior washing of vehicles and vehicle maintenance
will not be permitted either at the said vehicle staging area at the
Airport or at Greenbelt.
F. Washington. D.C. Passenger Waiting Lounge.
Contractor shall have the use of the waiting lounge located in the
Investment Building at 1517 "K" Street, Washington, D.C. for
passengers traveling to and from the Airport. The waiting lounge will
be made available only so long as the Metropolitan Washington Airport
Authority (MWAA) continues its contractual relationship with the
Administration. In the event that the current contract between the
Administration and MWAA is terminated, the Administration will use its
best efforts to locate a similar, centrally located facility in
Washington, D.C. The waiting lounge is provided at no additional cost
to Contractor, that is, Administration shall pay the required fees on
this facility which provides for MWAA staff to conduct Contractor's
distribution of schedules and dispatching services at this facility.
Schedule and fare information is available at this location under an
agreement with the MWAA. The Contractor may provide ticket sales
subject to MWAA agreeing to provide ticket counter space.
G. Greenbelt Terminal.
Contractor shall have the option to use the passenger waiting lounge
located adjacent to the Greenbelt Armory in Greenbelt, Maryland for
pickup and delivery of passengers making use of Contractor's service
under this Contract; provided however, that Contractor must exercise
its option to use the facility by notifying the Administration in
writing by no later than December 31, 1995. Contractor shall have the
use of this facility at no rental cost, but Contractor shall be
responsible to pay all utility, janitorial, trash removal, grass
cutting, and snow removal costs at this facility once it has exercised
its option to commence using the facility. Also, in the event that
the Adjutant General of the Maryland Department of the Military or his
designee determines that
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Contractor's operations at Greenbelt Armory are interfering with
emergency military affairs or responsibilities, Federal or State, and
the Adjutant General provides notice to the Administration of same,
then Administration shall advise Contractor to, at once, temporarily
suspend operations at the Greenbelt Terminal. At any time that the
Adjutant General, under other than emergency circumstances, determines
that Contractor's operations at Greenbelt Terminal are detrimental to
the missions and responsibilities of the Military Department, and the
Adjutant General or his designee has provided the Administration
written notice of same, the Administration shall give Contractor
written notice to quit the premises. In the event that action by the
Maryland Department of the Military forces Contractor to vacate the
above cited premises at the Greenbelt Terminal, Administration will
use its best efforts to locate, and make available to Contractor like
facilities nearby, at no cost to Contractor except Contractor shall be
required to provide and pay for the costs of staffing, utilities,
janitorial costs, and routine maintenance, including trash removal,
grass cutting and snow removal, as referenced herein.
H. Monitor Booth
Contractor shall have the right to place a booth on the upper level,
Pier A, adjacent to the interior doors. Contractor shall staff this
booth at its discretion, for the purpose of monitoring passenger
activity of vehicles used in the service (e.g., taking a "head count"
of passengers). The appearance and exact location of the booth shall
be subject to the Administration prior written approval.
ARTICLE VII
COMPENSATION FOR CONCESSION RIGHTS
A. Contractor shall pay to Administration during each year of the term of
this Contract, fifteen percent (15 %) of the total gross revenues
derived from Contractor's and its subcontractor(s)' primary ground
transportation outbound operations from the Airport. Primary ground
transportation operations shall be
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defined as those ground transportation services set forth in Article
III. of this Contract.
B. Within ten (10) days after the end of each calendar month, Contractor
shall forward a monthly payment to Administration in the amount of
fifteen percent (15 %) of the total gross revenues for all primary
ground transportation operations originating at the Airport. Along
with such payment, an itemized report in the format attached hereto as
Exhibit "H", and showing the actual total gross revenues for primary
ground transportation originating at the Airport for the previous
month shall be forwarded to the Administration. Copies of Contractor's
daily record of outbound trips shall be available for audit. The
aforementioned monthly report shall include the passenger statistics
required under Article III.F.7.
C. In addition to the foregoing, Contractor shall pay monthly to the
Administration, during the Contract Term, ten percent (10%) of the
total gross revenues derived from its optional secondary service
ground transportation activities originating at the Airport, as set
forth in Article IV of this Contract. Within ten (10) days after the
end of each calendar month, Contractor shall forward a monthly payment
to the Administration at the rate of ten percent (10%) of the total
gross revenues for all secondary ground transportation operations
originating at the Airport. An itemized report showing the actual
total gross revenues for secondary ground transportation operations
originating at the Airport for the previous month shall be
simultaneously forwarded to the Administration.
D. "Gross revenues" for purposes of this Article shall consist of all
revenue received or realized by or accruing to Contractor and its
subcontractor(s) from all sales, for cash or credit, of all primary
and secondary ground transportation services originating at the
Airport and described in Articles III., and IV. of this Contract. All
revenue shall be deemed to be received on the accrual basis in
accordance with generally accepted accounting principals. No
deductions from
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gross revenues shall be made for bad debts. However, there shall be
excluded or deducted, as the case may be, from "gross revenues" the
following:
1. Federal, state, municipal, or other governmental excise taxes,
use or privilege taxes now or hereafter imposed and required to
be collected by the Contractor or its subcontractor(s) directly
from patrons or customers or as part of the price of any ground
transportation services and required to be paid in turn to any
governmental agency.
2. Receipts from the sale or trade-in value of any furniture,
fixture or equipment used on the Assigned Premises.
3. The amount of any gratuities paid or given by patrons or
customers to Contractor's or its subcontractor(s)' employees.
4. Proceeds from any sale of waste paper, or other refuse materials.
5. Fees paid to and charges made by nationally recognized, major
credit card companies.
E. All payments herein are to be in lawful money of the United States of
America.
F. Payments not received within ten (10) days from date due shall be
assessed an additional one and one quarter percent (1.25 %) fee per
month late charge until paid. In the event Contractor's past due
account is forwarded by the Administration to the State of Maryland
Central Collection Unit (CCU), the Contractor will be responsible to
pay CCU's standard collection fees in addition to any amounts due to
the Administration.
ARTICLE VIII
INSURANCE
A. Contractor and/or its subcontractor(s) shall at its own cost and
expense, take out and maintain primary liability insurance with a
reputable insurance company authorized to conduct business in the
State of Maryland.
B: Contractor and/or its subcontractor(s), at its own cost and expense,
sball take out and carry in effect, throughout the term of the
Contract, a standard form
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policy, or policies, of insurance on an occurrence basis, for the
foregoing stated liability, in the following types and amounts:
1. Workers' Compensation Insurance as required by the laws of the
State of Maryland, including Employer's Liability Coverage, and
any applicable federal laws.
2. Automobile Liability (1.) for buses with a combined single limit
of not less than Five Million Dollars ($5,000,000) covering all
owned, hired, and non-owned vehicles, as the result of any single
occurrence, and (2.) for vans with a combined single limit of not
less than One Million Dollars ($1,000,000) covering all owned,
hired, and non-owned vehicles, as the result of any single
occurrence.
3. General Liability Insurance with combined single limit of not
less than One Million Dollars ($1,000,000), to include but not be
limited to, bodily injury and/or death, premises/operations,
personal injury, independent contractors, broad form property
damage and contractual insurance as a result of any single
occurrence.
C. Contractor agrees to furnish the Administration with certificates of
insurance from a responsible insurance carrier(s) evidencing coverage
of Contractor's and/or its subcontractor(s)' operations on the Airport
and the period of the policies, and indicating the type, kind, and
amount of insurance in effect. All policies shall identify the State
of Maryland, the Maryland Department of Transportation, the
Administration, its authorized officers, agents, employees and
representatives as additional insureds, not named insureds. The
Administration shall be provided with at least thirty (30) days
advance notice, in writing, of cancellation or of any material change.
D. Contractor shall furnish each certificate of insurance in duplicate to
the Administration for approval within fifteen (15) days from the date
of this Contract's Award, unless otherwise specifically authorized by
Administration in writing.
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Certificate(s) shall be issued to:
Maryland Aviation Administration
Division of Commercial Management
Terminal Building
Post Office Box 8766
Baltimore/Washington International
Airport, Maryland 21240-0766
Administration reserves the right to obtain relevant endorsements,
declaration pages, and/or a complete copy of the insurance policy(s)
from Contractor evidencing the coverage required herein, upon written
demand.
E. The failure of Administration, at any time or from time to time, to
enforce the foregoing insurance provisions, shall not constitute a
waiver of those provisions nor in any respect reduce the obligations
of Contractor to defend and hold the Administration harmless with
respect to any items of injury or damage covered by this Article.
ARTICLE IX
OPERATING RIGHTS
A. It is the intent of the Administration that it shall be able, at its
sole option, to obtain full and free competition in soliciting
proposals from other contractors in the event that the Administration
chooses to award successor scheduled ground transportation contracts
to this Contract.
B. Therefore, if the Administration solicits competitive proposals for
successor ground transportation contracts upon the termination or
expiration of this Contract, and if the Contractor under this Contract
does not obtain a subsequent follow-on ground transportation contract
from the Administration, it agrees to: (1) the surrender of its PSC
permit to operate the specified ground transportation services at the
Airport as described in this Contract, and (2) not to oppose
applications. for such PSC permits by the Administration or by any
other Contractor(s), chosen by the Administration for such follow-on
contracts.
C. Contractor shall not be entitled to any payment or other compensation
for: (1) the operating rights, (2) its agreement to surrender its PSC
permit, or (3) its
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agreement not to oppose the applications of the other contractor(s)
chosen by the Administration for the follow-on contract(s).
D. Within ten (10) days after the date of Notice of Award of the
Contract, Contractor shall submit to the Administration, for its prior
written approval, its proposed request to the PSC as required by
Article III.F., Paragraph 10., of this Contract or written evidence
that such PSC authorization has already been received from the PSC.
Contractor shall, during the term of this Contract, promptly seek
prior written approval by the Administration for any application it
intends to make to the PSC for any amendment to its permit authority,
or for any additional authorities affecting its operations at the
Airport, and provide copies to the Administration of any such
amendments or additional permits.
ARTICLE X
VEHICLE MAINTENANCE
The Administration will not authorize vehicle maintenance activities (e.g.,
engine tune ups, tire changes, oil/oil filter changes) on the Airport or any
other property owned or controlled by the Administration, except for any
Administration-approved facility which provides such services to the general
public. Administration will not provide and/or lease any existing maintenance
facilities on the Airport for the maintenance or cleaning of Contractor's or its
subcontractor(s)' vehicles or other equipment.
ARTICLE XI
UTILITIES
The Administration, at its own cost, agrees to provide the Contractor and
its subcontractors with sewerage and water and existing building electricity,
heat, ventilation and air-conditioning in and to the Operating Premises assigned
to Contractor in the Airport Terminal Building. Contractor will be responsible
to pay all utility costs at the Greenbelt Terminal if it elects to utilize that
facility. Any modifications to upgrade existing utilities beyond that
existing when the Operating Premises are assigned to Contractor will be at
Contractor's sole cost and expense, and subject to the Administration's prior
written permit
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process approval. The Contractor shall provide and pay for its own telephone
service within the Operating Premises.
ARTICLE XII
CONTRACTS WITH GROUND
TRANSPORTATION SUBCONTRACTORS
The consent of the Administration with respect to any ground transportation
subcontractor shall, in part, be conditioned on the reasonable acceptability of
the terms and provisions contained in the contracts with the subcontractors, a
copy of which must be submitted to the Administration for its written approval
prior to effective date. The Administration reserves the right to deny any
subcontractor contract for any reason it deems in the best interest of the
Airport.
Contractor will be the primary point of contact in all matters pertaining
to Contractor's subcontractors, which may arise in the conduct of the Contract.
Subcontractors will be held to those same applicable standards and requirements
as Contractor is held to under this Contract.
ARTICLE XIII
DISADVANTAGED BUSINESS ENTERPRISE PARTICIPATION
A. It is the policy of the Administration that DBEs, as defined in 49 CFR
Part 23, shall have the maximum opportunity to share in the benefits
from the Airport concession opportunities. Furthermore, in accordance
with Federal Regulations under 49 CFR Part 23, it is the
Administration's obligation to ensure that DBE's have the opportunity
to compete for available revenues at the Airport. A DBE is a business
entity, whether a sole proprietorship, partnership, joint venture, or
corporation of which at least fifty-one percent (51 %) of the interest
is owned and controlled by a "socially and economically disadvantaged
individual" as such term is defined in the Airport and Airways Safety
and Capacity Expansion Act of 1987 and the regulations promulgated
pursuant thereto at 49 CFR Part 23. DBES must meet the experience and
economic guidelines set forth in 49 CFR Part 23 and be certified by
the Maryland
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Department of Transportation (hereinafter referred to as "MDOT").
Individuals who are rebuttably presumed to be socially and
economically disadvantaged include women, Black-Americans,
Hispanic-Americans, Native Americans, Asian-Pacific Americans, and
Asian-Indian Americans.
B. In order to provide a fair opportunity for DBE participation, the
Administration requires that Contractor make good faith efforts, as
defined in Appendix A of 49 CFR Part 23, to provide for a level of DBE
participation in this concession equal to or greater than fifteen
percent (15 %) of concession gross revenues through an assignment of a
portion of the required services to DBE ground transportation related
service providers; or a combination of ownership options and the above
assignment provision. In the event that the Contractor qualifies as a
MDOT-certified DBE, the Contract goal shall be deemed to have been
met.
C. Selection of actual DBE ground transportation related service
providers, if proposed as a method of achieving participation, shall
be finalized after award to the Contractor. The Administration
encourages, but does not require, DBE selection based on a separate
request(s) for proposals to be issued by the Contractor or other
competitive methodology.
D. If the Contractor fails to achieve and maintain the level of MDOT
certified DBE participation submitted in its proposal, Contractor will
be required to provide documentation demonstrating that it made good
faith efforts, as determined by the Administration, in its attempt to
meet the required level of MDOT certified DBE participation. If
Contractor fails to reflect a good faith effort to achieve and
maintain the level of MDOT certified DBE participation submitted in
its proposal throughout the term of the Contract, Administration may
consider this as a material breach of the Contract and may terminate
the Contract in accordance with the Article XVI.
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ARTICLE XIV
FINES
The Administration may elect to impose on the Contractor the fines
described below on the basis of per violation; in addition to all other rights
and remedies enumerated in this
Contract:
Violation Article Assessment
--------- ------- ----------
Violation of Hours of III $100.00 per incident
Operation Requirement
Violation of Number III $100.00 per incident
of Trips Schedule
Less than required VI $100.00 per incident
number of employees
at ground transportation
counter at all times
ARTICLE XV
FINANCIAL LIABILITY OF
ADMINISTRATION AND CONTRACTOR
The Administration and the Contractor and its subcontractors are not and
shall not be considered as joint venturers, partners, or agents of each other,
and none shall have the power to bind or obligate any other except as set forth
in any contract agreed to by said parties. There shall be no liability on the
part of the Administration to any person for any debts incurred by the
Contractor or by any business conducted on or off the Airport in connection with
the operations of the ground transportation concession at the Airport unless
Administration agrees in writing to pay such debts.
ARTICLE XVI
DEFAULT AND RIGHTS AND REMEDIES UPON DEFAULT
A. The occurrence of any one or more of the following events shall be a
default under this Contract:
1. Contractor shall become insolvent, or shall take the benefit of
any present or future insolvency statute, or shall make a general
assignment
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for the benefit of creditors, or file a voluntary petition in
bankruptcy or a petition or answer seeking an arrangement of its
reorganization or the readjustment of its indebtedness under the
Federal bankruptcy laws or under any other law or statute of the
United States or of any state thereof, or consent to the
appointment of a receiver, trustee, or liquidator of all or
substantially all of its property; or
2. By order or decree of a court, Contractor shall be adjudged
bankrupt or an order shall be made approving a petition filed by
any of the creditors or, if Contractor is a corporation, by any
of the stockholders of Contractor seeking its reorganization or
the readjustment of its indebtedness under the Federal bankruptcy
laws or under any law or statute of the United States or of any
state thereof; or
3. A petition under any part of the Federal bankruptcy laws or an
action under any present or future insolvency law or statute
shall be filed against Contractor and petition against the
Contractor shall not be dismissed within thirty (30) days after
the filing thereof; or
4. The Contract or the rights and interest of Contractor hereunder
be transferred to, pass to, or devolve upon, by operation of law
or otherwise any other person, firm, or corporation; or
5. There is any substantial change in the ownership or
proprietorship of Contractor, which, in the opinion of the
Administration, is not in the best interest of the
Administration, or the public; or
6. Contractor, if a corporation, shall, without the prior written
consent of the Administration, become a non-surviving merged
corporation in a merger, a constituent corporation in a
consolidation, or a corporation in dissolution; or
7. Contractor is, or Contractors collectively are doing business as,
or constitute a co-partnership, and the said co-partnership shall
be dissolved as the result of any act or omission of its
co-partners or any of them or
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by operation of law or the order or decree of any court having
jurisdiction, or for any other reason whatsoever; or
8. By or pursuant to, or under authority of any legislative act,
resolution or rule, or any order or decree of any court or
governmental board, agency or officer having jurisdiction, a
receiver, trustee, or liquidator shall take possession or control
of all or substantially all of the property of Contractor, and
such possession or control shall continue in effect for a period
of fifteen (15) days; or
9. Any lien is filed against the Airport property because of any act
or omission of Contractor and is not removed within ten (10)
days; or
10. Contractor shall abandon, desert, vacate, or discontinue
performance of its operations and services required by the
Contract; or
11. Contractor shall assign, transfer, encumber or subcontract the
Contract or any interest therein without the prior written
approval of the Administration; or
12. Contractor shall fail duly and punctually to pay the concession
fee or to make any other payment required hereunder when due to
the Administration; or
13. Contractor shall fail to provide the quality of service to the
public to the satisfaction of the Administration, as required
herein, within ten (10) days after notice to correct the
condition or practice objected to; or
14. In the event that Contractor has leased space at the Airport,
Contractor fails to make required repairs to the leased premises
within fifteen (15) days after notice is received from the
Administration. If Contractor refuses or neglects to undertake
the maintenance, repairs, or replacements it is responsible for
after request by the Administration; or if Administration is
required to make any repairs necessitated by the negligent acts
or omissions of Contractor, its employees, agents, servants, or
licensees, Administration shall have the right, after fifteen
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(15) days written notice, to make such repairs on behalf of and
for Contractor. Such work shall be paid for by Contractor within
ten (10) days following demand by Administration for said payment
at Administration's cost or standard rates plus fifty percent
(50%) overhead; or
15. There is a cessation or deterioration of service for a period
which, in the judgement of the Administration, substantially and
adversely affects the operation of the ground transportation
service required hereunder; or
16. The Contractor conducts business activities at the Airport which
have not been approved in writing by the Administration and does
not cease such activities within twenty-four (24) hours after
notice by the Administration; or
17. Contractor shall fail to keep, perform and observe each and every
other promise, covenant, condition, and agreement set forth in
the Contract on its part to be kept, performed or observed and
does not cure such failure within ten (10) days after receipt of
notice of non-compliance thereunder by the Administration, or,
where fulfillment of its obligation requires activity over a
period of time, shall fail to commence performance to the
satisfaction of the Administration, within ten (10) days after
receipt of notice, and to continue such performance without
interruption; or
18. There is a finding by the Administration that there was a
material misstatement or omission made by the Contractor in its
proposal dated November 7, 1994, which the Administration relied
upon in making its award of the Contract.
B. Upon the occurrence of any such event detailed in Item A. of this
Article or at any time thereafter during the continuance thereof, the
Administration may, at its option, exercise concurrently or
successively any one or more of the following rights and remedies:
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1. Upon five (5) days notice, terminate the Contract and the rights
of the Contractor hereunder;
2. Without waiving any default, pay any sum required to be paid by
the Contractor to parties other than the Administration and which
Contractor has failed to pay, and perform any obligations
required to be performed by the Contractor under this Contract,
and any amounts so paid or expended by the Administration in
fulfilling the obligations of the Contractor hereunder shall be
repaid by the Contractor to the Administration on demand, at cost
plus a fifty percent (50%) administration fee, with interest
thereon at the rate of one and one quarter percent (1.25%) per
month from the date of such payment or expenditure, without
terminating the Contract;
3. Bring suit for the collection of any payments required by the
Contract for which Contractor may be in default or for the
performance of any other covenant, promise, or agreement
resulting upon Contractor for performance or damage therefor, all
without terminating the Contract. In such case, Contractor shall
be responsible to reimburse the Administration for any legal
costs it incurs in enforcing this provision;
4. Assess Contractor at the rate of one and one quarter percent
(1.25 %) per month of any and all fees and amounts not paid to
the Administration when due, until such fees or amounts are paid;
5. Without prior demand or notice, assume operation of the ground
transportation service at the Airport, either with or without the
institution of summary or any other legal proceedings or
otherwise and without diminishing, excusing or altering in any
effect the obligations of Contractor under the Contract, in which
case, subject to the Administration's obligation to mitigate
damages, the amount or amounts of concession fees shall become
due and payable to the Administration to the same extent, at the
same time or in the same manner as if no
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cancellation, re-entry, regaining or resumption of services took
place. The Administration may maintain separate actions each
month to recover any money due or at its option and at any time,
may sue to recover the full deficiency;
6. The rights and remedies of the Administration provided under this
Article shall not be exclusive and are in addition to any other
rights and remedies which the Administration may have at law or
in equity or under this Contract.
C. No waiver by the Administration at any time of any of the terms,
conditions, covenants or agreements herein shall be deemed or taken as
a waiver at any time thereafter of the same or any other term,
condition, covenant or agreement herein contained, nor of the strict
and prompt performance thereof. No delay, failure or omission of the
Administration to take or to exercise any right, power, privilege or
option arising from any default, or subsequent acceptance of fees then
or thereafter accrued, shall impair any such right, power, privilege
or option, or be construed to be a waiver of any such default or
relinquishment thereof, or acquiescence therein; and no notice by the
Administration shall be required to restore or revive any option,
right, power, remedy or privilege after waiver by the Administration
of default in one or more instances.
D. Contractor shall have the right to terminate this Contract in its
entirety upon:
1. Forty-five (45) days prior written notice to the Administration
of Contractor's intent to terminate, including the cause thereof;
and
2. Payment in full of all obligations to the Administration arising
hereunder through the date of termination; and
3. The occurrence of one or more of the following events provided
any said events shall result in material adverse impact on
Contractor's normal business operations or substantial diminution
of Contractor's gross revenues from ground transportation
operation, continuing for a period in excess of sixty (60) days:
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a. The destruction of all or a material portion of the Airport
facilities;
b. The occupation of the Airport or a substantial part thereof
by an agency or instrumentality of the United States
Government or State or local government;
c. A military mobilization or public emergency wherein there is
a curtailment, either by executive decree or legislative
action, of normal civilian traffic at the Airport or the use
of motor vehicles or air transportation by the general
public; or a substantial limitation of the supply of
automobiles or gasoline for general public use.
ARTICLE XVII
REMEDIES CUMULATIVE
All rights and remedies provided in this Contract shall be deemed
cumulative and additional and not in lieu of or exclusive of each other or of
any remedy available to the Administration at law or in equity.
ARTICLE XVIII
CONDUCT OF BUSINESS
The Contractor shall have the right to use public Airport facilities in
common with others authorized to do so, which right shall be exercised in
accordance with the laws of the United States of America and the State of
Maryland, the rules and regulations promulgated by their authority with
reference to aviation and air navigation, and all reasonable and applicable
rules and regulations of Baltimore/Washington International Airport.
ARTICLE XIX
PERFORMANCE GUARANTEE
A. The Contractor shall be required to execute and deliver to the
Administration within fifteen (15) calendar days after receipt of
notification of award of the Contract, a performance guarantee in the
amount of Twenty Thousand Dollars ($20,000.00). The Contractor shall
maintain such performance guarantee for
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the entire term of the Contract, to include any extension thereto. The
amount of the said performance guarantee shall be subject to
adjustment at the end of each Contract Year of the term; that is, the
amount of the performance guarantee shall be adjusted each year to an
amount equal to approximately fifty percent (50%) of the payments made
by the Contractor to the Administration for the previous Contract
Year.
B. If in the form of a surety bond, the performance guarantee may be
issued for a one (1) year period, provided, however, that evidence of
renewal or replacement of the said bond must be submitted annually by
the Contractor to the Administration at least sixty (60) days prior to
the expiration date of the bond. The surety bond shall contain
language that the surety company shall notify the Administration in
writing within fifteen (15) days of a determination that the surety
bond is to be terminated, or is not going to be renewed. The
Contractor shall maintain a performance guarantee in one of the forms
provided for in Paragraph D. below. One form of performance guarantee
may be substituted for another form of performance guarantee during
the Contract term at the option of the Contractor, provided there
shall not be any lapse of performance guarantee throughout the
complete term of the Contract.
C. The performance guarantee assures performance of the Contract by the
Contractor and payment to Administration of all payments due under the
Contract. The performance guarantee shall be subject to. claim in full
or in part by the Administration in the event of default by the
Contractor for failure to fully perform the Contract.
D. The performance guarantee, at the option of the Contractor, may be in
the form of: (1) an irrevocable letter of credit from a bank
acceptable to the Administration (2) a certified check; (3) a
cashier's check; or (4) in the form of a surety bond, executed by the
Contractor and by a surety meeting the qualifications set forth in
Article "XX" hereof.
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E. Any interest accrued on the performance guarantee will be retained by
the Administration.
F. In the event that the Contractor fails to provide the performance
guarantee for Contract Year 1 as provided herein, within fifteen (15)
days after receipt of notification of award of the Contract, the
Contract may not be executed by the Administration.
ARTICLE XX
SURETY QUALIFICATIONS
The surety, or sureties, upon the required performance bond shall be a
corporate surety, or sureties, duly authorized to do business in the State of
Maryland. Bonding companies whose names appear on the United States Treasury
Department's listing of Accepted Sureties on Federal Bonds need not submit with
the bond any proof of their being so authorized by the Maryland Insurance
Commissioner. Any company which is not on the U.S. Treasury Department's current
list and which is selected to become a surety upon such performance bond must
submit with the bond, at the time it is tendered to the Administration, a
certificate by the Maryland Insurance Commissioner, bearing date not more than
five (5) days prior to the date of the bond so tendered, and to the effect that
the company is authorized to do business in the State of Maryland. To ensure
compliance with the Administration's requirements in this connection, the agent
or attorney executing the bond for the bonding company will, whether the company
is or is not on the Treasury Department's approved list, attach to the bond its
power of attorney or other appropriate proof of authority to execute the bond.
ARTICLE XXI
SMOKING REGULATION
Smoking or carrying any lighted tobacco product in the main terminal
building at the Airport is prohibited except for bars or cocktail lounges where
alcoholic beverages are dispensed, airline or Airport clubs, or other tenant
areas not accessible to the public. An area in which smoking or carrying lighted
tobacco products is permitted shall be prominently marked.
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ARTICLE XXII
AUTOMATED VEHICLE IDENTIFICATION SYSTEM
The Administration may elect at any time during the Contract term to
require that an automated vehicle identification (AVI) system be installed in
each of Contractor's and its subcontractor(s)' vehicles used in the service. The
purpose of the AVI system is to monitor Contractor's activities and determine if
Contractor is operating on the required schedule. In the event a decision is
made to require installation, the Administration shall, at its cost and expense,
purchase, install and de-install the AVI system for the Airport. The Contractor
shall be responsible for installing transponders/tags in each vehicle at
Contractor's expense. Contractor shall complete such installation by a date set
by the Administration. The Contractor shall at its own cost and expense repair
and/or replace any transponders/tags damaged, destroyed or lost by Contractor,
its agents, servants, employees and subcontractors. Upon termination of the
Contract, Contractor shall return the transponders/tags to the Administration in
as good condition as upon installation, the usual wear and tear excepted.
ARTICLE XXIII
DEFINITIONS
As use d herein, each of the following words and expressions shall have the
following meaning:
1. door-to-door service means shared-ride pick-up and delivery to and
from an individual's home or other requested point and BWI Airport
with pick-up and delivery of the individual limited to the curb (i.e.,
drivers are not required to assist individual's from their door to the
vehicle or vice versa, but are required to assist passengers together
with their luggage into or out of the vehicle).
2. scheduled service means operating on a fixed schedule at designated
time intervals (e.g. every 30, 60, or 120 minutes) upon ticket
purchase from BWI Airport.
3. on demand service means a vehicle is dispatched upon request.
4. shared-ride means multiple parties travelling in one vehicle who are
not necessarily travelling companions or destined to the same
location.
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ARTICLE XXIV
GENERAL PROVISIONS
This Contract is subject to the attachment entitled "Lease and/or
Concession Agreements - General Provisions," which is attached hereto and is
made a part hereof. In the event of a conflict between the Special Provisions in
the Contract and the attachment entitled "Lease and/or Concession Agreements -
General Provisions," the Special Provisions shall govern.
ARTICLE XXV
CONTINGENT APPROVALS
It is agreed and understood by all parties hereto that the execution of
this Contract and its effectiveness is contingent upon approval by the Secretary
of Transportation and the Board of Public Works of Maryland and this Contract
shall be considered to bind the parties hereto in accordance with the
Constitution and laws of the State of Maryland and of the United States of
America.
-45-
<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed as of the date first above written.
ATIEST: SUPERSHUITLE, INC.
/s/ VALERIE GENE DAWSON BY: /s/ MARK L. JOSEPH (SEAL)
- ---------------------------- ----------------------------
Mark L. Joseph, President
(TITLE)
FEDERAL I.D. NO. 52-1827429
WITNESS: MARYLAND AVIATION ADMINISTRATION
/s/ DORIS W. SEIFERT BY: /s/ THEODORE E. MATHISON
- --------------------------- -----------------------------
Theodore E. Mathison
Acting Executive Director
APPROVED AS TO FORM
AND LEGAL SUFFICIENCY:
BY: /s/ JANICE G. SALZMAN
-------------------------
Janice G. Salzman
Assistant Attorney General
CONTRACT NO. MAA-LC-95-020
-46-
<PAGE> 49
BALTIMORE CITY SERVICE AREA
Exhibit "A"
MAA- LC -95-020
BALTIMORE CITY
EAST: BROADWAY TO NORTH AVENUE TO ST. PAUL STREET TO CHARLES STREET TO BALTIMORE
COUNTY LINE; NORTH: BALTIMORE COUNTY LINE; WEST: GREENSPRING AVENUE TO MONROE
STREET; AND SOUTH: I-95.
[GRAPHIC OMITTED - MAP]
<PAGE> 50
ANNAPOLIS SERVICE AREA
Exhibit "B"
MAA- LC -95-020
[GRAPHIC OMITTED - MAP]
ANNAPOLIS AREA
EAST TO RT 2 AND RT 50 TO BAY: NORTH TO DORSEY ROAD: WEST PRINCE GEORGE'S/HOWARD
COUNTY LINE; AND SOUTH TO CENTRAL AVENUE.
<PAGE> 51
BALTIMORE COUNTY SERVICE AREA
Exhibit "C"
MAA- LC -95-020
[GRAPHIC OMITTED - MAP]
BALTIMORE COUNTY
EAST: HARFORD ROAD & HARFORD COUNTY LINE; NORTH: PA BORDER; WEST: CARROLL
COUNTY/HOWARD COUNTY LINES; AND SOUTH: I-95.
<PAGE> 52
MONTGOMERY & PRINCE GEORGE'S COUNTIES SERVICE AREA
Exhibit "D"
MAA- LC -95-20
[GRAPHIC OMITTED - MAP]
PRINCE GEORGE'S/MONTGOMERY COUNTIES
EAST TO ANNE ARUNDEL & HOWARD COUNTIES LINES: NORTH FROM RT 97 TO RT 355 TO RT
27 TO RT 118 TO RT 112; WEST POTOMAC RIVER; AND SOUTH TO CHARLES COUNTY LINE.
<PAGE> 53
WASHINGTON, D.C. SERVICE AREA
Exhibit "E"
MAA- LC -95-020
[GRAPHIC OMITTED - MAP]
WASHINGTON, D.C.
ALL WITHIN LIMITS, AS MARKED.
<PAGE> 54
[GRAPHIC OMITTED - FLOOR PLAN]
135 Sq. Ft. of air-conditioned office space
CENTER TERMINAL Lower Level
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] NOTE: This exhibit depicts [LOGO] BWI
LOCATION only square footage of BALTIMORE/WASHINGTON
leased area and is INTERNATIONAL AIRPORT
not intended to address
construction details EXHIBIT "F"
MAA- LC -95-020
Office Space
- --------------------------------------------------------------------------------
<PAGE> 55
Exhibit "E"
MAA-LC; -95-020
[GRAPHIC OMITTED - FLOOR PLAN]
177 Sq. Ft. of air-conditioned counter space
CENTER TERMINAL Lower Level
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] NOTE: This exhibit depicts [LOGO] BWI
LOCATION only square footage of BALTIMORE/WASHINGTON
leased area and is INTERNATIONAL AIRPORT
not intended to address
construction details EXHIBIT "G"
MAA- LC -95-020
Ground Transportation Desk
- --------------------------------------------------------------------------------
<PAGE> 56
Exhibit "E"
MAA- LC -95-020
GROUND TRANSPORTATION ACTIVITY REPORT
Baltimore/Washington International Airport
Company Name ___________________________________________________________________
Contract No. _____________________________________ Report Month ________________
Complete Section I OR Section II as appropriate
- --------------------------------------------------------------------------------
SECTION I - Complete for % of gross revenue computation
$
---------------------
Total Gross Revenues
(for operation at BWI)
Concession Rate X %
---------------------
Concession Fee
---------------------
Less 1/12 minimum annual guarantee
(if any)
---------------------
AMOUNT DUE $
=====================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTION II -- Complete for flat rate computation
________________ X _________________ =
# Outbound Trips Flat Fee per Trip ---------------------
Less 1/12 minimum annual guarantee
(if any) ---------------------
AMOUNT DUE $
=====================
- --------------------------------------------------------------------------------
I certify that this is a true and accurate statement of gross revenue in
accordance with the terms of the lease and concession agreement.
( )
- -------------------- ------------------- ------------------ ----------
Signature Phone Title Date
1. Submit report in duplicate by 15th of month following report month.
2. Make check payable and remit to:
Maryland State Aviation Administration
P.O. Box 8766
Baltimore/Washington Int'l Airport, MD 21240
SAA-15 [ILLEGIBLE]
8/83
<PAGE> 57
INSTRUCTIONS
CONTRACT AFFIDAVIT
1. Please complete aLl blank spaces on this Affidavit. If the document is
received incomplete, it will be returned to your Company for proper
execution.
2. On Page 1, at the top left margin, please complete the State and County
portion of the Affidavit using your Company's State and County location.
3. Please note that the resident agent referred to in Section 2 must reside in
the State of Maryland.
4. Indicate "N/A" in any space which is "non-applicable" to your Company.
5. If you have any questions or require any assistance concerning corporation
registration (Section 2) when completing this Affidavit, please contact the
Maryland Department of Assessments and Taxation, Charter Division at (410)
225-1340, and if you have any other questions relating to this Contract
Affidavit please call the Maryland State Aviation Administration at (410)
859-7002.
<PAGE> 1
EX-10.16
Material Contracts
Exhibit 10.16
[LOGO]
CITY OF DALLAS
DALLAS/FORT WORTH INTERNATIONAL AIRPORT
SHARED RIDE OPERATING AUTHORITY
In accordance with Section 10, "Dallas/Fort Worth International Airport Shared
Ride Rules and Regulations," of Chapter Two, "Regulation of Vehicles," of the
Code of Rules and Regulations of the Dallas/Fort Worth International Airport
Board (adopted by Resolution No. 71-172), as amended, shared ride operating
authority is hereby issued to:
Holder: Supershutt1e DJW. Inc.
Address: 729 E. Dallas Rd. Grapevine, TX 76051
Responsible Person: John R. Donor Jr. Title: Owner
Assuance of this permit does not apply to other entities for which additional
permits may be required. Holder may operate for-hire shared ride service at
Dallas/Fort Worth International Airport for the purpose of transporting
passengers and their baggage. Holder shall operate such service in accordance
with and under the applicable provisions of the Dallas/Fort Worth International
Airport Rules and Regulations and all other laws. rules, or regulations which
pertain to the operation of the Holder's Shared Ride business, including the
Americans with Disabilities Act. Holder must comply with all rules and
requirements of the Federal Clean Air Act, any other State or local control
measures required for non-attainment areas, or any other Federal, State or local
laws applicable to the operation of the permitted business.
VEHICLES
Holder shall provide service using 82 Vehicle(s).
TYPE OF SERVICE TO BE PERFORMED PREARRANGED
PREARRANGED
RATES
Holder shall provide service using the following schedule of rates:
See attached list.
ECONOMIC DEVELOPMENT DEPARTMENT P.O. BOX 810929 DALLAS/FT WORTH TEXAS AIRPORT
DALLAS TEXAS 75281-0829 TELEPHONE 214/674 5879
<PAGE> 2
ISURANCE
Holder shall provide to the Administrator a policy or certificate of insurance
coverage for all motor vehicles used in its operation, and said coverage shall
be in accordance with the provisions of the Dallas/Fort Worth International
Airport Shared Ride Rules and Regulations, including Section 4-4 which states:
Insurance required under this section must: (a) be carried with an
insurance company authorized to do business in the State of Texas and (b)
include a cancellation rider under which the insurance company is required
to notify the Administrator in writing not less than 30 days before
cancelling or making material change to the insurance policy.
OPERATING PROCEDURES
The conditions set forth in this shared ride operating authority shall be
strictly adhered to, and no change in the conditions will be allowed without
first obtaining approval from the Assistant to the Director of Economic
Development and having the operating authority amended as required to the shared
ride rules and regulations.
FEE
The annual fee for shared ride operating authority is $360.00.
IDEMNITY
Holder shall and does hereby indemnify, save and hold harmless, and defend the
cities of Dallas and Fort Worth and the Dallas/Fort Worth International Airport
Board and all of their officers, agents, and employees from any and all suits,
actions, or claims for damages or injuries to persons or property of whatsoever
kind or character arising out of or in any manner connected with the acts or
omissions of Holder or any shared ride driver operating under Holder's authority
in the performance, use, or operation of vehicles or in the use of premises or
facilities of the Cities of Dallas or Fort Worth or the Dallas/Fort Worth
International Airport. It is specifically provided that this indemnity shall not
apply to any suit, action, or claim for damages or injuries to persons or
property arising out of or connected with negligent acts or omissions of any
agent or employee of the Cities of Dallas or Fort Worth or the Dallas Fort Worth
International Airport Board. Nothing herein shall be construed in any manner to
create a cause of action not otherwise existing at law or inure to the benefit
of any third party.
/s/ KATHY TOLER Effective: October 1, 1995
- -------------------------------
Kathy Toler Expires: September 30, 1996
Assistant to the Director
Economic Development Department Accepted: November 13, 1995
City of Dallas
Responsible
Person: /s/ [ILLEGIBLE]
Title: General Manager
<PAGE> 1
EX-10.17
Material Contracts
[LOGO]
CITY OF DALLAS
DALLAS/FORT WORTH INTERNATIONAL AIRPORT
LIMOUSINE OPERATING AUTHORITY
In accordance with Section 10, "Dallas/Fort Worth International Airport
Limousine Rules and Regulations," of Chapter Two, "Regulation of Vehicles," of
the Code of Rules and Regulations of the Dallas/Fort Worth International Airport
Board (adopted by Resolution No. 71-172), as amended, limousine operating
authority is hereby issued to:
Holder: Supershuttle DFW dba Execucar
Address: 729 E. Dallas Rd. Grapevine, TX 76051
Responsible Person: John Donor, Jr. Title: Director of Risk Management
Issuance of this permit does not apply to other entities for which additional
permits may be required. Holder may operate for-hire limousine service at
Dallas/Fort Worth International Airport for the purpose of transporting
passengers and their baggage. Holder shall operate such service in accordance
with and under the applicable provisions of the Dallas/Fort Worth International
Airport Rules and Regulations and all other laws, rules, or regulations which
pertain to the operation of the Holder's Limousine business, including the
Americans with Disabilities Act. Holder must comply with all rules and
requirements of the Federal Clean Air Act, any other State or local control
measures required for non-attainment areas, or any other Federal, State or local
laws applicable to the operation of the permitted business.
VEHICLES
Holder shall provide service using 6 Limousine(s).
PREARRANGED
RATES
Holder shall provide service using the following schedule of rates:
See attached list.
ECONOMIC DEVELOPMENT DEPARTMENT P.O. BOX 810929 DALLAS/FT WORTH TEXAS AIRPORT
DALLAS TEXAS 75281-0829 TELEPHONE 214/674 5879
<PAGE> 2
INSURANCE
Holder shall provide to the Administrator a policy or certificate of insurance
coverage for all motor vehicles used in its operation. and said coverage shall
be in accordance with the provisions of the Dallas as/Fort Worth International
Airport Limousine Rules and Regulations, including Section 4-4 which states:
lnsurance required under this section must: (a) be carried with an
insurance company authorized to do business in the State of Texas and (b)
include a cancellation rider under which the insurance company is required
to notify the Administrator in writing not less than 30 days before
cancelling or making material change to the insurance policy.
The conditions set forth in this limousine operating authority shall be strictly
adhered to, and no change in the conditions will be allowed without first
obtaining approval from the Assistant to the Director of Economic Development
and having the operating authority amended as required to the bus rules and
regulations.
FEE
The annual fee for limousine operating authority is $360.00
INDEMNITY
Holder shall and does hereby indemnify, save and hold harmless, and defend the
cities of Dallas and Fort Worth and the Dallas/Fort Worth International Airport
Board and all of their officers, agents, and employees from any and all suits,
actions, or claims for damages or injuries to persons or property of whatsoever
kind or character arising out of or in any manner connected with the acts or
omissions of Holder or any limousine driver operating under Holder's authority
in the performance, use, or operation of vehicles or in the use of premises or
facilities of the Cities of Dallas or Fort Worth or the Dallas/Fort Worth
International Airport. It is specifically provided that this indemnity shall not
apply to any suit, action, or claim for damages or injuries to persons or
property arising out of or connected with negligent acts or omissions of any
agent or employee of the Cities of Dallas or Fort Worth or the Dallas Fort Worth
International Airport Board. Nothing herein shall be construed in any manner to
create a cause of action not otherwise existing at law or inure to the benefit
of any third party.
/s/ KATHY TOLER Effective: October 1, 1995
- -------------------------------
Kathy Toler Expires: September 30, 1996
Transportation Regulation Administrator
Economic Development Department Accepted: November 13, 1995
City of Dallas
Responsible
Person: /s/ [ILLEGIBLE]
Title: General Manager
<PAGE> 1
EX-10.18
CONCESSION CONTRACT
CONCESSION CONTRACT
BETWEEN
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
AND
WASHINGTON SHUTTLE, INC.
TO OPERATE A DOOR-TO-DOOR/SHARED RIDE CONCESSION AT
WASHINGTON NATIONAL AIRPORT AND
WASHINGTON DULLES INTERNATIONAL AIRPORT
CONTRACT NO. MWAA-C3-96-O1
<PAGE> 2
INDEX
Article Page
- ------- ----
I. Operating Period 1
II. Facilities and Premises 2
III. Scope of Services 3
IV. Operational Requirements 5
V. Obligations of the Authority 15
VI. Financial Consideration 16
VII. Performance Guarantee 19
VIII. Indemnification and Insurance 20
IX. Quality of Performance and Liquidated Damages 21
X. Notices 22
XI. Trademarks, Service Marks, and Logos 23
XII. Scrip Reimbursement 24
XIII. Standard Provisions 24
EXHIBITS
A Premises Exhibits
B Sections of Contractor's Proposal
C Vehicle Markings
D Money Transfer Agreement
E Certified Statement
F Trademarks
G List of Hotels
ATTACHMENTS
1 Standard Provisions for Concession Contracts
<PAGE> 3
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
CONTRACT NO. MWAA-C3-96-O1
TO OPERATE A DOOR-TO-DOOR/SHARED RIDE CONCESSION AT
WASHINGTON NATIONAL AIRPORT AND
WASHINGTON DULLES INTERNATIONAL AIRPORT
THIS CONCESSION CONTRACT (hereinafter referred to as "Contract"), made and
entered into this second day of February 1996, by and between Washington
Shuttle, Inc., whose address is 3251 Washington Blvd., Arlington, Virginia,
22201, a corporation organized and existing under and by virtue of the laws of
Virginia, (hereinafter referred to as the "Contractor") and THE METROPOLITAN
WASHINGTON AIRPORTS AUTHORITY, 44 Canal Center Plaza, Alexandria, Virginia
22314, (hereinafter referred to as the "Authority")
W I T N E S S E T H :
WHEREAS, the Authority operates Washington National Airport and Washington
Dulles International Airport (hereinafter referred to collectively as "the
Airports") under the "Metropolitan Washington Airports Act of 1986"; and,
WHEREAS, the Authority has determined that the conduct of an exclusive
Door-to-Door/Shared Ride service operated under the Washington Flyer trademark
from, to, and on the Airports is essential and appropriate to the effective
operation of the Airports; and,
WHEREAS, the Authority wishes to assure that a safe, efficient service of
high quality is available at the Airports at all times for the benefit and
convenience of airline passengers and other visitors; and,
WHEREAS, the Contractor has submitted a proposal in response to the
Authority's public solicitation, Request for Proposals No. MWAA-R3-95-03, and
the Operations Committee of the Board of Directors of the Authority has approved
the selection of the Contractor's proposal and directed the General Manager to
enter into a contract with the Contractor on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the Parties hereto, for and in consideration of the fees
and covenants, agree as follows:
ARTICLE I. OPERATING PERIOD
A. Period of Contract: The Initial Period of this Contract shall commence as
of 12:01 AM on February 1, 1996, and end at 12:00 Midnight on April 30,
1996. The Operating Period of this Contract shall commence the date the
Contractor's equipment is available and operating authority has been
granted by the Virginia Department of Motor Vehicles,
Concession Contract
Contract No. MWAA-C3-96-O1
Page l of 26
<PAGE> 4
the Interstate Commerce Commission and the Washington Metropolitan Area
Transit Commission, or May 1, 1996, whichever shall first occur; provided,
however, that if the Contractor is unable to secure the appropriate
approvals prior to May 1, 1996 for reasons beyond the control of the
Contractor, the Authority and the Contractor shall agree upon a new start
date of the Operating Period. The Contract shall expire on April 30, 2001.
B. Contract Year: For the purpose of this Contract, "Contract Year" shall mean
the period of time beginning on the first day of the month in which the
Operating Period begins and ending on the last day of the month twelve
months later throughout the term of the Contract.
C. Option Years: The Authority, at its sole discretion, may extend the
Operating Period of this Contract by granting the Contractor one (1)
five-year option. The Authority shall notify the Contractor whether or not
it will grant an extension not later than one (1) year before the end of
the fifth Contract Year. The Authority may condition any extension upon
reaching a mutually acceptable agreement on changes to the terms and
conditions of this Contract, including payment to the Authority.
ARTICLE II. FACILITIES AND PREMISES
The Contractor shall be assigned the following premises on the Airports as shown
in Exhibit A in "as is" condition for the conduct of the Shared
Ride/Door-to-Door van service (hereafter referred to as "Shared Ride Service").
The Authority reserves the right to relocate the Contractor during the term of
the Contract to alternative facilities and premises upon thirty (30) days
advance written notice from the Authority to the Contractor. The Authority will
make best efforts to locate alternative facilities and premises that are
comparable to those being vacated by the Contractor. The Authority reserves the
right to expand or reduce the assigned facilities and premises upon thirty (30)
days advance written notice.
A. Premises
The Contractor will be granted the right to load and unload passengers
within specific areas at the Airports as identified in Exhibit A.
1. Future Premises:
a. Washington National Airport, Future Boarding Area: The Airport
shall provide boarding locations at the new North Terminal to be
designated prior to the opening of the terminal.
b. Washington Dulles International Airport, Future Boarding Area:
The Final Commercial Vehicle roadway will replace the Temporary
roadway
Concession Contract
Contract No. MWAA-C3-96-O1
Page 2 of 26
<PAGE> 5
during the summer of 1997. The Shared Ride service has been
tentatively assigned two boarding locations along the first
curbside, adjacent to the Main Terminal, between the two Ground
Transportation Centers. This assignment is subject to approval by
the Airport Manager.
c. Washington Dulles International Airport, Future Holding Area: The
Authority is currently reviewing vacant space along the West
Service Road for potential development of a commercial vehicle
holding area. If the Authority, at its sole option, chooses to
develop this area, it will accommodate Shared Ride vans, charter
buses, and other commercial vehicles.
2. Exclusive Use of Curbside: It is understood that the curbside space
assigned to the Contractor is for the exclusive use of the Contractor.
3. Fueling Station: An area immediately adjacent to the holding area at
Washington National Airport, as shown in Exhibit A, has been
identified for potential future development of a environmentally-
friendly fuel fueling station. In the event the Authority proceeds
with the development of an environmentally-friendly fuel fueling
station on this site, there may be some reduction of the Contractor's
holding area. The Authority will advise the Contractor in writing
thirty (30) days prior to any construction on this site. The Authority
is not obligated to provide the Contractor with substitute holding
area.
ARTICLE III. SCOPE OF SERVICES
A. This Contract grants the Contractor the exclusive right to operate a Shared
Ride service, (defined in Section IV (A) herein) from the Airports to
points within the Washington Metropolitan Area, according to the following
schedule. During the first Contract Year, the Contractor shall operate the
Shared Ride service, at a minimum, between Washington National Airport, the
Authority's Downtown Airports Terminal located at 1517 K Street, N.W,
Washington, D.C., and approximately seventy-five (75) hotels in the
Downtown Washington area, listed in Exhibit G. No later than the first day
of the second Contract Year, the Contractor shall provide the service from
Washington National Airport to all residential, business and government
addresses in the Washington Metropolitan Area. The Contractor may also
implement Shared Ride service from Washington Dulles International Airport
on the first day of the second Contract Year, and must provide this service
from Dulles Airport to all residential, business and government addresses
in the Washington Metropolitan area by the last day of the second Contract
Year. The Washington Metropolitan Area is defined as the District of
Columbia; the Maryland counties of Montgomery, Prince George's and Charles;
the Virginia counties of Arlington, Fairfax, Loudoun and Prince William;
and the Virginia independent cities of Alexandria, Fairfax,
Concession Contract
Contract No. MWAA-C3-96-O1
Page 3 of 26
<PAGE> 6
Falls Church, Herndon, Manassas and Manassas Park. Shared Ride service is
to be provided to patrons upon demand by the patron. Service is to be
provided, in a timely manner, in vans to patrons travelling to the same or
similar destinations. This exclusive right is subject to the following
limitations:
1. Shared Ride service may be provided to and from the Airports by
persons or entities other than the Contractor to the extent such
service is permitted by the Metropolitan Washington Airports
Regulations, as may be amended from time to time. The Authority's
regulations allow passengers to be dropped off at the Airport by
vehicles other than the Contractor's, but prohibit passenger pick-up
by non-Contractor vehicles unless such service has been prearranged by
the passenger and the operator of the non-Contractor vehicle, and the
operator of the non-Contractor service has a record of the name of the
person to be picked up, the point of pick-up and the time the request
was made. The Authority agrees to use its best efforts to enforce
these regulations.
2. Motels, hotels, rental car companies, parking operators and similar
establishments may provide "courtesy" transportation to and from the
Airports for their patrons.
3. The Authority shall have the right to provide or to enter into
contracts with others for the right to provide ground transportation
services other than Shared Ride services, such as, but not restricted
to: limousine and executive sedan services, taxicab service, and motor
coach service on a scheduled, unscheduled, regular route or irregular
route basis. For example, the Authority has granted a third party the
exclusive right to manage and dispatch taxi service at Washington
Dulles International Airport.
B. The Contractor may, at its discretion, provide Shared Ride service to the
Airports from points in the Metropolitan Washington Area for persons in
need of such service, subject to all laws and regulations enacted by the
governmental authorities with jurisdiction over such service. The Authority
will use its best efforts to assist the Contractor in obtaining rights from
other jurisdictions to pick up passengers for transport to the Airports.
C. In the event that the Contractor is unable to provide the level of service
required herein because of the general non-availability of fuel supplies,
the failure to provide the service required by this Contract shall not be
considered a default under Article IX., of the Standard Provisions attached
hereto. Under such circumstances, the Authority reserves the right to
contract with others to provide temporary transportation service to and
from the Airports throughout the term of the Contract, until such time as
the Contractor notifies the Authority of its ability to resume service in
accordance with the provisions of the Contract.
Concession Contract
Contract No. MWAA-C3-96-O1
Page 4 of 26
<PAGE> 7
ARTICLE IV. OPERATIONAL REQUIREMENTS
A. Service.
1. The Contractor shall establish and operate at Washington National and
Washington Dulles International Airports an exclusive Shared Ride
service, affiliated with the Washington Flyer transportation system,
to transport passengers to and from the Airports, the Downtown
Airports Terminal, and other points within the Washington Metropolitan
Area, as defined in Article III.A. This service shall be operated in a
manner consistent with the provisions of this Contract, and that will
meet the transportation needs of all passengers and accompanying
baggage at the Airports terminal buildings and the Airport's fixed
base operator facilities.
Shared ride service is defined as a service in which passengers will
share vans with other passengers travelling between the Airports and
the same or proximate locations. Each van operated in the Shared Ride
service may make up to three stops when travelling to or from the
Airports, unless one of the following three circumstances, as
described in the Contractor's proposal (Exhibit B), applies,
permitting more than three stops to be made:
a. A travel emergency may only be declared by the Contractor's
Operations Manager and is defined to include such occurrences as
a natural disaster or extremely inclement weather conditions that
result in extraordinary travel conditions, or a special event
that results in road restrictions and closures (e.g.,
Presidential Inaugurations).
b. Holiday restrictions are defined as those holiday periods of
extraordinarily high transportation demand (e.g. Thanksgiving and
Christmas) that necessitate the addition of extra stops to
accommodate an increased number of service requests.
c. Express Areas are defined as clearly delineated, published areas
in which the Contractor has determined that customary passenger
density is so high that the occurrence of more than three stops
within close proximity would not likely increase the average
amount of time the passenger would spend in the van, as compared
to a Shared Ride van making three stops outside the Express Area.
The Contractor shall provide the Authority with a detailed
description of its proposed Express Areas as part of its
Operations and Procedures Manual.
2. The Contractor shall conduct its activities under the Contract in a
manner which is at all times consistent with the laws and regulations
enacted by any
Concession Contract
Contract No. MWAA-C3-96-O1
Page 5 of 26
<PAGE> 8
governmental authority having jurisdiction over its operations and
shall possess all required permits and licenses. Copies of said
permits and licenses shall be provided by the Contractor to the
Authority upon request.
3. To ensure a high level of customer service, the Contractor shall,
during the term of the Contract, at its own cost and expense:
a. Establish and operate an automated Shared Ride dispatch and
control system using personnel who are thoroughly trained to
provide for the effective and efficient movement and utilization
of vehicles and personnel. Within thirty (30) days after the
commencement date of the Initial Period of the Contract, the
Contractor must provide to the Authority a full and complete
Operations and Procedures Manual for the central automated
dispatch and control system, describing current capabilities and
limitations and potential for growth. Backup systems and
emergency procedures to be followed in the event of primary
system failure must also be described. The system must provide
for rapid reservations and ticketing from all non-Airport points
of origin including, but not limited to, hotels, convention
centers, and residences within the Washington Metropolitan Area.
The Operations and Procedures Manual may be updated by the
Contractor as necessary. Any updates to this Manual shall be
provided to the Authority prior to their implementation.
b. Acquire, install and operate a dedicated frequency by which to
maintain radio contact between the Contractor's central dispatch
system, its (curbside) Guest Coordinators and all of its van
operators in the Washington Metropolitan Area. The Contractor's
telephone reservation and dispatching location shall be operated
twenty-four (24) hours daily.
c. Equip Guest Coordinators with communications equipment
specifically allowing them to maintain radio contact with the
vehicle holding area and thereby provide an efficient flow of
vehicles between the holding areas and the loading areas.
d. Guest Coordinators shall assist all passengers as needed,
including the physically disabled, assign passengers to vehicles,
and coordinate the vehicle flow between the holding and loading
areas. The guest coordinators shall be courteous and helpful and
shall at all times conduct themselves in a manner which reflects
positively upon the Contractor and the Authority.
e. Require that the operators of all vans used to provide passenger
service to
Concession Contract
Contract No. MWAA-C3-96-O1
Page 6 of 26
<PAGE> 9
and from the Airports load and unload passenger baggage at curb
side promptly, carefully, courteously and efficiently, exercising
reasonable control over baggage to prevent its theft or loss.
Require that the operators of all vehicles conduct themselves in
a courteous manner to passengers during each trip.
f. Provide, throughout the term of this Contract, the full-time and
part-time staffing as shown in Exhibit B of this Contract. The
Contractor's staffing may be reduced only after the Contractor
receives written approval of such reduction from the Authority.
The names of all management staff shall be provided to the
Authority. The Contractor shall notify the Authority in writing
of any changes in management personnel and schedules. The
Operations Manager(s) shall maintain office hours at least eight
hours daily, Monday through Friday, excluding holidays. The
Contractor shall provide the Authority with the name and phone
number of the Operations Manager or other supervisory employee
who can be contacted by the Authority in the event of an
emergency.
g. Promptly and courteously respond to, and resolve to the extent
possible, customer complaints made directly to the Contractor by
the customer or made to the Authority and referred by the
Authority to the Contractor. A record of all such complaints
shall be maintained by the Contractor throughout the term of this
Contract. The Contractor shall within three (3) calendar days of
the date in which a written complaint is first received, either
as a passenger complaint referred by the Authority or as a
complaint made directly to the Contractor, make an appropriate
written response to the customer. If further action on the
complaint is required, the initial response may consist of an
acknowledgment of the complaint and a statement of further action
or investigation to be taken by the Contractor. When such further
action or investigation is complete, a follow-up response will be
sent to the customer. Customer complaints which are received by
telephone are to be responded to immediately by telephone and, if
appropriate, in writing. The Contractor shall submit to the
Authority a copy of each complaint report prepared by the
Contractor and the Contractor's written response to or record of
telephone discussions with the customer to resolve such
complaints. The Contractor shall also provide a copy of its
procedures for handling customer complaints to the Authority for
approval within thirty (30) days after the commencement of the
Contract.
h. Implement the process contained in the Contractor's proposal,
Exhibit B, to inspect all vans prior to their departure to (he
loading areas. The
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Contractor shall, daily: 1) perform such inspections in
accordance with the inspection procedures outlined in Exhibit B,
2) record in writing vehicle and driver deficiencies and
establish a reasonable period of time for the resolution of said
deficiencies, 3) remove from service any van not meeting the
minimum standards required in this Contract, and 4) require that
the operators of all vehicles maintain a neat and clean
appearance at all times while on duty.
i. Establish a notification form which will list all Authority rules
and regulations applicable to operating vehicles on the Airports.
The purpose of this form is to ensure formal notification to each
driver of the applicable rules and regulations governing the
right to operate a vehicle on the Airports. The Contractor shall
provide a copy of the form to the Authority. Copies of all
Authority regulations will be provided to the Contractor prior to
commencement of operations.
j. Ensure that all drivers have a current, valid operator's permit
or license authorizing the operation of a "for hire" vehicle at
all times while providing service under the terms of the
Contract.
k. Assure that all of its drivers obtain and at all times carry in
their vehicles comprehensive road maps of the following areas:
the District of Columbia; the Maryland counties of Montgomery,
Prince George's and Charles; the Virginia counties of Arlington,
Fairfax, Loudoun and Prince William; the Cities of Alexandria,
Fairfax, Manassas, Falls Church, Herndon and Manassas Park; the
State of Maryland and the Commonwealth of Virginia.
1. Establish and implement a training program, as described in
Exhibit B, for all drivers which will assure that the drivers
are:
(1) Familiar with locations of streets, hotels/motels and other
locations within the Washington Metropolitan Area.
(2) Capable of, and have demonstrated to the Contractor, an
ability to read and find locations within the Washington
Metropolitan Area on maps of these areas and that the
drivers readily comprehend and can follow oral directions to
a destination.
(3) Thoroughly versed in the Contractor's policies regarding
service standards, handling of customer complaints,
ticketing procedures and other areas of daily operation.
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m. Be responsible for all matters of personnel and contract
administration necessary to conduct said Shared Ride service in
an efficient manner.
n. Provide an itemized monthly report showing the actual number of
outbound and inbound trips and passengers for each day during the
month. This report shall be forwarded to the Airport Managers,
with a copy provided to the Manager, Commercial Programs, within
fifteen (15) days after the end of each calendar month. The
Authority reserves the right to require the Contractor to submit
any additional reports or data on the Shared Ride service as the
Authority shall specify from time to time. The Contractor shall
also cooperate fully with any survey of Shared Ride service
conducted by the Authority.
4. The Contractor shall develop a written procedure to suspend a driver
for failure to obey the orders of the guest coordinator or for a
serious violation of the motor vehicle laws and regulations of any
jurisdiction, including the Authority, while transporting passengers
to or from the Airports. This procedure shall be detailed in the
Contractor's Operations and Procedures Manual. The Contractor shall
further advise the drivers that the Authority may suspend a driver's
right to operate on the Airports or take other action against a driver
for violation of the Metropolitan Washington Airports Regulations.
5. The Authority shall have the right to inspect all operating and
financial records relating to the Shared Ride service and such records
shall be made available to the Authority upon the request of the
Authority during normal hours of business operation.
6. The Contractor shall not engage in any other business activities at
the Airports without the specific written approval of the Authority.
7. The Contractor shall provide the Authority with its proposed schedule
of fares within thirty (30) days of the commencement of the Initial
Period of this contract. The Contractor shall obtain all necessary
approvals for the said fares from State and local governmental
entities having jurisdiction over the fares. The fares proposed by the
Contractor, and any changes thereto, shall be mutually agreeable to
the Contractor and the Authority. Any proposed changes to the schedule
of fares shall first be approved by the Authority prior to seeking
approval from the applicable governmental entities. The Authority's
approval of fare changes shall not be unreasonably withheld or delayed
for more than thirty (30) days.
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B. Frequency and Type of Service from Airports.
The Contractor must provide Shared Ride service to and from the Airports on
an "on demand" basis seven (7) days per week as follows:
1. Between the hours of 6:00 a.m. and 12 midnight, and for any regularly
scheduled flights arriving between 12 midnight and 6:00 a.m., "on
demand" service shall be defined as service not to exceed ten (10)
minutes waiting time of a passenger's request for transportation
service, regardless of the number of other persons requiring the same
service to the designated locations at the same time and shall be
subject to fleet availability in accordance with the Contractor's
proposal as shown in Exhibit B. Reasonable allowances will be made for
unanticipated traffic conditions and weather problems beyond the
control of the Contractor.
2. Except as provided in the preceding paragraph, between the hours of 12
midnight and 6:00 a.m. each day seven (7) days per week, the
Contractor shall provide service from the Airports on an "on demand"
basis within thirty (30) minutes of a passenger's request for
transportation service and shall be subject to fleet availability in
accordance with the Contractor's proposal as shown in Exhibit B.
Reasonable allowances will be made for unanticipated traffic
conditions and weather problems beyond the control of the Contractor.
3. The Contractor's service response time shall be defined as the time
elapsing between the time of the initial passenger demand to the
Contractor for service to the time the van departs the Airport
curbside. Dispatch personnel shall maintain a daily liaison with the
Airports' Operations Offices and the airlines regarding schedule
changes, late flight operations, diversions, or other changes which
shall require additional transportation services. Trips departing the
Airports must leave the curbside upon loading within the service
response time, and may not re-cycle through the Airports before
proceeding with their outbound trips.
4. The Contractor shall assume responsibility for providing shared ride
service that is currently operated by the Washington Flyer Express bus
between National Airport, the Downtown Airports Terminal and hotels
downtown. The Contractor shall operate this service on a demand basis.
Washington Flyer Express bus service from National Airport to points
other than Washington Dulles International Airport shall be
discontinued as Shared Ride service begins.
C. Passenger Information.
The Contractor shall place in each van in a location where they may be
easily and clearly read by passengers: 1) a description of the rates, 2)
the approximate fares to the most
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<PAGE> 13
frequently requested locations, and 3) the driver's name and photo. The
Authority reserves the right to direct the Contractor to alter the display
of such information within each vehicle.
D. Equipment.
1. The Contractor shall furnish the type, quantity, and quality of vans
necessary to provide a high quality service capable of meeting the
requirements of all airline passengers and their accompanying baggage,
maintained in proper working order at all times to adequately provide
for the safety and comfort of passengers. Vans shall be obtained by
the Contractor directly through lease or purchase, or indirectly
through subcontract or other arrangements with van owner/operators, or
through a combination of lease, purchase, or subcontract arrangements.
Upon commencement of the Operating Period, the Contractor shall
provide, at a minimum, the number of full-size vans projected in its
proposal, as shown in Exhibit B.
2. The Contractor is required to operate vehicles which utilize
environmentally-friendly, clean-burning fuels (such as, compressed
natural gas, propane, bio-fuels, electricity, etc.). In the event that
the Contractor chooses to utilize vans which operate on compressed
natural gas, it shall have the option of utilizing bi-fueled vehicles
until such time as compressed natural gas fueling is made available on
or adjacent to the Airports.
3. All vans acquired at the outset of the Contract or added during the
term of the Contract shall be new, full-size vans as approved by the
Authority, and unless otherwise agreed by the Authority, shall be used
for a period not to exceed four (4) years beyond the date the vehicle
was titled new. A new vehicle shall be a vehicle that is titled new
and is i) strictly new or ii) a dealer demonstrator model having no
more than 12,000 miles. Vans shall not have been previously owned by a
federal, state or local government or by a company in the business of
leasing vehicles.
4. The Contractor shall provide a vehicle replacement plan to the
Authority prior to its first scheduled replacement of vehicles. The
Authority shall meet with the Contractor to review vehicle replacement
needs, and agrees to give reasonable consideration to the Contractor's
suggested replacement schedule.
If, at any time during the term of the Contract, the Authority, based
on its own observations of frequent and recurring public demand, or of
service response times which do not meet the minimum service
requirements as defined in Article IV.B., herein, determines that the
number of vans is inadequate, it may upon written
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<PAGE> 14
notice, require the Contractor to place a reasonable number of
additional vans into service in order to meet the service standards of
the Contract. Such additional vehicles shall be placed into service by
the Contractor within sixty (60) days of the Authority's written
request, subject to market conditions and availability of vehicles.
5. Each van shall be numbered so that they begin with the number 001 and
run through the actual number of vans placed in operation by the
Contractor. Vans shall retain their existing fleet dispatch numbers
until the vehicle is retired.
6. The following vehicle records and reports shall be maintained and
provided to the Authority by the Contractor:
a. In order to adhere to the replacement schedule, the Contractor
shall maintain accurate records on all vans in service as to
mileage, and the day, month, and year each van was titled new.
Such documentation shall be made available to the Authority
within ten (10) business days from date of request
b. The Contractor shall submit a list to the Authority of vans which
are initially proposed to be put into service. This list shall be
submitted within thirty (30) days after the commencement date of
the Operating Period of the Contract and shall include the
vehicle make and model, mileage and the day, month and year each
vehicle was titled new, fleet dispatch number assigned each
vehicle, and the vehicle license number. The Contractor shall
update this list as necessary and provide a copy to the
Authority.
c. On February 1, June 1, and October 1 of each year, and at other
times upon request by the Authority, the Contractor shall submit
to the Authority a list of the vans in service. This inventory
shall include the make, model, and manufacturer's model year,
year titled new, fleet dispatch number assigned, and the vehicle
license number. A vehicle mileage report shall be provided on
October 1 of each year.
7. The Contractor shall clearly mark and paint Shared Ride vehicles with
manufacturer's standard paint or equal, in accordance with color and
design specifications approved in writing by the Authority. All
vehicles shall be identically painted and permanently marked as
described in Exhibit C.
8. At a minimum, all new Shared Ride vans shall be capable of carrying
eight (8) passengers, including the driver, and their baggage, and
should be equipped with the following: seat belts available for each
passenger; appropriate equipment to assist passengers in entering or
exiting the vans; a divider or restraint device
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<PAGE> 15
between the last passenger seating row and the baggage area of the van
to protect passengers from shifting luggage; and factory-installed
heating and air conditioning.
9. During the term of the Contract, the Authority reserves the right, as
an additional revenue control and identification requirement, to have
each Shared Ride vehicle ouffitted with an automated vehicle tracking
device. The Authority shall be responsible for the acquisition costs
of the automated vehicle tracking devices and the Contractor shall be
responsible for any costs associated with installing the automated
vehicle tracking devices in its Shared Ride vehicles. The Authority
shall provide the Contractor with sixty (60) days written notice prior
to the date upon which the devices will be available for installation.
If such an automated vehicle tracking device is requested, the
Authority shall provide written specifications and other information
to the Contractor, sufficient to permit the Contractor to install and
operate the device. Output of the automated vehicle tracking device,
in relationship to the Shared Ride service, shall be made available to
the Contractor.
10. The Contractor shall provide for the thorough cleaning, washing and
maintenance of the interior and exterior of all Shared Ride vehicles
and equipment. Cleaning, fueling and maintenance shall be accomplished
prior to commencing service each day and as necessary throughout the
day.
11. The Contractor shall ensure that all vans and other equipment used in
the Shared Ride operation are maintained in safe and satisfactory
working condition. The interiors and exteriors of all vans shall be
maintained in good condition. If the Authority, in its sole judgment,
finds that any van is not 1) in a safe and satisfactory working
condition, or 2) is not being maintained in a neat and clean condition
throughout each day, the Contractor shall immediately remove such a
vehicle from service and correct the condition or replace it.
12. The Contractor is required to comply with the Americans with
Disabilities Act (ADA) and the federal regulations implementing ADA.
The service provided by the Contractor to disabled passengers,
including wheelchair users, shall be equivalent to that provided
non-disabled passengers with respect to: 1) response time; 2) fares;
3) geographic area of service; 4) hours and days of service; 5)
availability of information; 6) reservations capability; 7) any
constraints on capacity or service availability; and, 8) restrictions
priorities based on trip purpose.
13. The Contractor shall provide, or subcontract for, a twenty-four (24)
hour on-call tow truck service to assist any shared ride vehicle that
becomes disabled within the Metropolitan Washington SMSA.
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<PAGE> 16
E. Employee Uniform Requirements:
The Contractor shall require that uniforms are to be worn by all guest
coordinators, drivers and supervisors. The Contractor's uniforms shown in
its proposal are approved. Any modification of the approved uniforms shall
be subject to approval by the Authority.
1. The Contractor shall provide each employee with a name plate
containing engraved Washington Flyer logo and employee name/title to
be affixed to the upper left pocket area of each uniform and at
approximately the same location on each outer garment as specified by
the Authority.
2. The Contractor shall establish and maintain an employee uniform
appearance standard that meets the Authority's specifications. All
employees must wear the appropriate uniforms and must maintain a neat
and clean appearance at all times while on duty as a condition to
their employment. The Contractor shall establish employee appearance
standards which include, but are not limited to: prohibiting the
wearing of headphones, the wearing of hats not part of the uniform,
the chewing of gum, or the use of tobacco products while on duty.
3. The Contractor shall provide adequate supplies of uniform clothing to
be available for new issue and reissue to employees during the period
of the Contract. The Contractor shall insure that exact color, fabric,
and style specifications remain consistent with all employees during
the operating period of this Contract.
F. Marketing Requirements:
1. The Contractor shall provide the Manager of the Washington Flyer
Ground Transportation System with an annual marketing and promotion
plan consistent with that described in its proposal, Exhibit B, in
order to coordinate marketing activities among the participants in the
System. In addition, the Contractor shall meet with the Manager of the
Washington Flyer Ground Transportation System on a quarterly basis to
summarize results of marketing activities for the previous ninety
days.
2. Any advertising upon or within the Contractor's Shared Ride vehicles
shall not be permitted without the prior written approval of the
Manager of the Washington Flyer Ground Transportation System.
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<PAGE> 17
ARTICLE V OBLIGATIONS OF THE AUTHORITY
A. Collection of Shared Ride Fares.
Fare collection at the Airports and at the Downtown Airports Terminal shall
be the responsibility of the Authority and will be accomplished through the
use of a separate contract issued by the Authority for ticketing services
for the Washington Flyer Ground Transportation System. The Authority will
use its best efforts to provide a level of staffing, to be mutually agreed
upon by the Authority and the Contractor, at ticket sales locations that is
appropriate to the level of passenger traffic anticipated and that is
consistent with quality passenger service. Revenues from Shared Ride ticket
sales collected at the Airports and the Downtown Terminal, as well as
points of other origin, shall be reported to the Contractor on a periodic
basis to be mutually agreed upon by the Contractor and the Authority.
1. National Airport: Ticket sales at Washington National Airport will be
conducted initially at Washington Flyer counter locations in the
Interim Terminal (in the bag claim area), and in the Main Terminal (at
the north end in the United Terminal, and in the south end in the
Northwest Terminal). When the new North Terminal opens, ticket sales
will be conducted at two the Ground Transportation Information Centers
(GTICs) at the bag claim level, at three ticket sales podiums located
at the north, center and south ends of the bag claim level, and at a
location in the Main Terminal proximate to passenger traffic (to be
determined by the Authority after final airline space assignments have
been made).
2. Washington Dulles International Airport: Ticket sales at Washington
Dulles International Airport will be conducted at Washington Flyer
counter locations in the East and West Ground Transportation Centers
within the Main Terminal.
B. Washington Flyer Ground Transportation System Marketing: The Authority
shall include the Shared Ride service in its efforts to market the
Washington Flyer Ground Transportation system, and shall use its best
efforts to incorporate input from the Contractor in the development of the
Washington Flyer annual marketing plan. The Authority's marketing program
currently includes, but is not limited to, preparation and distribution of
promotional materials, as well as participation in tourism and travel trade
shows.
C. Interactive Video System: The Authority currently employs a program of
general passenger information presented via interactive video kiosks.
Airport users can use the interactive video kiosks to obtain information
about the Airports, the region, airport services and ground transportation
options. In addition to providing general information to passengers, the
kiosks will also offer the capability to pre-arrange services through a
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<PAGE> 18
direct telephone link and credit card reader located at the kiosks.
The Authority agrees to limit the information provided on the kiosks
regarding competitors of the Shared Ride service to that typically found in
"Yellow Pages" (telephone directory-type) listings. The Authority shall
configure the interactive video kiosks such that passengers cannot use the
direct phone link or credit card reader to arrange ground transportation
services directly with Shared Ride providers other than the Contractor.
ARTICLE VI. FINANCIAL CONSIDERATION
In consideration of the rights and privileges to be granted to the Contractor by
the Authority, the Contractor shall pay to the Authority as compensation
therefor, during each Contract Year of the Contract, the following fees:
A. In addition to all other charges or costs required to be paid or borne by
the Contractor herein, the Contractor shall, during the term of the
Contract, pay the Authority the greater of the Minimum Annual Guarantee or
a Per Trip Fee, based on the number of vehicle trips departing from the
Airports. The fee shall be paid to the Authority in lawful currency of the
United States of America in the following manner:
1. Minimum Annual Guarantee: On the first day of each calendar month
during the Operating Period of this Contract, the Contractor shall pay
to the Authority, without demand or invoice by the Authority, an
amount equal to one twelfth of the Minimum Annual Guarantee due for
that Contract Year. The Minimum Annual Guarantee for each Contract
Year is as follows:
Amount Expressed Amount Expressed
Contract Year in Figures in Words
------------- ---------------- ----------------
First $150,000 One Hundred Fifty Thousand Dollars
Second $300,000 Three Hundred Thousand Dollars
Third $500,000 Five Hundred Thousand Dollars
Fourth $500,000 Five Hundred Thousand Dollars
Fifth $500,000 Five Hundred Thousand Dollars
TOTAL CONTRACT YEARS 1-5:
$1,950,000 One Million Nine Hundred Fifty Thousand Dollars
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<PAGE> 19
2. Per Trio Fee: By no later than the 15th day after the beginning of
each calendar month during the Operating Period of this Contract and
the month after the expiration or termination of this Contract, the
Contractor shall pay to the Authority, without demand or invoice by
the Authority, a sum of money equivalent to the difference between the
Minimum Annual Guarantee paid for the prior month, and the Per Trip
Fee multiplied by the total number of outbound trips, from the
Airports, carrying at least one passenger, during the prior month. Per
Trip Fee payments shall be deemed delinquent if not received by the
twentieth calendar day of the month. The Per Trip Fee bid by the
Contractor is as follows:
Amount Expressed Amount Expressed
Contract Year in Figures in Words
------------- ---------------- ----------------
First $1.40 One Dollar and Forty Cents
Second $1.00 One Dollar and No Cents
Third $1.40 One Dollar and Forty Cents
Fourth $1.40 One Dollar and Forty Cents
Fifth $1.40 One Dollar and Forty Cents
The total number of outbound trips carrying at least one passenger
shall be reported by the Contractor in its monthly Certified
Statement, which shall be submitted with the Per Trip Fee payment by
the fifteenth day of each month. As a revenue control enhancement, the
Authority reserves the right to implement an Automatic Vehicle
Identification (AVI) system, as described in Article IVE.8, and to
require that the Contractor outfit each of its vehicles with an AVI
tracking device.
3. Transfer of Funds. Subject to periodic adjustment by the Authority,
the Authority or its agent shall transfer proceeds of tickets sold by
the Authority or the agent, after deductions for credit card fees, to
the Contractor's commercial bank account designated for this purpose,
at a frequency of no more than once per week. Said transfers may be
made at intervals greater than once per week if the parties mutually
agree upon a process under which the Authority would advance funds to
the Contractor and the advanced funds would subsequently be reconciled
against ticket sales proceeds. The agreement between the Authority and
the Contractor for the transfer of funds shall be detailed in Exhibit
D.
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<PAGE> 20
4. Remittances. All remittances shall be made payable to the
"Metropolitan Washington Airports Authority", and be forwarded to:
Metropolitan Washington Airports Authority
P.O. Box 2143
Merrifield, Virginia 22116-2143
Attention: Accounting Branch
All payments must be accompanied by the itemized monthly statement
setting forth the purpose and period for which payment is being made.
The Authority reserves the right to implement procedures for
electronic funds transfer in place of direct remittances.
B. Itemized Certified Statement. By no later than the 15th day of the
following month, the Contractor shall provide to the Authority a monthly
statement showing its total Gross Receipts, the number of outbound and
inbound trips from the Shared Ride operation for the preceding month, and
the total number of inbound and outbound passengers, in such form and
detail which the Authority may reasonably request, including a level of
detail equivalent to the Contractor's own general ledger delineations. The
format of the Itemized Certified Statement to be submitted by the
Contractor is shown in Exhibit E attached hereto.
C. Annual Statement. Within ninety (90) days following the end of each
Contract Year, the Contractor, at its own cost and expense, shall provide
to the Authority schedules of Gross Receipts and concession fees paid for
the Contract Year. Said statement shall be prepared by an independent
certified public accountant (CPA). The statements shall also include a
statement by the independent CPA that, in his/her opinion, the schedules of
such receipts and fees have been prepared in accordance with GAAP and in
accordance with the terms and conditions of this Contract. Such statement
shall also contain a list of the vehicle trips, by month, as shown on the
books and records of the Contractor and which were used to compute the fees
paid to the Authority during the period covered by the Annual Statement.
The Authority reserves the right to approve the Contractor's selection of
the independent CPA, if the independent CPA is not an entity of national
repute. The Authority reserves the right to conduct its own audit of the
Contractor's Annual Statement, in addition to or in lieu of the CPA audit.
1. Additional Payment if Fees Underpaid. If the schedules provided by the
Contractor to the Authority pursuant to Article V.E. herein with
respect to any Contract Year indicate that the amount of Per Trip Fees
which the Contractor paid to the Authority with respect to such
Contract Year was less than the amount of Per Trip Fees due and owing
for such Contract Year under the terms of this Contract, then the
Contractor shall pay the difference to the Authority.
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<PAGE> 21
2. Credit if Fees Overpaid. If the schedules provided by the Contractor
to the Authority pursuant to Article V.E., with respect to any
Contract Year indicate that the amount of Per Trip Fees which the
Contractor actually paid to the Authority with respect to such
Contract Year was greater than the amount of Per Trip Fees due and
owing for that Contract Year under the terms of this Contract, then
the amount of such excess shall be credited to the concession fees
next due and owing from the Contractor to the Authority, unless the
Contract has expired, in which event such amount shall be promptly
refunded to the Contractor by the Authority. Any such payments are
subject to final audit and reconciliation of payments due to the
Authority.
ARTICLE VII. PERFORMANCE GUARANTEE
A. The Contractor shall, at its own cost, deliver a performance guarantee to
the Authority within thirty (30) calendar days prior to the commencement of
the Operating Period of the Contract, in the amount of Seventy-Five
Thousand Dollars ($75,000). Contractor's proposal guarantee (a cashier's
check in the amount of $20,000) shall be held by the Authority as a
performance guarantee until the Authority receives the performance
guarantee specified in the preceding sentence.
B. This performance guarantee is required in order to guarantee performance of
the Contract by the Contractor and shall be subject to claim in full or in
part by the Authority in the event of default of the Contractor for failure
to fully perform the Contract. The Contractor must ensure that the
performance guarantee is maintained at all times in the proper amount
throughout the term of the Contract.
C. The amount of said performance guarantee may be subject to adjustment at
the end of each Contract Year, to an amount equal to fifty percent (50%) of
the Minimum Guaranteed Rent for the next Contract Year.
D. The performance guarantee, at the option of the Contractor, may be in the
form of an irrevocable letter of credit from a bank (with a bank rating of
"B" or better by Sheshunoff Information Systems), or by a certified check,
cashier's check, or money order, acceptable to the Authority and made
payable to the Authority, which will be deposited into an Authority bank
account upon receipt. The performance guarantee may also be in the form of
a performance bond, issued by an insurance company that is acceptable to
the Authority.
E. If the Contractor fails to provide or maintain the performance guarantee in
effect at any time during the term of this Contract, the Contractor shall
be in default and the Contract may be terminated by the Authority.
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<PAGE> 22
ARTICLE VIII. INDEMNIFICATION AND INSURANCE
A. The Contractor shall assume all risks incident to, or in connection with,
its operations under the Contract; shall be solely responsible for all
accidents or injuries to persons or property caused by its operations under
this Contract; and shall indemnify, defend, and save harmless the
Authority, its authorized agents and representatives, from any and all
claims, suits, losses, or damages, including attorney's fees, for injuries
to persons or property, of whatsoever kind or nature, arising from any act
or omission of the Contractor, its agents, employees, or customers.
B. Notwithstanding the above indemnification, the Contractor shall give the
Authority notice of any matter covered hereby and shall forward to the
Authority every demand, notice, summons, or other process received in any
claim or legal proceeding covered hereby. The Contractor shall provide and
maintain at its expense during the Operating Period, the following
insurance coverage from an insurance company or companies possessing a
rating of B+10 or higher from the A.M. Best Company or an equivalent
rating.
1. Workers Compensation and Employer's Liability: Virginia Statutory
Limits with All States Endorsement for Workers' Compensation and
$1,000,000 in Employers' Liability.
2. Commercial General Liability Insurance: $5,000,000 Combined Single
Limit for Bodily Injury and Property Damage per occurrence or
$3,000,000 Bodily Injury and $3,000,000 Property Damage. Coverage must
include Broad Form Contractual, Property Damage, Products-Completed
Operations, Personal Injury, Premises-Operations, Independent
Contractors and Subcontractors, and Fire Legal Liability.
3. Comprehensive Automobile Liability Insurance: $1,000,000 Combined
Single Limit for Bodily Injury and Property Damage per occurrence for
owned, non-owned, and hired vehicles.
C. Said policy or policies of insurance shall contain a provision that written
notice of cancellation, alteration, or any material change thereof shall be
delivered to the Authority not less than thirty (30) days in advance of the
effective date thereof, and in no event shall such policies be cancelled by
the Contractor without the Authority's prior written consent unless
equivalent replacement policies are then issued and available. All
policies, except Workers Compensation and Employer's Liability shall
identify the Authority, its agents, employees, and representatives and the
Contractor's leasehold mortgagee(s), if any, as additional insured in a
manner satisfactory to the Authority. Said policy shall cover only claims
arising from events addressed in the Contract.
Concession Contract
Contract No. MWAA-C3-96-O1
Page 20 of 26
<PAGE> 23
If, in the Authority's opinion, the minimum limits of the insurance herein
required have become inadequate during the term of the Contract, the
Contractor agrees that it will increase such minimum limits by reasonable
amounts on request of the Authority, provided that said coverage is
available at standard commercial rates.
D. The Contractor shall deliver each policy and certificate of required
coverage to the Authority for approval upon execution of the Contract.
Certificates shall be issued to:
For National Airport:
Contract Management Branch, MA-132
Metropolitan Washington Airports Authority
Washington National Airport
Washington, DC 20001
For Dulles Airport:
Contract Management Branch, MA-236
Metropolitan Washington Airports Authority
P.O. Box 17045
Washington Dulles International Airport
Washington, DC 20001
ARTICLE IX. QUALITY OF PERFORMANCE AND LIQUIDATED DAMAGES
The following provisions relate to the quality of the service that the Authority
expects to be provided to the public under the Contract. The Contractor agrees
that it is obligated to perform the following provisions, that nonperformance
denigrates the quality of the service, and therefore, is in violation of this
Contract, and that the amount of damages suffered by the Authority following
damages are a reasonable approximation of the Authority's actual damages. The
occurrence of any of the following situations may result in the imposition of
liquidated damages. The Authority will notify the Contractor within seven (7)
days following the incident if liquidated damages will be imposed for the
incident. Liquidated damages shall not be imposed for the first violation of
each type listed below observed by the Authority during each Contract Year; the
Contractor shall receive a written warning from the Authority instead. Failure
to impose liquidated damages for a particular violation shall not bar the
Authority from imposing liquidated damages for subsequent violations of the same
nature.
A. Guest Coordinator Performance and Shuttle Service. Between 6:00 a.m. and
Midnight, for each time that the Authority observes a passenger seeking to
board a shuttle at the dispatch area when the dispatch area is unattended,
the Contractor shall pay the Authority Fifteen Dollars ($15.00) in
liquidated damages. Each time that the Authority observes the
Concession Contract
Contract No. MWAA-C3-96-O1
Page 21 of 26
<PAGE> 24
frequency of shuffle service below the minimum service prescribed in
Article IV.B., herein, the Contractor shall pay the Authority a Fifteen
Dollar ($15.00) liquidated damage fee.
B. Vehicle Maintenance. Except in an emergency, the Contractor shall not allow
its drivers or its employees to perform maintenance to shuffles or private
vehicles, including washing, changing oil or filters, or making engine or
body repair on the Airports, unless specifically authorized by the
Authority. Also, overnight parking, and the storage of tires and automotive
parts, shall not be permitted. The Contractor shall take appropriate and
reasonable steps to prevent such practices from occurring. For each time in
which the Authority observes the Contractor's drivers and/or employees
performing any of the aforementioned maintenance or storage other than as
herein permitted, the Contractor shall pay the Authority One Hundred
Dollars ($100.00) in liquidated damages.
ARTICLE X. NOTICES
A. All notices, consents, and approvals required under the term of this
Contract shall be given by a designated representative of the party by or
in whose behalf they are given and delivered either by hand or certified
mail, postage prepaid, return receipt requested, and addressed as follows:
1. To the Authority:
For National Airport:
Airport Manager, MA-100
Metropolitan Washington Airports Authority
Washington National Airport
Washington, DC 20001
For Dulles Airport:
Airport Manager, MA-200
Metropolitan Washington Airports Authority
Washington Dulles International Airport
P.0. Box 17045
Washington, D.C. 20001
With a copy to:
Manager of Commercial Programs, MA-50
Metropolitan Washington Airports Authority
44 Canal Center Plaza
Alexandria, Virginia 22314
Concession Contract
Contract No. MWAA-C3-96-O1
Page 22 of 26
<PAGE> 25
or to such other address as the Authority may, from time to time,
designate in writing to the Contractor.
2. To the Contractor:
President
Washington Shuffle, Inc.
2100 Huntingdon Avenue
Baltimore, MD 21211
or other addressees as the Contractor may, from time to time,
designate by notice to the Authority.
B. The date of the notice, if mailed by certified mail, shall be the date in
which the notice is deposited in an office of the United States Postal
Service.
ARTICLE XI. TRADEMARKS, SERVICE MARKS, OR LOGOS
A. The Contractor acknowledges and agrees that the Authority is the sole and
lawful owner of certain trademarks, service marks and logos (the
"Proprietary Marks" and "Trade Dress"), including but not limited to
"Washington Flyer". The "Washington Flyer" trademark is shown in Exhibit F.
The Contractor is hereby authorized to use the mark "Washington Flyer" in
connection with its operations under the Contract. The Contractor agrees
not to infringe upon, harm or contest the rights of the Authority in and to
the use of these Proprietary Marks and Trade Dress. The Contractor further
recognizes that any and all goodwill arising from the use of the name
"Washington Flyer" inures to the benefit of the Authority and the
Contractor has no property right to said goodwill.
The Contractor further agrees that after termination or expiration of this
Contract, it will not directly or indirectly at any time or in any manner
identify any other business with the Washington Flyer Proprietary Marks or
Trade Dress; nor will it use, or attempt to influence others to use, in any
manner or for any purpose, any of the Proprietary marks or Trade Dress,
similar words or designations, or any colorable imitation thereof.
B. The Authority acknowledges and agrees that SuperShuttle International, Inc.
("SuperShuttle") is the sole and lawful owner of certain trademarks,
service marks and logos (the "Proprietary Marks" and "Trade Dress"),
including but not limited to "SuperShuttle". The "SuperShuttle" trademark
is shown in Exhibit F.
The Authority acknowledges that only SuperShuttle and its designated
licensees or franchisees shall have the right to use the SuperShuttle
Proprietary Marks and Trade Dress and that use of said Proprietary Marks
and Trade Dress is granted for only so long as the license granted to the
Contractor as a franchisee of SuperShuttle Franchise Corporation
Concession Contract
Contract No. MWAA-C3-96-O1
Page 23 of 26
<PAGE> 26
("License Agreement") remains in force, and only in connection with the
conduct of the SuperShuttle Transportation System. Therefore, the
Authority's non-exclusive right to use the trademark "SuperShuttle" is
derived solely from and subject to the terms and conditions of the
Contractor's License Agreement and this Contract. Such right is limited to
the Authority's operations of the Airports beginning with the effective
date of this Contract and for the Period of the Contract plus any Option
Years granted the Contractor under this Contract, unless sooner terminated
in accordance with the provisions of this Contract. The Authority agrees
not to infringe upon, harm, contest or oppose, nor to assist anyone else to
contest or oppose, directly or indirectly, the rights of the Contractor or
SuperShuttle in and to the use of these Proprietary Marks.
The Authority agrees that its usage of the Proprietary Marks and Trade
Dress and any goodwill established thereby shall inure to the exclusive
benefit of SuperShuttle. The Authority further agrees that after the
termination or expiration of this Contract, it will not directly or
indirectly at any time or in any manner identify any other business with
the SuperShuttle Proprietary Marks; nor will it use, or attempt to
influence others to use, in any manner or for any purpose, any of the
Proprietary Marks or Trade Dress, similar words or designations, or any
colorable imitation thereof.
C. Any other trademarks, service marks or logos created or developed or the
Shared Ride concession not utilizing any of the SuperShuttle Proprietary
Marks or Trade Dress shall be the property of the Authority.
ARTICLE XII. SCRIP REIMBURSEMENT
From time to time, the airlines serving the Airports may provide passengers with
Ground Transportation or Passenger Accommodation Vouchers ("scrip") for use on
Washington Flyer shuffles. The arrangements under which the Contractor receives
cash payments for scrip shall be between the Contractor and the individual
airline(s) issuing the scrip. The Contractor may stipulate reasonable terms and
conditions to the airlines serving the Airports regarding the acceptance, use
and payment of scrip including, but not limited to, the provision for
administrative handling fees and late charges for payments not received within a
thirty (30) day period.
ARTICLE XIII. STANDARD PROVISIONS FOR CONCESSION CONTRACTS
"Standard Provisions to Concession Contracts of the Metropolitan Washington
Airports Authority", dated March 1, 1994 (revised), is provided as attached,
incorporated and made a part of this Contract. In the event of a conflict
between the provisions of this Contract and the attached Standard Provisions,
the foregoing provisions of this Contract shall govern.
Concession Contract
Contract No. MWAA-C3-96-O1
Page 24 of 26
<PAGE> 27
IN WITNESS WHEREOF, the Parties hereto have executed this Contract in
counterparts effective February 1, 1996:
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
WITNESS:
/s/ [ILLEGIBLE] /s/ CLYDE J. BINGMAN
- ------------------------------ --------------------------------------------
Clyde J. Bingman
Manager
Commercial Programs Division
Concession Contract
Contract No. MWAA-C3-96-O1
Page 25 of 26
<PAGE> 28
IN WITNESS WHEREOF, the Parties hereto have executed this Contract in
counterparts effective February 1, 1996:
WASHINGTON SHUTTLE, INC.
ATTEST:
/s/ [ILLEGIBLE] /s/ Mark L. Joseph
- ------------------------------ ------------------------------
(Name) Mark L. Joseph
[SEAL OF WASHINGTON SHUTTLE, INC.]
President
---------------------------------------------
(Title) (Seal)
SECRETARY'S CERTIFICATE
I, Neal C. Nichols, certify that I am Secretary of the corporation named as
Contractor herein, that Mark L. Joseph who signed this Contract on behalf of
said Contractor was then President of said corporation; that said Contract was
duly signed for and on behalf of said corporation by authority of its governing
body and is within the scope of its corporate powers.
[SEAL OF WASHINGTON SHUTTLE, INC.]
/s/ NEAL C. NICHOLS
------------------------------ (Corporate Seal)
(Secretary's Signature)
Concession Contract
Contract No. MWAA-C3-96-0l
Page 26 of 26
<PAGE> 1
EXHIBIT 10.19
PORT AUTHORITY PERMIT NO. AX-678
THIS PERMIT SHALL NOT BE BINDING UPON THE PORT AUTHORITY UNTIL DULY EXECUTED BY
AN EXECUTIVE OFFICER THEREOF, AND DELIVERED TO THE PERMITTEE BY AN AUTHORIZED
REPRESENTATIVE OF THE PORT AUTHORITY.
THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY
One World Trade Center
New York, New York 10048
PRIVILEGED REPRESENTED GROUND TRANSPORTATION SERVICE PERMIT
The Port Authority of New York and New Jersey (herein called the "Port
Authority") hereby grants to the Permittee hereinafter named the hereinafter
described privilege at the Port Authority Facilities hereinafter named, in
accordance with the Terms and Conditions hereof; and the Permittee agrees to pay
the fee hereinafter specified and to perform all other obligations imposed upon
it in the said Terms and Conditions:
1. FACILITIES: Newark International Airport, John F. Kennedy
International Airport and LaGuardia Airport
2. PERMITTEE: Shuttle Associates, LLC
D.B.A. Super Shuttle New York
a limited liability company of the State of
New York
PERMITTEE'S ADDRESS: 4610 South 35th Street
Phoenix, Arizona 85040
3. PERMITTEE'S
REPRESENTATIVE: R. Brian Wier, President
4. PRIVILEGE: As set forth in Special Endorsement No. 1
5. FEE: Two Hundred Seventy Two Dollars ($272) per
seat, per vehicle, annually.
6. EFFECTIVE DATE: May 1, 1998
7. EXPIRATION DATE: February 29, 2000, unless sooner revoked or
terminated as provided in Section 1 of the
following Terms and Conditions.
8. ENDORSEMENTS: 3.1, 8.0, 9.1, 9.5, 9.6, 10.1, 12.1, 14.1,
16.1, 17.1, 18.1, 19.1, 19.2, 19.3, 22, 23.1,
28 and SPECIAL
SHUTTLE ASSOCIATES, LLC. THE PORT AUTHORITY OF NY & NJ
D.B.A SUPER SHUTTLE NEW YORK
By: /s/ Illegible Signature By:
------------------------------ ---------------------------------
Title: President Title:
--------------------------- -------------------------------
Dated: as of April 2, 1998
<PAGE> 2
TERMS AND CONDITIONS
1. The permission granted by this Permit shall take effect upon the
effective date hereinbefore set forth. Notwithstanding any other term
or condition hereof, it may be revoked without cause, upon thirty (30)
days' written notice, by the Port Authority or terminated without
cause, upon thirty (30) days' written notice by the Permittee provided,
however, that it may be revoked on twenty-four (24) hours' notice if
the Permittee shall fail to keep, perform and observe each and every
promise, agreement, condition, term and provision contained in this
Permit, including but not limited to the obligation to pay fees. Unless
sooner revoked or terminated, such permission shall expire in any event
upon the expiration date set forth above. Revocation or termination
shall not relieve the Permittee of any liabilities or obligations
hereunder which shall have accrued on or prior to the effective date of
revocation or termination.
2. The rights granted hereby shall be exercised
(a) if the Permittee is a corporation, by the Permittee acting
only through the medium of its officers and employees,
(b) if the Permittee is an unincorporated association, or a
"Massachusetts" or business trust, by the Permittee acting
only through the medium of its members, trustees, officers,
and employees, or
(c) if the Permittee is a partnership, by the Permittee acting
only through the medium of its partners and employees, or
(d) if the Permittee is an individual, by the Permittee acting
only personally or through the medium of his employees;
and the Permittee shall not, without the written approval of the Port
Authority, exercise such rights through the medium of any other person,
corporation or legal entity. The Permittee shall not assign or transfer
this Permit or any of the rights granted hereby, or enter into any
contract requiring or permitting the doing of anything hereunder by an
independent contractor. In the event of the issuance of this Permit to
more than one individual or other legal entity (or to any combination
thereof), then and in that event each and every obligation or
undertaking herein stated to be fulfilled or performed by the Permittee
shall be the joint and several obligation of each such individual or
other legal entity.
3. This Permit does not constitute the Permittee the agent or
representative of the Port Authority for any purpose whatsoever.
<PAGE> 3
4. The operations of the Permittee, its employees, invitees and those
doing business with it shall be conducted in an orderly and proper
manner and so as not to annoy, disturb or be offensive to others at the
Facility. The Permittee shall provide and its employees shall wear or
carry badges or other suitable means of identification and the
employees shall wear appropriate uniforms. The badges, means of
identification and uniforms shall be subject to the written approval of
the Manager of the Facility. The Port Authority shall have the right to
object to the Permittee regarding the demeanor, conduct and appearance
of the Permittee's employees, invitees and those doing business with
it, whereupon the Permittee will take all steps necessary to remove the
cause of the objection.
5. In the use of the parkways, roads, streets, bridges, corridors,
hallways, stairs and other common areas of the Facility as a means of
ingress and egress to, from and about the Facility, and also in the use
of portions of the Facility to which the general public is admitted,
the Permittee shall conform (and shall require its employees, invitees
and others doing business with it to conform) to the Rules and
Regulations of the Port Authority which are now in effect or which may
hereafter be adopted for the safe and efficient operation of the
Facility.
The Permittee, its employees, invitees and others doing business with
it shall, except as provided pursuant to Special Endorsement No. 10 (b)
of this Permit, have no right to park vehicles within any Facility
hereunder, except in regular parking areas and upon payment of the
regular charges therefor.
6. (a) The Permittee shall indemnify and hold harmless the Port
Authority, its commissioners, officers, employees and
representatives, from and against (and shall reimburse the Port
Authority for the Port Authority's costs and expenses including
legal expenses incurred in connection with the defense of) all
claims and demands of third persons including but not limited to
claims and demands for death or personal injuries, or for property
damages, arising out of any default of the Permittee, its
officers, employees, and persons who are doing business with it,
in performing or observing any term or provision of this Permit,
or out of any of the operations, acts or omissions of the
Permittee, its officers, employees, and persons who are doing
business with it, including claims and demands of the City of New
York or the City of Newark against the Port Authority for
indemnification arising by operation of law or through agreement
of the Port Authority with either of the said Cities.
(b) If so directed, the Permittee shall at its own expense defend
any suit based upon any such claim or demand (even if such claim
or demand is groundless, false or fraudulent), and in handling
such it shall not, without obtaining express advance permission
from the General Counsel of the Port Authority, raise any defense
involving in any way the jurisdiction of the tribunal, the
immunity of the Port Authority, its Commissioners, officers,
agents or employee, the governmental
2
<PAGE> 4
nature of the Port Authority, or the provisions of any statutes
respecting suits against the Port Authority.
7. The Permittee shall promptly repair or replace any property of the Port
Authority damaged by the Permittee's operations hereunder. The
Permittee shall not install any fixtures or make any alterations or
improvements in or additions or repairs to any property of the Port
Authority except with its prior written approval.
8. Any property of the Permittee placed on or kept at the Facility by
virtue of this Permit shall be removed on or before the expiration of
the permission hereby granted or on or before the revocation or
termination of the permission hereby granted, whichever shall be
earlier. If the Permittee shall so fail to remove such property upon
the expiration, termination, or revocation hereof, the Port Authority
may at its option, as agent for the Permittee, remove such property to
a public warehouse, or may retain the same in its own possession, and
in either, event after the expiration of thirty (30) days may sell the
same at public auction; the proceeds of any such sale shall be applied
first to the expenses of removal, storage and sale, second to any sums
owed by the Permittee to the Port Authority; any balance remaining
shall be paid to the Permittee. Any excess of the total cost of
removal, storage and sale over the proceeds of sale shall be paid by
the Permittee to the Port Authority upon demand. Without limiting any
other term or provision of this Permit the Permittee shall indemnify
and hold harmless the Port Authority, its Commissioners, officers,
agents, employees and contractors from all claims of third persons
arising out of the Port Authority's removal and disposition of property
pursuant to this Section, including claims for conversion, claims for
loss or damage to property, claims for injury to persons (including
death), and claims for any other damages, consequential or otherwise.
9. The Permittee represents that it is the owner of or fully authorized to
use or sell any and all services, processes, machines, articles, marks,
names or slogans used or sold by it in its operations under or in any
wise connected with this Permit. Without in any wise limiting its
obligations under Section 6 hereof the Permittee agrees to indemnify
and hold harmless the Port Authority, its Commissioners, officers,
employees, agents and representatives of and from any loss, liability,
expense, suit or claim for damages in connection with any actual or
alleged infringement of any patent, trademark or copyright, or arising
from any alleged or actual unfair competition or other similar claims
arising out of the operations of the Permittee under or in any wise
connected with this Permit.
10. The Port Authority shall have the right at any time as often as it may
consider it necessary to inspect the Permittee's machines and other
equipment, any services being rendered, any merchandise being sold or
held for sale by the Permittee, and any
3
<PAGE> 5
activities or operations of the Permittee hereunder. Upon request of
the Port Authority, the Permittee shall operate or demonstrate any
machines or equipment owned by or in the possession of the Permittee on
the Facility or to be placed or brought on the Facility and shall
demonstrate any process or other activity being carried on by the
Permittee hereunder. Upon notification by the Port Authority of any
deficiency in any machine or piece of equipment, the Permittee shall
immediately make good the deficiency or withdraw the machine or piece
of equipment from service, and provide a satisfactory substitute.
11. No signs, posters or similar devices shall be erected, displayed or
maintained by the Permittee in view of the general public without the
written approval of the Manager of the Facility; and any not approved
by him may be removed by the Port Authority at the expense of the
Permittee.
12. The Permittee's representative hereinbefore specified (or such
substitute as the Permittee may hereafter designate in writing) shall
have full authority to act for the Permittee in connection with this
Permit, and to do any act or thing to be done hereunder, and to execute
on behalf of the Permittee any amendments or supplements to this Permit
or any extension thereof, and to give and receive notices hereunder.
13. The term "Executive Director" as used herein shall mean the person or
persons from time to time designated by the Port Authority to exercise
the powers and functions vested in the Executive Director by this
Permit; but until further notice from the Port Authority to the
Permittee, it shall mean the Executive Director of the Port Authority
for the time being, or his duly designated representative or
representatives.
14. A bill or statement may be rendered and any notice or communication
which the Port Authority may desire to give the Permittee shall be
deemed sufficiently rendered or given, if the same is in writing and
sent by certified or registered mail addressed to the Permittee at the
address specified on the first page hereof or at the address that the
Permittee may have most recently substituted therefor by notice to the
Port Authority, or left at such address, or delivered to the
representative of the Permittee, and the time of 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 mailed, left or delivered as
herein provided. Any notice from the Permittee to the Port Authority
shall be validly given if sent by registered mail addressed to the
Executive Director of the Port Authority at One World Trade Center, New
York, New York 10048, or at such other address as the Port Authority
shall hereafter designate by notice to the Permittee.
4
<PAGE> 6
15. The Permittee agrees to be bound by and comply with the provisions of
all endorsements annexed to the Permit at the time of issuance.
16. Neither the Commissioners of the Port Authority nor any officer, agent
or employee thereof, shall be charged personally by the Permittee with
any liability, or held liable to it, under any term or provision of
this Permit, or because of its execution or attempted execution, or
because of any breach thereof.
17. This Permit, including the attached endorsements and exhibits, if any,
constitutes the entire agreement of the Port Authority and the
Permittee on the subject matter hereof and may not be changed,
modified, discharged or extended, except by written instrument duly
executed on behalf of the Port Authority and the Permittee. The
Permittee agrees that no representations or warranties shall be
binding upon the Port Authority unless expressed in writing herein.
5
<PAGE> 7
A principal purpose of the Port Authority in granting the permission
under this Permit is to have available for passengers, travelers and other
users of the Port Authority Facility, all other members of the public, and
persons employed at the Facility, the merchandise and/or services which the
Permittee is permitted to sell and/or render hereunder, all for the better
accommodation, convenience and welfare of such individuals and in fulfillment of
the Port Authority's obligation to operate facilities for the use and benefit of
the public.
The Permittee agrees that it will conduct a first class operation and
will furnish all fixtures, equipment, personnel (including licensed personnel as
necessary), supplies, materials and other facilities and replacements necessary
or proper therefor. The Permittee shall furnish all services hereunder on a
fair, equal and non-discriminatory basis to all users thereof.
STANDARD ENDORSEMENT NO. 3.1
ACCOMMODATION OF THE PUBLIC
All Facilities
8/21/49
<PAGE> 8
If the Permittee should fail to pay any amount required under this
Permit when due to the Port Authority, including without limitation any payment
of any fixed or percentage fee or any payment of utility or other charges, or if
any such amount is found to be due as the result of an audit, then, in such
event, the Port Authority may impose (by statement, bill or otherwise) a late
charge with respect to each such unpaid amount for each late charge period
(hereinbelow described) during the entirety of which such amount remains unpaid,
each such late charge not to exceed an amount equal to eight-tenths of one
percent of such unpaid amount for each late charge period. There shall be
twenty-four late charge periods on a calendar year basis; each late charge
period shall be for a period of at least fifteen (15) calendar days except one
late charge period each calendar year may be for a period of less than fifteen
(but not less than thirteen) calendar days. Without limiting the generality of
the foregoing, late charge periods in the case of amounts found to have been
owing to the Port Authority as the result of Port Authority audit findings shall
consist of each late charge period following the date the unpaid amount should
have been paid under this Permit. Each late charge shall be payable immediately
upon demand made at any time therefor by the Port Authority. No acceptance by
the Port Authority of payment of any unpaid amount or of any unpaid late charge
amount shall be deemed a waiver of the right of the Port Authority to payment of
any late charge or late charges payable under the provisions of this Endorse-
ment with respect to such unpaid amount. Nothing in this Endorsement is intended
to, or shall be deemed to, affect, alter, modify or diminish in any way (i) any
rights of the Port Authority under this Permit, including without limitation the
Port Authority's rights set forth in Section 1 of the Terms and Conditions of
this Permit or (ii) any obligations of the Permittee under this Permit. In the
event that any late charge imposed pursuant to this Endorsement shall exceed a
legal maximum applicable to such late charge, then, in such event, each such
late charge payable under this Permit shall be payable instead at such legal
maximum.
STANDARD ENDORSEMENT NO. 8.0
LATE CHARGES
All Facilities
7/30/82
<PAGE> 9
The Permittee shall
(a) Furnish good, prompt and efficient service hereunder,
adequate to meet all demands therefor at the Airport;
(b) Furnish said service on a fair, equal and
non-discriminatory basis to all users thereof; and
(c) Charge fair, reasonable and non-discriminatory prices for
each unit of sale or service, provided that the Permittee may make
reasonable and non-discriminatory discounts, rebates or other similar
types of price reductions to volume purchasers.
As used in the above subsections "service" shall include furnishing of
parts, materials and supplies (including sale thereof).
The Port Authority has applied for and received a grant or grants of
money from the Administrator of the Federal Aviation Administration pursuant to
the Airport and Airways Development Act of 1970, as the same has been amended
and supplemented, and under prior federal statutes which said Act superseded
and the Port Authority may in the future apply for and receive further such
grants. In connection therewith the Port Authority has undertaken and may in the
future undertake certain obligations respecting its operation of the Airport and
the activities of its contractors, lessees and permittees thereon. The
performance by the Permittee of the promises and obligations contained in this
Permit is therefore a special consideration and inducement to the issuance of
this Permit by the Port Authority, and the Permittee further agrees that if the
Administrator of the Federal Aviation Administration or any other governmental
officer or body having jurisdiction over the enforcement of the obligations of
the Port Authority in connection with Federal Airport Aid, shall make any
orders, recommendations or suggestions respecting the performance by the
Permittee of its obligations under this Permit, the Permittee will promptly
comply therewith at the time or times, when and to the extent that the Port
Authority may direct.
STANDARD ENDORSEMENT NO. 9.1
FEDERAL AIRPORT AID
Airports
1/19/81
<PAGE> 10
(a) Without limiting the generality of any Of the provisions of this
Permit, the Permittee, for itself, its successors in interest and assigns, as a
part of the consideration hereof, does hereby agree that (1) no person on the
grounds of race, creed, color, national origin or sex shall be excluded from
participation in, denied the benefits of, or be otherwise subject to
discrimination in the use of any Space and the exercise of any privileges under
this Permit, (2) that in the construction of any improvements on, over, or under
any Space under this Permit and the furnishing of services thereon by it, no
person on the grounds of race, creed, color, national origin or sex shall be
excluded from participation in, denied the benefits of, or otherwise be subject
to discrimination, (3) that the Permittee shall use any Space and exercise any
privileges under this Permit in compliance with all other requirements imposed
by or pursuant to Title 49, Code of Federal Regulations, Department of
Transportation, Subtitle A, Office of the Secretary, the Department of
Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as
said Regulations may be amended, and any other present or future laws, rules,
regulations, orders or directions of the United States of America with respect
thereto which from time to time may be applicable to the Permittee's operations
thereat, whether by reason of agreement between the Port Authority and the
United States Government or otherwise.
(b) The Permittee shall include the provisions of paragraph (a) of this
Endorsement in every agreement or concession it may make pursuant to which any
person or persons, other than the Permittee, operates any facility at the
Airport providing services to the public and shall also include therein a
provision granting the Port Authority a right to take such action as the United
States may direct to enforce such provisions.
(c) The Permittee's noncompliance with the provisions of this
Endorsement shall constitute a material breach of this Permit. In the event of
the breach by the Permittee of any of the above non-discrimination provisions,
the Port Authority
STANDARD ENDORSEMENT NO. 9.5 (Page 1)
NON-DISCRIMINATION
AIRPORTS
5/19/80
<PAGE> 11
may take any appropriate action to enforce compliance or by giving twenty-four
(24) hours' notice, may revoke this Permit and the permission hereunder; or may
pursue such other remedies as may be provided by law; and as to any or all of
the foregoing, the Port Authority may take such action as the United States may
direct.
(d) The Permittee shall indemnify and hold harmless the Port Authority
from any claims and demands of third persons including the United States of
America resulting from the Permittee's noncompliance with any of the provisions
of this Endorsement and the Permittee shall reimburse the Port Authority for any
loss or expense incurred by reason of such noncompliance.
(e) Nothing contained in this Endorsement shall grant or shall be
deemed to grant to the Permittee the right to transfer or assign this Permit, to
make any agreement or concession of the type mentioned in paragraph (b) hereof,
or any right to perform any construction on any Space under the Permit.
STANDARD ENDORSEMENT No. 9.5 (Page 2)
NON-DISCRIMINATION
AIRPORTS
5/19/80
<PAGE> 12
The Permittee assures that it will undertake an affirmative action
program as required by 14 CFR Part 152, Subpart E, to insure that no person
shall on the grounds of race, creed, color, national origin, or sex be excluded
from participating in any employment activities covered in 14 CFR Part 152,
Subpart E. The Permittee assures that no person shall be excluded on these
grounds from participating in or receiving the services or benefits of any
program or activity covered by this subpart. The Permittee assures that it will
require that its covered suborganizations provide assurances to the Permittee
that they similarly will undertake affirmative action programs and that they
will require assurances from their suborganizations, as required by 14 CFR Part
152, Subpart E, to the same effect.
STANDARD ENDORSEMENT NO. 9.6
AIRPORTS
AFFIRMATIVE ACTION
<PAGE> 13
The Permittee shall daily remove from the Airport by means of
facilities provided by it all garbage, debris and other waste material arising
out of or in connection with its operations hereunder.
STANDARD ENDORSEMENT NO. 10.1
GARBAGE
AIRPORTS
7/12/49
<PAGE> 14
The Permittee shall refrain from entering into continuing contracts or
arrangements with third parties for furnishing services covered hereunder when
such contracts or arrangements will have the effect of utilizing to an
unreasonable extent the Permittee's capacity for rendering such services. A
reasonable amount of capacity shall be reserved by the Permittee for the purpose
of rendering services hereunder to those who are not parties to continuing
contracts with the Permittee.
The Permittee shall not enter into any agreement or understanding,
express or implied, binding or nonbinding, with any other person who may furnish
services at the Airport similar to those furnished hereunder which will have the
effect of (a) fixing rates and charges to be paid by users of the services; (b)
lessening or preventing competition between the Permittee and such other
furnishers of services; or (c) tending to create a monopoly on the Airport in
connection with the furnishing of such services.
STANDARD ENDORSEMENT NO. 12.1
CAPACITY & COMPETITION
Airports
7/21/49
<PAGE> 15
Except as specifically provided herein to the contrary, the Permittee
shall not, by virtue of the issue and acceptance of this Permit, be released or
discharged from any liabilities or obligations whatsoever under any other Port
Authority permits or agreements including but not limited to any permits to
make alterations.
In the event that any space or location covered by this Permit is the
same as is or has been covered by another Port Authority permit or other
agreement with the Permittee, then any liabilities or obligations which by the
terms of such permit or agreement, or permits thereunder to make alterations,
mature at the expiration or revocation or termination of said permit or
agreement, shall be deemed to survive and to mature at the expiration
or sooner termination or revocation of this Permit, insofar as such liabilities
or obligations require the removal of property from and/or the restoration of
the space or location.
STANDARD ENDORSEMENT NO. 14.1
DUTIES UNDER OTHER AGREEMENTS
All Facilities
7/21/49
<PAGE> 16
The Permittee shall observe and obey (and compel its officers,
employees, guests, invitees, and those doing business with it, to observe and
obey) the rules and regulations of the Port Authority now in effect, and such
further reasonable rules and regulations which may from time to time during the
effective period of this Permit, be promulgated by the Port Authority for
reasons of safety, health, preservation of property or maintenance of a good and
orderly appearance of the Airport including any Space covered by this Permit, or
for the safe and efficient operation of the Airport including any space covered
by this Permit. The Port Authority agrees that, except in cases of emergency, it
shall give notice to the Permittee of every rule and regulation hereafter
adopted by it at least five days before the Permittee shall be required to
comply therewith.
The Permittee shall provide and its employees shall wear or carry
badges or other suitable means of identification. The badges or means of
identification shall be subject to the written approval of the Airport Manager.
STANDARD ENDORSEMENT NO. 16.1
RULES & REGULATIONS COMPLIANCE
Airports
6/29/62
<PAGE> 17
The Permittee shall procure all licenses, certificates, permits or
other authorization from all governmental authorities, if any, having
jurisdiction over the Permittee's operations at the Facility which may be
necessary for the Permittee's operations thereat.
The Permittee shall pay all taxes, license, certification, permit and
examination fees and excises which may be assessed, levied, exacted or imposed
on its property or operation hereunder or on the gross receipts or income
therefrom, and shall make all applications, reports and returns required in
connection therewith.
The Permittee shall promptly observe, comply with and execute the
provisions of any and all present and future governmental laws, rules,
regulations, requirements, orders and directions which may pertain or apply to
the Permittee's operations at the Facility.
The Permittee's obligations to comply with governmental requirements
are provided herein for the purpose of assuring proper safeguards for the
protection of persons and property at the Facility and are not to be construed
as a submission by the Port Authority to the application to itself of such
requirements or any of them.
STANDARD ENDORSEMENT NO. 17.1
LAW COMPLIANCE
All Facilities
8/29/49
<PAGE> 18
Neither the Commissioners of the Port Authority nor any of them, nor
any officer, agent or employee thereof shall be charged personally by the
Permittee with any liability, or held liable to it, under any term or provision
of this Permit, or because of its execution or attempted execution, or because
of any breach thereof.
STANDARD ENDORSEMENT NO. 18.1
NO PERSONAL LIABILITY
All Facilities
6/1/50
<PAGE> 19
Notwithstanding any other provision of this Permit, the permission
hereby granted shall in any event terminate with the expiration or termination
of the lease of La Guardia Airport from the City of New York to the Port
Authority under the agreement between the City and the Port Authority dated
April 17, 1947, as the same from time to time may have been or may be
supplemented or amended. Said agreement dated April 17, 1947 has been recorded
in the Office of the Register of The City of New York, County of Queens, on May
22, 1947, in Liber 5402 of Conveyances, at pages 319 et seq. No greater rights
or privileges are hereby granted to the Permittee than the Port Authority has
power to grant under said agreement as supplemented or amended as aforesaid.
"La Guardia Airport" or "Airport" shall mean the land and premises in
The City of New York, in the County of Queens and State of New York, which are
shown in green upon the exhibit attached to said agreement between the City and
the Port Authority and marked "Map I", and lands contiguous thereto which may
have been heretofore or may hereafter be acquired by the Port Authority to use
for air terminal purposes.
The Port Authority has agreed by a provision in its agreement of lease
with the City covering the Airport to conform to the enactments, ordinances,
resolutions and regulations of the City and of its various departments, boards
and bureaus in regard to the construction and maintenance of buildings and
structures and in regard to health and fire protection, to the extent that the
Port Authority finds it practicable so to do. The Permittee shall, within
forty-eight (48) hours after its receipt of any notice of violation, warning
notice, summons, or other legal process for the enforcement of any such
enactment, ordinance, resolution or regulation, deliver the same to the Port
Authority for examination and determination of the applicability of the
agreement of lease provision thereto. Unless otherwise directed in writing by
the Port Authority, the Permittee shall conform to such enactments, ordinances,
resolutions and regulations insofar as they relate to the operations of the
Permittee at the Airport. In the event of compliance with any such enactment,
ordinance, resolution or regulation on the part of the Permittee, acting in good
faith, commenced after such delivery to the Port Authority but prior to the
receipt by the Permittee of a written direction from the Port Authority, such
compliance shall not constitute a breach of this Permit, although the Port
Authority thereafter notifies the Permittee to refrain from such compliance.
Nothing herein contained shall release or discharge the Permittee from
compliance with any other provision hereof respecting governmental requirements.
ENDORSEMENT NO. 19.1
La Guardia Airport
5/19/49
<PAGE> 20
Notwithstanding any other provisions of this Permit, the permission
hereby granted shall in any event terminate with the expiration or termination
of the lease of John F. Kennedy International Airport from The City of New York
to the Port Authority under the agreement between the City and the Port
Authority dated April 17, 1947, as the same from time to time may have been or
may be supplemented or amended. Said agreement dated April 17, 1947 has been
recorded in the Office of the Register of The City of New York, County of
Queens, on May 22, 1947, in Liber 5402 of Conveyances, at pages 319 et seq. No
greater rights or privileges are hereby granted to the Permittee than the Port
Authority has power to grant under said agreement as supplemented or amended as
aforesaid.
"John F. Kennedy International Airport" or "Airport" shall mean the
land and premises in The City of New York, in the County of Queens and State of
New York, which are shown in green upon the exhibit attached to said agreement
between the City and the Port Authority and marked "Map II", and lands
contiguous thereto which may have been heretofore or may hereafter be acquired
by the Port Authority to use for air terminal purposes.
The Port Authority has agreed by a provision in its agreement of lease
with the City covering the Airport to conform to the enactments, ordinances,
resolutions and regulations of the City and of its various departments, boards
and bureaus in regard to the construction and maintenance of buildings and
structures and in regard to health and fire protection, to the extent that
the Port Authority finds it practicable so to do. The Permittee shall, within
forty-eight (48) hours after its receipt of any notice of violation, warning
notice, summons, or other legal process for the enforcement of any such
enactment, ordinance, resolution or regulation, deliver the same to the Port
Authority for examination and determination of the applicability of the
agreement of lease provision thereto. Unless otherwise directed in writing by
the Port Authority, the Permittee shall conform to such enactments, ordinances,
resolutions and regulations insofar as they relate to the operations of the
Permittee at the Airport. In the event of compliance with any such enactment,
ordinance, resolution or regulation on the part of the Permittee, acting in good
faith, commenced after such delivery to the Port Authority but prior to the
receipt by the Permittee of a written direction from the Port Authority, such
compliance shall not constitute a breach of this Permit, although the Port
Authority thereafter notifies the Permittee to refrain from such compliance.
Nothing herein contained shall release or discharge the Permittee from
compliance with any other provision hereof respecting governmental requirements.
ENDORSEMENT NO. 19.2
JFKIA
1/16/64
<PAGE> 21
Notwithstanding any other provision of this Permit, the permission
hereby granted shall in any event terminate with the expiration or termination
of the lease of Newark International Airport from The City of Newark to the
Port Authority under the agreement between the City and the Port Authority dated
October 22, 1947, as the same from time to time may have been or may be
supplemented or amended. Said agreement dated October 22, 1947 has been recorded
in the Office of the Register of Deeds for the County of Essex on October 30,
1947 in Book E-110 of Deeds at pages 242, et seq. No greater rights or
privileges are hereby granted to the Permittee than the Port Authority has power
to grant under said agreement as supplemented or amended as aforesaid.
"Newark International Airport" or "Airport" shall mean the land and
premises in the County of Essex and State of New Jersey, which are westerly of
the right of way of the Central Railroad of New Jersey and are shown upon the
exhibit attached to the said agreement between the City and the Port Authority
and marked "Exhibit 'A'", as contained within the limits of a line of crosses
appearing on said exhibit and designated "Boundary of terminal area in City of
Newark", and lands contiguous thereto which may have been heretofore or may
hereafter be acquired by the Port Authority to use for air terminal purposes.
The Port Authority has agreed by a provision in its agreement of lease
with the City covering the Airport to conform to the enactments, ordinances,
resolutions and regulations of the City and of its various departments, boards
and bureaus in regard to the construction and maintenance of buildings and
structures and in regard to health and fire protection, to the extent that the
Port Authority finds it practicable so to do. The Permittee shall, within
forty-eight (48) hours after its receipt of any notice of violation, warning
notice, summons, or other legal process for the enforcement of any such
enactment, ordinance, resolution or regulation, deliver the same to the Port
Authority for examination and determination of the applicability of the
agreement of lease provision thereto. Unless otherwise directed in writing by
the Port Authority, the Permittee shall conform to such enactments, ordinances,
resolutions and regulations insofar as they relate to the operations of the
Permittee at the Airport. In the event of compliance with any such enactment,
ordinance, resolution or regulation on the part of the Permittee, acting in good
faith, commenced after such delivery to the Port Authority but prior to the
receipt by the Permittee of a written direction from the Port Authority, such
compliance shall not constitute a breach of this Permit, although the Port
Authority thereafter notifies the Permittee to refrain from such compliance.
Nothing herein contained shall release or discharge the Permittee from
compliance with any other provision hereof respecting governmental
requirements.
STANDARD ENDORSEMENT NO. 19.3
PARTICULAR FACILITY
Newark International Airport
3/15/74
<PAGE> 22
The Permittee shall promptly observe, comply with and execute the
provisions of any and all present and future rules and regulations,
requirements, orders and directions of the New York Board of Fire Underwriters
and the New York Fire Insurance Exchange, or if the Permittee's operations
hereunder are in New Jersey, the National Board of Fire Underwriters and The
Fire Insurance Rating Organization of N.J., and any other body or organization
exercising similar functions which may pertain or apply to the Permittee's
operations hereunder. If by reason of the Permittee's failure to comply with the
provisions of this Endorsement, any fire insurance, extended coverage or rental
insurance rate on the Airport or any part thereof or upon the contents of any
building thereon shall at any time be higher than it otherwise would be, then
the Permittee shall on demand pay the Port Authority that part of all fire
insurance premiums paid or payable by the Port Authority which shall have been
charged because of such violation by the Permittee.
The Permittee shall not do or permit to be done any act which
(a) will invalidate or be in conflict with any fire insurance
policies covering the Airport or any part thereof or upon the
contents of any building thereon, or
(b) will increase the rate of any fire insurance, extended
coverage or rental insurance on the Airport or any part
thereof or upon the contents of any building thereon, or
(c) in the opinion of the Port Authority will constitute a
hazardous condition, so as to increase the risks normally
attendant upon the operations contemplated by this Permit, or
(d) may cause or produce upon the Airport any unusual, noxious or
objectionable smokes, gases, vapors or odors, or
(e) may interfere with the effectiveness or accessibility of the
drainage and sewerage system, fire-protection system,
sprinkler system, alarm system, fire hydrants and hoses, if
any, installed or located or to be installed or located in or
on the Airport, or
(f) shall constitute a nuisance in or on the Airport or which may
result in the creation, commission or maintenance of a
nuisance in or on the Airport.
For the purpose of this Endorsement, "Airport" includes all structures
located thereon.
STANDARD ENDORSEMENT NO. 22
PROHIBITED ACTS
Airports
7/13/49
<PAGE> 23
Upon the execution of this Permit by the Permittee and delivery thereof to the
Port Authority, the Permittee shall deposit with the Port Authority (and shall
keep deposited throughout the effective period of the permission under this
Permit) the sum of Twenty-Five Thousand Dollars and Zero Cents ($25,000) either
in cash, or bonds of the United States of America, or of the State of New
Jersey, or of the State of New York, or of the Port Authority of New York and
New Jersey, having a market value of that amount, as security for the full,
faithful and prompt performance of and compliance with, on the part of the
Permittee, all of the terms, provisions, covenants and conditions of this Permit
on its part to be fulfilled, kept, performed or observed. Bonds qualifying for
deposit hereunder shall be in bearer form but if bonds of that issue were
offered only in registered form, then the Permittee may deposit such bonds or
bonds in registered form, provided, however, that the Port Authority shall be
under no obligation to accept such deposit of a bond in registered form unless
such bond has been re-registered in the name of the Port Authority (the expense
of such re-registration to be borne by the Permittee ) in a manner satisfactory
to the Port Authority. The Permittee may request the Port Authority to accept a
registered bond in the Permittee's name and if acceptable to the Port Authority
the Permittee shall deposit such bond together with an irrevocable bond power
(and such other instruments or other documents as the Port Authority may
require) in form and substance satisfactory to the Port Authority. In the event
the deposit is returned to the Permittee any expenses incurred by the Port
Authority in re-registering a bond to the name of the Permittee shall be borne
by the Permittee. In addition to any and all other remedies available to it, the
Port Authority shall have the right, at its option, at any time and from time to
time, with or without notice, to use the deposit or any part thereof in whole or
partial satisfaction of any of its claims or demands against the Permittee.
There shall be no obligation on the Port Authority to exercise such right and
neither the existence of such right nor the holding of the deposit itself shall
cure any default or breach of this Agreement on the part of the Permittee. With
respect to any bonds deposited by the Permittee, the Port Authority shall have
the right, in order to satisfy any of its claims or demands against the
Permittee, to sell the same in whole or in part, at any time, and from time to
time, with or without prior notice at public or private sale, all as determined
by the Port Authority, together with the right to purchase the same at such sale
free of all claims, equities or rights of redemption of the Permittee. The
Permittee hereby waives all right to participate therein and all right to prior
notice or demand of the amount or amounts of the claims or demands of the Port
Authority against the Permittee. The proceeds of every such sale shall be
applied by the Port Authority first to the costs and expenses of the sale
(including but not limited to advertising or commission expenses) and then to
the amounts due the Port Authority from the Permittee. Any balance remaining
shall be retained in cash toward bringing the deposit to the sum specified
above. In the event that the Port Authority shall at any time or times so use
the deposit, or any part thereof, or if bonds shall have been
Standard Endorsement no. 23.1 (Page 1)
Security Deposit
All Facilities SHUTTLE ASSOCIATES, LLC D.B.A. SUPER SHUTTLE NEW YORK
6/12/87 Federal Tax Identification No. 06-1481042
<PAGE> 24
deposited, or any part thereof, or if bonds shall have been deposited and the
market value thereof shall have declined below the above-mentioned amount, the
Permittee shall, on demand of the Port Authority and within two (2) days
thereafter, deposit with the Port Authority additional cash or bonds so as to
maintain the deposit at all times to the full amount above stated, and such
additional deposits shall be subject to all the conditions of this Standard
Endorsement. After the expiration or earlier revocation or termination of the
effective period of the permission under this Permit, and upon condition that
the Permittee shall then be in no wise in default under any part of this Permit,
and upon written request therefor by the Permittee, the Port Authority will
return the deposit to the Permittee less the amount of any and all unpaid claims
and demands (including estimated damages) of the Port Authority by reason of any
default or breach by the Permittee of this Permit or any part thereof. The
Permittee agrees that it will not assign or encumber the deposit. The Permittee
may collect or receive any interest or income earned on bonds and interest paid
on cash deposited in interest-bearing bank accounts, less any part thereof or
amount which the Port Authority is or may hereafter be entitled or authorized by
law to retain or to charge in connection therewith, whether as or in lieu of any
administrative expense, or custodial charge, or otherwise; provided, however,
that the Port Authority shall not be obligated by this provision to place or to
keep cash deposited hereunder in interest-bearing bank accounts.
Standard Endorsement no. 23.1 (Page 2)
Security Deposit
All Facilities
6/12/87
<PAGE> 25
If any type of strike or other labor activity is directed against the
Permittee at the Facility or against any operations pursuant to this Permit
resulting in picketing or boycott for a period of at least forty-eight (48)
hours which, in the opinion of the Port Authority, adversely affects or is
likely adversely to affect the operation of the Facility or the operations of
other permittees, lessees or licensees thereat, whether or not the same is due
to the fault of the Permittee, and whether caused by the employees of the
Permittee or by others, the Port Authority may at any time during the
continuance thereof, by twenty-four (24) hours' notice, revoke this Permit
effective at the time specified in the notice. Revocation shall not relieve the
Permittee of any liabilities or obligations hereunder which shall have accrued
on or prior to the effective date of revocation.
STANDARD ENDORSEMENT NO. 28
DISTURBANCES
All Facilities
6/20/51
<PAGE> 26
PORT AUTHORITY PERMIT NO. AX-678
SPECIAL ENDORSEMENTS
1. (a) The Permittee is hereby granted the nonexclusive privilege of using
the routes, roads and ways of the Airports (as said term is defined in
paragraph (b) of Special Endorsement No. 12 hereof) as may from time to
time be designated by the Port Authority for the purpose of conducting
the Permittee's business at the Airports as described in paragraphs (b)
and (c) of this Special Endorsement No. 1.
(b) (i) The Permittee is hereby granted the privilege to provide, and
the Permittee hereby agrees to conduct the business of
providing, a ground transportation service by chauffeured
motor vehicle using only vehicles having a capacity of seven
passengers or more, including the driver, which bear proper
Port Authority issued vehicle stickers, as further provided in
Special Endorsement No. 15 below, for all persons (and their
baggage) desiring transportation by the Permittee to and from:
Newark International Airport, John F. Kennedy International
Airport or LaGuardia Airport on one hand and points and
communities in Manhattan between 23rd Street and 96th Street
from the East River to the Hudson River on the other hand,
on the basis of a separate charge to each passenger using the
same (the "Privileged Represented Service"). No portion of
this subparagraph shall affect or limit the requirements of
Standard Endorsement No. 17.1 and Special Endorsement No. 7 of
the Permit.
(ii) The Permittee is hereby granted the privilege to provide, and
the Permittee hereby agrees to conduct the business of
providing, a ground transportation service by chauffeured
motor vehicle using only vehicles having a capacity of seven
(7) passengers or more, including the driver, which bear
proper Port Authority issued vehicle stickers, as further
provided in Special Endorsement No. 15 below, for all persons
(and their baggage) desiring transportation by the Permittee
to and from all other points in the metropolitan area which
the Permittee notifies the Port Authority it desires to serve
pursuant to subparagraph (b)(iii) below and except as provided
in a notice from the Port Authority pursuant to subparagraph
(b)(iii) below, on the basis of a separate charge to each
passenger using the same (the "Represented service"), with the
exception of such points and communities as may be specified
from time to time in a notice to the Permittee from the Port
Authority. On the date hereof such excluded points and
communities are:
(1) The Counties of Fairfield, New Haven and Hartford in
the State of Connecticut;
1
<PAGE> 27
PORT AUTHORITY PERMIT NO. AX-678
(2) The vicinity of the New Jersey Turnpike-Route 1
corridor from East Brunswick south to Princeton, New
Jersey (service to and from LaGuardia Airport and
such points and communities set forth in this item 2
is not excluded under this Permit); or
(3) Yardley, Pennsylvania (service to and from LaGuardia
Airport and such point set forth in this item 3 is
not excluded under this Permit).
(4) Nassau and Suffolk Counties (service to and from
Newark International Airport and such points and
communities set forth in this item 4 is not excluded
under this Permit).
No portion of this subparagraph shall affect or limit the
requirement of Standard Endorsement No. 17.1 and Special
Endorsement No. 7 of this Permit.
(iii) The Privileged Represented Service and the Represented Service
set forth in this paragraph (b), are sometimes in this Permit
collectively called the "Shared Ride Service". The Permittee
shall give notice to the Port Authority and keep the Port
Authority advised at all times in writing of the points and
communities with respect to which it operates the Shared-Ride
Service, the schedules and fares to be maintained by the
Permittee with respect to all or any part of the Shared Ride
Service and the schedules required to be maintained by the
Permittee with respect to the Shared Ride Service by any
regulatory agency whose franchise or license, together with
this Permit, authorizes the operation of the Shared Ride
Service hereunder. Such written notice of changes in points
and communities served, schedules and fares shall be given to
the Port Authority at least ten (10) working days in advance
of the planned changes. The Permittee shall give to the Port
Authority such further written information with respect to the
schedules or other aspects of the Shared Ride Service as the
Port Authority may from time to time and at any time request.
Changes in points and communities served, schedules and fares
shall go in effect as requested by the Permittee, except as
otherwise provided in a notice to the Permittee from the Port
Authority. The Permittee hereby acknowledges that its
application for a permit is based on its desire and intention
to provide regular service for airline passengers between the
Airports and the points and communities as set forth above,
and not for the ancillary opportunity to engage in the
Additional Service, as such term is defined below, at the
Airports. The foregoing acknowledgment by the Permittee is a
special inducement and consideration to the Port Authority in
entering into this Permit with the Permittee.
(iv) The Permittee shall not carry persons or baggage whose origin
and destination are each at one of the Airports except with
the prior written consent of the Port Authority.
(c) (i) The Permittee shall operate the Privileged Represented Service
on the schedule as submitted in its response to the Request
For Proposal issued by the Port
2
<PAGE> 28
PORT AUTHORITY PERMIT NO. AX-678
Authority dated August 1996 which in any event shall
include service during all hours of flight activity
sufficient to meet passenger demand and shall be at a
minimum of at least one arrival and one departure
from each Airport hereunder every two (2) hours,
every day during the day, during the hours from 7:00
am to midnight, seven days a week, except as is
otherwise authorized by the Port Authority in
writing.
(ii) The Permittee shall operate the Represented Service
during all hours of flight activity sufficient to
meet passenger demand and shall be at a minimum of at
least one arrival and one departure from each Airport
hereunder every two (2) hours, every day during the
day, during the hours from 7:00 am to midnight seven
days a week except as is otherwise authorized by the
Port Authority in writing.
(d) The Permittee is hereby granted the additional nonexclusive
privilege to provide a chauffered motor vehicle service (the
"Additional Service") to, at and from the Airports to persons
who desire the same using only vehicles having a capacity of
seven passengers or more, including the driver, which bear
proper Port Authority issued vehicle stickers as further
provided in Special Endorsement No. 15 below. The Additional
Service shall mean the service by the Permittee of providing
an entire vehicle and its driver to one customer, on the basis
of a per vehicle charge and where the service is not "Charter
Bus Service", as such term is defined below. It is hereby
expressly understood and agreed that the privilege granted
under this Permit to provide the Additional Service shall not
include providing said service to a customer who is an
Aircraft Operator and the Permittee hereby expressly agrees
that it shall not provide the Shared Ride Service or the
Additional Service to an Aircraft Operator, or to the
passengers of an Aircraft Operator when such service is
arranged by the Aircraft Operator or its employees, unless the
Permittee has a separate permit or permits issued by the Port
Authority authorizing such service. In no event shall the
Permittee indirectly or directly utilize its personnel (except
as specifically authorized in writing by the Port Authority)
or facilities at the Airports to carry on or conduct any
business operation or service at the Airports other than as
specifically set forth herein.
(e) The term "Aircraft Operator" as used in this Permit shall mean
(i) a person, as such term is defined below, owning one or
more aircraft which are not leased or chartered to any other
Person for operation, and (ii) a Person owning one or more
aircraft which are leased or chartered for operation, whether
the aircraft so owned, leased or chartered are military or
non-military, or are used for private business, pleasure or
governmental business, or for carrier or non-carrier
operations, or for scheduled or nonscheduled operations or
otherwise. Said phrase shall not mean the pilot of an aircraft
unless he is also the owner or lessee thereof or a Person, as
such term is defined below, to whom it is chartered.
(f) The term "Person" as used in this Permit shall mean not only a
natural person, corporation or other legal entity, but also
two or more natural Persons, corporations or other legal
entities acting jointly as a firm, partnership, unincorporated
association, consortium joint adventurers or otherwise.
3
<PAGE> 29
PORT AUTHORITY PERMIT NO. AX-678
(g) To qualify for the "Charter Bus Service" exclusion, the service of
the Permittee must meet all of the requirements set forth in the
definition of "Charter Bus Service." The term "Charter Bus Service"
as used in this Permit shall mean the service of the Permittee of
(i) providing a bus to a corporation or other commercial, religious
or eleemosynary entity for the ground transportation of Persons to
or from the Airports, but not between any Airports operated by the
Port Authority; (ii) where the bus used by the Permittee therefor
has a seating capacity of at least twenty-five (25) passengers
including the driver; (iii) where the customer pays for the service
on the basis of the number of bus trips, mileage, time or some other
basis but not on the basis of the number of passengers carried; and
(iv) where the payment is made on the basis of accounts receivable
and payable and not on a cash basis. The foregoing deletion of the
Charter Bus Service from the Additional Service shall not create or
be deemed to create as to the Permittee or any third party a
precedent or a waiver by the Port Authority of its right to include
charter bus service as part of the Additional Service or as part of
the privilege under any other permit which may be issued by the Port
Authority in the future. Accordingly, the Port Authority shall have
the right at any time in its sole and absolute discretion on sixty
(60) days' written notice to the Permittee to delete the provisions
of this paragraph (g), and from and after the effective date of such
notice, vehicles used to provide the Charter Bus Service shall be
subject to the requirements of this Permit with respect to the
Additional Service including without limitation the payment of fees.
The Port Authority agrees that it shall not give such notice unless
at the same time the Port Authority serves similar notices on all
Persons who have permits with the Port Authority at the Airport
granting them the privilege of providing the Additional Service.
(h) The Permittee acknowledges and agrees that Persons may at any time
during the effective period of this Permit receive a permit or
permits from the Port Authority granting the privilege of carrying
employees or passengers of an Aircraft Operator to and from an
Airport, the reservation or arrangement for such having been made by
or through the Aircraft Operator or its employees or agents.
(i) It is further understood and agreed that notwithstanding the
definition of the Shared Ride Service or the Additional Service as
hereinbefore set forth, the Permittee shall not provide said service
to and from points within the Central Terminal area of the Airports
(said Central Terminal Area being the areas where the airline
passenger terminal facilities are located).
(j) The Permittee shall have no right hereunder to carry on or conduct
any business operation or service at the Airports other than as
specifically set forth herein. The Permittee shall not solicit
business on the public areas of the Airports and the use, at any
time, of hand or standard megaphones, loudspeakers or any electric,
electronic or other amplifying devices or the distribution of
written materials, except as otherwise authorized by the Port
Authority, in writing, is hereby expressly prohibited.
4
<PAGE> 30
PORT AUTHORITY PERMIT NO. AX-678
2. (a) The Permittee shall pay a fee hereunder of Twenty-two Dollars
and Sixty-five Cents ($22.65) per calendar month, per seat
(including the driver's seat) in each vehicle (i) operated by
the Permittee hereunder to provide either the Shared Ride
Service or the Additional Service at any time during the
calendar month or (ii) which vehicle had a Port Authority
vehicle sticker issued to it pursuant to Special Endorsement
No. 15 below at any time during such calendar month. (The
number of seats in each such vehicle shall be based on the
actual number of seats in such vehicle with the seating
information appearing on the vehicle registration to be
utilized unless the actual number of seats is at variance or
except as may be otherwise determined by the Port Authority.)
The Port Authority shall bill the Permittee for fees due for
the preceding calendar month, which payment shall be due on
presentation of the bill by the Port Authority. Such billings
shall be based on requests by the Permittee for vehicle
stickers pursuant to Special Endorsement No. 15 below, which
billings shall be subject to change by the Port Authority
including without limitation changes based on the Port
Authority's determination of the actual number of vehicles (i)
used by the Permittee hereunder during the preceding calendar
month or (ii) which had issued to it a vehicle sticker at any
time during the preceding calendar month. Each vehicle sticker
surrendered in accordance with the requirements of Special
Endorsement No. 15 (c) which is replaced during the same
calendar month with another vehicle sticker which is
outstanding for the remainder of the calendar month shall be
fee payable based on the number of seats in the vehicle for
which the sticker was issued on the last day of such calendar
month.
(b) In the event this Permit commences on other than the first day
of a calendar month the fee hereunder shall be prorated based
on the actual number of the days in such calendar month. In
the event this Permit is revoked by the Port Authority
effective on a date other than the last day of a calendar
month the fee hereunder shall be prorated based on the actual
number of the days in such calendar month. There shall be no
abatement or reduction of the fee in the event the Ground
Transportation Center Provisions, as such term is defined
below, are suspended or revoked as provided below. In the
event of any change in the number of vehicles operated by the
Permittee under this Permit in a calendar month during the
effective period of this Permit, there shall be no abatement
of the fee hereunder for any calendar month during which a
vehicle was operated under this Permit or had issued to it a
vehicle sticker under this Permit.
(c) Payments made hereunder shall be sent to the following address
and shall include the Port Authority permit number on the
face of the check:
The Port Authority of New York and New Jersey
P. O. Box 17309
Newark, New Jersey 07194
3. The terms and provisions of this Special Endorsement No. 3 shall be
herein referred to in this Permit as the "Ground Transportation
Center Provisions".
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<PAGE> 31
PORT AUTHORITY PERMIT NO. AX-678
(a) The Port Authority now operates one or more Consolidated Ground
Transportation Information and Reservation Service Centers
(hereinafter singly or collectively, as the case may be, called the
"Center" or the "Centers") in airline terminal buildings
("Terminals) located at the Airports. The Centers are operated to
(i) provide schedule, fare and other information to the public and
(ii) to book trips through Center Personnel, as such term is defined
below, to and from the Airport for patrons of various Port Authority
Permittees providing Shared-Ride Service which are in good standing
under their permits. The Port Authority may commence the operation
of additional Centers in the future. The Permittee acknowledges and
agrees that the provisions of this Special Endorsement shall control
the relationship of the Permittee and the Port Authority regarding
the Centers, regardless of when they were or may be established.
(b) The Centers shall be the sole means by which the Permittee is
represented in Terminals having such Center or Centers. The
Permittee shall be represented at each such Center.
(c) The Port Authority will use reasonable efforts to engage a third
party contractor or contractors who will agree to staff the Centers
approximately sixteen hours per day (except as may be otherwise
determined by the Port Authority) with an individual, or individuals
("Center Personnel"), who will provide services to the extent
practical, including without limitation, generally the following:
(i) Use rate and schedule data compiled from information provided
by Port Authority permittees to provide information to the
public about available services;
(ii) Make advance bookings for members of the public;
(iii) Coordinate passenger departures with permittee
representatives,
(iv) Announce departures to passengers; and
(v) Such other services as the Port Authority may, in its
discretion, deem appropriate.
Facilities provided at the Centers may include self service
telephone equipment to be used by the public for toll-free calling
to the Permittee hereunder at the expense of the Permittee as well
as other Port Authority permittees. The Permittee, upon notice from
the Port Authority, shall furnish a toll-free telephone number for
use hereunder. The telephone equipment shall be used by the
Permittee and its customers solely in connection with the Shared
Ride Service and the Additional Service hereunder unless the
Permittee holds another Port Authority permit specifically
authorizing other usage of the telephone equipment.
(d) The Port Authority may, by notice, elect to cease operation of a
Center or Centers effective at least twenty-four (24) hours after
written notice thereof is delivered to the
6
<PAGE> 32
PORT AUTHORITY PERMIT NO. AX-678
Permittee. Such cessation of operation of a Center or all the
Centers shall not be deemed a revocation of this Permit.
(e) The Port Authority reserves the right to relocate or change the
configuration of the Centers or any of them. The Port Authority
shall notify the Permittee at least twenty-four (24) hours prior to
such relocation or change.
(f) Without limiting the generality of any other provision of this
Permit, the Permittee's rights under the Ground Transportation
Center Provisions may be revoked without cause, with respect to one
or more Centers, upon thirty (30) days' written notice by the Port
Authority, provided, however, that the Ground Transportation Center
Provisions may be revoked on twenty-four hours' notice, with respect
to one or more or all Centers if the Permittee shall fail to keep,
perform and observe each and every promise, agreement, condition,
term and provision contained in this Permit including those
contained in the Ground Transportation Center Provisions, including
but not limited to the obligation to pay the fees due under this
Permit or to properly display a currently valid vehicle sticker as
provided in Special Endorsement No. 15 below. Revocation of the
Permittee's rights under the Ground Transportation Center Provisions
shall not abate, reduce or affect the obligation of the Permittee to
pay fees hereunder.
(g) Without limiting the generality of any other provision of this
Permit, the Permittee's rights under the Ground Transportation
Center Provisions may be suspended, with or without cause, with
respect to one or more Centers, upon twenty-four (24) hour's written
notice by the Port Authority for the period, not to exceed thirty
(30) days, stated in such notice, provided however, that the
suspension of the Permittees rights under the Ground Transportation
Center Provisions shall not abate, reduce or affect the obligation
of the Permittee to pay fees hereunder. The effective period of any
such suspension shall be extended to include the period ending on
the date of revocation by the Port Authority, if notice thereof
shall be given by the Port Authority during any such period of
suspension.
(h) The Port Authority reserves the right, in its discretion, to utilize
Port Authority personnel in lieu of such Center Personnel as
described above, and in such event such Port Authority personnel
shall be "Center Personnel" under this Permit.
(i) The Port Authority assumes no responsibility for any deficiencies
in, or interruption of, operation of the Centers not caused by the
Port Authority's willful misconduct.
(j) Without limiting any other provision of this Special Endorsement,
the Port Authority shall not be responsible either for collecting
fees due to the Permittee from passengers utilizing its services
offered hereunder, or for making the Permittee whole in connection
with such fees as may remain unpaid.
(k) The Permittee agrees that it will cooperate fully with the Port
Authority and its contractors to achieve the operation of Centers
which serve the public in a first class manner as determined by the
Port Authority.
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<PAGE> 33
PORT AUTHORITY PERMIT NO. AX-678
(l) The Permittee agrees that it will pickup passengers who have
requested transportation with it, either directly or through Center
Personnel within 15 minutes of its promised pickup time.
(m) The Port Authority reserves the right to publish or post information
at the Ground Transportation Centers or elsewhere relative to the
standards of service provided by the Permittee.
(n) No portion of this Special Endorsement shall affect the Port
Authority's rights of revocation contained elsewhere in this Permit.
4. (a) During the effective period of this Permit, the Port Authority will
not provide schedule or fare information through personnel at the
Ground Transportation Centers regarding more than one other provider
of Shared-Ride Service to the geographic area to which the Permittee
operates the Permitted Shared-Ride Service except for High Volume
Scheduled Coach Service, Incidental Scheduled Coach Service and
Public Transportation Alternative Service as such terms are defined
below. In addition, personnel at the Ground Transportation Centers
may inform patrons of the availability of For-Hire Service,
Non-Represented Shared Ride Service, and Waterborne and Airborne
Transportation Service, as such terms are defined below.
(b) "High Volume Scheduled Coach Service" is any service which is so
classified by the Port Authority. As of June 1, 1996, such High
Volume Scheduled Coach Service is any service which carries at least
30,000 passengers per month to and from the Airport with at least
eighty-five (85) percent of the passengers being transported in
buses having twenty-five or more seats, including the driver's seat,
and the operator of which does not operate any other service to and
from the Airport. A High Volume Scheduled Coach Service provider may
represent its service in one or more terminals at the Airports at or
adjacent to the Ground Transportation Centers or be represented by
the Port Authority or its contractors at the Ground Transportation
Centers in a similar manner to the representation provided to the
Permittee.
(c) "Incidental Scheduled Coach Service" is any service operated on a
scheduled basis exclusively in buses having twenty-five (25) or more
seats including the driver's seat serving a metropolitan area at
least fifty (50) miles from the Airport, which makes a stop at the
Airport, and which stop is incidental to stops at other major
transportation facilities such as the Port Authority Bus Terminal in
midtown Manhattan. Ground Transportation Center personnel may give
schedule and fare information regarding such services.
(d) "Public Transportation Alternative Service" includes local scheduled
public bus service, subway, Amtrak and commuter railroad service and
taxi service. Ground Transportation Center personnel may give
schedule and fare information regarding such services.
8
<PAGE> 34
PORT AUTHORITY PERMIT NO. AX-678
(e) "For-Hire Service" is any service operated using vehicles
having six or fewer seats, including the driver's seat, on the
basis of a per vehicle charge. Ground Transportation Center
personnel give general information regarding such service
which service is available through self-service telephone
boards at or adjacent to such Centers.
(f) "Non-Represented Shared-Ride Service" is any service operated
in vehicles having seven or more seats, including the driver's
seat, with fares payable on the basis of a separate charge to
each passenger, the operator of which service does not have a
Privileged Represented Ground Transportation Service Permit or
Represented Ground Transportation Service Permit from the Port
Authority. In the event that a passenger is seeking service
other than the Privileged Represented Service or Represented
Service, a list of entities, generally offering
Non-Represented Shared-Ride Service may be distributed by
personnel at the Ground Transportation Centers and the
passenger will be free to arrange transportation using a
public telephone.
(g) "Waterborne and Airborne Transportation Service includes
ferries and helicopters. Passengers may obtain such service
via shuttle vans or buses operated by either the waterborne or
airborne transportation provider or its contractor(s) or the
Port Authority or its contractor(s). Information about such
providers may be made available through the Ground
Transportation Centers.
(h) "Privileged Represented Service" is any service operated in
vehicles having seven or more seats, including the driver's
seat, with fares payable on the basis of a separate charge to
each passenger, to points and communities designated by the
Port Authority, the Port Authority having granted to the
operator thereof a Permit which provides that only such
operators will be represented at the Ground Transportation
Centers with respect to such service as and to the extent
provided in such Permit.
(i) The Port Authority reserves the right to modify the
representation of High Volume Scheduled Coach Service,
Incidental Scheduled Coach Service, For-Hire Service and
Public Transportation Alternative Service by personnel at the
Ground Transportation Centers if operational conditions at the
Airports make the same advisable.
5. The Permittee has advised the Port Authority that it desires to operate
all or a portion of either or both the Shared Ride Service and the
Additional Service hereunder by means of independent contractor
arrangements whereby the driver of each vehicle used in performing the
Shared Ride Service and the Additional Service (hereinafter in this
Permit called the "Independent Contractor Services") will conduct the
same on behalf of the Permittee under a form of written agreement (such
agreements being hereinafter in this Permit being called the
"Independent Contractor Agreements") entered into between the Permittee
and each such driver (such drivers being hereinafter in this Permit
being called the "Independent Contractor Drivers"). The Port Authority
has no objection to the use of the Independent Contractor Drivers to
conduct the Independent Contractor Services, as aforesaid,
notwithstanding any provision of Section No. 2 of the Terms and
Conditions of this Permit or Standard Endorsement No. 12.1 which may
conflict or be inconsistent herewith, provided that:
9
<PAGE> 35
PORT AUTHORITY PERMIT NO. AX-678
(vi) The Permittee shall keep and make available to the Port
Authority for the time period specified for records in
Standard Endorsement No. 2.8 hereof, all Independent
Contractor Agreements which it has or may enter into and
shall furnish copies thereof to the Port Authority upon
request.
(vii) The Permittee shall provide to the Port Authority for the time
period specified in subparagraph (f) such information, data
and documents as the Port Authority may request from time to
time in connection with the Permittee's Independent Contractor
Drivers, including but not limited to, the names and addresses
of the Independent Contractor Drivers.
(viii) Without limiting the generality of the provisions of Standard
Endorsement No. 17.3 of this Permit and any other provisions
contained in this Permit regarding compliance with
governmental requirements and the maintenance of required
governmental permissions, the Permittee shall procure and
maintain all required licenses, certificates, permits,
franchises or other authorizations from all governmental
authorities having or asserting jurisdiction over the use of
Independent Contractor Drivers by the Permittee hereunder. The
requirements of the previous sentence shall include without
limitation compliance by the Permittee and all Independent
Contractor Drivers with all applicable federal and state
statutes or regulations regarding securities or franchising.
The foregoing may include requirements of the United States
Securities and Exchange Commission, the Trade Practice
Regulation of the Federal Trade Commission set forth in 16
CFR, Part 436, as well as any applicable requirements of the
State of New Jersey, the State of New York (including without
limitation Articles 23(a) and 33 of the General Business Law)
and any other State having jurisdiction.
(ix) The Permittee shall include in all Independent Contractor
Agreements it may enter into during the effective period of
this Permit and shall amend, effective as of a date prior to
the effective date of this Permit, all Independent Contractor
Agreements which it has entered into prior to the effective
date of this Permit to include, the following provision:
"Notwithstanding any other provision of this Agreement, the
Driver (by which is meant the independent contractor or
franchisee) acknowledges and agrees that any privilege permit
which the Ground Transportation Operator (by which is meant
the franchiser or the supplier) has or may enter into with the
Port Authority of New York and New Jersey for the conduct of
ground transportation operations to, at and from any Port
Authority Airport provides that the Port Authority has no
business relationship with any Driver but only with the
Ground Transportation Operator (the Ground Transportation
Operator being called, in such Port Authority Permit, the
"Permittee") and that the Permittee has and has under this
Agreement (of which this provision is a part) all the rights
and powers with respect to Drivers necessary to insure and
enforce immediate and full compliance by the Drivers with all
of the agreements and
11
<PAGE> 36
PORT AUTHORITY PERMIT NO. AX-678
undertakings of the Permittee under such Permit, including the right
of the Port Authority to object to the demeanor, conduct and
appearance of Drivers and the obligation of the Permittee to remove
the cause of such objection. Such Port Authority Permits provide for
revocation by the Port Authority without cause on thirty (30) days'
written notice to the Permittee. Any consent by the Port Authority
to the use of Drivers contained in such Permit may be separately
revoked by the Port Authority without cause on thirty (30) days'
written notice to the Permittee. The Permit specifically provides
that nothing therein contained shall create or shall be deemed to
create any relationship between the Port Authority and any Driver.
The Permit provides that the Ground Transportation Operator and
Drivers must comply with any and all federal state statutes and
regulations, which may be applicable to this Agreement and the
arrangement created hereby including, without limitation those of
the U.S. Federal Trade Commission and the U.S. Securities and
Exchange Commission and those of the Attorney General of the State
of New York. The Driver and the Ground Transportation Operator both
hereby agree that the Port Authority is a third-party beneficiary of
the agreement contained in this paragraph."
6. The Permittee shall furnish to the Port Authority upon the request of the
Port Authority therefore at any time and from time to time a copy of its
most recent certificate of public convenience and necessity or equivalent
certificate issued by the Department of Transportation of the State of New
York, the Department of Transportation of the State of New Jersey, any
certificate of public convenience and necessity issued by the Interstate
Commerce Commission of the United States of America and any similar
license or certificate issued by any municipal or other regulatory body.
7. Without limiting the provisions of Standard Endorsement No. 17.1, the
Permittee, in its own name, shall procure and maintain in full force and
effect throughout the effective period of the permission granted under
this Permit, all licenses, certificates, permits, franchises or other
authorization over the operations of the Permittee, which may be necessary
for the conduct of its operations, either at the Airports or in rendering
the service of which its operation at the Airports is a part. Neither the
issuance of this Permit nor anything contained therein shall be or be
construed to be a grant of any franchise, consent, license, permit, right
or privilege of any nature or kind whatsoever to operate omnibuses,
taxicabs or any other vehicles or conveyances carrying passengers or
property, whether for hire or otherwise, outside the Airports, or over the
public streets or roads of or located in any municipality of the States of
New York or New Jersey.
8. The Permittee shall not permit any of its employees to enter the Airport
terminals except for drivers actively engaged in loading passengers having
already made arrangements with the
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<PAGE> 37
PORT AUTHORITY PERMIT NO. AX-678
13. All advertising and other forms of publicity made by the Permittee in
connection with this Permit shall be subject to the prior and continuing
approval of the Port Authority.
14. (a) The Permittee shall promptly report in writing to the Manager of the
Facility all accidents whatsoever arising out of or in connection
with its operations hereunder and which result in death or injury to
persons or damage to property, setting forth such details thereof as
the Port Authority may desire.
(b) In addition to and without limiting the other obligations of the
Permittee under this Permit, the Permittee, with respect to each
vehicle operated by it, in its own name as insured and including the
Port Authority as an additional insured, shall maintain and pay the
premiums on the following described policy or policies of insurance
in not less than the following limits which shall cover its
operations hereunder and shall be effective during the effective
period of this Permit:
(i) Comprehensive General Liability Insurance covering airport
operations and covering bodily injury including wrongful
death, and property damage which shall not exclude property
damage to any property in the care, custody or control of the
Permittee, in the minimum amount of $2,000,000 combined single
limit for each occurrence.
(ii) With respect to each vehicle having a seating capacity of
fifteen (15) or less passengers: Comprehensive Automobile
Liability Insurance to include owned, non-owned and hired
vehicles, as applicable, listing the Vehicle Identification
Number (VIN) for each vehicle, covering bodily injury
including wrongful death, and property damage, which shall not
exclude property damage to any property in the care, custody
or control of the Permittee, in the minimum amount of
$1,500,000 combined single limit for each occurrence.
(iii) With respect to each vehicle having a seating capacity of
sixteen (16) or more passengers: Comprehensive Automobile
Liability Insurance to include owned, non-owned and hired
vehicles, as applicable, listing the Vehicle Identification
Number (VIN) for each vehicle covered, covering bodily injury,
including wrongful death, and property damage, which shall not
exclude property damage to any property in the care, custody
or control of the Permittee, in the minimum amount of
$5,000,000 combined single limit for each occurrence.
(c) The Permittee shall secure as part of each said policy of insurance
a contractual liability endorsement covering the obligations of the
Permittee, none of the foregoing policies to contain any exclusion
for bodily injury to or sickness, disease or death of any employee
of the Permittee which would conflict with or in any way impair
coverage on the contractual liability endorsement. The insurance
required hereunder shall also provide or contain an endorsement
providing that the protections afforded the Permittee thereunder
with respect to any claim or action by a third person shall pertain
and apply with like effect with respect to any claims or actions
against the Permittee by the Port
16
<PAGE> 1
Exhibit 10.20
AGREEMENT
Between
BROWARD COUNTY
and
LIMOUSINES OF SOUTH FLORIDA, INC.
for
AIRPORT SHUTTLE BUS SERVICES AT THE
FORT LAUDERDALE-HOLLYWOOD INTERNATIONAL AIRPORT
RLI # 90596-RB
<PAGE> 2
TABLE OF CONTENTS
ARTICLE
I DEFINITIONS ................................................... 4
II TERM AND PROVISIONS
PERTAINING TO INITIAL TERM .................................... 6
III OBLIGATIONS OF THE OPERATOR ................................... 7
IV EQUIPMENT REQUIREMENTS ........................................ 12
V FEES, CHARGES, AND ACCOUNTABILITY ............................. 15
VI OPERATIONAL REQUIREMENTS AND STANDARDS ........................ 23
VII COMPLAINTS .................................................... 27
VIII COMPLIANCE .................................................... 28
IX ASSIGNMENT .................................................... 29
X INSURANCE AND INDEMNIFICATION;
PERFORMANCE BOND .............................................. 30
XI TERMINATION BY COUNTY ......................................... 33
XII SECURITY ...................................................... 36
XIII FIRE AND OTHER DAMAGE ......................................... 36
XIV INDEPENDENT CONTRACTOR ........................................ 37
XV GENERAL PROVISIONS ............................................ 37
XVI MISCELLANEOUS ................................................. 42
<PAGE> 3
EXHIBITS
A SHUTTLE ROUTES AND PARKING AREAS
B HEADWAY TIMES
C VEHICLE SPECIFICATIONS
AND NUMBERS - CORE BUS FLEET
D VEHICLE SPECIFICATIONS, HOURLY EXPENSE FOR
SUPPLEMENTAL BUS FLEET
Attachment I NONDISCRIMINATION REQUIREMENTS
Attachment II SDBE PARTICIPANTS
<PAGE> 4
AGREEMENT
Between
BROWARD COUNTY
and
LIMOUSINES OF SOUTH FLORIDA, INC
for
AIRPORT SHUTTLE BUS SERVICES AT THE
FORT LAUDERDALE-HOLLYWOOD INTERNATIONAL AIRPORT
This is an Agreement, made and entered into by and between: BROWARD
COUNTY, a political subdivision of the State of Florida, hereinafter referred to
as "County,"
AND
LIMOUSINES OF SOUTH FLORIDA, INC, a Florida corporation, authorized to
do business in the State of Florida, hereinafter referred to as "Operator."
WHEREAS, County is the owner and operator of the Fort
Lauderdale-Hollywood International Airport, hereinafter referred to as
"Airport"; and
WHEREAS, the Operator is experienced in the business of managing and
operating Airport Shuttle Bus operations similar in nature to that required at
the Airport; and
WHEREAS, the County wishes to grant to Operator the right to operate
the Airport Shuttle Bus Services at the Airport under an agreement containing
mutually satisfactory terms and covenants;
NOW, THEREFORE, IN CONSIDERATION of the mutual terms, conditions,
promises, covenants and payments hereinafter set forth, County and Operator
agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Affiliate" is an entity which is controlled by or under common control
with another entity, and "control" shall mean ownership of not less
than fifty percent (50%) of all the voting stock or equitable interest
in such corporation or entity.
4
<PAGE> 5
1.2 "Agreement" shall mean this Agreement, including all exhibits thereto
and any supplements, modifications or amendments thereof.
1.3 "Airport" shall refer to Fort Lauderdale-Hollywood International
Airport, Broward County, Florida.
1.4 "Airport Terminals" and "Terminals" shall mean the terminal buildings
at the Airport, including the existing buildings and all terminals
hereafter constructed at the Airport during the term of this Agreement.
1.5 "Annual Management Fee" is set forth in Section 5.2, hereof.
1.6 "Aviation Department" shall mean the County's Aviation Department or
such other named County organization that from time to time may
exercise functions equivalent or similar to those now exercised by such
Department.
1.7 "Director of Aviation" and "Director" shall mean the Director or Acting
Director of the Aviation Department and from time to time shall include
such person or persons as may from time to time be authorized in
writing by the Broward County Board of County Commissioners, the
Broward County Administrator or by the Director to act for the Director
with respect to any or all matters pertaining to this Agreement.
1.8 "Capital Equipment Charge" is set forth in Section 5.4, hereof.
1.9 "Contract Year" shall mean the period beginning on the Commencement
Date and ending on the 365th day thereafter and each twelve-month
period thereafter, until the termination of this Agreement.
1.10 "County" shall mean Broward County, a body corporate and a political
subdivision of the State of Florida.
1.11 "Federal Aviation Administration" hereinafter sometimes referred to as
FAA, shall mean that agency of the United States Government created and
established under the Federal Aviation Act of 1958, or its successor.
1.12 "In-Service Bus Hour Charge" is set forth in Section 5.3, hereof.
1.13 "Reimbursable Expenses" shall mean all items which are specifically
approved, in writing, as reimbursable by the Aviation Department
pursuant to Section 5.5, hereof.
1.14 "RLI Documents" is defined in Section 15.19, hereof.
5
<PAGE> 6
1.15 "Parking Facilities" are designated on Exhibit A, attached hereto and
made a part hereof and may include public parking facilities and
employee parking facilities.
1.16 "Prior Agreement" shall mean that certain Employee Shuttle Bus Service
Agreement entered into between Limousines of South Florida, Inc. and
County, having an effective date of April 1, 1992, which agreement was
amended by that certain amendment dated August 6, 1996 to add Airport
public parking shuttle bus services and extended through June 30, 1997
by letter from the Director of the Broward County Purchasing Division
dated March 24, 1997.
1.17 "Shuttle Bus Routes" are designated on Exhibit A attached hereto and
made a part hereof.
1.18 "Shuttle Bus Services" shall mean the passenger and employee shuttle
bus services to be provided pursuant to this Agreement by Operator, to
and from the Parking Facilities and the Terminals, and such other
Shuttle Bus Services as may be required from time to time by the
Aviation Department.
ARTICLE II
TERM AND PROVISIONS PERTAINING TO INITIAL TERM
2.1 This Agreement shall be effective on July 1, 1997. The initial term of
this Agreement ("Initial Term") shall begin on July 1, 1997, and shall
extend until the "Commencement Date" (as hereinafter defined). During
the Initial Term of this Agreement, only the provisions of this Section
2.1 and the provisions of the Prior Agreement shall apply, and during
the Initial Term the parties shall be governed by and shall comply with
and abide by all of the terms, provisions and conditions of the Prior
Agreement, all of which terms, provisions and conditions are
incorporated into and made a part of this Agreement by reference.
During the Initial Term the Operator shall provide the services
described by the Prior Agreement and all payments by County to Operator
for such services shall be made at the rates and the intervals last in
effect under the Prior Agreement.
2.2 The Commencement Date for all of the terms and provisions of this
Agreement except those set forth in Section 2.1, above, and in the
Prior Agreement, shall be October 1, 1997, or such later date as is
established pursuant to an extension request as hereinafter set forth
("Commencement Date"). Upon the Commencement Date, all provisions of
the Prior Agreement which are incorporated herein by reference shall
cease to have any effect whatsoever and for all periods following the
Commencement Date the parties shall be governed only by the terms and
provisions of this Agreement.
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2.3 This Agreement shall terminate on the last day of the third Contract
Year following the Commencement Date, unless extended or earlier
terminated as provided herein ("Termination Date").
2.4 The Commencement Date of this Agreement may be extended by the County
for a period of not more than nine (9) calendar months if, due to no
fault of the Operator, the Operator is not able to obtain the vehicles
comprising the "Core Bus Fleet" (as hereinafter defined) from the
manufacturer by the Commencement Date. The Operator shall give the
Aviation Department at least forty-five (45) days advance notice of the
need for such an extension, which notice shall state the reasons for
the request. The Operator shall provide such back-up documentation as
the Aviation Department shall reasonably request. The Director of the
Aviation Department, on behalf of the County, shall grant or deny the
extension request within thirty (30) days following receipt of such
request. The total time of all extensions of the Commencement Date that
may be granted pursuant to the provisions hereof shall not exceed nine
(9) calendar months.
2.5 The Termination Date of this Agreement may be extended by the County
for not more that three (3) one-year periods (each such period being
called a "Renewal Term"). The County may exercise any of its options to
extend this Agreement by providing written notice to Operator of its
intention to extend the Agreement at least one hundred eighty (180)
days prior to the beginning of such Renewal Term. All terms and
conditions of this Agreement shall apply during any Renewal Term,
except that fees and charges for each Renewal Term shall be negotiated
by the parties prior to the beginning of such Renewal Term and such
fees and charges shall be set forth in an amendment to this Agreement
which shall be executed with the same formality and of equal dignity
with this Agreement. In the event the parties fail to reach agreement
as to the fees and charges for any Renewal Term, then the fees and
charges in effect during the immediately preceding Contract Year shall
apply to the Renewal Term, and either party shall have the right to
terminate this Agreement by not less than ninety (90) days written
notice to the other party. The Director of the Aviation Department is
authorized to act on behalf of the County and to give all notices
pursuant to Section 2.4 and this Section 2.5.
ARTICLE III
OBLIGATIONS OF THE OPERATOR
3.1 The Operator shall provide Shuttle Bus Services between the Terminals
and the Parking Facilities using the Shuttle Bus Routes. In addition,
Operator shall provide Shuttle Bus Services to such other Airport
facilities as may be directed in writing by the Aviation Department and
shall provide Shuttle Bus Services for any other purpose related to the
operational requirements or desires of the County, as may be directed
in writing by the Aviation Department.
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(a) From time to time Shuttle Bus Services may be required to be
provided outside the confines of the Airport. The County and
the Operator recognize that all the requirements of the
services contemplated herein cannot be determined with
precision at the time of the award of this contract. It is
understood that such matters as scheduling, the advertising
and announcing of available services, locations of shuttle
stops and equipment staging areas, designation of Parking
Facilities and Shuttle Bus Routes and other operational
matters will be determined and/or adjusted from time to time
as the needs of Airport dictate. It is the intent and
purpose of the parties that the services to be provided
hereunder shall be provided in such a manner as to most
efficiently meet the operational needs of the Airport.
(b) Shuttle Bus Services shall include, but not be limited to: (1)
transportation of employees and other persons and their
baggage between the Airport Terminals and the designated
employee parking facilities using Shuttle Bus Routes; (2)
transportation of airline passengers and other persons and
their baggage between the Terminals and the designated public
parking facilities using Shuttle Bus Routes; (3) on-demand
transportation of persons and their baggage between Airport
facilities and other sites as directed by the Aviation
Department (4) on-demand transportation of airline passengers
to conduct air side aircraft loading/unloading at sites remote
from the Terminal buildings as directed by the Aviation
Department; (5) on-demand transportation of persons and
baggage to or from such other facilities as may be directed in
writing by the Aviation Department, and (6) on-demand
transportation of persons and baggage for any other purpose
related to the operational requirements or desires of the
Aviation Department, as may be directed by the Aviation
Department. On-demand services may be required by verbal
instructions of the Aviation Department's representative,
which shall be followed by written confirmation.
(c) The Operator shall provide all personnel and supplies for the
provision of Shuttle Bus Services pursuant to this Agreement.
3.2 It is the intent of the parties that during the term of this Agreement,
the Operator shall be the sole provider of Core Bus Fleet services at
the Airport, as described in Section 4.2, hereof. It is understood and
agreed that the County may from time to time use other providers of
shuttle bus services for any services required by the County, other
than Core Bus Fleet services. Moreover, the provisions of this
Agreement shall not be deemed to prevent the County from permitting any
other method of ground transportation at the Airport, including but not
limited to, rental vehicles, private passenger vehicles not-for-hire,
charter or non-charter buses, airport or charter limousines, airline
crew transport, rental car pickup vans, or
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transportation of cruise ship passengers. The County further reserves
the right to authorize properly identified hotel and motel courtesy
vehicles, which are owned and operated by hotels or motels, to pick up
their customers upon prior arrangement.
3.3 The Operator has the right of ingress and egress over Airport public
roadways, including common use roadways, subject to all laws,
ordinances, rules and regulations which have been established or shall
be established in the future by the Airport, the County, the federal
government, or the State of Florida. Such rights of ingress and egress
shall apply to the Operator's employees, guests, patrons, invitees,
suppliers, and other authorized individuals. The County, while
providing parking facilities to the Operator's employees in common with
employees of Operators and other users of the Airport, retains the
right, at the sole election of the County, to impose a reasonable
charge for the privilege of utilizing these parking facilities.
3.4 The Operator agrees to comply with the federal non-discrimination
requirements set forth on Attachment 1, attached hereto and made a part
hereof. This Agreement may be subject to the requirements of the U.S.
Department of Transportation's regulations, 49 CFR, Part 23, Subpart F.
The Operator agrees that it will not discriminate against any business
owner because of the owner's race, creed, color, national origin, sex,
religion, sexual orientation, marital status, political affiliation,
age or physical or mental disability in connection with the award or
performance of any agreement covered by 49 CFR, Part 23, Subpart F. The
Operator agrees to include the above statements in any subsequent
agreements that it enters into for services under this Agreement and
shall cause those businesses to similarly include the statements in
further agreements.
(a) Operator hereby acknowledges and agrees to abide by the rules,
regulations and provisions promulgated by the Small
Disadvantaged Business Enterprise Affirmative Action Program
for the Aviation Department, Broward County, Florida, as
provided by the Board of County Commissioners, Broward County,
Florida, pursuant to 49 CFR, Part 23, of the Regulations of
the Office of the Secretary of the United States Department of
Transportation. Operator shall be required to comply with any
and all additional applicable provisions of 49 CFR, Part 23,
implementing Section 511(h) of the AAIA. Operator shall
submit such reports. as may be required by County in the form
specified by the County for the purpose of demonstrating
compliance with this subsection.
(b) The Operator shall submit an SDBE Affirmative Action Plan
relating to the utilization of qualified disadvantaged
business enterprises whether directly or indirectly involved
in this Agreement. Such plan should detail the
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Operators efforts to invite disadvantaged business enterprises
to contract with Operator for professional, technical, vendor,
and supplier services. These firms must be certified as
disadvantaged business enterprises by the Broward County
Division of Equal Employment & Small Business Opportunity.
(c) The Broward County Board of County Commissioners enacted an
ordinance establishing SDBEAAP and including goals in all
County procurement activity of $75,000 or more and in other
selected County procurement activity. This Agreement does have
assigned SDBE goals as stated: 10% minority business
enterprise participation (any group); and 10% women business
enterprise participation.
(d) County and Operator agree that prime and subcontract awards to
Small Disadvantaged Business Enterprises and Minority -
Majority Joint Ventures are crucial to the achievement of
County's SDBE participation goals. In an effort to assist
County in achieving its established goals for this contract,
Operator agrees to take affirmative actions to meet the
current SDBE participation goals established by County.
(e) Operator incorporates by Attachment II, attached hereto and
made a part hereof, the names, addresses, scope of work and
dollar value of SDBE participation on the Schedule of SDBE
Participation. Operator understands that each minority and/or
women-owned firm utilized to meet County's goals must be
certified by the Broward County Division of Equal Employment &
Small Business Opportunity. Any subcontractors of Operator
other than those set forth on Attachment II must receive the
prior written approval of the Aviation Department. To qualify
for SDBE participation, any subcontractors of Operator must be
certified by the Broward County Division of Equal Employment
& Small Business Opportunity.
(f) Operator understands that it is the responsibility of the
Aviation Department and the Broward County Division of Equal
Employment & Small Business Opportunity to monitor compliance
with the SDBEAAP. In that regard, Operator agrees to furnish
quarterly reports to both parties on the progress of SDBE
participation commencing with the end of the first quarter of
this Agreement.
(g) Operator shall not unlawfully discriminate against any person
in its operations and activities in its use or expenditure of
the funds or any portion of the funds provided by this
Agreement and shall affirmatively comply with all applicable
provisions of the Americans with Disabilities Act (ADA) in the
course of providing any services funded in whole or in part by
County,
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including Titles I and II of the ADA (regarding
nondiscrimination on the basis of disability), and all
applicable regulations, guidelines, and standards.
(h) Operator's decisions regarding the delivery of services under
this Agreement shall be made without regard to or
consideration of race, age, religion, color, gender, sexual
orientation, national origin, marital status, physical or
mental disability, political affiliation, or any other factor
which cannot be lawfully or appropriately used as a basis for
service delivery.
(i) Operator shall comply with Title I of the Americans with
Disabilities Act regarding nondiscrimination on the basis of
disability in employment and further shall not discriminate
against any employee or applicant for employment because of
race, age, religion, color, gender, sexual orientation,
national origin, marital status, political affiliation, or
physical or mental disability. In addition, Operator shall
take affirmative steps to ensure nondiscrimination in
employment against disabled persons. Such actions shall
include, but not be limited to, the following: employment,
upgrading, demotion, transfer, recruitment or recruitment
advertising, layoff, termination, rates of pay, other forms of
compensation, terms and conditions of employment, training
(including apprenticeship), and accessibility.
(j) Operator shall take affirmative action to ensure that
applicants are employed and employees are treated without
regard to race, age, religion, color, gender, sexual
orientation, national origin, marital status, political
affiliation, or physical or mental disability during
employment. Such actions shall include, but not be limited to,
the following: employment, upgrading, demotion, transfer,
recruitment or recruitment advertising, layoff, termination,
rates of pay, other forms of compensation, terms and
conditions of employment, training (including apprenticeship),
and accessibility.
3.5 All vehicles (including both new and used) that will provide services
under this Agreement must be accessible to disabled persons and must
comply with all applicable provisions of the Americans with
Disabilities Act of 1990, 47 CFR Section 38, and all other applicable
rules and regulations promulgated thereunder and all other federal,
state, County and local laws, rules, and regulations.
3.6 It is understood and agreed between the County and Operator that the
County maintains and operates the Fort Lauderdale-Hollywood
International Airport as a public facility, and that in order to render
proper airport services to the public, it is necessary that the
Operator provide and make available the services set forth herein, and
that failure of Operator to provide these services shall constitute a
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breach of this Agreement, entitling the County to immediately terminate
the same and shall entitle County to pursue any and all other remedies
provided under this Agreement or any remedies available to County at
law or in equity.
3.7 The County reserves the right to change, remove, add or delete Shuttle
Bus Routes or Parking Facilities for any reason whatsoever, including
without limitation, operational needs, other Airport purposes, or
during construction activities. Furthermore, any such change, removal,
addition, or deletion of any of the foregoing may be upon 24-hours
written notice to the Operator. In the event the Aviation Department
deems it desirable to change, remove, add or delete any Shuttle Bus
Routes or any Parking Facilities, then upon written notice by the
Aviation Department, Operator shall be required to cease operating from
such deleted areas and to operate from any charged or added areas,
without additional expense to County. In the event of any change,
removal, addition or deletion as provided hereunder, then an exhibit
reflecting such shall be executed by the Director of Aviation and
attached to this Agreement.
ARTICLE IV
EQUIPMENT REQUIREMENTS
4.1 The Operator will provide a "Core Bus Fleet" sufficient to provide the
normal day-to-day scheduled Shuttle Bus Services. This Core Bus Fleet
must be in the numbers set forth on Exhibit C, attached hereto and made
a part hereof, and must satisfy the specifications set forth on Exhibit
C, and must be available and ready for operation on the Commencement
Date. The Operator will also provide a "Supplemental Bus Fleet" to meet
excess demand, back-up, on-demand and special service needs, as
requested in advance by the Aviation Department. A distinction is made
in this Agreement between vehicles comprising the "Core Bus Fleet" and
vehicles comprising the "Supplemental Bus Fleet," as set forth below.
4.2 Core Bus Fleet, Operator shall be responsible for the purchase,
ownership and maintenance of the Core Bus Fleet. The Core Bus Fleet
must be vehicles that meet the specifications set forth on Exhibit C,
and at the Commencement Date of this Agreement must be comprised of the
number of vehicles specified on Exhibit C. The vehicles purchased for
the Core Bus Fleet must be used exclusively for this contract and shall
be eligible for the Capital Equipment Charge payable by the County each
calendar month during the term of this Agreement in accordance with
Article V of this Agreement The Operator shall notify the Aviation
Department if any vehicle within the Core Bus Fleet becomes
unserviceable (i.e., unsafe, poor performance or appearance) during the
term of this Agreement and, upon the written approval of the Aviation
Department, the Operator shall replace same. In addition, the Aviation
Department may direct that additional vehicles be added to the Core Bus
Fleet. Any such replacement or addition to the Core Bus Fleet that
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is made with the written approval of the Aviation Department shall be
reflected on an amended Exhibit C, as hereinafter provided, and shall
be eligible for the Capital Equipment Charge.
(a) The vehicles in the Core Bus Fleet shall be "new" when first
put into service at the Airport by the Operator. The term
"new" as used herein shall mean that such vehicles, when put
into service at the Airport, shall be either of the same model
year as the year such vehicle is first put into service at the
Airport or shall be not more than one (1) model year older
than the year it is first put into service at the Airport. In
order to determine the Capital Equipment Charge for used
vehicles in the Core Bus Fleet, the "Operator's investment"
(for purposes of Article V) in a used vehicle shall be
determined by a certified appraisal which shall be prepared by
a franchised dealer member of the Mid-size Bus Manufacturer's
Association, or other organization acceptable to the Aviation
Department.
(b) Vehicles will be added to (or will replace vehicles in) the
Core Bus Fleet as required in writing by the Aviation
Department in its sole discretion, and in such event the
Capital Equipment Charge shall be adjusted pursuant to Article
V. In the event vehicles are added to, or replaced in, the
Core Bus Fleet pursuant to these provisions, then such change
in the Core Bus Fleet shall be reflected In an amendment to
Exhibit C, which shall be signed by the Director of Aviation
and attached to this Agreement. In the event of any conflict
between the terms of Exhibit C and any other terms of this
Agreement, the terms of Exhibit C shall control. In the event
that due to any changes in the Core Bus Fleet, the parties
agree that an adjustment of the In-Service Bus Hour Charge is
appropriate, then such adjustment shall be made by an
amendment to this Agreement, which shall be executed with the
same formality and of equal dignity herewith.
(c) Provision for Future Addition of Specialty Vehicles to Core
Bus Fleet Inventory. It is anticipated that the Aviation
Department shall require the Operator to purchase additional
"Specialty Vehicle(s)" such as trams, airfield buses, or
similar vehicles, subsequent to the Commencement Date, which
will be added to the Core Bus Fleet for the purpose of
inter-garage passenger transportation, transportation to and
from remote aircraft passenger loading areas, or other
purposes determined by the Aviation Department to be necessary
for Airport operational requirements. Such purchase and
addition to the Core Bus Fleet shall only be pursuant to the
written requirements of the Aviation Department and upon such
purchase, an amendment to Exhibit C that includes a
description of the Specialty Vehicle(s) and the date of
addition to the Core Bus Fleet inventory shall be signed by
the Director of Aviation and attached to this Agreement. No
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vehicle in the Core Bus Fleet shall be deemed a Specialty
Vehicle, unless specifically identified as such on Exhibit C
(or an amendment thereto) which has been signed by the
Director of Aviation. In recognition of the unique procurement
and resale markets for Specialty Vehicle(s), it is agreed that
if any "qualified Specialty Vehicle(s)" (as hereinafter
described) are in the Core Bus Fleet inventory at the time of
termination of this Agreement (other than a termination due to
the default of Operator); then the County or its designee
shall purchase and the Operator shall sell such qualified
Specialty Vehicle(s) to the County or its designee. The
obligation to purchase herein contained shall only apply to
Specialty Vehicle(s) that meet the following criteria (such
vehicle(s) being called "qualified Specialty Vehicle(s)"): (i)
the vehicle must have been in the Core Bus Fleet inventory for
only a period of three (3) years or less at the time of
termination of this Agreement; (ii) the vehicle must be
identified as a Specialty Vehicle on Exhibit C (or amendment
thereto); and (iii) the vehicle must be in good repair and
operating condition and good appearance (which shall be
confirmed by inspection of the County or its designee). The
purchase price for each qualified Specialty Vehicle shall be
an amount limited to the "unamortized balance of the vehicle
investment" (as defined in Section 5.4 hereof). In the event
of any such purchase of qualified Specialty Vehicle(s) by the
County or its designee, the Operator shall deliver good,
marketable title to the purchased vehicles to the County or
its designee, free and clear of all liens, claims and
encumbrances whatsoever. In the event that any qualified
Specialty Vehicle is encumbered by a mortgage, then the
Operator must obtain a release from the mortgagee and the
purchase price shall be paid to the Operator upon receipt of
evidence that title certificates for the qualified Specialty
Vehicle(s) will be delivered to the County or its designee
free and clear of all liens, claims and encumbrances
whatsoever. Upon payment to the Operator of the amount
required hereunder, the Operator shall deliver the qualified
Specialty Vehicle(s) and the title certificates to the County
or its designee, free and clear of all liens, claims and
encumbrances, and shall execute the title certificates any and
all other documents required to effect such transfer. Nothing
herein contained shall be deemed to obligate County or its
designee to purchase any qualified Specialty Vehicle upon any
termination of this Agreement due to the default of the
Operator.
4.3 Supplemental Bus Fleet, From time to time, the Operator may be required
to provide additional shuttle bus vehicles and equipment acceptable to
the Aviation Department to meet periodic increases in demand or to
provide specific on-demand services. Such services shall be provided
upon the written request of the Aviation Department. The "Supplemental
Bus Fleet" shall consist of vehicles ranging in size from vans to full
size passenger coach buses. The Supplemental Bus Fleet may be owned,
leased or hired by Operator and such vehicles shall meet the minimum
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specifications set forth on Exhibit D, attached hereto and made a part
hereof. The Operator shall not use any vehicle that is unserviceable
(i.e., unsafe, poor performance or appearance) for Supplemental Bus
Fleet services. There shall be no Capital Equipment Charge payable with
respect to any vehicles in the Supplement Bus Fleet.
4.4 It is understood and agreed that if operations or vehicles must be
increased or expanded, the Aviation Department will consult with
Operator on the selection of type of equipment and decision as to
whether to include any such equipment in the Core Bus Fleet, or the
Supplemental Bus Fleet, and whether a lease of the equipment is
appropriate. In any case, the Aviation Department shall be entitled to
make the final decision as to the necessity for additional operations
or equipment. Should the Aviation Department decide that the Core Bus
Fleet must be increased, the Operator shall provide the necessary
capital, personnel and additional vehicles and other equipment to meet
such requirements, subject to the provisions of this Agreement. Each
vehicle added to the Core Bus Fleet shall be described on an amendment
to Exhibit C, which shall be executed by the Director of Aviation, and
shall be eligible for the Capital Equipment Charge in accordance with
Article 5 of this Agreement.
4.5 Leasing of Vehicles or other Equipment, During the term of this
Agreement certain shuttle requirements may be better served by leasing
vehicles or other equipment. Any such lease shall be subject to the
prior written approval of the Aviation Department. In the event that
the Aviation Department shall determine that any such lease is not in
the best interest of the Airport or the County, for any reason
whatsoever, then such lease shall not be entered into by the Operator.
Rental payments under leases that have been approved in writing by the
Aviation Department shall be a Reimbursable Expense for the Operator
pursuant to Section 5.5(a)(3) hereof, and shall not be included in the
Capital Equipment Charge or any other charge. Maintenance and repairs
for any leased equipment and vehicles included in the Core Bus Fleet
shall not be a Reimbursable Expense, it being recognized by the parties
that all such costs shall be included in the In-Service Bus Hour
Charge.
ARTICLE V
FEES, CHARGES, AND ACCOUNTABILITY
5.1 The County will pay the Operator the fees and charges during the term
of this Agreement that are set forth in the remaining Sections of this
Article V. It is expressly understood and agreed that all costs and
expenses of the Operator of whatever kind or nature and whether imposed
directly upon the Operator under the terms and provisions hereof or in
any other manner whatsoever because of the requirements of the
operation of the Airport Shuttle Bus Service or otherwise under
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this Agreement shall be borne by the Operator without any compensation
or reimbursement from the County, except as specifically contained in
this Agreement.
(a) Except as specifically set forth herein, the entire and
complete costs and expenses of the Operator's services and
operations hereunder shall be borne solely by the Operator.
Under no circumstances shall the County be liable to any third
party (including the Operator's employees or any permitted
subcontractors) for any costs and expenses incurred by the
Operator, and under no circumstances shall the County be
liable to the Operator for the same, except as specifically
contained in this Agreement.
(b) All payment and performance obligations of County for future
fiscal year periods shall be subject to the availability of
funds. Broward County has presently budgeted funds for this
Agreement through SEPTEMBER 30, 1997. Thus, the term of this
Agreement shall continue into or through subsequent fiscal
years only if funds for payment of the Operator are budgeted
and made available by the Broward County Board of County
Commissioners. Termination due to failure to budget and make
funds available shall not be deemed a breach of this
Agreement.
5.2 Annual Management Fee
(a) An Annual Management Fee, which will be computed and payable
monthly in arrears, shall be payable by the County to the
Operator in the amount set forth below for each Contract Year:
(i) For the first Contract Year, the Annual Management
Fee shall be $396,829.00.
(ii) For the second Contract Year, the Annual Management
Fee shall be $396,829.00.
(iii) For the third Contract Year, the Annual Management
Fee shall be $396,829.00.
(b) The Operator acknowledges and agrees that the annual
Management Fee covers and includes for each Contract Year: (i)
all salary and benefits of the on-site management team of the
Operator, (ii) all profit of the Operator, and (iii) all
amounts for overhead and administration, including without
limitation, business insurance, finance and interest expenses,
supervisory, legal, and other overhead costs. The Operator
shall not be entitled to payment by the County of any amounts
on account of any of the foregoing items, except payment of
the monthly installments of the Annual Management Fee.
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5.3 In-Service Bus Hour Charge
(a) An "In-Service Bus Hour Charge" for each hour any vehicle in
the Core Bus Fleet is used to provide services under this
Agreement shall be payable by the County to the Operator in
the amount set forth below during each Contract Year:
First Contract Year: $16.35, for each In-Service Bus Hour
Second Contract Year: $16.98, for each In-Service Bus Hour
Third Contract Year: $16.98, for each In-Service Bus Hour
(b) The In-Service Bus Hour Charge will be computed and payable in
arrears. Concessionaire shall submit invoices on the 1st and
the 15th day of each calendar month. An "In-Service Bus Hour"
is defined as a one hour time period during which a vehicle is
providing authorized services under this Agreement.
(c) The Operator acknowledges and agrees that the In-Service Bus
Hour Charge covers and includes all operating costs for each
vehicle, including without limitation, payroll costs, fuel,
maintenance, vehicle insurance and repairs. The Operator shall
not be entitled to payment by the County of any amounts on
account of any of the foregoing items, except payment of the
applicable In-Service Bus Hour charge.
5.4 Capital Equipment Charge (Core Bus Fleet)
(a) The County agrees to pay to the Operator a charge ("Capital
Equipment Charge") each calendar month in arrears during the
term of the Agreement based on the "Operator's investment" (as
hereinafter defined) in each vehicle in the Core Bus Fleet
inventory during such month.
(b) The Capital Equipment Charge for each vehicle shall be
computed as follows: (i) the Operator's investment in each
vehicle included in the Core Bus Fleet shall be multiplied by
the fraction 1/72; and (ii) there shall be added to the
product obtained in (i) preceding, monthly interest computed
at the rate of one-twelfth of the "prime rate" (as hereinafter
defined) of interest on the "unamortized balance of the
vehicle investment" (as hereinafter defined).
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(1) The "prime rate" shall be as published in the Wall
Street Journal on the date the Capital Equipment
Charge is set for each vehicle. The "prime rate" set
for each vehicle shall remain the same throughout the
term of this Agreement and shall not fluctuate.
(2) The "unamortized balance of the vehicle investment"
shall be determined by multiplying (i) the Operator's
investment in the vehicle by (ii) a fraction, the
numerator of which shall be determined by subtracting
from 72 the number of whole calendar months
(subsequent to the Commencement Date) that the
vehicle has been in inventory, as of the first day of
the month for which the charge is being determined
AND the denominator of which shall be 72.
(3) The "Operator's investment" in a vehicle shall be the
actual purchase price paid by the Operator for such
vehicle, plus any sales taxes paid, but shall only
include costs incurred by Operator to a third party,
which are substantiated as such by a report prepared
by an independent Certified Public Accountant ("CPA
Report"), and shall not include any finance or
interest expenses, or administration, supervisory, or
overhead or internal costs of the Operator or any
payments to any affiliate of Operator. In order to
determine the Capital Equipment Charge for used
vehicles in the Core Bus Fleet, the "Operator's
investment" in a used vehicle shall be determined by
a certified appraisal which shall be prepared by a
franchised dealer member of the Mid-size Bus
Manufacturer's Association, or other organization
acceptable to the Aviation Department ("Certified
Appraisal"). Copies of the CPA Report and the
Certified Appraisals for all vehicles in the Core Bus
Fleet shall be provided to the Aviation Department,
together with all other documentation reasonably
requested by the Aviation Department.
(c) In the event that any vehicle, at any time during the term of
this Agreement has been lost or destroyed or removed from the
active vehicle inventory in the Core Bus Fleet, then there
shall be deducted from the Operator's investment in the Core
Bus Fleet an amount equal to the unamortized balance of the
vehicle investment for the vehicle that is lost, destroyed or
being removed from the Core Bus Fleet. The Aviation Department
shall be given not less than thirty (30) days notice of any
vehicle that is lost or destroyed. Any other removal of a
vehicle from the Core Bus Fleet inventory shall only occur
with the written consent of the Aviation Department.
(d) In the event that any vehicle is added to the Core Bus Fleet
inventory [either as a replacement vehicle for one lost,
destroyed or removed pursuant to (c), above, or as an
additional vehicle pursuant to the written request of the
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Aviation Department] then there shall be added to the
Operator's investment in the Core Bus Fleet an amount equal to
the lesser of: (i) the Operator's investment in the
replacement or additional vehicle that has been approved in
writing by the Aviation Department; or (ii) the unamortized
balance of the vehicle investment pertaining to the vehicle
(if any) that was removed from the Core Bus Fleet inventory.
(e) Notwithstanding any other provision of this Agreement, it is
hereby understood that the Operator may place a mortgage,
lien, conditional bill of sale or other encumbrance or
security interest (hereinafter called "the mortgage") on
individual vehicles in the Core Bus Fleet, provided, however,
that the mortgage with respect to each vehicle: (i) does not
secure an indebtedness in excess of ninety percent (90%) of
the purchase price of the encumbered vehicle; (ii) shall
contain provisions calling for payment of the indebtedness and
interest in successive monthly installments; (iii) shall
receive the prior written approval of the Aviation Department,
and (iv) shall contain the following provisions to be binding
upon the Operator and the mortgagee.
(1) In the event of any default under the mortgage, the
mortgagee shall give County written notice of such
default at the same time as such notice is given to
the Operator, together with a statement of any and
all sums which would at that time be due under the
mortgage, designating where and to whom payment shall
be made. Such written notice shall be given at the
address of County set forth in the notice provision
of this Agreement. The County shall have the right,
but not the obligation, to cure any such default,
with the County's period to cure such default being
equal to thirty (30) days beginning on the expiration
of any cure period provided to the Operator. Operator
hereby consents to all such payments made by County
to mortgagee and Operator further agrees that the
amount of all such payments made by County to
mortgagee shall be a set off and deducted from all
amounts payable by County to Operator, pursuant to
Article V or any other provision of this Agreement.
(2) In the event of the termination of this Agreement by
the County and in the event that the Core Bus Fleet
or any vehicle thereof is then encumbered by the
mortgage, the Operator shall have the right to pay
the mortgagee the outstanding indebtedness then due
under the mortgage together with interest due as of
such date, without penalty, and to secure a release
of the Core Bus Fleet or any vehicle thereof from the
mortgage, and to have such mortgage canceled and
discharged. In the event the Operator does not pay
the mortgagee as aforesaid, the County or its
designee shall have the right but not the obligation
to itself pay
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directly to the mortgagee the outstanding
indebtedness then due under the mortgage together
with interest due as of said date, without penalty,
and to secure the release of the Core Bus Fleet or
any vehicle thereof from the mortgage and to have
such mortgage canceled and discharged. The Operator
and the mortgagee shall execute and deliver to the
County or its designee upon the payment by the County
to the mortgagee as aforesaid, any and all
instruments which may be necessary or desirable so as
to release the vehicle(s) from the mortgage and from
any and all rights of the mortgagee thereto, and to
convey good, marketable title in the vehicle(s), free
of all liens, claims and encumbrances, to the County
or its designee.
(3) Upon execution of the mortgage, the mortgagee shall
give the County a true copy thereof. No amendments
shall be made to the mortgage without the prior
written consent of the Aviation Department and a
true copy of any amendments shall be provided to the
Aviation Department. The provisions of the mortgage
and any amendments shall not be in violation of the
foregoing provisions.
(f) The Operator hereby agrees that it shall promptly make the
payments required under any mortgage and shall not be in
default under any term or provision thereof. The Operator
further agrees that it shall give prompt written notice to the
Aviation Department in the event it is in default in making
any payments under any mortgage and in the event it receives
any notice or communication from the mortgagee indicating
that the Operator is in default under any terms or provisions
of any Mortgage.
5.5 Reimbursable Expenses
(a) Reimbursable Expenses shall include only the following:
(1) The direct hourly expense associated with providing
Supplemental Bus Fleet services requested in writing
by the Aviation Department in accordance with Section
4.3 of this Agreement. The direct hourly expense for
Supplemental Bus Fleet services shall be limited to
the rates specified on Exhibit D for the vehicles
identified thereon. For all other Supplemental Bus
Fleet services, the direct hourly expense for any
such vehicle shall be limited to the actual
out-of-pocket expenses of the Operator, with no
profit, overhead or other administrative expenses.
(2) The out-of-pocket cost associated with any service
other than Core Bus Fleet or Supplemental Bus Fleet,
that is specifically approved in advance in writing,
by the Aviation Department that is necessary to
fulfill an
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Aviation Department requirement during the term of
this Agreement. The County shall reimburse only the
actual out-of-pocket expenses of the Operator, with
no profit, overhead or other administrative expenses.
(3) Lease payments for vehicles and equipment,
specifically approved in advance, in writing by the
Aviation Department, that is necessary to fulfill an
Aviation Department requirement during the term of
this Agreement, other than Core Bus Fleet or
Supplemental Bus Fleet. The County shall reimburse
only the actual out-of-pocket expenses of the
Operator, with no profit, overhead or other
administrative expenses.
(4) Travel expenses pursuant to Section 6.17 of this
Agreement, provided such expenses must be approved in
advance by the Aviation Department. Such travel
expenses shall include identifiable per diem, meals
and lodging, taxi fares and miscellaneous
travel-connected expenses subject to the limitations
of Section 112.061, Florida Statutes. Meals for class
C travel inside Broward County will not be
reimbursed. Lodging will be reimbursed only for room
rates equivalent to Holiday Inn, Howard Johnson or
Ramada Inn. Mileage will not be reimbursed for any
travel within the tri-county area of Dade, Broward
and Palm Beach County.
(b) The County shall pay approved Reimbursable Expenses to the
Operator, monthly in arrears.
5.6 Monthly Report, Payment. On or before the fifteenth (15th) day of each
month, the Operator shall submit to the County a monthly report,
certified by an officer of the Operator on a form approved in writing
by the Aviation Department. This monthly report shall set forth the
monthly installment of the Annual Management Fee, the monthly
In-Service Bus Hour Charge, the monthly Capital Equipment Charge, and
any Reimbursable Expenses, by category, for the previous month.
(a) The monthly report shall contain documentation of the
In-Service Bus Hour Charge, Capital Equipment Charge and all
Reimbursable Expenses, including activity reports, vehicle
inventory, and copies of invoices. If requested by the County
at any time, the Operator shall provide original invoices
and/or front and back of canceled checks, and all other
documentation the Aviation Department shall reasonably
request. THE MONTHLY REPORT SHALL ALSO INDICATE THE CUMULATIVE
AMOUNT OF SDBE PARTICIPATION TO DATE.
(b) The monthly report shall include a statement from the Operator
indicating, on a monthly basis: (i) the actual number of
vehicle hours by category of
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vehicle, and whether it is in the Core Bus Fleet or the
Supplemental Bus Fleet, and (ii) the number of passengers by
route. The monthly report shall be retrievable on a data base
in a format that is compatible with Aviation Department
software, and if requested by the Aviation Department, the
Operator will provide both a hard copy report and a computer
disk containing the data on a monthly basis.
(c) Upon acceptance by the Aviation Department of the monthly
report, the County will process and pay the invoices within
thirty (30) days. If, during the process, certain expenses or
charges are not approved for payment, such expenses or charges
shall be deducted from the invoice and the approved portion of
the invoice shall be processed for payment.
5.7 The Operator shall keep separate books and records for its Airport
operations. Such books and records shall be kept and maintained in
accordance with generally accepted accounting practices. Such books and
records shall be kept and maintained during the "Retention Period" (as
hereinafter defined). The "Retention Period" is defined as the greater
of: (i) the required retention period of the Florida Public Records Act
(Chapter 119, Fla. Stat), if applicable, or (ii) the period of time
covering the term of this Agreement and any extensions thereof and for
a period of three (3) years after the expiration of this Agreement or
(ii) if any audit has been initiated and audit findings have not been
resolved at the end of the three years, the books and records shall be
retained until resolution of the audit findings. If the Florida Public
Records Act is determined by County to be applicable to Operator's
records, Operator shall comply with all requirements thereof, however,
no confidentiality or non-disclosure requirement of either federal or
state law shall be violated by Operator. Such books and records shall
be true, full and accurate and shall include without limitation,
payroll records, worker's compensation payment records, liability
insurance records, and books of account (Including records of original
entry and daily forms) recording, connected with, or related to, the
operations of the Operator and any approved subcontractors. Such books
and records shall include but not be limited to, all matters relating
to the fees and charges payable by the County to the Operator under
this Agreement, and such additional information as the County may, from
time to time require. Such records shall include a separate recording
of the actual number of service hours by individual vehicle including
the number of passengers thereon and whether such vehicle is in the
Core Bus Fleet or the Supplemental Bus Fleet.
5.8 In performing on-demand services, the Operator will keep a separate
record of the actual number of vehicle hours (by type) in providing the
service. The Operator will also record the number of passengers thereon
and keep separate records on the number of trips and passengers thereon
of any approved subcontractor providing services hereunder. The
Operator shall, at its own expense, install, maintain and
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use such equipment and devices for recording the hours of service as
shall be appropriate to its business and necessary or desirable to keep
accurate records of the same and as the Aviation Department may from
time to time require. The Operator shall at all reasonable times allow
inspection by the agents and employees of the County of all such
equipment or devices.
5.9 The County shall have the right through its representatives, and at all
reasonable times during the Retention Period, to inspect and audit any
and all books and records relating to this Agreement and to determine
the correctness of the fees and charges paid by the County to the
Operator for any annual period which ended no more than three (3) years
prior to the date of commencement of such audit. The County shall have
the right to audit the books and records of all approved Subcontractors
and of affiliated and related parties of the Operator, if during the
review of Operator's books and records it is determined that there are
affiliated or related party financial transactions. Said books and
records shall be made available at the Airport premises or at the
corporate headquarters of the entity, as may be directed by the County.
In the event that any such audit reflects that the total fees and
charges actually paid by County during any annual period shall exceed
the fees and charges due and owing for such period, then a refund will
be made by the Operator to the County in the amount of such difference,
plus interest thereon from the date of overpayment at the rate of
eighteen percent (18%) per annum. If, as a result of any audit, it is
established that the Operator has overstated the amount of fees and
charges payable by the County by one (1%) percent or more during, the
annual reporting period covered by the audit, the entire expense of
said audit shall be borne by the Operator.
ARTICLE VI
OPERATIONAL REQUIREMENTS AND STANDARDS
6.1 The hours of business during which Operator is to conduct its
operations shall be twenty-four (24) hours a day, seven (7) days a
week, including holidays. The Operator, shall provide adequate
personnel at all times and this requirement shall be reflected in its
management and operation plan. The Operator shall provide additional or
reduced staffing at such times as may be determined by the Aviation
Department.
6.2 Operator shall submit a management and operation plan to the Aviation
Department for approval prior to the Commencement Date of this
Agreement. The Operator agrees to update the plan on an annual basis,
if so directed by the Aviation Department, and submit such updated plan
for approval by the Aviation Department. The burden of proving
compliance with the management and operation plan rests with the
Operator. The Aviation Department must approve all revisions and/or
updates to said plan in writing, and the Operator agrees to
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demonstrate compliance with the rules, regulations, and operating
procedures contained within the management and operation plan. A
failure to comply with the management and operation plan that has been
approved by the Aviation Department shall be a default under this
Agreement, entitling the County to exercise any and all remedies
available hereunder. In the event of any conflict between the terms of
the management and operation plan and any terms of this Agreement, the
terms of this Agreement shall control.
6.3 Operator agrees to maintain all vehicles in first class appearance and
mechanical condition throughout the duration of this Agreement.
Vehicles will be swept at the beginning of each shift and at any time
during each shift as necessary. In addition, all debris, trash, and
other items will be removed from the interior of the vehicle after each
round trip. Vehicles will be washed and cleaned (interior and exterior)
at least twice per week and at such other times as necessary.
6.4 Operator agrees to provide, at its expense, an adequate number of
suitable and operational radios to perform all services required by
this Agreement. Allowance should be made for downtime caused by routine
maintenance, recharging of batteries, equipment failures, or for any
other reasons.
6.5 Operator shall provide all service and maintenance for vehicles,
including but not limited to, gas, oil, repairs. Fueling and
maintenance of vehicles shall be done while vehicles are not required
to be in service. The total number of vehicles required to be
operational during a shift will not be decreased for any period of time
to allow for fueling or maintenance of vehicles.
6.6 Vehicles must be equipped with a fully functioning air-conditioning
system and proper safety equipment. All vehicles shall be equipped with
signs and numbers on the front, rear and right side, and/or any other
location the Aviation Department deems necessary, with the words
designated by the Aviation Department.
6.7 Operator agrees to maintain minimum headway times and maximum
frequency. At no time will vehicles exceed the headway times set forth
on Exhibit B, provided that by verbal notice to the Operator from the
Aviation Department (which verbal notice shall be followed by written
confirmation) such headway times may be increased or decreased to meet
the operational needs of the Aviation Department. All such changed
headway times shall be attached to this Agreement, as a supplement to
Exhibit B, which shall be signed by the Aviation Director. Vehicles
should be evenly spaced throughout the system. One additional
operational vehicle should be available at all times to be placed in
service in an emergency or during periods of high demand. It is the
intent and purpose of this agreement that the Operator shall conduct
the services required hereunder in such a manner as to provide for the
cost efficient movement of passengers and employees using the Airport.
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6.8 The Operator shall furnish, at its own cost and expense, managers,
supervisors, drivers and such other employees as may be necessary for
the proper conduct and operation of the services required hereunder.
The on-site management team shall consist of a full time Manager of
Shuttle Bus Services, and a least five (5) persons who are shift
supervisory personnel. All such employees shall possess all necessary
permits, licenses, approvals, and certificates required by any
applicable law, ordinance, rule or regulation of Broward County, the
State of Florida or the United States. The Manager of Shuttle Bus
Services may not be changed without the prior written approval of the
Aviation Department.
6.9 The Operator shall establish and implement personnel policies that will
provide, as of the Commencement Date of this Agreement, that bus
drivers who have been employed by the previous shuttle bus operator
shall be given a preference in hiring as employees of the Operator. All
employees of the Operator shall wear legible name tags while on duty.
6.10 The Operator's representatives, agents, managers, supervisors, drivers,
and employees shall maintain the highest standards of service and shall
be courteous, polite and inoffensive in their conduct and demeanor.
Upon objection from the Aviation Department concerning the conduct,
demeanor or appearance of such persons, the Operator shall forthwith
take all steps necessary to remove the cause of the objection and
impose such disciplinary actions against any employee as may be
required by company policy.
6.11 Operator shall assure that all management employees and all other
employees, including drivers, that have direct contact with the public
have at least eight (8) hours of customer service training annually
(including participation in the Airport Ambassador Program). The
Aviation Department shall be given notice of company customer service
training at least two (2) weeks in advance of such training. The
Aviation Department reserves the right to send a representative(s) to
observe such training.
6.12 The Operator's employees, who are in contact with the public, must wear
distinctive uniforms while on duty identifying them as the Operator's
employees, and the style, color, and insignia of such uniforms and the
employee's nameplate must have been approved in writing in advance by
the Aviation Department.
6.13 All employees of the Operator parking their own personal vehicles on
Airport property shall park such vehicles in the employee parking areas
designated by the Aviation Department and shall be subject to the fees
promulgated for such lot.
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6.14 The Operator shall assure that all drivers of any vehicles are licensed
to drive the type of vehicles assigned to them and have at least eight
(8) hours of driver safety training annually. The Aviation Department
shall be given notice of such training at least two (2) weeks in
advance of such training. The Aviation Department reserves the right to
send a representative(s) to observe such training.
6.15 The Operator shall select and appoint a full time Manager of Shuttle
Bus Services, who shall be in complete charge of Operator's operations,
and whose sole and full time duties shall be as Manager of Shuttle Bus
Services at the Airport. Such person shall be a highly qualified and
experienced manager, with at least three (3) years of experience in
managing a ground transportation operation of transporting passengers
and employees.
(a) The Manager of Shuttle Bus Services shall be vested with full
power and authority to take all necessary actions where a
prompt response is required to maintain or restore Shuttle Bus
Services, prior to or without obtaining company headquarters'
approval of such actions. In addition, the Manager of Shuttle
Bus Services shall be responsible to respond in writing to
customer complaints regarding Shuttle Bus Services and report
such complaints and their resolution to the Aviation
Department.
(b) The Manager of Shuttle Bus Services shall ordinarily be
available during regular business hours, and at times during
the Manager's absence an equally authorized and qualified
supervisor shall be in charge and available. Operator shall
provide to the Aviation Department the daily schedule for the
manager and all other supervisory personnel, and shall notify
the Aviation Department of any changes to that schedule. In
addition, when on duty, the manager and all supervisory
personnel must be available to the Aviation Department by
radio contact, at all times. Said radios shall be purchased
and/or leased at the Operator's expense.
(c) Management personnel shall wear proper business attire.
(d) Prior to the Commencement Date, Operator shall submit to the
Aviation Department, for approval prior to his/her assignment,
a complete resume of the person whom the Operator proposes to
designate as the initial Manager of Shuttle Bus Services. In
the event that the Operator intends to replace the Manager of
Shuttle Bus Services for any reason, the Operator shall notify
the Aviation Department in writing of its intent. Operator
shall also submit to the Aviation Department for approval
prior to his/her assignment, a complete
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resume of the person whom Operator proposes to next designate
as Manager of Shuttle Bus Services. The Aviation Department
reserves the right to disapprove Operator's designee for the
position of Manager of Shuttle Bus Services.
(e) In the event that the Aviation Department determines that the
incumbent Manager of Shuttle Bus Services has failed to manage
properly the Operator's operation in a professional, competent
manner at all times or to fully perform his/her duties and
obligations as Operator's representative hereunder, then in
addition to all other rights under this Agreement, the
Aviation Department shall have the right to require the
Operator to replace such manager. The Aviation Department
shall notify the Operator in writing of its demand for
replacement and shall allow the Operator thirty (30) days from
the date of such notice to effect replacement.
6.16 Operator shall devise and implement an orientation program for all new
employees to include customer service training and orientation to
company policies and procedures and provide and document appropriate
training to ensure that Operator's employees at the Airport have a good
understanding of the location of various facilities, businesses and
agencies at the Airport and in the community that such employees may
provide adequate public information. This training must be up-dated on
a regular and on-going basis.
6.17 In recognition that Operator possesses specialized knowledge in the
management and operation of Shuttle Bus Services, the Aviation
Department may at any time require Operator to provide certain
information and input with respect to the operation of the Airports
Shuttle Bus Services. In such event, Operator agrees to fully cooperate
with such inquiries and to be available to the Aviation Department,
including the attending of meetings. Any travel expenses and other
related costs resulting from Operator's compliance with this provision,
subject to the provisions of Section 5.5, shall be Reimbursable
Expenses.
ARTICLE VII
COMPLAINTS
7.1 Operator is obligated to respond to complaints regarding the quality of
service, whether patrons' complaints or on the Aviation Department's
own initiative or otherwise. Such response shall be provided by the
Operator in writing within five (5) working days. The Operator shall
copy the Aviation Department on all correspondence. At the request of
the Aviation Department, Operator shall meet with the Aviation
Department to review any complaints or concerns and to promptly
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correct any deficiencies. The Aviation Department's determination as to
quality of operation or services shall be conclusive, and curative
measures shall be implemented by Operator as expeditiously as possible.
7.2 The Aviation Department shall have the right to inspect the vehicles
during the Operator's regular hours or at any time in case of emergency
to determine whether the Operator has complied with and is complying
with the terms and conditions of this Agreement. The Aviation
Department may, at its discretion, require the Operator to effect
repairs at Operator's expense.
7.3 Operator shall make no improvements, additions, alterations or
modifications to any portion of the Airport premises, including without
limitation, the Shuttle Bus Routes and the Parking Facilities.
Article VIII
COMPLIANCE
8.1 The Operator, its officers, agents, servants, employees, contractors,
licensees and any other person who the Operator controls or has the
right to control shall comply with all present and future laws,
ordinances, orders, directives, rules, and regulations of the United
States of America, the State of Florida, Broward County and all other
local governmental authorities with jurisdiction and their respective
agencies, departments, authorities and commissions which may affect the
Operator or its operations in connection with this Agreement, including
without limitation, the Americans with Disabilities Act, as amended,
and all rules, regulations, and directives thereunder.
8.2 Operator shall pay, on or before their respective due dates, to the
appropriate collecting authority, all federal, state, County and local
taxes and fees, which are now or may hereafter be levied upon the
premises, or upon Operator, or upon the business conducted by the
Operator, or upon any of Operator's property used in connection
therewith, or upon any fees or other amounts payable hereunder, and
shall maintain in current status all federal, state, County and local
licenses and permits required for the operation of the business
conducted by Operator.
8.3 Operator and its approved subcontractors shall pay wages that are not
less than the minimum wages required by federal and state statutes and
County and local ordinances, to persons employed in its operations
hereunder.
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Article IX
ASSIGNMENT
9.1 Operator shall not sell, transfer, assign, pledge, or otherwise
encumber this Agreement, or any portion thereof, or any of its rights
and privileges hereunder, or contract for the performance of any of the
services to be provided by it under this Agreement (collectively, a
"Disposition"), or permit any such Disposition to occur by operation of
law, without the County's prior written consent, which consent may be
granted or withheld by the County in the exercise of its sole
discretion or conditioned upon such additional terms and conditions as
County, in its sole discretion, may seek to impose, including but not
limited to: (i) an assessment of whether or not any proposed assignee
or other party meets the standards and qualifications as proposed by
Operator during the initial selection; (ii) a requirement that any
proposed assignee or other party have a net worth in excess of the net
worth of the Operator, and/or (iii) a requirement that the Operator
not be in default under any of the terms, covenants, and conditions
herein contained. In the event of any Disposition, the Operator shall
not be released of any liability hereunder. In the event of any
Disposition between Operator and an affiliate of Operator, the County
shall require the execution by Operator of a Payment and Performance
Guaranty, in form and substance satisfactory to County, whereby
Operator guarantees the performance of all obligations hereunder and
the payment of all sums due hereunder. This Agreement does not
constitute a lease of any premises, and Operator shall have no right
whatsoever to lease or sublease any areas described in this Agreement.
9.2 For purposes of this Article IX a Disposition shall include any
transfer of this Agreement by merger, consolidation or liquidation or
by operation of law, or if Operator is a corporation (except if
Operator is a corporation whose stock is publicly traded) any change in
ownership of or power to vote a majority of the outstanding voting
stock of Operator from the owners of such stock or those controlling
the power to vote such stock on the date of this Agreement, or if
Operator is a limited or a general partnership or joint venture, any
transfer of an interest in the partnership or joint venture which
results in a change in control of such partnership or joint venture
from those controlling such partnership or joint venture on the date of
this Agreement. Notwithstanding the foregoing, a transfer of stock of
the Operator among its current stockholders or among its current
stockholders and their immediate families, any transfer of stock
resulting from the death of a stockholder, a transfer of partnership or
joint venture interests in Operator among existing partners or among
existing partners or joint venturers and their immediate families, or
any transfer of such an interest resulting from the death of a partner
or joint venturer, shall not be deemed a Disposition for purposes of
this Article.
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9.3 In the event that any Disposition shall occur without the prior written
consent of the County, then in addition to all other available
remedies, the County shall be entitled to immediately terminate this
Agreement. Any written consent required hereunder shall not be
effective unless evidenced by a document of equal dignity with and
executed with the same formality as this Agreement.
Article X
INSURANCE AND INDEMNIFICATION: PERFORMANCE BOND
10.1 Operator shall at all times hereafter indemnify, hold harmless and, at
County Attorney's option, defend or pay for an attorney selected by
County Attorney to defend County, its officers, agents, servants, and
employees against any and all claims, losses, liabilities, and
expenditures of any kind, including attorney fees, court costs, and
expenses, caused by negligent act or omission of Operator, its
employees, agents, servants, or officers, or accruing, resulting from,
or related to the subject matter of this Agreement including, without
limitation, any and all claims, demands, or causes of action of any
nature whatsoever resulting from injuries or damages sustained by any
person or property. The provisions of this section shall survive the
expiration or earlier termination of this Agreement To the extent
considered necessary by the Aviation Department and the County
Attorney, any sums due the Operator under this Agreement may be
retained by County until all of County's claims for indemnification
pursuant to this Agreement have been settled or otherwise resolved; and
any amount withheld shall not be subject to payment of interest by the
County. The provisions of this Section 10.1 shall survive the
expiration or earlier termination of this Agreement.
10.2 Liability Insurance. In order to insure the indemnification obligation
contained above, Operator shall, as a minimum, provide, pay for, and
maintain in force at all times during the term of this Agreement
(unless otherwise provided), the insurance coverages set forth below,
in accordance with the terms and conditions required hereby. Each
insurance policy shall clearly identify the foregoing indemnification
as insured.
(a) Such policy or policies shall be without any deductible amount
and shall be issued by United States Treasury approved
companies authorized to do business in the state of Florida,
and having agents upon whom service of process may be made in
Broward County, Florida.
(b) Comprehensive General Liability Insurance. A Comprehensive
General Liability Insurance Policy shall be provided which
shall contain minimum limits of Five Hundred Thousand Dollars
($500,000.00) per occurrence combined single limit for bodily
injury liability and property damage liability. Coverage must
be afforded on a form no more restrictive than the latest
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edition of the Comprehensive General Liability Policy, without
restrictive endorsements, as filed by the Insurance Services
Office and must include: Premises and/or operations,
Independent contractors, Products and/or Completed Operations
for contracts, Hazard, Broad Form Contractual Coverage
applicable to this specific Contract, including any hold
harmless and/or indemnification agreement. Personal Injury
Coverage with Employee and Contractual Exclusions removed,
with minimum limits of coverage equal to those required for
Bodily Injury Liability and Property Damage Liability.
(c) Business Automobile Liability. Business Automobile Liability
with minimum limits of Five Hundred Thousand Dollars
($500,000.00) per occurrence, combined single limit for Bodily
Injury Liability and Property Damage Liability. Coverage must
be afforded on a form no more restrictive than the latest
edition of the Business Automobile Liability policy, without
restrictive endorsements, as filed by the Insurance Services
Office, and must include: Owned Vehicles, Hired and Non-Owned
Vehicles. Such insurance shall also provide that in the event
any vehicle is operated on any "airside" area of the Airport,
coverage shall be increased to One Million Dollars
($1,000,000.00) per occurrence, combined single limit, bodily
injury and property damage liability.
(d) Workers' Compensation Insurance. Workers' Compensation
insurance to apply for all employees in compliance with the
"Workers' Compensation Law" of the State of Florida and all
applicable federal laws. In addition, the policy(ies) must
include: Employers' Liability with a limit of Five Hundred
Thousand Dollars ($500,000.00) each accident.
10.3 Operator shall furnish to the Contract Administrator Certificates of
Insurance or endorsements evidencing the insurance coverages specified
by this Article prior to beginning performance of work under this
Agreement. The required Certificates of Insurance shall name the types
of policies provided, refer specifically to this Agreement, and state
that such insurance is as required by this Agreement.
10.4 Coverage is not to cease and is to remain in force (subject to
cancellation notice) until all performance required of Operator is
completed. All policies must be endorsed to provide County with at
least thirty (30) days' notice of cancellation and/or restriction. If
the any of the insurance coverages will expire prior to the completion
of the work, copies of renewal policies shall be furnished at least
thirty (30)days' prior to the date of their expiration.
10.5 The aforesaid minimum limits of insurance shall be reviewed from time
to time by the County Risk Management Division and may be adjusted if
the Risk Management Division determines that such adjustments are
necessary to protect
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County's interest. When such policies or certificates have been
delivered by the Operator to the County as aforesaid and at any time or
times thereafter, the County may notify the Operator in writing that
the insurance represented thereby does not conform to the provisions of
this Article X either because of the amount or because of the insurance
company or for any other reason, and the Operator shall have fifteen
(15) days in which to cure any such defect. Compliance with the
requirements of this Article X as to the carrying of insurance shall
not relieve the Operator of its liability under any other provision of
this Agreement.
10.6 As security for the performance of all obligations hereunder, an
Irrevocable Letter of Credit ("Letter of Credit") or a Payment and
Performance Bond ("Bond"), in form and substance satisfactory to
County, in an amount equal to Two Hundred Thousand and 00/100 Dollars
($200,000.00) for the term of the Agreement ("Security Deposit"), shall
be submitted to the County simultaneously with the execution of this
Agreement by the Operator. The Security Deposit shall be in form and
substance satisfactory to the County's Risk Management Division. In the
event of any failure by Operator to perform all obligations of this
Agreement, then in addition to any other rights and remedies available
to County at law or in equity, County shall be entitled to draw down up
to the full amount of the Security Deposit and apply same to all
amounts owed under this Agreement and all damages incurred by County
due to any default of Operator. Upon notice of any such draw, Operator
shall immediately replace the Security Deposit with a new Letter of
Credit or Bond in the full amount of the Security Deposit required
hereunder. The Letter of Credit or Bond, as applicable, shall be kept
in full force and effect throughout the term of this Agreement and for
a period of six (6) months following the termination date of this
Agreement. If a Letter of Credit is posted, then the term and all
renewal terms of the Letter of Credit shall be for a period of not less
than one year. Not less than ninety (90) days prior to any expiration
date of the Letter of Credit or Bond, Operator shall submit evidence in
form satisfactory to County that said security instrument has been
renewed. A failure to renew or replace the Letter of Credit or Bond, as
applicable, within ten (10) days of notice from the Aviation Department
to do so, shall (i) entitle the County to draw down the full amount of
such Security Deposit, and (ii) be a default of this Agreement,
entitling County to all available remedies. Upon receipt of any
replacement Letter of Credit, the County shall return any prior Letter
of Credit, provided the replacement Letter of Credit satisfies the
provisions hereof.
10.7 Each Letter of Credit provided hereunder or under any other Section or
provision of this Agreement shall be provided by a financial
institution of recognized standing authorized to do business in the
State of Florida. Throughout the term of the Letter of Credit, the
financial institution that has issued the Letter of Credit must have an
office in Broward, Dade or Palm Beach County, Florida, at which the
Letter of Credit may be presented for drawing down, and the financial
institution must have been
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in business with a record of successful continuous operation for at
least five (5) years. Each letter of credit shall be in form and
substance satisfactory to the County. Each Bond provided hereunder, or
under any other Section or provision of the Agreement, shall be
executed by a surety company of recognized standing authorized to do
business in the State of Florida and having a resident agent in Broward
County and having been in business with a record of successful
continuous operation for at least five (5) years. Each Bond shall be in
form and substance satisfactory to the County. Furthermore, such surety
company must have at least a "B+" rating in the latest revision of
Best's Insurance Report.
Article XI
TERMINATION BY COUNTY
11.1 In addition to all other remedies available to the County, this
Agreement, at the option of the County, shall be subject to immediate
termination should any one or more of the following events of default
occur:
(a) If Operator shall neglect or fail to perform or observe any of
the terms, provisions, conditions or covenants herein
contained, if such neglect or failure shall continue for a
period of fifteen (15) days after written notice of such
neglect or failure is given to Operator, provided that if
within said fifteen (15) day period Operator shall commence
and thereafter diligently proceed to cure such default, said
cure period shall be extended for a reasonable time; or
(b) If the estate hereby created shall be taken by execution or by
other process of law; or
(c) The taking by a court of competent jurisdiction of Operator or
its assets pursuant to proceedings under the provisions of any
federal or state reorganization code or act, insofar as the
following enumerated remedies for default are provided for or
permitted in such code or act; or
(d) If any court of competent jurisdiction shall enter a final
order with respect to Operator, providing for modification or
alteration of the rights of creditors; or
(e) If Operator shall fall to abide by all applicable federal,
state, County and local laws, ordinances, rules and
regulations.
(f) If Operator shall make any Disposition, without the prior
written consent of the County; or
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(g) If Operator shall fail to commence operations by the
Commencement Date or, if subsequent to the Commencement Date,
Operator shall discontinue its operations at the Airport; or
(h) If any of Operator's permitted subcontractors shall fail to
perform according to terms of this Agreement.
11.2 In the event any condition of default shall occur (notwithstanding any
waiver, license or indulgence granted by County with respect to any
condition of default in any form or instance) County, then, or at a
time thereafter, shall have the right, at its option, to terminate this
Agreement by giving written notice to that effect, at which time
Operator will then Immediately quit the Airport premises and all areas
covered by this Agreement, and shall cease operations at the Airport,
and such termination shall be without prejudice to any remedy of County
for damages or any other remedies whatsoever.
11.3 Upon termination of this Agreement, County shall have the right to
engage another operator to provide the Shuttle Bus Services at the
Airport, for such period or periods (which may extend beyond the term
of this Agreement) at such fees and upon such other terms and
conditions as County may, in good faith, deem advisable. County shall
in no event be liable and Operator's liability shall not be affected or
diminished in any way whatsoever for failure of County to obtain
another operator.
11.4 Upon termination or non-renewal of this Agreement the purchase of
qualified Specialty Vehicle(s) shall be pursuant to Section 4.2(c) of
this Agreement. In addition, upon termination or non-renewal of this
Agreement, the County or its designee shall have the right, but not the
obligation, to purchase any of the vehicle(s) in the Core Bus Fleet.
The purchase price paid for such vehicle(s) (the "Payment") shall be
limited to and not more than the "unamortized balance of the vehicle
investment" (as defined in Section 5.4, hereof). In the event of any
such purchase by the County or its designee, the Operator shall deliver
title to the purchased vehicle(s) to the County or its designee, free
and clear of all liens, claims and encumbrances whatsoever. In the
event that the Core Bus Fleet or any vehicle therein is encumbered by a
mortgage, then the Operator must obtain a release from the mortgagee
and the Payment shall be paid to the Operator upon receipt of evidence
that title certificates for the vehicle(s) will be delivered to the
County or its designee free and clear of all liens, claims and
encumbrances whatsoever. Upon making the Payment to the Operator, the
Operator shall deliver the vehicle(s) and the title certificates to the
County or its designee, free and clear of all liens, claims and
encumbrances, and shall execute the title certificates and all other
documents required to effect such transfer.
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11.5 If this Agreement shall terminate for any reason, Operator and those
operating under it shall forthwith remove their personal property from
the Airport premises. If Operator or any such claimant shall fail to
effect such removal of personal property forthwith, County may, at its
option, without liability to Operator or those claiming under Operator,
remove such personal property and may store the same for the account of
Operator or of the owner thereof at any place selected by County, or,
at County's election, and upon fifteen (15) days written notice to
Operator of date, time and location of sale, County may sell the same
at public auction or private sale on such terms and conditions as to
price, payment and otherwise as County in its sole discretion may deem
advisable. If, in County's judgment, the cost of removing and storing
or the cost of removing and selling any such personal effects exceeds
the value thereof or the probable sale price thereof, as the case may
be, County shall have the right to dispose of such goods in any manner
County may deem advisable. Operator shall be responsible for all costs
of removal, storage and sale, and County shall have the right to
reimburse itself from the proceeds of any sale for all such costs paid
or incurred by County. If any surplus sale proceeds shall remain
after such reimbursement County may deduct from such surplus any other
sum due to County hereunder and shall pay over to Operator any
remaining balance of such surplus sale proceeds.
11.6 If proceedings shall at any time be commenced against Operator by
County under this Agreement and compromise or settlement shall be
effected either before or after judgment whereby Operator shall be
permitted to continue to operate under this Agreement, then such
proceedings shall not constitute a waiver of any condition or agreement
contained herein or of any subsequent event of default.
11.7 Any amount paid or expense or liability incurred by County due to
Operator's failure to perform in accordance with the terms and
provisions of this Agreement, shall be deemed to be monies due by
Operator to County hereunder and shall be paid by the Operator to the
County upon demand therefor. At the option of the County, the same may
be deducted from any amounts payable by County to Operator hereunder.
11.8 Operator hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of any
termination of this Agreement. The rights given to County herein are in
addition to any rights that may be given to County by statute or
otherwise.
11.9 Upon termination of this Agreement, through passage of time or
otherwise, the Operator shall aid the County in all ways possible in
continuing the provision of shuttle bus services at the Airport without
interruption of service.
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11.10 In the event of any termination of this Agreement, Operator shall have
no further rights hereunder and shall cease forthwith all operations
upon the Airport premises and shall pay in full any amount owed to
County. The Operator's Security Deposit may be applied by the County to
any sums due to County under this Agreement and any damages incurred by
County.
Article XII
SECURITY
FAA Regulations and Security - Operator agrees to observe all security
requirements and other requirements of the Federal Aviation Regulations
applicable to Operator, including without limitation, Part 107 and Part 139, and
the Operator agrees to comply with the Airport Security Program, and amendments
thereto, as approved by the Federal Aviation Administration, and to take such
steps as may be necessary or directed by the County to insure that sublessee,
employees, contractors, agents, invites and guests observe these requirements.
If required by the Aviation Department, Operator shall conduct background checks
of its employees and of the employees of its subcontractors in accordance with
applicable Federal Regulations. If as a result of the acts or omissions of
Operator, its sublessee, employees, contractors, agents, invites or guests, the
County incurs any fines and/or penalties imposed by the Federal Aviation
Administration or any expense in enforcing the regulations of the Federal
Aviation Administration, including without limitation, Part 107 and Part 139
and/or any expense in enforcing the Airport Security Program, then Operator
agrees to pay and/or reimburse to County all such costs and expenses, including
all costs of administrative proceedings, court costs, and attorneys fees and all
costs incurred by County in enforcing this provision. Operator further agrees to
rectify any security deficiency or other deficiency as may be determined as such
by the County or the Federal Aviation Administration. In the event Operator
fails to remedy any such deficiency, the County may do so at the cost and
expense of Operator. The County reserves the right to take whatever action
necessary to rectify any security deficiency or other deficiency.
Article XIII
FIRE AND OTHER DAMAGE
In the event that structural or permanent portions of any buildings or
improvements located at the Airport shall be damaged by fire or other casualty,
the obligations of the Operator
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hereunder shall not cease, however any fees and charges payable by County shall
be adjusted by an amendment, if it is equitable to do so, to take into account
any lower level of service or any increased level of service occasioned by such
damage.
Article XIV
INDEPENDENT CONTRACTOR
Operator is an independent contractor under this Agreement. Services provided by
Operator shall be subject to the supervision of Operator, and such services
shall not be provided by Operator or its agents as officers, employees, or
agents of the County. The parties expressly acknowledge that it is not their
intent to create any rights or obligations in any third person or entity under
this Agreement.
Article XV
GENERAL PROVISIONS
15.1 Federal Aviation Act, Section 308 - Nothing herein contained shall be
deemed to grant the Operator any exclusive right or privilege within
the meaning of Section 308 of the Federal Aviation Act for the conduct
of any activity on the Airport, except that, subject to the terms and
provisions hereof, the Operator shall have the right to operate at the
Airport under the provisions of this Agreement.
15.2 Notices - Whenever either party desires to give notice to the other,
such notice must be in writing, sent by certified United States Mail,
postage prepaid, return receipt requested, or by hand-delivery with a
request for a written receipt of acknowledgment of delivery, addressed
to the party for whom it is intended at the place last specified. The
place for giving notice shall remain the same as set forth herein until
changed in writing in the manner provided in this section. For the
present, the parties designate the following:
COUNTY:
Director
Broward County Aviation Department
Fort Lauderdale-Hollywood International Airport
1400 Lee Wagener Boulevard
Fort Lauderdale, FL 33315
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With a copy to:
County Administrator
Governmental Center
115 South Andrews Avenue
Fort Lauderdale, FL 33301
OPERATOR:
Limousines of South Florida, Inc.
2595 N.W. 38th Street
Miami, FL 33142
Attention: Mark Levitt, Vice President
15.3 Captions - The headings of the several articles and sections of this
Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit, or describe the scope or intent
of any provisions of this Agreement and shall not be construed to
affect in any manner the terms and provisions hereof or the
interpretation or construction thereof.
15.4 Severability - In the event this Agreement or a portion of this
Agreement is found by a court of competent jurisdiction to be invalid,
the remaining provisions shall continue to be effective unless County
or Operator elects to terminate this Agreement. The election to
terminate this Agreement based upon this provision shall be made within
seven (7) days after the finding by the court becomes final.
15.5 Agent for Service of Process - It is expressly understood and agreed
that if the Operator is not a resident of the State of Florida, or is
an association or partnership without a member or partner resident of
said State, or is a foreign corporation, then in any such event the
Operator does designate the Secretary of State, State of Florida, its
agent for the purpose of service of process in any court action between
it and the County arising out of or based upon this Agreement, and the
service shall be made as provided by the laws of the State of Florida
for service upon a non-resident, who has designated the Secretary of
State as agent for service. It is further expressly agreed, covenanted,
and stipulated that, if for any reason, service of such process is not
possible, and as an alternative method of service of process, Operator
may be personally served with such process out of this State by
certified mailing to the Operator at the address set forth herein. Any
such service out of this State shall constitute valid service upon the
Operator as of the date of mailing. It is further expressly agreed that
the Operator is amenable to and hereby agrees to the process so served,
submits to the jurisdiction, and waives any and all objections and
protest thereto.
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15.6 Waiver of Claims - The Operator hereby waives any claim against Broward
County and its officers, commissioners and employees for any
consequential damages, including, without limitation, any loss of
anticipated profits, caused by (a) any default of County hereunder, or
(b) any suit or proceedings directly or indirectly attacking the
validity of this Agreement or any part thereof, or (c) any judgement or
award in any suit or proceeding declaring this Agreement null, void or
voidable, or delaying the same or any part thereof, from being carried
out.
15.7 Public Entity Crimes Act - Operator represents that the execution of
this Agreement will not violate the Public Entity Crimes Act (Section
287.133, Florida Statutes), which essentially provides that a person or
affiliate who is a contractor, consultant or other provider and who has
been placed on the convicted vendor list following a conviction for a
Public Entity Crime may not submit a bid on a contract to provide any
goods or services to County, may not submit a bid on a contract with
County for the construction or repair of a public building or public
work, may not submit bids on leases of real property to County, may not
be awarded or perform work as a contractor, supplier, subcontractor, or
consultant under a contract with County, and may not transact any
business with County in excess of the threshold amount provided in
Section 287.017, Florida Statutes, for category two purchases for a
period of 36 months from the date of being placed on the convicted
vendor list. Violation of this section shall result in termination of
this Agreement and recovery of all monies paid hereto, and may result
in debarment from County's competitive procurement activities. In
addition to the foregoing, Operator further represents that there has
been no determination, based on an audit, that it committed an act
defined by Section 287.133, Florida Statutes, as a "public entity
crime" and that it has not been formally charged with committing an act
defined as a "public entity crime" regardless of the amount of money
involved or whether Operator has been placed on the convicted vendor
list.
15.8 Right to Develop Airport - It is further covenanted and agreed that the
County reserves the right to further develop or improve the Airport and
all landing areas and taxiways as it may see fit, regardless of the
desires or views of the Operator and without interference or hindrance.
15.9 Development Orders/Regulatory Approvals - The Operator acknowledges
that County is subject to certain Development Orders issued pursuant to
Chapter 380, Florida Statutes (collectively, "Development Orders"). The
County has completed its 1994 Fort Lauderdale-Hollywood International
Airport Master Plan Update (said document as hereinafter amended or
replaced being referred to as the "Airport Master Plan") and its 1994
Fort Lauderdale-Hollywood International Airport FAR Part 150 Program
Update (said document as hereinafter amended or replaced being
hereinafter referred to as the "Part 150 Study"). Accordingly, the
County will be seeking regulatory approvals (collectively "Regulatory
Approvals)" consistent
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with such plans and the implementation of such plans, which may include
the following: (1) amendment of the existing Development Orders
consistent with Chapter 380, Florida Statutes, as may be amended; (2)
Preliminary Development Agreement(s) from the Department of Community
Affairs consistent with Chapter 380, Florida Statutes, as may be
amended; (3) land use and zoning amendments pursuant to Chapter 163,
Part II, Florida Statutes, as may be amended; (4) preparation of an
Environmental Impact Statement, consistent with federal requirements,
(5) such environmental permitting as may be required by federal, state,
or local regulations, and (6) any other regulatory approvals as may be
required by any governmental authority having jurisdiction over the
issuance of permits for the approval and implementation of the Airport
Master Plan and the Part 150 Study.
Operator agrees to cooperate with County in connection with County's
efforts to obtain the Regulatory Approvals. From and after the date of
execution of this Agreement, Operator covenants and agrees (i) to
support the County's efforts to obtain the Regulatory Approvals; and
(ii) to execute any document(s) or instrument(s) reasonably requested
by County in order to assist County in obtaining the Regulatory
Approvals, provided that Operator shall not be required to bear any
expense in connection therewith and the Operator shall not be deemed an
agent of the County.
15.10 Subordination of Agreement - This Agreement, and all provisions hereof,
is subject and subordinate to the terms and conditions of the
instruments and documents under which the County acquired the Airport
from the United States of America and shall be given only such effect
as will not conflict or be inconsistent with the terms and conditions
contained in such instruments and documents and any existing or
subsequent amendments thereto. This Agreement and all provisions
hereof, is subject and subordinate to any ordinances, rules or
regulations which have been, or may hereafter be adopted by the County
pertaining to the Airport. This Agreement, and all provisions hereof,
is subject and subordinate to the provisions of any agreement
heretofore or hereafter made between the County and the United States
Government relative to the operation or maintenance of the Airport, the
execution of which has been required as a condition precedent to the
transfer of federal rights or property to the County for Airport
purposes, or the expenditure of federal funds for the improvements or
development of the Airport, including without limitation the
expenditure of federal funds for the development of the Airport under
the provisions of the Federal Aviation Act of 1958, as it has been
amended from time to time. In addition, this Agreement is subordinate
and subject to the provisions of all resolutions heretofore and
hereafter adopted by the County in connection with any revenue bonds
issued by the County with respect to the operations of the Airport, or
any improvements to the Airport or any of its facilities, and to the
provisions of all documents executed in connection with any such bonds,
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including without limitation, any pledge, transfer, hypothecation or
assignment made at any time by County to secure any such bonds.
15.11 Radon Gas - Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of
radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon
testing may be obtained from your County public health unit.
15.12 Incorporation by Reference - The truth and accuracy of each "Whereas"
clause set forth above is acknowledged by the parties. The attached
Exhibits A, B, C and D, and Attachments I and II are incorporated into
and made a part of this Agreement.
15.13 Incorporation of Required Provisions - The parties incorporate herein
by this reference all provisions lawfully required to be contained
herein by any governmental body or agency.
15.14 Non-Liability of Agents and Employees - No commissioner, officer,
agent, director, or employee of the County shall be charged personally
or held contractually liable by or to the Operator under any of the
terms or provisions of this Agreement or because of any breach thereof
or because of its or their execution or attempted execution.
15.15 Successors and Assigns Bound - This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties
hereto where permitted by this Agreement.
15.16 Right to Amend - In the event that the Federal Aviation Administration
or its successors requires modifications or changes in this Agreement
as a condition precedent to the granting of funds for the improvement
of the Airport, or otherwise, the Operator agrees to consent to such
amendments, modifications, revisions, supplements, or deletions of any
of the terms, conditions, or requirements of this Agreement as may be
reasonably required.
15.17 Time of Essence - Time shall be deemed to be of the essence in
performing the duties, obligations and responsibilities required by
this Agreement.
15.18 Interpretation - Words of any gender used in this Agreement shall be
held and construed to include any other gender and words in the
singular number shall be held to include the plural, unless the context
otherwise requires. All personal pronouns used in this Agreement shall
include the other gender, and the singular shall include the plural,
and vice versa, unless the context otherwise requires.
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Terms such as "herein," "hereof," "hereunder," and "hereinafter" refer
to this Agreement as a whole and not to any particular sentence,
paragraph, or section where they appear, unless the context otherwise
requires. Whenever reference is made to a Section of this Agreement,
such reference is to the Section as a whole, including all of the
subsections and subparagraphs of such Section, unless the reference is
made to a particular subsection or subparagraph of such Section.
Captions and Section headings used in this Agreement are for the
convenience of reference of the parties and shall not be deemed to
limit or in anyway affect the meaning of any of the provisions of this
Agreement. The words "shall" and "must" when used in this Agreement are
mandatory; the words "should" and "may" when used in this Agreement are
permissive.
15.19 Incorporation of RLI Documents - The Request for Letters of Interest
("Request") issued by the County and the proposal documents submitted
by Operator to County for evaluation in the award process pursuant to
which this Agreement was awarded to Operator, is hereby incorporated by
reference into this Agreement and made a part hereof (the Request and
all documents filed by Operator in response thereto are called
collectively, "RLI Documents"). Operator shall be bound by all terms,
conditions, representations, and commitments contained in the
Operator's RLI Documents, except to the extent any provision in the
Operator's RLI Documents is specifically deleted hereby. In the event
Operator shall fail to abide by and comply with any of the terms,
conditions, representations, or commitments contained in the Operator's
RLI Documents, then, at the option of County, such failure shall be
deemed a default of this Agreement.
Article XVI
MISCELLANEOUS
16.1 It is understood and agreed that this Agreement, the exhibits hereto
and the RLI Documents constitute the entire agreement between the
parties hereto. It is further understood and agreed by Operator that no
claim or liability or cause for termination shall be asserted by
Operator against County, and County shall not be liable by reason of,
the breach of any representations or promises not expressly stated in
this Agreement; any other written or parol agreement with County being
expressly waived by Operator.
16.2 This Agreement is binding at execution. The individuals executing this
Agreement on behalf of Operator personally warrant that they have full
authority to execute this Agreement on behalf of the entity for whom
they are acting herein.
16.3 All approvals and consents required to be obtained hereunder must be in
writing to be effective.
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16.4 All rights and remedies of County hereunder or at law or in equity are
cumulative, and the exercise of any right or remedy shall not be taken
to exclude or waive the right to the exercise of any other. Failure by
County to enforce any provision of this Agreement shall not be deemed a
waiver of such provision or modification of this Agreement. A waiver of
any breach of a provision of this Agreement shall not be deemed a
waiver of any subsequent breach and shall not be construed to be a
modification of the terms of this Agreement. County and Operator agree
that each requirement, duty, and obligation set forth herein is
substantial and important to the formation of this Agreement and,
therefore, is a material term hereof.
16.5 Operator covenants and agrees that it will not sell, convey, transfer,
mortgage, pledge or assign this Agreement or any right created hereby
or take any other action described by Article IX hereof, without the
prior consent of the County, contained in a written document executed
with the same formality and of equal dignity herewith.
16.6 No modification, extension, amendment or alteration of the terms and
conditions contained herein shall be effective unless contained in a
written document prepared with the same or similar formality as this
Agreement, and executed by the Operator and the Broward County Board of
County Commissioners, except an amendment of Exhibit C, which is
executed by the Operator and the Director of the Aviation Department in
accordance with Sections 4.2 and 4.4 of this Agreement.
16.7 Jurisdiction. This Agreement shall be interpreted and construed in
accordance with and governed by the laws of the State of Florida. Venue
for litigation concerning this Agreement shall be in Broward County,
Florida.
16.8 Environmental Impairment; Containment, Removal and Abatement - The
discharge of any pollutants or hydrocarbon contamination, or other
contaminants (collectively, "Pollutants") at the Airport in violation
of any federal, state or local law, rule or regulation or in violation
of any order or directive of any federal, state or local court or
entity with jurisdiction of such discharge is prohibited.
(a) Any such discharge of Pollutants by Operator or any of its
officers, employees, contractors, subcontractors, invitees, or
agents, and whether or not committed prior to or following the
execution of this Agreement, shall be, at the Operator's
expense, immediately contained, removed and abated to the
satisfaction of the County, and any court or regulatory entity
having jurisdiction of the discharge. If Operator does not
take action immediately to have such Pollutants contained,
removed or abated, the County may undertake the removal of the
discharge, however, any such action by the County shall not
relieve the Operator of its obligations and responsibilities
under this or any other provision of this Agreement or as
imposed by law.
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No action taken by either the Operator or the County to
contain or remove Pollutants, or to abate a discharge, whether
such action is taken voluntarily or not, shall be construed as
an admission of liability as to the source of or the person
who caused the pollution or its discharge.
(b) Operator shall provide County with immediate notice of any and
all spills, leaks or discharges of any size whatsoever of
Pollutants arising from its operations on the Airport
property, and shall further provide County with prior notice
of not less than one (1) business day of all curative
measures, remediation efforts and/or monitoring activities to
be effected. Copies of such notice shall be sent to the
Director of Aviation, and the Director of the Department of
Natural Resource Protection.
(c) As required by law, Operator shall provide the relevant
regulatory authorities with notice of spills, leaks or
discharges of Pollutants on Airport property, and shall have
an updated contingency plan in effect relating to such
discharges.
(d) County shall have the right to inspect all documents relating
in any way to discharge of any Pollutants at the Airport and
all activities thereon relating to writings regarding
environmental issues, remediation efforts, etc., including,
but not limited to, manifests evidencing proper transportation
and disposal of Pollutants, site assessments, and sampling and
test results.
(e) If the County arranges for the removal of any Pollutants at
the Airport that were caused by the Operator, or any of its
officers, employees, contractors, subcontractors, invitees, or
agents, the costs of such removal incurred by the County shall
be paid by Operator to the County immediately upon County's
written demand, with interest at the rate of eighteen percent
(18%) per annum thereafter accruing.
(f) Operator shall not be liable for the discharge of any
Pollutants caused by the negligence or willful misconduct of
the County. Nothing herein shall relieve Operator of its
general duty to cooperate with the County in ascertaining the
source and, containing, removing and abating any Pollutants at
the Airport.
(g) The provisions of this Section shall survive the expiration or
other termination of this Agreement.
16.9 Upon termination or expiration of this Agreement, the Operator shall
remain liable for all obligations and liabilities that have accrued
prior to the date of termination or expiration.
44
<PAGE> 45
16.10 Joint Preparation - Preparation of this Agreement has been a joint
effort of County and Operator and the resulting document shall not,
solely as a matter of judicial construction, be construed more severely
against one of the parties than any other.
16.11 Third Party Beneficiaries - Neither Operator nor County intend to
directly or substantially benefit a third party by this Agreement.
Therefore, the parties agree that there are no third party
beneficiaries to this Agreement and that no third party shall be
entitled to assert a claim against either of them based upon this
Agreement.
16.12 Remedies - In the event of a breach of any of the terms or conditions
of this Concession Agreement, it is specifically acknowledged and
agreed that either party shall, in addition to all other remedies which
may be available in law or equity, have the right to enforce this
Agreement by specific performance, injunctive relief, prohibition or
mandamus to compel the other party to abide by the terms of this
Agreement.
16.13 Drug-free Workplace - It is a requirement of County that it enter into
contracts only with firms that certify the establishment of a drug free
work place in accordance with Chapter 21.31(a) of the Broward County
Procurement Code. Execution of this Agreement by Operator shall also
serve as Operator's required certification that it either has or that
it will establish a drug free work place in accordance with Chapter
21.31(a) of the Broward County Procurement Code.
16.14 Conflicts - Unless the Operator shall receive the prior written
consent of the County, Operator agrees that during the term of this
Agreement, it and its employees shall not have or hold any employment
or contractual relationship with any business entity or any agency that
will create a continuing or frequently recurring conflict between the
duties, obligations and requirements of Operator under this Agreement
and such other employment or contractual relationship, or that would
impede the discharge of any of the duties, obligations or requirements
of this Agreement. Operator agrees that none of its employees shall,
during the term of this Agreement, give sworn testimony or issue a
report or writing, as an expression of his or her opinion, which is
adverse or prejudicial to the interests of County in any pending or
threatened legal or administrative proceeding. The limitations of this
section shall not preclude such persons from representing themselves in
any action or in any administrative or legal proceeding regarding this
Agreement.
16.15 Contingency Fee - Operator warrants that it has not employed or
retained any company or person, other than a bona fide employee working
solely for Operator, to solicit or secure this Agreement and that it
has not paid or agreed to pay any person, company, corporation,
individual or firm, other than a bona fide employee working solely for
Operator, any fee, commission, percentage, gift, or other consideration
contingent upon or resulting from the award or making of this
45
<PAGE> 46
Agreement. For a breach or violation of this provision, Board shall
have the right to terminate this Agreement without liability at its
discretion, or to deduct from the Agreement price or otherwise recover
the full amount of such fee, commission, percentage, gift or
consideration.
16.16 Ownership of Documents. Any and all reports, photographs, surveys, and
other data and documents provided or created in connection with this
Agreement are and shall remain the property of County. In the event of
termination of this Agreement, any reports, photographs, surveys, and
other data and documents prepared by Operator, whether finished or
unfinished, shall become the property of County and shall be delivered
by Operator to the Contract Administrator.
16.17 Police/Regulatory Powers. County cannot, and hereby specifically does
not, waive or relinquish any of its regulatory approval or enforcement
rights and obligations as it may relate to regulations governing this
Agreement or any operations or activities pursuant hereto. Nothing in
this Agreement shall be deemed to create an affirmative duty of County
to abrogate its sovereign right to exercise its police powers and
governmental powers by approving or disapproving or taking any other
action in accordance with its zoning and land use codes, administrative
codes, ordinances, rules and regulations, federal laws and regulations,
state laws and regulations, and grant agreements.
16.18 Prior Agreements - This document incorporates and includes all prior
negotiations, correspondence, conversations, agreements, and
understandings applicable to the matters contained herein and the
parties agree that there are no commitments, agreements or
understandings concerning the subject matter of this Agreement that are
not contained in this document. Accordingly, the parties agree that no
deviation from the terms hereof shall be predicated upon any prior
representations or agreements, whether oral or written. It is further
agreed that no modification, amendment or alteration in the terms or
conditions contained herein shall be effective unless contained in a
written document in accordance with Section 16.6 above.
16.19 Priority of Provisions. If there is a conflict or inconsistency between
any term, statement, requirement, or provision of any exhibit attached
hereto, any document or events referred to herein, or any document
incorporated into this Agreement by reference and a term, statement,
requirement, or provision of this Agreement, the term, statement,
requirement, or provision contained in Articles I through 16 of this
Agreement shall prevail and be given effect.
16.20 Counterparts. This Agreement may be executed in up to five (5)
counterparts, each of which shall be deemed to be an original.
46
<PAGE> 47
AGREEMENT BETWEEN BROWARD COUNTY AND LIMOUSINES OF SOUTH FLORIDA, INC. FOR
AIRPORT SHUTTLE BUS SERVICES AT THE FORT LAUDERDALE-HOLLYWOOD INTERNATIONAL
AIRPORT
IN WITNESS WHEREOF, the parties have made and executed this Agreement
on the respective dates under each signature: BROWARD COUNTY through its BOARD
OF COUNTY COMMISSIONERS, signing by and through its Chair, or Vice Chair
authorized to execute same by Board action on the 24 day of June, 1997, and
Limousines of S. Florida, signing by and through its Vice President, duly
authorized to execute same.
COUNTY
ATTEST: BROWARD COUNTY, through its
BOARD OF COUNTY COMMISSIONERS
/s/ Illegible By /s/ Illegible
- ----------------------------- --------------------------------
County Administrator and Chair
Ex-Officio Clerk of the
Board of County Commissioners
of Broward County, Florida [County Commissioners Seal]
Approved as to Insurance Approved as to form by
Requirements by Office of County Attorney
RISK MANAGEMENT DIVISION Broward County, Florida
JOHN J. COPELAN, JR., County Attorney
Governmental Center, Suite 423
115 South Andrews Avenue
By /s/ Mary. M. Meister Fort Lauderdale, Florida 33301
- ----------------------------- Telephone: (954) 357-7600
Director Telecopier: (954) 357-7641
By /s/ Christine C. Lee
--------------------------------
Christine C. Lee
Assistant County Attorney
47
<PAGE> 48
AGREEMENT BETWEEN BROWARD COUNTY AND LIMOUSINES OF SOUTH FLORIDA, INC. FOR
AIRPORT SHUTTLE BUS SERVICES AT THE FORT LAUDERDALE-HOLLYWOOD INTERNATIONAL
AIRPORT
OPERATOR
LIMOUSINES OF SOUTH FLORIDA, INC.
ATTEST:
/s/ Illegible By /s/ Mark Levitt
- ------------------------- ----------------------------------
Secretary Print Name: Mark Levitt
Title: Vice President
(CORPORATE SEAL) 27 day of May 1997
WITNESS
/s/ Michael Clemente
- -------------------------
/s/ J.N. Sullera
- -------------------------
48
<PAGE> 1
EXHIBIT 10.21
FRANCHISE AGREEMENT
FOR EXCLUSIVE DEMAND
GROUND TRANSPORTATION SERVICES
Miami International Airport
Dade County, Florida
MIAMI SHUTTLE, INC. d/b/a SUPERSHUTTLE (TM)
Carrier
Effective Date
Agreement No.
Customer No.
Resolution No. R-1129-92
(AD-2)
<PAGE> 2
4.08 Advertising 12
4.09 No Interference 12
4.10 Waste Disposal 12
ARTICLE 5 PERSONNEL
5.01 Manager 12
5.02 Starter Services 13
5.03 Employees 13
5.04 Employee Discipline 14
ARTICLE 6 FARES AND RATES
6.01 No Assignment 14
6.02 Fare Adjustments 14
6.03 Potting and Fares 14
ARTICLE 7 INDEMNIFICATION 15
ARTICLE 8 INSURANCE
8.01 Insurance Required 15
8.02 Insurance Certificates Required 16
8.03 Carrier Liable 16
8.04 Right to Examine 16
8.05 Special Default 16
ARTICLE 9 ASSIGNMENT AND OWNERSHIP
9.01 No Assignment 17
9.02 Ownership of Carrier 17
ARTICLE 10 LABOR ACTIVITY 17
ARTICLE 11 TERMINATION BY COUNTY
11.01 Payment Defaults 17
11.02 Revenue Control and Audit Defaults 17
11.03 Default Terminations 18
11.04 Other Terminations 18
11.05 Habitual Default 18
11.06 Automatic Termination 19
ARTICLE 12 TERMINATION BY CARRIER 19
ARTICLE 13 TERMINATION BY CONCESSIONAIRE
13.01 Employment Discrimination 19
13.02 Nondiscriminatory Access to Service 20
13.03 Breach of Nondiscrimination Covenants 20
13.04 Affirmative Action and Disadvantaged
Business Enterprise Programs 20
(AD-2)
<PAGE> 3
ARTICLE 14 RULES, REGULATIONS AND PERMITS
14.01 Rules and Regulations 21
14.02 Violations of Rules and Regulations 21
14.03 Permits and Licenses 21
14.04 Alcohol and Drug Testing 21
14.05 Drug-Free Workplace Certification 22
ARTICLE 15 TRUST AGREEMENT AND BOND RESOLUTION
15.01 Incorporation of Trust Agreement
and Bond Resolution by Reference 24
15.02 Adjustment of Terms and Conditions 24
15.03 Carrier Right to Terminate 25
ARTICLE 16 CIVIL ACTIONS
16.01 Governing Law; Venue 25
16.02 Notice of Commencement of Civil Action 25
16.03 Registered Office/Agent; Jurisdiction 26
ARTICLE 17 OTHER PROVISIONS
17.01 Cooperation at Termination 26
17.02 Payment of Taxes 26
17.03 Rights to be Exercised by Department 26
17.04 Rights of County at Airport 26
17.05 Federal Subordination 26
17.06 Notices 27
17.07 Severability 27
17.08 No Waiver 27
17.09 Right to Regulate 28
17.10 Inspections 28
17.11 Headings 28
17.12 Binding Effect 28
17.13 Performance 28
17.14 County-Carrier Relationship 28
17.15 Entirety of Agreement 29
Signatures 30/31
EXHIBITS A, B, C, D, E
(AD-2)
<PAGE> 4
TABLE OF CONTENTS
PAGE
ARTICLE 1 TERMS
1.01 Term 1
1.02 Extensions 1
1.03 Deleted
1.04 Bid Incorporated 2
ARTICLE 2 SERVICES
2.01 Services - General 2
2.02 Demand Services - Defined 2
2.03 Prearranged Contract Services - Defined 3
2.04 Demand Services - Service Areas 3
2.05 Demand Service Zones 3
2.06 Vehicle Storage Area 4
2.07 Service Obligations 4
2.08 Terminal Building - Curbside, Leased Space 4
2.09 Control Check Booths 5
2.10 Public Buses 5
2.11 Terminal and Ground Transportation
Improvements Programs 5
2.12 Adjustment of Minimum Guarantee Due to
Impact by Construction 5
2.13 Emergency Services 5
ARTICLE 3 PAYMENTS AND REPORTS
3.01 Minimum Annual Guarantee 6
3.02 Adjustment of Minimum Annual Guarantee 6
3.03 Percentage Fee 6
3.04 Gross Revenues 7
3.05 Late Payment Charge 7
3.06 Worthless Check or Draft 7
3.07 Address for Payments 8
3.08 Payments Security 8
3.09 Records and Reports 8
3.10 Revenue Control Procedures 9
3.11 Monthly Report and Gross Revenues 9
3.12 Annual Audit Required 9
3.13 Right To Inspect 9
ARTICLE 4 OPERATIONS
4.01 Vehicles 10
4.02 Passenger Loading 11
4.03 Substitute Service 11
4.04 Vehicle Waiting 11
4.05 Complaints 11
4.06 Lost and Found 12
4.07 No Solicitations 12
(AD-2)
<PAGE> 5
Cust. No.
Reso. No.
Date:
Doc. Name GTFRAN.AGT
EXCLUSIVE DEMAND GROUP TRANSPORTATION
FRANCHISE AGREEMENT BETWEEN DADE COUNTY,
FLORIDA, AND MIAMI SHUTTLE, INC. d/b/a
SUPERSHUTTLE (TM)
MIAMI INTERNATIONAL AIRPORT
THIS FRANCHISE AGREEMENT ("Agreement" or "Franchise") made and entered
into as of the 13 day of OCTOBER, 1992 by and between DADE COUNTY, Florida
("County") and MIAMI SHUTTLE, INC. d/b/a SUPERSHUTTLE(TM), a Florida
corporation, authorized to do business in the State of Florida ("Carrier").
WITNESSETH:
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
Article 1
Term
1.01 Term: The County hereby grants to the Carrier for an initial term
of four years, commencing January 1, 1993 and ending December 31, 1997, the
exclusive right to provide demand ground transportation service from Miami
International Airport ("Airport") and the nonexclusive right to provide demand
ground transportation service to the Airport, as described herein, unless sooner
terminated or extended as provided for herein.
1.02 Extension: The County reserves the right to extend this Agreement
for four additional one-year periods upon the terms and conditions contained
herein. Such right shall be exercised by the Aviation Department of the County
("Department"), acting on behalf of the County. In the event the Department
elects to extend this Agreement, the Carrier shall be notified in writing at
least 90 days prior to the expiration of the initial term or any previous
extension(s), as applicable. In the event the Department does not give such
notice, this Agreement shall terminate as provided herein. The Carrier shall
within 15 days following receipt of notice from the Department, have the right
to reject any such extension by written notice to the Department and, if so
rejected, this Agreement shall terminate as provided for in Article 1.01 above
or at the end of any previous extension period. Failure of the Carrier to
respond
FA-1 (AD-3)
<PAGE> 6
to the Department within the 15 day period shall automatically constitute
acceptance of the extension.
1.03 Omitted intentionally.
1.04 Bid incorporated: The Carrier acknowledges that it has submitted
to the County a bid ("Bid") that was the basis for the award of this Agreement
and upon which the County has relied. The Bid of the Carrier, where not
inconsistent with the terms of this Agreement, is hereby incorporated into this
Agreement by reference.
If the Carrier as part of its Bid evidenced the minimum experience
required in the Bid Documents through a corporate officer, the Carrier must at
all times during the term of this Agreement employ a corporate officer,
full-time, who shall be responsible for operations under this Agreement with
equal or better qualifications as those of such corporate officer set forth in
its Bid which qualified the Carrier. Failure to maintain such a corporate
officer shall be a default hereunder and this Agreement shall be cancellable
upon 30 calendar days notice of such default by the Department unless such
default is cured within the notice period.
Article 2
Services
2.01 Services - General: The County hereby grants to the Carrier the
exclusive franchise, including the attendant obligations, to provide multiple
party vehicle, demand ground transportation services from designated zones in
the vicinity of the Terminal Building ("Terminal") at Miami International
Airport ("Airport"). The County also hereby grants the Carrier the nonexclusive
right to provide demand ground transportation services to drop-off areas at the
Terminal at the Airport as designated by the Department.
2.02 Demand Services - Defined: The term "Demand Services", as used
herein, is defined to mean ground-transportation services provided to any person
requesting same on a demand basis from the designated demand service pick-up
zones at the Airport, to any and all points within service areas designated by
the Carrier and from such designated service areas to designated drop-off areas
at the Terminal at the Airport and for which service the charges or fares are
fixed and are paid for by or on behalf of said person at the time the service is
rendered in cash or by voucher. All points shall mean door to door service. Said
demand service pick-up zones and service areas are defined and set forth in
Article 2.05 herein. For the purposes of this Agreement, Demand
FA-2 (AD-2)
<PAGE> 7
Services does not include ground transportation services provided by taxicabs,
as defined in the Code of Metropolitan Dade County, Florida, or Prearranged
Contract Service as defined herein. At all times the obligation of the Carrier
to provide required Demand Services shall take precedence over any right of the
Carrier to provide Prearranged Contract Services under separate Permit, in the
event of any conflicts or problems with equipment or manpower availability.
2.03 Prearranged Contract Services - Defined: The term "Prearranged
Contract Services," as used herein is defined to mean nonexclusive ground
transportation services provided at a prearranged time, by a single vehicle or,
in the case of large groups, by multiple vehicles specifically assigned for such
services, from the Airport, to a predetermined specific location, which services
are arranged and contracted for in advance of the arrival of the person or
persons to be transported at the Airport, and for which service the charges or
fares for the service are paid for either in advance by said person or persons
as part of a tour, through fare, group or similar arrangement or through an
after the fact billing or credit arrangement, as in the case of airline crew
transportation services. The provision of Prearranged Contract Services at the
Airport, by the Carrier, shall be subject to the issuance by the Department of
permits separate and apart from this Agreement and uniform procedures and fees
established by the Department and by Operational Directive 24.
2.04 Demand Services - Service Areas: The Carrier shall have the
obligation to provide Demand Services to all of Dade County, as a minimum, and
to other areas, as designated by the Carrier in the Bid submitted by the
Carrier, pursuant to the award of this Agreement, and incorporated herein by
reference and hereby designated Exhibit A, and any special remote passenger
terminal facilities which might be established to serve the Airport ("Service
Areas") using such equipment provided by the Carrier pursuant to Article 4.01.
The Carrier with the Department's written concurrence may add, delete or change
the Service Areas each six months during the term or any extensions of this
Agreement, in order to provide services consistent with customer demand. At
least 30 days in advance of any change in Service Areas, the Carrier shall
publish and post notice of the Service Areas, prices, service frequencies and
loading rules to be used in the following six month period.
2.05 Demand Service Zones: Exhibit B, dated May 18, 1992, attached
hereto and made a part hereof, shows, for the Airport, the preferential use
service zones, to be used by the providers of Prearranged Contract Services, and
the 24 hour demand service zones, to be used by the Carrier, taxicabs as defined
by County ordinance, authorized rent-a-cars, and other vehicles owned or
FA-3 (AD-2)
<PAGE> 8
authorized by the Department to operate in the 24 hour demand service zones
which are not transporting demand services passengers into or off the Airport
("Service Zones"). The Department, to accommodate changing patterns of ground
transportation service demands, Airport operational and environmental concerns
and Airport construction activities, shall have the right to change such Service
Zones, upon due notice to the Carrier and other users of the Service Zones. The
Department, at all times, shall have the right and duty to control, by means of
operational directives, rules and regulations and other policy statements, the
methods and areas of operation and number and size of vehicles, in general or by
type of service provided (taxicab, rent-a-car, vehicles of the Carrier, etc.),
to be allowed at any time within the Service Zones, and particularly the 24 hour
Demand Service Zones. Further, the Department shall have the right to move high
density Demand Services of the Carrier from the Service Zones to other
designated areas when required by operational necessity.
2.06 Vehicle Storage Area: The Vehicle Storage Area, shown on Exhibit
C, attached hereto and made a part hereof, shall be reserved for the use of
taxicabs, other holders of Department issued permits, and temporary storage of
up to ten vehicles to be used in providing Demand Services under this Agreement.
The Department shall have the right to reassign use of or relocate the vehicle
storage area, but in no event shall the reassigned/relocated storage area
provide for less than ten vehicles of the Carrier.
2.07 Service Obligations: The Carrier shall be obligated to provide all
the ground transportation services authorized herein 24 hours per day each day
of the year, and shall promptly provide such transportation service to all
passengers arriving at curbside at the Airport Terminal facility. Promptly shall
mean within fifteen minutes of such passenger arrival at curbside. The Carrier
shall adequately meet all demands for such service, including the implementation
of additional services as provided for by this Agreement. The Department, in
writing, may authorize the substitution of scheduled departure service to low
customer demand Service Areas or the subcontracting of such service under such
terms established by the Department. In the event the said services are
subcontracted, the Carrier shall use its best efforts to insure that at least
10% of the service under subcontract shall be provided by disadvantaged business
enterprises.
2.08 Terminal Building - Curbside Leased Space: In the event that the
Carrier desires to lease, and the Department agrees to lease, vehicle dispatch
facilities, counter space, office space, vehicle service or storage areas or
other facilities in or about the Terminal Building and/or Terminal Building
Curbside areas, not specifically provided under the terms of this Agreement,
other than designated Demand Service
FA-4 (AD-2)
<PAGE> 9
starter positions, then such facilities shall be leased at prevailing rental
rates,
2.09 Control Check Booths: The Carrier shall staff, operate and
maintain the control check booths assigned by the Department to the operation.
All vehicles of the Carrier arriving at the Airport and all Demand Service
vehicles of the Carrier departing Demand Service Zones shall, unless otherwise
authorized by the Department, stop at the control check booths for the making of
required internal control checks, passenger counts, and so forth. Data
collected by the Carrier from such control check booths shall be made available
to the Department for its internal use.
2.10 Public Buses: Nothing contained herein shall prevent the County,
through the Department or another agency of the County, from providing public
transportation or using public buses from and to the Airport and such shall not
constitute a violation of the exclusive rights granted by this Agreement.
2.11 Terminal and Ground Transportation Improvements Programs: The
Carrier acknowledges that the County is currently undertaking Terminal and
Ground Transportation Improvements Programs that will include airline
relocations, changes in access to the Terminal and concourses, construction of
new concession spaces, construction of new parking garages, a central toll
plaza, widening of the upper and lower drive lanes, realignment of Central
Boulevard, a new bus loop, and other improvements that may affect various
transportation operations in the Terminal Building Area. THE TERMINAL AND GROUND
TRANSPORTATION IMPROVEMENTS PROGRAMS MAY OR MAY NOT AFFECT THE OPERATION OF THE
CARRIER AND THE DEMAND SERVICE ZONES, AND THE COUNTY SHALL BE FREE FROM ANY AND
ALL LIABILITY TO THE CARRIER FOR BUSINESS DAMAGES OCCASIONED DURING SUCH
IMPROVEMENTS PROGRAMS.
2.12 Adjustment of Minimum Guarantee Due to Impact by Construction:
After the first year of this Agreement, in the event that the Carrier's demand
service passenger ridership leaving the Airport is adversely affected by
construction impacting passenger or vehicular access to the Demand Service Zones
at the Terminal, reflected by a 10 percent or more reduction in such ridership
from the previous year, and the deplaning/enplaning passenger counts of the
Airport for the same period have not decreased, the Department shall reduce the
Minimum Monthly Guarantee payment required under Article 3.01 by the same
percentage of such reduction in ridership, for the month(s) affected. The
Carrier must submit a request, in writing to the Department for such reduction
in the Minimum Monthly Guarantee, for each month, stating the ridership for the
month affected, the previous year's ridership, and the specific cause of
disruption.
2.13 Emergency Services: In the event of disruption of the employee
and/or public parking shuttle service(s) at the Airport, upon the written
request of the Department, the Carrier, if qualified to provide such service,
shall operate said bus service
FA-5 (AD-2)
<PAGE> 10
on an interim basis. In such event, the Carrier shall be reimbursed for all
actual costs plus ten percent of such costs. The actual costs shall be
documented in a form auditable and acceptable to the Department. In the event of
cessation or disruption of other ground transportation services at the Airport,
upon request of the Department, the Carrier shall enhance its service, during
such cessation, either directly or through a subcontract to a third party, or
the Department may directly provide or contract for some or all of such
replacement services.
ARTICLE 3
Payment and Reports
3.01 Minimum Annual Guarantee: The Carrier, for the first year of this
Agreement, shall pay to the County a Minimum Annual Guarantee of $250,000.00.
This Minimum Annual Guarantee shall be prorated monthly based on the percentages
as shown on Exhibit D, attached hereto and made a part hereof, and payable in
twelve monthly payments in U.S. funds on the first day of every month in advance
and without billing or demand ("Minimum Monthly Guarantee"), plus any State
sales/use tax, as may be applicable and required by law.
3.02 Adjustment of Minimum Annual Guarantee: in the event the Carrier
is operating by virtue of this Agreement on January 1, 1994, and annually
thereafter, for the remaining term of this Agreement or any extension(s)
thereof, the Carrier shall pay to the County the Minimum Annual Guarantee as
adjusted by the County. This adjustment shall be equal to the change in the
Consumer Price Index (CPI) for Miami/Fort Lauderdale, Florida, published by the
U.S. Department of Labor from January 1, 1993 (base month) as compared to each
subsequent January (anniversary month) of each year of the initial term or any
extensions thereof. Upon the determination of the amount of the appropriate
increase or decrease, this Agreement shall be administratively amended to
reflect the said CPI change as of each January 1, without formal amendment, upon
written notification by the County to the Carrier. In no event shall such an
adjustment result in a decrease in the annual guarantee below that of the first
year Minimum Annual Guarantee.
3.03 Percentage Fees: As additional consideration for the rights and
privileges granted the Carrier herein, the Carrier shall pay the County the
amount by which six and thirty and no hundredths percent (6.30%) of the monthly
Gross Revenues as defined in Article 3.04 exceeds the Minimum Monthly Guarantee
payment required by Article 3.01, and as such monthly guarantee payment may be
adjusted in accordance with Article 3.02. The Carrier shall pay such amount to
County by the tenth day of the month following the month in which the gross
revenues were received or accrued. Any unreported revenues determined by the
annual audit provided for in Article 3.12, are considered due
FA-6 (AD-3)
<PAGE> 11
by the tenth day of the month following the month during which the gross
revenues were received or accrued and late payment charges will be applied in
accordance with Article 3.05.
The amount of the Percentage Fee payable hereunder by the Carrier on
monthly Gross Revenues for demand service passengers, originating and
transported specifically from the Seaport to the Airport, shall be reduced by
the amount paid by the Carrier to the Seaport Department in fees for the
privilege of transporting passengers from the Seaport to the Airport, but in no
event shall such reduction be greater than the percent fee payable to the
Department for such Seaport-to-Airport service under this Agreement.
3.04 Gross Revenues: The term "Gross Revenues" shall mean all monies,
paid or payable for all transactions made or services rendered by the Carrier or
its subcontractor pursuant to the terms of this Agreement, regardless of when
paid, or when or where transactions are made or services rendered, whether paid
or unpaid, whether on a cash or credit basis, including, but not limited to,
monies derived from providing the Demand Services to and from the Airport and
sales of advertising space; provided, however, any sales and use taxes imposed
by law and directly paid by the Carrier to a taxing authority shall be excluded
therefrom. For these purposes, advance or deposit receipts shall be recognized
as Gross Revenues when received and billings for services rendered shall be
recognized as Gross Revenues when the services are performed. Receipts from
passengers (or the distributor of such coupons, tokens and vouchers) using
coupons, tokens, and vouchers shall be considered part of Gross Revenues if used
for Demand Services. Such coupons, tokens and vouchers may be at discounted
rates. Sales Commissions paid by the Carrier to third parties shall be deducted
from Gross Revenues.
3.05 Late Payment Change: In the event the Carrier fails to make any
payments as required to be paid under the provisions of this Agreement within
ten calendar days of the due date, interest at the rates established from time
to time by the Board of County Commissioners of Dade County, Florida (currently
set at l 1/2% per month) shall accrue against all such delinquent payment(s)
from the original due date until the Department actually-receives payment. The
right of the County to require payment of such interest and the obligation of
the Carrier to pay same shall be in addition to and not in lieu of the rights of
the County to enforce other provisions herein, including termination of this
Agreement, and to pursue other remedies provided by law.
3.06 Worthless Check or Draft: In the event that the Carrier delivers a
worthless check or draft to the County in payment of any obligation arising
under this Agreement, the Carrier shall incur and pay a service charge
of FIFTEEN DOLLARS or five percent of the face value of the check, whichever is
greater (Florida Statute 68.065), plus a service fee of FIFTEEN DOLLARS or five
percent of the face value of the check, whichever is greater (Florida Statue
125.0105). Further, in such event,
FA-7 (AD-2)
<PAGE> 12
the Department may require that future payments required pursuant to this
Agreement be made by cashier's check, wire transfer or other means acceptable to
the Department.
3.07 Address for Payments: All payments required from the Carrier shall
be due and payable, by mail, at the following:
Dade County Aviation Department
Accounting Division
Post Office Box 592616
Miami, Florida 33159
Payments may be made by hand delivery to the Accounting Division
offices during normal working hours.
3.08 Payments Security: Prior to the commencement of operations under
this Agreement, the Carrier shall provide the County, and shall keep in full
force and effect during the term of this Agreement, an irrevocable letter of
credit or other type of security, acceptable to the Department and so endorsed
as to be readily negotiable by the County, for the payments required hereunder
in an amount equal to $100,000, plus any State sales/use taxes as may be
applicable and required by law. The Department may draw upon such payment
security instrument if the Carrier fails to pay the fees and charges required
within the time limits specified herein. Such payment security instrument shall
be in a form acceptable to the Department.
3.09 Records and Reports: The Carrier shall keep in Dade County, and at
the Maintenance Facility on the Airport if leased by the Carrier, during the
term of this Agreement, all, books of account, records and reports customarily
used in this type of operation necessary to report Gross Revenues and to
calculate the Percentage Fees payable hereunder and as may, from time to time,
be required by the Department to document the activities of the Carrier pursuant
to this Agreement. The form of all such books of account, records, and reports
and accounting procedures to be used hereunder shall be subject to the approval
of the Department and/or the auditors of the County (one or more of the
following: the designated external auditing firm or other certified public
accounting firm selected by the Department, the Internal Auditing Department of
the County or auditors of the State of Florida), prior to the commencement of
operations hereunder. Subsequent recommendations for changes, additions or
deletions to such books of account, records and reports by the auditors of the
County shall be complied with by the Carrier when requested by the Department.
All moneys collected hereunder shall be accounted for in accordance with
generally accepted accounting principles. The auditors of the County and the
Department shall have the right without limitation, and shall be permitted,
during normal business hours, to audit and examine all books of account, records
and reports relating to the operations of the Carrier hereunder, including, but
not limited to, balance sheets, profit and loss statements, deposit receipts,
Florida State Sales Tax
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Reports and such other documents as may be determined by the Department to be
necessary and appropriate, provided that the Carrier shall not be required to
retain such records in Dade County, Florida for more than five years after the
end of each annual period of this Agreement nor for more than three years
following termination of this Agreement.
3.10 Revenue Control Procedures: Notwithstanding anything to the
contrary contained herein, the Carrier shall comply with such revenue control
procedures as may be established from time to time by the Department.
3.11 Monthly Report of Gross Revenues: on or before the tenth day
following the end of each calendar month throughout the term of this Agreement,
the Carrier shall furnish to the Department a statement of monthly Gross
Revenues for the Carrier for the preceding calendar month and certify as to the
accuracy of such Gross Revenues in Exhibit E and in detail as shall be
prescribed by the Department, from time to time.
3.12 Annual Audit Required: As soon as practical, but no later than 60
days after each anniversary of the commencement date of this Agreement and
within 60 days following termination of this Agreement, the Carrier shall, at
its sole cost and expense, provide to the Department on an annual (or portion
thereof) basis an audit report of monthly Gross Revenues, containing an
unqualified opinion, prepared and attested to by an independent certified public
accounting firm. The report shall include a schedule, on a monthly basis, of
Gross Revenues and Minimum Monthly Guarantee and Percentage Fees payments made
to the County under this Agreement, prepared in accordance with the
comprehensive basis of accounting defined under terms of this Agreement and
reported in such format as shall be prescribed by the Department. The audit
shall be conducted in accordance with generally accepted auditing standards and
include the issuance of a management letter, which will contain the findings
discovered during the course of the examination, such as recommendations to
improve internal controls and other significant matters related to this
Agreement. In addition, the audit shall also include comprehensive compliance
procedures to determine whether the books of account, records and reports were
kept in accordance with the terms of the Agreement for the period of
examination. The auditor shall report such procedures and findings in a separate
letter report to the Department. The last such report shall include the last
day(s) of operations. All reports and letters required pursuant to this Article
3.12 shall be submitted to and discussed with the Department in draft form,
before being issued in final form. There shall be no changes in the scope of the
reports and letters required hereunder without the specific prior written
approval of the Department.
3.13 Right to inspect: The Department and the auditors of the County
shall have the right, without limitation, of access at all reasonable times to
any premises, on or off-Airport, which
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the Carrier may occupy for use as administrative, maintenance and operational
facilities in connection with its operations pursuant to this Agreement, to: (1)
inspect, review, verify and check all or any portion(s) of the procedures of the
Carrier for recording or compiling Gross Revenues information; and (2) audit,
check, inspect and review all books of account, records, financial reports,
financial statements, operating statements, inventory records, copies of Federal
income and State sales tax returns, and work papers relating to operation of the
Franchise, and other pertinent information as may be determined to be needed or
desirable by the Department.
ARTICLE 4
Operations
4.01 Vehicles: The Carrier shall provide an adequate number of new,
suitable, modern, airconditioned transportation vehicles, as permitted by law,
having not less than nine passenger seats, of good quality, ready for use and
immediately available to transport all passengers requesting demand ground
transportation pursuant to this Agreement. New vehicles shall be defined as
vehicles purchased new by the Carrier within a 12 month period prior to or after
January 1, 1993. Such vehicles shall be sufficient in size, quality and quantity
and maintained in good condition so as to meet all such demands for the
exclusive transportation service rights granted to and obligations assumed by
the Carrier under this Agreement. The Carrier shall utilize equipment and
services of other companies as may be necessary for it to meet the reasonable
normal and peak demand for the services required of the Carrier under this
Agreement at any time that the quantity of its own equipment is insufficient to
meet the demand, as determined by the Department. Vehicles so used shall be of a
quality at least equal to those owned by the Carrier and used to provide demand
services herein. The Carrier shall maintain its vehicles and other equipment in
a clean, first-class operable condition and shall at all times maintain
efficient and courteous service to the public. The Carrier shall equip all
vehicles being used for services hereunder with two-way communications. All
vehicles operated by Carrier in providing services under this Agreement shall
have distinctive markings, painting, graphics, signing and colors, which
identify the name of Carrier, the vehicle itself by a distinctive number and the
type of service for which the vehicle is used. Color, paint, markings, graphics
and signing shall be approved in advance by the Department. All multi-passenger
vehicles shall be capable of prominently posting, for external reading, a
Service Area destination sign. The Carrier shall maintain its vehicles in
quality condition for any extension period and the determination of the
Department to extend this Agreement will, in part, be based on the condition of
the Carrier's vehicles and the Carrier's commitment to properly maintain, or
replace vehicles as necessary. At any time during the extension period referred
to in Article 1.02, hereof, if requested to do so by the Department, or at any
time during the initial term of this Agreement that vehicles are replaced by the
Carrier, the Carrier shall acquire or replace the vehicles with
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vehicles approved by the Department. During the initial term, if this Agreement
is terminated for cause or by lapse of time, the County shall have the right to
purchase the vehicles of the Carrier, used in providing the Demand Services, for
the unamortized portion of the original purchase price, on a four year straight
line basis, of such vehicles, but such right shall impose no obligation upon the
County to purchase all or any the vehicles. The Carrier shall furnish an
inventory of its vehicles used in providing the Demand Services hereunder, along
with documentation of the acquisition cost, within 30 days of such acquisition,
and as replacement vehicles are acquired. During the initial term or any
extension period of this Agreement, if this Agreement is cancelled by the
Department pursuant to Article 11.04(A), the Department shall purchase the
demand service vehicles used in the day-to-day operations of the Carrier
hereunder, which have been purchased by the Carrier and in service by the
Carrier for less than four years, for the unamortized portion of the original
purchase price on a four year straight-line basis.
Vehicles used in the provision of services hereunder must be owned or
leased by the Carrier and must be driven by employees of the Carrier.
4.02 Passenger Loading: Unless otherwise directed by the Department,
the Carrier shall load passengers only within the Demand Service Zones as
established and designated pursuant to Article 2.05 hereof. Notwithstanding
anything to the contrary contained herein, any passenger loaded in the Demand
Service Zones shall be considered a demand service passenger hereunder.
4.03 Substitute Service: It is understood and agreed between the
parties hereto, that in the event of temporary or substantial failure of
service by the Carrier, or in the event the Carrier fails to have a sufficient
number of vehicles available and ready for use for loading of passengers
desiring transportation, pursuant to this Agreement, the Department, at its
sole discretion, for passenger convenience, may supplement or authorize other
services until complete service is restored by the Carrier. Any such action of
substitution or authorization of other service on behalf of the County shall not
be considered as a violation by the County of the rights of the Carrier under
this Agreement, nor shall it relieve the Carrier of its responsibilities,
financial and otherwise, under this Agreement.
4.04 Vehicle Waiting: The Carrier shall require its drivers and
vehicles to remain away from the passenger loading areas and the starter
positions at the Terminal until such time as either a Carrier or Department
starter specifically instructs the driver and vehicle to approach the passenger
loading area in a Service Zone. The Carrier shall ensure that their
transportation vehicles in the waiting line are manned by drivers. The Carrier
shall require that the doors of its vehicles nearest the moving traffic lane be
closed at all times.
4.05 Complaints: The public shall be given the highest consideration in
matters affecting the operation of the Carrier under the terms of this
Agreement. Any questions or complaints
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regarding the standards of service, appearance and maintenance of the vehicles
or other standards of operation or public safety, which shall be brought before
the Department, shall be subject to review by the Department with due notice
thereof given to the Carrier. The Department may take such action as it deems
appropriate in the particular circumstances. The Carrier shall thereafter take
the necessary steps to comply with any reasonable directive of the Department
necessary to resolve complaints received and to prevent their recurrence. The
Carrier shall send copies of all correspondence related to customer complaints
relative to operations hereunder to the Department.
4.06 Lost and Found: The Carrier shall operate a lost and found service
for baggage and belongings of its customers.
4.07 No Solicitations: The Carrier agrees that no solicitations for
private business other than that herein provided for shall be carried on by the
Carrier at the Airport. The carrying on, or conducting, or the administration or
supervision of any other type or kind of business at the Airport by the Carrier
is strictly prohibited, unless specifically authorized by a separately issued
permit or agreement. This prohibition includes, but is not limited to,
activities such as the solicitation of, or the execution of rental car
contracts, the receipt of rental cars or the servicing, parking or moving of
rental cars on the Airport.
4.08 Advertising: The Carrier may sell advertising space, for display
on the outside or inside of its demand service vehicles. All revenues derived
from such sales shall be considered as part of Gross Revenues hereunder.
4.09 No Interference: The Carrier shall conduct its operations in an
orderly and proper manner so as not to annoy, disturb, interfere with or be
offensive to others, and shall control the conduct, demeanor and appearance of
its officers, employees, agents and representatives, and, upon objection from
the County or its authorized representative(s) concerning the conduct, demeanor
and appearance of such persons, shall immediately take all steps necessary to
correct or remove the cause of the objection.
4.10 Waste Disposal: The Carrier shall cause its drivers to use the
waste receptacles provided for the disposal of all waste materials, including
cigarette butts, matches, paper and other accumulated waste.
ARTICLE 5
Personnel
5.01 Manager: The Carrier shall designate, in writing, a qualified
full-time, locally resident, Manager, different from the manager(s) required by
any other agreement with the County, who shall be readily available during
regular business hours, and who shall serve as the primary day-to-day contact of
the Carrier
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with the Department for all activities pursuant to this Agreement ("Manager").
The Manager shall be qualified and experienced in the management, control and
operation of the services required to be performed hereunder and shall be
delegated sufficient authority by the Carrier to insure proper performance in
accordance with the terms and conditions of this Agreement. The Manager shall
have no other responsibilities except pursuant to this Agreement. The Carrier
shall also designate, in writing, sufficient assistant managers and supervisors,
who can be contacted by telephone, radio, or pager during non-regular business
hours and absences of the Manager.
5.02 Starter Services: The Carrier shall, at all reasonable times and
during the periods following the arrival of all incoming flights, have qualified
and experienced starters (dispatchers), approved in writing by Department, with
considerable knowledge of the South Florida area, assigned to appropriate
Service Zones to supervise and direct the vehicle drivers of the Carrier and
assist passengers relative to their use of the Demand Services. All starter
personnel shall be able to read and clearly and distinctively speak both English
and Spanish. The starters shall assist passengers in selection of an
appropriate mode of transportation, provide information on fares and services,
and coordinate the flow of ground transportation vehicles of the Carrier from
and through the Service Zones. The Carrier shall at all times, 24 hours per day,
seven days per week, have assigned to duty in the Airport Terminal Complex, not
less than one highly qualified, experienced starter supervisor, who shall be
authorized to act for the Carrier relative to operations hereunder. During
off-peak periods, overall or on a zone-by-zone basis, as may be defined by the
Department from time to time, a driver of the Carrier may also serve as starter,
if such driver meets the qualifications of a starter as stated herein. In the
event the Carrier does not provide a starter meeting the requirements above, the
Department shall have the right to provide a qualified starter and the Carrier
shall pay all costs for such starter provided by the County plus a 25%
administrative charge.
5.03 Employees: The Carrier shall properly control its employees, who
shall present a clean, neat and professional appearance at all times, discharge
their duties in a cooperative, courteous and efficient manner, and be suitably
uniformed in a manner distinctly different from that of other employees of the
Carrier at the Airport or other Airport personnel. The Carrier shall require all
personnel to wear visibly on their person, at all times while on duty, a
distinctive name tag identifying the individual by name, employee number, as an
employee of the Carrier, and, if appropriate, title. The name and employee
number of vehicle drivers, plus any other information or data as may be required
by the County Code, shall be prominently posted inside their vehicles during any
vehicle operations hereunder. All employees of the Carrier, who operate any
vehicle in connection with the provision of services hereunder, must have in
their
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possession a current, valid Florida chauffeurs license. All employees of the
Carrier having public contact shall be able to speak English clearly and
distinctly. The Carrier shall provide such testing programs, acceptable to the
Department, as are necessary to ensure compliance with the above requirement.
5.04 Employee Discipline: If it is determined by the Department that an
employee of the Carrier has acted improperly in the performance of services
hereunder, or contrary to the intent and purpose of this Agreement, the Carrier
shall be so advised and shall promptly institute appropriate disciplinary
action in accordance with the policies and procedures of the Carrier and the
severity of the infraction. Should initial disciplinary action fail to correct
the performance of an employee or should the severity of the infraction alleged
so warrant, the Department shall have the right to require that the Carrier not
use such employee in the provision of services under this Agreement.
ARTICLE 6
Fares and Rates
6.01 Initial Fares: The maximum per passenger fares for Demand Services
from the Airport to the Demand Service Areas in Dade County, and other areas
identified in the Carrier's Bid (which include applicable taxes), imposed by the
Carrier during the first year of the term of this Agreement, have been provided
to the County by the Carrier as part of its Bid for award of this Agreement, and
are incorporated herein by reference and shall be binding on the Carrier.
6.02 Fare Adjustments: The maximum per passenger fares pursuant to
Article 6.01 shall be subject to adjustment each six months, during the initial
term of this Agreement or any extensions thereof, to compensate for increases in
the price of fuel, the percent change in the Miami Area Consumer Price Index,
labor cost changes and governmental mandated costs. The Carrier shall request
such changes in writing, justifying such adjustments, which the Department may
administratively authorize. Any increases in such per passenger fares for other
reasons shall require approval by the Board of County Commissioners of Dade
County, Florida. In the event the Board of County Commissioners rejects such
fare adjustment request, or fails to approve such request following the
Carrier's written request, the Carrier shall have the right to cancel this
Agreement upon 90 days written notice. In addition, the per passenger fares
charged by the Carrier for Demand Services passengers transported from the
Airport shall not be less than the marginal cost of the Carrier in providing
such Services.
6.03 Posting of Fares: The Carrier shall develop a schedule of fares
and services in an easily readable form, approved by the Department, which shall
be printed in English and Spanish and any other languages as may be required by
the Department. Such
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schedule shall be posted for the specified service areas and any other
destinations served by the Carrier, at each passenger loading point required by
the Department and shall be available in printed form in each vehicle and with a
starter at each passenger loading point.
Article 7
Indemnification
The Carrier shall protect, defend, and hold the County and its
officers, agents and employees completely harmless from and against any and all
liabilities, losses, suits, claims, judgments, fines or demands arising by
reason of injury or death of any person or damage to any property, including all
reasonable costs for investigation and defense thereof (including but not
limited to attorney fees, court costs, and expert fees), of any nature
whatsoever arising out of or incident to this Agreement, except those arising as
a result of the County's right(s) to enter into this Agreement and/or the award
hereof, and/or the acts or omissions of officers, agents, employees,
contractors, subcontractors, licensees, or invitees of the Carrier regardless of
where the injury, death, or damage may occur, unless such injury, death or
damage is caused by the sole active negligence of the County. The County shall
give the Carrier reasonable notice of any such claims or actions. The Carrier
shall also use counsel reasonably acceptable to the County in carrying out its
obligations hereunder. The provisions of this Article shall survive the
expiration or early termination of this Agreement.
Article 8
Insurance
8.01 Insurance Required: In addition to such other insurance as may be
required by law, the Carrier shall maintain, during the term of this Agreement
the following:
(A) Public Liability Insurance on a comprehensive basis,
including Contractual Liability, in an amount not
less than $1,000,000 combined single limit per
occurrence for bodily injury and property damage.
(B) Automobile Liability Insurance, covering all owned,
non-owned and hired vehicles, in an amount not less
than $1,000,000 per occurrence combined single limit
for bodily injury and property damage or in an amount
equal to the insurance requirements for taxicab
operations and as required by State law and/or County
Code, whichever is the greater.
The liability insurance coverages required herein shall include those
classifications as listed in standard liability insurance manuals, which most
nearly reflect the operations of the Carrier under this Agreement. All insurance
policies
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required pursuant to the terms of this Agreement shall be issued by companies
authorized to do business under the laws of the State of Florida. Such companies
must be rated no less than "B" as to management and no less than Class VIII as
to strength, by the latest edition of Best's Insurance Guide, published by A. M.
Best Company, Inc., or its equivalent, or under programs authorized by the State
of Florida, subject to approval of the County Risk Management Division.
8.02 Insurance Certificates Required: Prior to commencement of
operations hereunder and annually thereafter, the Carrier shall furnish
certificates to the County which certificates shall clearly indicate; (1) that
the Carrier has obtained insurance in the type, amount and classifications as
required for strict compliance with this Article; (2) that the County is named
as an additional insured for the coverage required hereunder; and (3) that no
material change or cancellation of said insurance shall be effective without 30
days prior written notice to County. The County reserves the right to require
the Carrier to provide such reasonably amended insurance coverage as it deems
necessary or desirable upon issuance of notice in writing to the Carrier, which
notice shall automatically amend this Agreement effective 30 days after such
notice. Other than for Workers Compensation coverage, the County shall have the
right to reject aggregate limit policies, policies containing deductibles and
self-insurance or other programs regardless of State approval. In determining
whether to accept or reject such policies or programs, the Department will
consider the adequacy of and security for stand-by coverages, funding levels,
self insurance reserves, the ability of the Carrier to handle uninsured claims
and risks and the protection of the interests of the County and legitimate
claimants.
8.03 Carrier Liable: Compliance with the requirements of this Article 8
shall not relieve the Carrier from its liability under any other portion of this
Agreement.
8.04 Right to Examine: The Department reserves the right, upon
reasonable notice, to examine the original policies of insurance (including but
not limited to: binders, amendments, exclusions, riders and applications) to
determine the true extent of coverage. The Carrier agrees to permit such
inspection in the designated, appropriate offices of the Department.
8.05 Special Default: Failure by the Carrier to maintain required
insurance, to replace or renew expired or exhausted policies or, if
self-insurance has been authorized, to maintain adequate reserves, standby
coverages or other conditions of the authorization shall be grounds for
immediate termination of this Agreement by the Department; provided however that
this Agreement may be reinstated by the Department, if, within five days after
such termination, the Carrier provides proof, satisfactory to the Department,
that the coverages or policies are then as required herein.
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Article 9
Assignment and Ownership
9.01 No Assignment: The Carrier shall not assign, transfer, pledge, or
otherwise encumber this Agreement.
9.02 Ownership of Carrier: Since the ownership, control, and experience
of the Carrier were material considerations to the County in the entering into
of this Agreement, the Carrier shall take no actions which shall serve to
transfer or change the structure, ownership or control of the business entity of
the Carrier without prior written approval of the Department.
Article 10
Labor Activity
If any strike, boycott, picketing, work stoppage, slowdown or other
labor activity is directed against the Carrier which results in the curtailment
or discontinuance of services performed hereunder, the Department shall have the
right, during said period, to cause the services required to be provided by the
Carrier under this Agreement to be performed by others, without liability by the
County to the Carrier. During such period, the contractual requirement to
provide the services set forth in Article 2 and to make the payments set forth
in Article 3 shall be abated. All other terms, conditions, covenants and
provisions contained in this Agreement shall remain in full force and effect. In
the event the County incurs any costs as a result of the need to provide
alternate services as a result of such labor activity, the Carrier shall pay all
such reasonable costs upon billing by the Department.
Article 11
Termination by County
11.01 Payment Defaults: The County shall have the right, upon seven
calendar days written notice to the Carrier specifying the amount of payment in
default, to terminate this Agreement whenever the non-payment of any sum or sums
due hereunder continues for a period of ten calendar days after the due date for
such payments; provided, however, that such termination shall not be effective
if the Carrier makes the required payment within the notice period.
11.02 Revenue Control and Audit Defaults: The inability or failure of
the Carrier to strictly adhere to the revenue control of procedures established
pursuant to Article 3.10, or to provide the County with an unqualified certified
audit pursuant to Article 3.12, shall constitute a noncurable default and in
such event the County shall have the right to terminate this Agreement upon
seven calendar days written notice to the Carrier, without liability to the
Carrier. In addition to termination for such
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default, the County shall be entitled to collect damages in the full amount of
the payments security required pursuant to Article 3.08 hereof.
11.03 Default Terminations: The County shall have the right to
terminate this Agreement, upon 30 days written notice to the Carrier, upon the
occurrence of any one or more of the following, unless the same shall have been
corrected within such period:
(A) Nonperformance of any covenant of this Agreement,
other than the covenants to pay monies when due and
defaults pursuant to Article 11.02.
(B) The conduct of any business, the performance of any
service, or the merchandising of any product or
service not specifically authorized herein or
authorized by permit or otherwise in writing by the
Department.
11.04 Other Terminations: The County shall have the right to terminate
this Agreement or abate the terms and conditions of this Agreement, upon five
days written notice to the Carrier, without liability by the County to the
Carrier, at any time after the occurrence of one or more of the following:
(A) Issuance by any court of competent jurisdiction of
any injunction substantially restricting the use of
the Airport for airport purposes, or the continuance
of the provision of services by the Carrier under
this Agreement.
(B) The assumption by the United States Government or any
authorized agency thereof, or any governmental
agency, of the operation, control or use of the
Airport facilities or any substantial part, or parts
thereof, in such a manner as substantially to
restrict services and operations under this
Agreement.
11.05 Habitual Default: Notwithstanding the foregoing, in the event
that the Carrier has frequently, regularly or repetitively defaulted in the
performance of or breached any of the covenants and conditions required herein
to be kept and performed by the Carrier, regardless of whether the Carrier has
cured each individual condition of breach or default as provided in Articles
11.01 and 11.03 hereinabove, the Carrier shall be determined to be a "habitual
violator." At the time such determination is made, the Department shall issue to
the Carrier a written notice, advising of such determination and citing the
circumstances therefor. Such notice shall also advise the Carrier that there
shall be no further notice or grace periods to correct any subsequent breach(es)
or default(s) and that any subsequent breach(es) or default(s), of whatever
nature, taken with all previous breaches and defaults, shall be considered
cumulative and collectively, shall constitute a condition of noncurable default
and grounds for immediate termination of this
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Agreement. In the event of any such subsequent breach or default, the County
may terminate this Agreement upon the giving of written notice of termination
to the Carrier, such termination to be effective upon the seventh day following
the date of receipt thereof and all payments due hereunder shall be payable to
said date, and the Carrier shall have no further rights hereunder. Immediately
upon receipt of said notice of termination, the Carrier shall discontinue its
operations at the Airport.
11.06. Automatic Termination: The discontinuance of operations and
services required under this Agreement, except pursuant to Article 10 hereof or
by reason of Acts of God or force majeure, for any period of time exceeding
one consecutive three hour period shall constitute a default by the Carrier and
this Agreement shall be automatically terminated.
Article 12
Termination by Carrier
The Carrier shall have the right, upon 30 calendar days written notice to
the County, to terminate this Agreement, without liability to the County, at
any time after the occurrence of one or more of the following events:
(A) Issuance by any court of competent jurisdiction of any injunction
substantially restricting the use of the Airport for airport purposes,
and the remaining in force of said injunction for a period of more
than 90 calendar days.
(B) Breach by the County of any of the material terms, covenants or
conditions contained in this Agreement required to be kept by the
County and failure of the County to remedy such breach for a period of
90 calendar days after receipt by the Department of written notice
sent by registered or certified mail from the Carrier of the existence
of such breach.
(C) Assumption by the United States Government of any authorized agency
thereof, or any other governmental agency, of the operation, control
or use of the Airport facilities or any substantial part, or parts
thereof, in such a manner as substantially to restrict the operations
of the Carrier for a period of 90 days.
Article 13
Nondiscrimination
13.01 Employment Discrimination: The Carrier shall not discriminate
against any employee or applicant for employment to be employed in the
performance of services under this Agreement
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with respect to hire, tenure, terms, conditions, or privileges of employment, or
any matter directly or indirectly related to employment because of age, sex or
physical handicaps (except where based on a bona fide occupational
qualification), or because of race, color, religion, national origin or
ancestry.
13.02 Nondiscriminatory Access to Service: The Carrier, for itself, its
personal representatives, successors in interest and assigns, as a part of the
consideration hereof, does hereby covenant and agree as a covenant of this
Agreement; (1) that no person on the grounds of race, color, age, sex, religion,
national origin or ancestry shall be excluded from participation in, denied the
benefits of, or be otherwise subjected to discrimination in the use of the
services provided hereunder; (2) that in the furnishing of services hereunder,
no person on the grounds of race, color, age, sex, religion, national origin or
ancestry shall be excluded from participation in, denied the benefits of, or
otherwise be subjected to discrimination; and (3) that the Carrier shall provide
services in compliance with all other requirements imposed by or pursuant to
Title 49, Code of Federal Regulations, Department of Transportation-Effectuation
of Title VI of the Civil Rights Act of 1964, and as said Regulations may be
amended.
13.03 Breach of Nondiscrimination Covenants: In the event it has been
determined that the Carrier has breached the nondiscrimination covenants
contained in Articles 13.01 and 13.02 above, pursuant to the complaint
procedures contained in the applicable Federal Regulations, and the Carrier
fails to comply with the sanctions and/or remedies which have been prescribed,
the County shall have the right to terminate this Agreement pursuant to Article
11.03 hereof.
13.04 Affirmative Action and Disadvantaged Business Enterprise
Programs: The Carrier acknowledges that the provisions of 14 CFR Part 152,
Affirmative Action Employment programs, and 49 CFR Part 23, Disadvantaged
Business Enterprise programs, are applicable to the activities of the Carrier
under the terms of this Agreement, unless exempted by said regulations, and
hereby agrees to comply with all requirements of the County, the Department, the
Federal Aviation Administration and the U.S. Department of Transportation,
which are applicable to the activities of the Carrier. These requirements may
include, but not be limited to, the compliance with Disadvantaged Business
Enterprise and/or Employment Affirmative Action participation goals, the keeping
of certain records of good faith compliance efforts, which would be subject to
review by the various agencies, and the submission of various reports,
including, if directed by the Department, the contracting of specified
percentages of goods and services contracts to Disadvantaged Business
Enterprises. In the event it has been determined, in accordance with applicable
regulations, that the Carrier has defaulted in the requirement to comply with
the requirements of this section and fails to comply with the sanctions and/or
FA-20 (AD-2)
<PAGE> 25
remedies then prescribed, the County shall have the right, upon written notice
to the Carrier, to terminate this Agreement pursuant to Article 11.03 hereof.
Further, the Carrier acknowledges that as part of its bid, it has
submitted an Affirmative Action Plan which, along with any Department approved
revisions, is hereby incorporated as a contractual obligation to Dade County.
The Carrier shall undertake and perform the affirmative actions specified
therein. The Aviation Director may declare the Carrier in default of this
Agreement for failure of the Carrier to comply with the requirements contained
herein.
Article 14
Rules, Regulations and Permits
14.01 Rules and Regulations: The Carrier, notwithstanding anything to
the contrary contained herein, shall comply with all Ordinances of the County,
including Chapter 25 (the Rules and Regulations of the Department) and Chapter
31 (Vehicles for Hire), of the Code of Metropolitan Dade County, Florida, as the
same may be amended from time to time, Operational Directives issued thereunder,
and all additional laws, ordinances, regulations and rules of the Federal, State
and County Governments, and any and all plans and programs developed in
compliance therewith, which may be applicable to its operations or activities
under this Agreement.
14.02 Violations of Rules and Regulations: The Carrier agrees to pay on
behalf of the County any penalty, assessment or fine, issued in the name of the
County, or to defend in the name of the County any claim, assessment or civil
action, which may be presented or initiated by any agency of the Federal, State
or County governments, based in whole or substantial part upon a claim or
allegation that the Carrier, its agents, employees or invites, have violated any
law, ordinance, regulation or rule described in Article 14.01 above or any plan
or program developed in compliance therewith. The Carrier further agrees that
the substance of this Article 14.02 and Article 14.01 above shall be included in
every contract and other agreement, which the Carrier may enter into related to
its operations and activities under this Agreement and that any such contract
and other agreement shall specifically provide that "Dade County, Florida, is a
third party beneficiary of this and related provisions." This provision shall
not constitute a waiver of any other conditions of this Agreement prohibiting or
limiting assignments or subcontracting.
14.03 Permits and Licenses: The Carrier shall obtain, pay for, and
maintain current all permits and licenses as required for its operations
hereunder.
14.04 Alcohol and Drug Testing: The Carrier acknowledges that the
County, as a public agency sponsor under the provisions
FA-21 (AD-2)
<PAGE> 26
of the Airport and Airway Improvement Act of 1982, as amended, has the
obligation to establish a drug free workplace and to establish policies and
programs to ensure airport safety and security. The Carrier acknowledges that
the Department, on behalf of the County, has the right to require users of the
Airport (Lessees, Permittees, Licensees, etc.) to establish reasonable programs
to further the achievement of the obligations described herein. Accordingly, the
Carrier shall establish programs for pre-employment alcohol and drug screening
for all candidates for employment at the Airport and for the same or similar
screening based upon a reasonable suspicion that an employee, while on duty at
the Airport, may be under the influence of alcohol or drugs. Further, to the
extent permitted by law and/or contract, the Carrier shall establish a program
for the random alcohol and drug screening of all its employees who are
authorized, pursuant to other provisions of this Agreement, to operate, any type
or kind of motor vehicle on the Airport. The Carrier shall make reasonable good
faith efforts to try to negotiate amendments to any existing contract(s) which
may serve as a bar to the Carrier's implementation of its obligations hereunder.
14.05 Drug-Free Workplace Certification: Notwithstanding the provisions
of Article 14.04 above and in addition thereto, the Carrier, in its execution of
this Agreement, hereby certifies and agrees, pursuant to County Ordinance
#92-15, adopted on March 17, 1992, as such may be amended from time to time,
that it will provide drug-free workplace(s) for all its employees. In providing
such drug-free workplace(s), as a minimum, the Carrier shall do the following:
(A) Provide each employee with a written statement
notifying the employee that the unlawful manufacture,
distribution, dispensation, possession or use of a
controlled substance, as defined in Section
893.02(4), Florida Statutes in the Carrier's
workplace(s) is prohibited and specifying the actions
the Carrier will take against employees for violation
of such prohibition. Such written statement shall
also inform the employee about the following:
(1) The dangers of alcohol and drug abuse in the
workplace.
(2) The Carrier's policy of maintaining a
drug-free environment at all its workplaces,
including, but not limited to, all locations
where employees perform any task relating to
its operations under this Agreement.
(3) Any available alcohol and drug counseling,
rehabilitation and employee assistance
programs available to employees with an
alcohol or drug problem.
FA-22 (AD-2)
<PAGE> 27
(4) The penalties that may be imposed by the
Carrier on employees for alcohol or drug
abuse violations.
(B) Require each employee to sign a copy of the written
statement required pursuant to Section (A) above to
acknowledge the employee's receipt of same and advice
as to the specifics of such policy. The Carrier shall
maintain copies of the statements signed by its
employees. The Carrier shall also post in prominent
places at all of its workplaces a written statement
of its drug-free workplace policy containing at least
all of the elements contained in Paragraphs (1)
through (4) of Section (A) above.
(C) Notify each employee, in the written statement
required pursuant to Section (A) above, that as a
condition of employment, the employee will (i) abide
by the Carrier's drug-free workplace policy contained
in the written statement; and (ii) notify the Carrier
of any criminal drug statute conviction for a
violation occurring in the workplace no later than
five days after such conviction.
(D) Notify the Department within ten days after receiving
notice under Section (C) above from such employee or
otherwise receiving actual notice of such conviction.
(E) Impose appropriate personnel action, up to and
including termination, for any employee convicted for
violation of a criminal drug statute; or, require
such employee to satisfactorily participate in a drug
abuse assistance or rehabilitation program, approved
for such purposes by a Federal, State or local
health, law enforcement or other appropriate agency.
(F) Make a good faith effort to continue to maintain a
drug-free workplace through implementation, of
Sections (A) through (E) above.
Annually, as of the annual anniversary date of the effective date of
this Agreement, the Carrier shall provide a certification, in a form to be
prescribed by the County, that it will continue to provide for drug-free
workplace(s) in the same manner as described herein.
This Agreement shall be terminated, upon fifteen days written notice to
the Carrier, and without liability to the County, if the Department or the
County Manager determines any of the following
(G) That the Carrier has made a false certification in
its execution of this Agreement or in accordance with
the annual re-certification required above;
FA-23 (AD-2)
<PAGE> 28
(H) That the Carrier has violated its original or renewal
certification by failing to carry out any of the
requirements contained in Sections (A), (B), (C),
(D), (E) or (F); or
(I) That such a number of employees of the Carrier have
been convicted of violations in workplace(s), as to
indicate that the Carrier has failed to make a good
faith effort to provide a drug-free workplace as
required herein.
Article 15
Trust Agreement and Bond Resolution
15.01 Incorporation of Trust Agreement and Bond Resolution by
Reference: Notwithstanding any of the terms, provisions and conditions of this
Agreement, it is understood and agreed by the parties hereto that the provisions
of the Trust Agreement dated as of the 1st day of October, 1954, as amended, by
Chase Manhattan Bank, (now the Chase Manhattan Bank, National Association) as
trustee and the First National Bank of Miami (now Southeast Bank, N.A.) as
co-trustee, (the "Trust Agreement") and Resolution No. R-1654-84 adopted by the
County on December 4, 1984, securing Dade County Aviation Facilities Revenue
Bonds (the "Bond Resolution"), which Trust Agreement and Bond Resolution are
incorporated herein by reference thereto, shall prevail and govern in the event
of any conflict or inconsistency with or ambiguity relating to the terms and
conditions of this Agreement, including rents, fees or charges required herein,
and their modification or adjustment. Copies of the Trust Agreement and Bond
Resolution are available for inspection in the offices of the Department during
normal working hours.
15.02 Adjustment of Terms and Conditions: If, at any time during the
term of this Agreement, a court of competent jurisdiction shall determine that
any of the terms and conditions of this Agreement, including the rentals, fees
and charges required to be paid hereunder to the County by the Carrier or by
other Carriers or Lessees under other Agreements of the County for the lease or
use of facilities used for similar purposes, are unjustly discriminatory, the
County shall have the right to modify such terms and conditions and to increase
or otherwise adjust the rentals, fees and charges required to be paid under this
Agreement in such a manner as the County shall determine is necessary and
reasonable so that the rentals, fees and charges payable by the carriers and
others shall not thereafter be unjustly discriminatory to any user of like
facilities and shall not result in any violation of the Trust Agreement and/or
Bond Resolution or in any deficiency in revenues necessary to comply with the
covenants of the Trust Agreement and/or Bond Resolution. In the event the County
has modified the terms and conditions of this Agreement, including any
adjustment of the rentals, fees and
FA-24 (AD-2)
<PAGE> 29
charges required to be paid to the County pursuant to this provision, this
Agreement shall be amended to incorporate such modification of the terms and
conditions including the adjustment of rentals, fees and charges upon the
issuance of written notice from the Department to the Carrier.
15.03 Carrier Right to Terminate: In the event the terms and conditions
of this Agreement, including the rentals, fees and charges payable hereunder,
have been substantially modified pursuant to Article 15.02 above, the Carrier,
at any time within one year following the effective date of such modification
may terminate this Agreement by giving 90 days written notice to the County,
without liability by any party to any other party.
Article 16
Civil Actions
16.01 Governing Law/Venue: This Agreement shall be governed and
construed in accordance with the laws of the State of Florida. The venue of any
action on this Agreement shall be laid in Dade County, Florida, and any action
to determine the rights or obligations of the parties hereto shall be brought in
the courts of the State of Florida.
16.02 Notice of Commencement of Civil Action: In the event that the
County or the Carrier commence a civil action in the State or Federal courts,
where such action is based in whole or in part on an alleged breach of this
Agreement, the County and the Carrier agree to waive the procedure for initial
service of process mandated by Chapters 48 and 83, Florida Statutes, Rule 1.070,
Florida Rules of Civil Procedure and Rule 4(c), Federal Rules of Civil
Procedure. In such event the County and the Carrier agree to submit themselves
to the jurisdiction of the court in which the action has been filed when initial
service has been made in the following manner:
(A) Upon the County: by Certified Mail, Return Receipt
Requested, sent to (i) the party indicated in Article
17.06 on behalf of the County and (ii) with a copy to
the County Attorney, Aviation Division, P.O. Box 592075
AMF, Miami, FL 33159.
(B) Upon the Carrier: by personal service or by Certified
Mail, Return Receipt Requested, upon the party
indicated in Article 17.06 on behalf of the Carrier,
with a copy to whatever attorney the Carrier has
designated in writing, if any.
In the event that the County and/or the Carrier raise an objection to
service of initial pleadings as provided for herein, and the trial court
overrules such objection, the objecting party shall pay liquidated damages
(attorney's fees) in the amount of
FA-25 (AD-2)
<PAGE> 30
$250.00 to plaintiff in such action, prior to answering the complaint.
16.03 Registered Office/Agent; Jurisdiction: Notwithstanding the
provisions of Article 16.02 above, and in addition thereto, the Carrier, if a
corporation, shall designate a registered office and a registered agent, as
required by Section 48.091, Florida Statutes, such designations to be filed with
the Florida Department of State in accordance with Section 607.034, Florida
Statutes. If the Carrier is a natural person, he and his personal representative
hereby submit themselves to the jurisdiction of the Courts of this State for any
cause of action based in whole or in part on the alleged breach of this
Agreement.
Article 17
Other Provisions
17.01 Cooperation at Termination: Upon notice of termination of this
Agreement, the Carrier shall cooperate, upon written request of the Department,
with the operator selected to succeed the Carrier, such cooperation to include,
but not be limited to, meeting with the successor operator to coordinate the
changeover in service, allow successor to inspect all facilities owned by the
Department, and coordinate with the successor installation of communication
lines and the like necessary for its operation.
17.02 Payment of Taxes: The Carrier shall pay any taxes lawfully
assessed against its operations hereunder; provided, however, that the Carrier
shall not be deemed to be in default of its obligations under this Agreement for
failure to pay such taxes pending the outcome of any legal proceedings
instituted in courts of competent jurisdiction to determine the validity of such
taxes. Failure to pay same after the ultimate adverse conclusion of such contest
shall constitute a default, pursuant to Article 11.01.
17.03 Rights to be Exercised by Department: Wherever in this Agreement
rights are reserved to the County, such rights may be exercised by the
Department.
17.04 Rights of County at Airport: The County shall have the absolute
right, without limitation, to make any repairs, alterations and additions to
any structures and facilities at the Airport. The County shall, in the exercise
of such right, be free from any and all liability to the Carrier for business
damages occasioned during the making of such repairs, alterations and additions,
except those occasioned by the sole active negligence of the County, its
employees, or agents.
17.05 Federal Subordination: This Agreement shall be subordinate to the
provisions of any existing or future agreements between the County and the
United States of America
FA-26 (AD-2)
<PAGE> 31
relative to the operation and maintenance of the Airport, the execution of which
has been or may be required as condition precedent to the expenditure of Federal
funds for the development of the Airport. All provisions of this Agreement shall
be subordinate to the right of the United States of America to lease or
otherwise assume control over the Airport, or any part thereof, during time of
war or national emergency for military or naval use and any provisions of this
Agreement inconsistent with the provisions of such lease to the United States of
America shall be suspended.
17.06 Notices: Any notices given under the provisions of this Agreement
shall be in writing and shall be hand delivered or sent by Registered or
Certified Mail, Return Receipt Requested to:
To the County:
Director
Dade County Aviation Department
Post Office Box 592075
Miami, Florida 33159
To the Carrier, care of the Manager, or to:
Miami Shuttle, Inc.
4300 N.W. 14th Street
Miami, Florida 33126
or to such other respective addresses as the parties may designate to each other
in writing from time to time. Notices by Registered or Certified Mail shall be
deemed given on the delivery date indicated on the Return Receipt from the U.S.
Postal Service.
17.07 Severability: If any provision of this Agreement or the
application thereof to either party to this Agreement are held invalid by a
court of competent jurisdiction, such invalidity shall not affect other
provisions of this Agreement which can be given effect without the invalid
provision, and to this end, the provisions of this Agreement are severable.
17.08 No Waiver: There shall be no waiver of the right of the County to
demand strict performance of any of the provisions, terms and covenants of this
Agreement nor shall there be any waiver of any breach, default or
non-performance hereof by the Carrier unless such waiver is explicitly made in
writing by the Department. Any previous waiver or course of dealing shall not
affect the right of the County to demand strict performance of the provisions,
terms and covenants of this Agreement with respect to any subsequent event or
occurrence or of any
FA-27 (AD-2)
<PAGE> 32
subsequent breach, default or non-performance hereof by the Carrier.
17.09 Right to Regulate: Nothing in this Agreement shall be construed
to waive or limit the governmental authority of the County, as a political
subdivision of the State of Florida, to regulate the Carrier or its operations.
17.10 Inspections: The authorized employees and representatives of the
County, and of any applicable Federal or State agencies having jurisdiction
hereof, shall have the right of access at all reasonable times to the equipment
operated by the Carrier hereunder and any premises, on or off-Airport, which the
Carrier may occupy for use as administrative, maintenance and operational
facilities in connection with its operations hereunder for the purposes of
inspection to determine compliance with the provisions of this Agreement, even
if such inspection may disrupt the activities of the Carrier. The right of the
County to make inspections, pursuant to this Article and other provisions of
this Agreement, shall impose no duty on the County to inspect and shall impart
no liability on the County should it not make any such inspections.
17.11 Headings: The headings of the various Articles and Sections of
this Agreement, and the Table of Contents, are for convenience and ease of
reference only, and shall not be construed to define, limit, augment or describe
the scope, context or intent of this Agreement or any part or parts of this
Agreement.
17.12 Binding Effect: The terms, conditions and covenants of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their successors and assigns. This provision shall not constitute a waiver
of any conditions prohibiting assignment or subletting.
17.13 Performance: The parties expressly agree that time is of the
essence in the performance of this Agreement and that the failure by the Carrier
to complete performance within the time specified, or within a reasonable time
if no time is specified herein, shall relieve County of any obligation to accept
such performance.
17.14 County-Carrier Relationship: Notwithstanding any of the terms,
conditions and covenants of this Agreement, nothing contained herein shall be
construed as creating any landlord and tenant relationship between the County
and the Carrier. Further, officers, agents, or employees of the Carrier shall
not be deemed to be employees of the County for any purpose whatsoever. No
partnership or joint venture relationship between the County or the Department
and the Carrier is created or intended in this Agreement.
FA-28 (AD-2)
<PAGE> 33
17.15 Entirety of Agreement: The parties hereto agree that this
Agreement sets forth the entire Agreement between the parties, and there are no
promises or understandings other than those stated herein. None of the
provisions, terms and conditions contained in this Agreement may be added to,
modified, superseded or otherwise altered, except as may be specifically
authorized herein or by written instrument executed by the parties hereto.
FA-29 (AD-2)
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their appropriate officials as of the date first above written.
BOARD OF COUNTY COMMISSIONERS
OF DADE COUNTY, FLORIDA
By: /s/ Illegible Signature
County Manager
Attest: Marshall Ader, Clerk
By: /s/ Illegible Signature
Deputy Clerk
(COUNTY SEAL)
[COUNTY COMMISSIONERS SEAL]
CARRIER: (If Individual or CARRIER: (If Corporation)
partnership)
Name: Name:
MIAMI SHUTTLE, INC.
By: By: /s/ CHARLES E. MARTIN
President
Print Name
CHARLES E. MARTIN
Title: Print Name
WITNESS TO ABOVE SIGNATURE: Attest: /s/ CHARLES E. MARTIN
Secretary
/s/ Illegible Signature
/s/ CHARLES E. MARTIN
Print Name
/s/ Illegible Signature
FA-30 (AD-2)
<PAGE> 1
EXHIBIT 10.22
DOOR-TO-DOOR OPERATOR
COMMERCIAL GROUND TRANSPORTATION OPERATING PERMIT
JOHN WAYNE AIRPORT
ORANGE COUNTY
Permittee is hereby authorized and permitted by the County or Orange,
hereinafter referred to as "County", acting by and through its Airport Director,
hereinafter referred to as "Director", to operate its business or a phase
thereof at the John Wayne Airport, hereinafter referred to as "Airport", for the
following purposes only and subject to the terms and conditions hereinafter set
forth.
The following specific terms and conditions are hereby mutually agreed to
between County and PREFERRED TRANSPORTATION, INC. DBA SUPERSHUTTLE (hereinafter
referred to as "Permittee"):
1. Use Purpose Defined
Provide Door-to-Door ground transportation service to airline passengers whose
flights are arriving at or departing from the John Wayne Airport. Passenger
drop-offs, in conjunction with the providing of such services, may be made at
the terminal curbs on the Upper Level of the Terminal roadways, and passenger
pick-ups may be made at the loading zones on the Lower Level of the Terminal
roadways, and only by authorized vehicles bearing a valid identification sticker
and an automatic vehicle identification device (transponder) issued by Director.
2. Term of Permit
This permit shall become effective on 7-7, 1997, and shall continue in forms on
a thirty (30) day, month-to-month basis, until revoked or mutually cancelled as
hereinafter provided.
3. Authorized Vehicles
A. Permittee shall report to Director, on forms provided for that
purpose, the California State Vehicle Identification Number,
License plate number, company identification number, if any, and
vehicle type for each of the Permittee's vehicles used for its
operations at Airport.
B. All of Permittee's vehicles operated at the Airport shall possess
identical color schemes and marking, so as to be readily
identifiable as belonging to Permittee; shall display the name of
Permittee, or its "DBA" on the rear and sides of each vehicle, in
a type style and size so as to be
<PAGE> 2
Transportation Operating Permit
Page 2
readily identifiable; shall possess Permittee's company
identification sticker and automatic vehicle identification
device, permanently affixed as instructed by Director.
C. Upon receipt of the requisite information and performance of all
other conditions precedent contained in this Permit Director may
issue identification stickers and automatic identification devices
to be attached to each authorized vehicle.
4. Consideration for Permit
As consideration for this Permit, Permittee agrees:
A. To pay County, a monthly fee determined by the number of monthly
trips conducted by Permittee under this Permit. For the purposes
of this Permit, a trip shall be defined as each time one of
Permittee's vehicles passes in front of Airport's Terminal
Building on the Lower Level only. The per trip fee payable shall
be established in the Airport's Rules and Regulations, which may
be amended from time to time by the Board of Supervisors.
Payments shall be made in lawful money of the United States, free
from all claims, demands, set-offs, or counter claims of any kind
against County. Payments not paid when due shall be subject to
interest thereon at the rate of one and one-half percent (1-1/2%)
per month.
B. To allow County to permanently affix a transponder to the roof of
Permittee's vehicles so that County may monitor Permittee's
operation of its vehicles on the Terminal roadways and
automatically record the number of monthly vehicle trips Permittee
conducts under this Permit.
In the event of an Automatic Vehicle Identification System
failure, County shall determine Permittee's monthly fee based upon
the number of vehicle trips made in the same month prior year, or
if less than one full year of operation, Permittee's fee shall be
based upon the average of the number of vehicle trips for the
total number of months in operation under this Permit.
County will provide the first transponder for each of Permittee's
vehicles.
<PAGE> 3
Transportation Operating Permit
Page 3
Permittee will pay for any replacement transponders. County, or
its agent or employees, shall attach the transponder to the
vehicle roof, County shall not drill, rivet or otherwise puncture
the body of Permittee's vehicles in the course of installing the
transponder unit, and shall install the transponders in a
workmanlike manner so as to avoid unnecessary damage to the roofs
of Permittee's vehicles.
Permittee agrees to waive all and any claims against the County
for any or all incidental damage caused to Permittee's vehicles by
the ordinary process of install or removing the transponders.
5. Books and Records
Permittee shall maintain for a period of four years or, in the event of
claim by County, until such claim of County for payments hereunder shall
have been fully ascertained, fixed and paid, separate and accurate daily
records of gross revenues derived from ground transportation operations
and trip activity as herein defined, and in accordance with generally
accepted accounting principles, showing detail all business done or
transacted in, on, about or from or pertaining to Permittee's operations
at Airport, and Permittee shall enter all receipts arising from such
business in regular books of account, and all entries in any such records
or books shall be made at or about the time the transactions respectively
occur. In addition, Permittee shall maintain monthly and annual reports
of gross revenues and trip activity derived from its operation under this
Permit, using a form and method as is determined by Director. Such forms
and methods shall be employed by Permittee throughout the term of this
Permit. Such books and records shall be maintained at Permittee's
principal place of business unless otherwise permitted by Director in
writing. Upon Director's written request, Permittee shall make available
immediately at Airport any and all books, records and accounts pertaining
to its operations under this Permit. The intent and purpose of the
provisions of this section are that Permittee shall keep and maintain
records which will enable County to ascertain, determine and audit, if so
desired by County, clearly and accurately, the gross revenues and trip
activity of Permittee, and that the form and method of Permittee's
reporting of gross revenues and trip activity will be adequate to provide
a control and test check of all revenues derived by
<PAGE> 4
Transportation Operating Permit
Page 4
Permittee under this Permit.
Should any examination, inspection, and audit of Permittee's books and
records by County disclose an underpayment by Permittee in excess of five
percent (5%) of the consideration due, Permittee shall promptly pay
County the amount of such underpayment and shall reimburse County all
costs incurred in the conduct of such examination, inspection, and audit.
In the event that County deems it necessary to utilize the services of
legal counsel in connection with collecting the reimbursement for such
examination, inspection, and audit, then Permittee shall reimburse County
for reasonable attorney's fees and litigation expenses as part of the
aforementioned costs incurred.
Not later than ninety (90) days after the annual anniversary of the
commencement of this Permit, when required by Director, Permittee shall
furnish to County a confidential report, certified by Permittee to be
true and correct, of the ground transportation gross revenues and trip
activity derived by Permittee from its operations permitted hereunder.
Said report shall not be made public except as required by law.
Permittee shall furnish County with such other financial or statistical
reports as Director, from time to time, may reasonably require.
6. Other Charges and Fees
Permittee shall pay all other charges, penalties or fees occasioned by
Permittee's operations or activities on or about the Airport.
7. Indemnity
Permittee and Permittee's independent contractors agree to defend,
indemnify and hold harmless County, Board of Supervisors and its members,
and all of the officers, agents, and employees if each of them, from and
against all damages, claims, demands, obligations, suits, judgements,
penalties, causes of action, losses or liability for injuries to or
deaths of persons or damage to property proximately caused by or arising
out of acts, omission, use occupancy or operation of the actions of
Permittee or Permittee independent contractors related to this Permit.
<PAGE> 5
Transportation Operating Permit
Page 5
Each party hereto shall give to the other prompt and timely written
notice of any claim made or suit instituted coming to its knowledge which
in any way, directly or indirectly, contingently or otherwise, affects or
might affect either, and each shall have the right to participate in the
defence of the same to the extent of its own interest.
8. Insurance
Permittee shall procure and maintain during the term of this Permit the
following insurance:
A. Workers' Compensation, with Employer's Liability at a minimum
single limit of $1,000,000.
B. Comprehensive General Liability Insurance with respect to each
occurrence of bodily injury, property damage, contractual
liability, independent contractors, personal injury, products, and
completed operations with a minimum single limit of $1,000,000.
C. Comprehensive Automobile Liability Insurance with limits not less
than FIVE MILLION DOLLARS ($ 5,000,000) each occurrence combined
single limit bodily injury or property damage, including
employer's non-ownership liability and hired automobile coverage.
The evidence of insurance (policy or certificate) must contain the
following Endorsements:
D. Additional Named Insureds: The County of Orange, the Board of
Supervisors of Orange County and its members and all of their
officers, employees and agents of each of them are named as
additional insureds hereunder.
E. Severability of Interest (Cross Liability): The term "the insured"
is used severally and not collectively, and the insurance afforded
under the liability coverage applies separately to each insured
against whom claim is made or suit is brought, but the inclusion
herein of more than one insured shall not operate to increase the
limits of the company's liability.
<PAGE> 6
Transportation Operating Permit
Page 6
F. Cancellation or Material Change Notice: Written notice of
cancellation or of any material change in said policy shall be
delivered thirty (30) days in advance of the effective date
thereof to: John Wayne Airport, Landside Operations, 18601 Airport
way #41, Santa Ana, CA 92707. Such written notice will commence
from the date the notice is actually received at the John Wayne
Airport.
G. Premises and/or Operations Insured: Activities upon, in and around
John Wayne Airport and any space hereafter assigned.
H. No Other Insurance Stipulation: No other insurance effected by the
County of Orange will be called on to contribute to a loss covered
hereunder.
I. Primary Insurance: Such policies are primary insurance to any
other insurance available to the Additional Insureds, with respect
to any claims arising out of this Permit, and that insurance
applies separately to each insured against whom claim is made or
suit is brought.
Certificates of insurance evidencing all coverages and endorsements above
shall be furnished to the County before commencing any operations under
this Permit.
Permittee agrees that the terms of these insurance requirements may be
increased and revised upon the written demand of the County, which demand
must be based on reasonable and justifiable grounds.
9. Faithful Performance Bond
Permittee agrees that upon execution of this Permit, it will, at its own
expense, deliver to Director a surety bond or bonds in the amount of TWO
THOUSAND DOLLARS ($ 2,000 ), payable to County, naming County as obligee
and issued by a surety company or companies acceptable to County, and in
such form as approved by County, which surety bond or bonds may be
renewed annually, and shall be maintained in full force and effect during
the term of this Permit at the expense of the Permittee, to insure the
faithful performance by Permittee of all the covenants, terms and
conditions of this Permit, inclusive of but not restricted to the payment
of all considerations provided therein. The surety company issuing said
bond or
<PAGE> 7
Transportation Operating Permit
Page 7
bonds shall give Director notice in writing by registered mail at least
sixty (60) days, prior to an anniversary date of its intention not to
renew said bond or bonds. In lieu of such surety bond or bonds, permittee
may deposit with County an Irrevocable Letter of Credit, Treasury Bonds
of the United States of America, Certificates of Deposit or a Certified
Check, in a form acceptable to County, in the agreed amounts as security
for faithful performance by Permittee as herein above provided, and
Permittee may have the right to reserve to itself interest payable on
said United States Bonds, or Certificates of Deposit.
County reserves the right to adjust the amount of the Faithful
Performance Bond to reflect changes in operations or changes in "trip"
fees established by County. Within thirty (30) days after notification of
any change in required Faithful Performance Bond amount from County,
Permittee shall submit to County any additional Faithful Performance Bond
as may be required.
10. Right of Access
During the existence of the Permit, and subject to the Airport's rules
and regulations, Permittee, its agents, licensees and business invitees,
shall possess the right of ingress to and egress from and about the
Airport by authorized vehicles bearing valid identification stickers and
automatic vehicle identification devices, as required by Permittee's
operations hereunder; provided that such right shall not be exercised in
a manner and to such extent as to impede or interfere with the operation
of the Airport by County, its lessees, or other permittees, and shall be
subject to the rules and regulations of the Airport.
11. Waybills
Every Door-to-Door passenger pickup shall be documented by a waybill
prepared in advance of the pickup. Waybills shall be prepared by
Permittee or the driver of the Permittee's vehicle prior to the vehicle's
arrival at the Airport passenger pickup zone. The waybill shall state the
passenger's name, the number of persons in the party, the location of the
pickup, the time of the scheduled pickup, and the airline and flight
number on which the passenger has arrived. The driver of the Permittee's
vehicle is required to present the waybill to any Airport official who
requests to inspect it. The driver of the Permittee's vehicle may prepare
the waybill based on radio or telephone communications to the driver.
<PAGE> 8
Transportation Operating Permit
Page 8
12. Default by Permittee
Permittee shall be in default under this Permit if:
A. Permittee shall fail duly and punctually to pay the fees, or to
make any other payment required hereunder, when due to County; or
B. The interest of Permittee under this Permit shall be transferred,
without the approval of the County, by reason of death, operation
of law, assignment, sub-lease or otherwise, to any person, firm or
corporation; or
C. Permittee shall voluntarily abandon, desert or fail to use its
rights hereunder; or
D. Permittee shall fail to keep, perform or observe each and every
other promise, covenant and agreement set forth in this Permit,
including maintenance of affirmative action and employment
non-discrimination goals as set forth herein or the submission of
reports requested herein, and such failure shall continue for a
period of more than thirty (30) days after delivery by Director of
a written notice of such breach or default, except where
fulfillment of its obligation requires activity over a period of
time, and Permittee shall have commenced in good faith to perform
whatever may be required for fulfillment within ten (10) days
after receipt of notice and continues such performance without
interruption except for causes beyond its control; or
E. Permittee shall use or give its permission to any person to use
any portion of Airport, used by Permittee under this Permit, for
any illegal purpose.
13. County Remedies
If default is made by Permittee in any of the covenants, terms and
conditions herein contained, County may elect to:
A. Allow this Permit to continue in full force and effect and to
enforce all of the County's rights and remedies hereunder,
including, without limitation, the right to collect fees as they
become due together with interest thereon at the rate of one and
one-half percent (1 - 1/2%) per
<PAGE> 9
Transportation Operating Permit
Page 10
hereunder or which in the ordinary course would likely result
therefrom.
15. No Waiver of Subsequent Breaches or Defaults
The failure of County at any time to insist upon a strict performance of
any of the terms, conditions and covenants herein shall not be deemed a
waiver of any subsequent breach or default in the terms, conditions and
covenants herein.
16. Prohibition Against Advertising
No advertising or solicitation, including the posting of room rates or
transportation fares, shall be allowed on any of Permittee's vehicles,
unless specifically approved in writing by Director; except that a
vehicle may display Permittee's authorized common color scheme and
markings and destination signs.
17. Prohibited Conduct
The following activities are Permittee are prohibited:
A. Picking up or discharging passengers or their baggage at any
terminal level other than those designated for such purpose;
B. Leaving the vehicle unattended;
C. Failing to give, upon a passenger's request a receipt showing the
amount of fare paid, the driver's correct name, the name of the
Permittee and the vehicle number, if any;
D. Failing to maintain the interior and exterior of the vehicle in a
clean condition;
E. Littering of the loading zone;
F. Providing false information to authorized Airport Personnel;
G. Failure to display a waybill on request by any Airport Official;
<PAGE> 10
Transportation Operating Permit
Page 11
H. Displaying to an Airport Official a waybill in an altered or
fictitious form:
I. Driving in a vehicle that does not bear a valid identification
sticker or an automatic vehicle identification device issued by
the Airport;
J. Solicitation of passengers on Airport property; except as
otherwise provided by contract or permit with the Airport;
K. The use or possession of any alcoholic beverage, or any dangerous
drug or narcotic, while operating a vehicle on the Airport;
L. Failing to operate a vehicle in a safe manner as required by the
California Vehicle Code;
M. Failing to comply with posted speed limits and traffic control
signs;
N. Use of profane or vulgar language directed to or at the public;
O. Any attempt to solicit payment in excess of that authorized by
law;
P. Any solicitation for or on behalf of any hotel, motel, club or
nightclub;
Q. Any solicitation of any activity prohibited by the Penal Code of
the State of California;
R. Operating a vehicle which is not in a safe mechanical condition or
which lacks mandatory safety equipment as defined in the
California Vehicle Code;
S. Disconnecting any pollution control equipment;
T. Engaging in any conduct or activity intended to or apparently
intended to ask, implore or persuade a passenger to alter his or
her previously chosen mode of ground transportation or specific
ground transportation operator, except as otherwise provided by
contract or permit with the Airport.
18. Compliance with Rules and Regulations
Permittee shall abide by and conform to all laws, governmental orders,
rules
<PAGE> 11
Transportation Operating Permit
Page 12
and regulations, including any future amendments thereto, controlling or
in any manner affecting the use or occupancy of Airport property.
Permittee shall abide by and conform to all Airport Rules and
Regulations, operational notices or bulletins now and hereafter in force
and effect. Permittee shall provide County with a copy of its current
appropriate California Public Utilities Commission Permit.
19. Nonassignability
This Permit is not assignable, in whole or in part.
20. Revocable Permit
This permit is revocable at any time, in the absolute discretion of the
Director. Such revocation shall be accomplished by giving 24 hours prior
written notice to the Permittee. Should Permittee, at any time, fail to
provide or maintain the insurance or faithful performance bond required
under this Permit, then the Director may, by 24 hour prior written
notice, revoke this Permit. Permittee may terminate this Permit by giving
thirty (30) days prior written notice to the Director. This Permit may be
cancelled by the mutual written consent of the parties at any time
without the aforesaid written notice.
21. Section Headings
The section headings contained herein are for convenience in reference
and are not intended to define or limit the scope of any provision of
this Permit.
22. Severability
In the event any term, covenant or condition herein contained is held to
be invalid by any court of competent jurisdiction, such invalidity shall
not affect any other valid term, covenant or condition herein contained.
<PAGE> 12
Transportation Operating Permit
Page 13
IN WITNESS WHEREOF, the parties hereto have executed this Permit in duplicate by
their duly authorized officers.
PERMITTEE: COUNTY OF ORANGE:
By /s/ Stephen Allan /s/ O. B. Schooley
------------------------ --------------------
Authorized Signature Airport Director
Title President
---------------------
Dated 7-7-97 Dated 7/17/97
--------------------- ----------
<PAGE> 13
[JOHN WAYNE AIRPORT Letterhead]
July 17,1997
Mr. Stephen Allen, President
Preferred Transportation, Inc.
1430 S. Anaheim Blvd.
Anaheim, CA 92805
Subject: GROUND TRANSPORTATION OPERATING PERMIT
Dear Ground Transportation Operator:
Enclosed you will find your copy of the Commercial Ground Transportation
Operating Permit between John Wayne Airport and your organization. The original
signed permits are kept in our central files at John Wayne Airport.
Additionally, I am returning the security deposit instrument filed with John
Wayne Airport on October 16, 1990 from Supershuttle International, Inc. That is
now considered obsolete.
Sincerely,
/s/ William Pemberton
- --------------------------------
William Pemberton
Manager, Landside Operations
Enclosure
<PAGE> 14
NO. 5518675 $2,000.00
COUNTY OF ORANGE
Santa Ana, California
RECEIVED OF: PREFERRED TRAN. INC DATE: 7-8-97
------------------------------ --------------
ADDRESS: (SUPER SHUTTLE CITY:
------------------------------ ------------
FOR ORANGE CO)
-------------------------------------------------------------
GROUND TRANS. DEPOSIT
- -----------------------------------------------------------------
Questions? Contact the agency/department where payment was made.
(Directory assistance 834-5400) Suspect fraud?
Contact the Internal Audit Department at 834-5475
PAID BY CASH $ CHECK NO. 018043 /s/ JWA
---------------- --------------- --------
COUNTY NO. STATE NO.
---------------- ---------------
BY: /s/ R Reddick
--------------
PAYMENT BOND CERTIFICATE
[Union Bank Logo] Office of Account: #335 L.A.X. International Airport
Account Number: #3359007832 Amount Deposited $5,250.00**** On October 16, 1990
FIVE THOUSAND TWO HUNDRED FIFTY NO/100**** UNITED STATES**** Dollars was
deposited for Collateral Hold by Supershuttle International, Inc.*****
(Depositor) and is payable to Supershuttle International, Inc. As Collateral
Hold For John Wayne Airport on January 14, 1991 (the Maturity Date), upon
presentation of this Certificate, properly endorsed. This deposit will earn
interest at the rate of 7.200%, compounded daily using a 365-day year, for an
effective annual yield of 7.460%******. Interest will be paid to the Depositor
Supershuttle, Inc. If this Certificate is not presented for payment on the
account's Maturity Date or within TEN days after that date, the deposit will be
renewed for a like term at the interest rate in effect on the account's Maturity
Date. This Certificate in NONE transferable.
If all or any part of this deposit is withdrawn before the account's original
or any subsequent maturity date, the amount withdrawn may be subject to an
early withdrawal or compensating fee.
Certificate Serial Number: 011192 B A Thomas
AUTOMATIC RENEWAL, NON-NEGOTIABLE ------------------------------
AUTHORIZED SIGNATURE
FORM 3117 (Rev. 10/89) 119232--1 Member FDIC
<PAGE> 1
Exhibit 10.23
NON-EXCLUSIVE LICENSE AGREEMENT BETWEEN
THE CITY OF LOS ANGELES AND
Preferred Transportation, Inc.
COVERING CHARTER PARTY CARRIER
TRANSPORTATION SERVICES TO AND FROM LOS
ANGELES INTERNATIONAL AIRPORT
THIS LICENSE AGREEMENT, made and entered into this 1 day of July,
1997 by and between the CITY OF LOS ANGELES, a municipal corporation
(hereinafter referred to as "City"), acting by order of and through its Board of
Airport Commissioners, (hereinafter referred , to as "Board"), and
Preferred Transportation, Inc.
(hereinafter referred to as "Licensee"),
WITNESSETH
WHEREAS, City owns and operates Los Angeles International Airport
(hereinafter referred to as "Airport"), in the City of Los Angeles, State of
California; and
WHEREAS, Licensee is the holder of a Charter Party Carrier Permit
issued by the Public Utilities Commission of the State of California
(hereinafter referred to as "P.U.C."), authorizing Licensee to transport
passengers to and from Airport on a pre-arranged charter basis with charges
assessed on a vehicle mileage or time of use basis, or a combination of the two
or the holder of authority granted by the Interstate Commerce Commission
(hereinafter referred to as "I.C.C.") to conduct similar transportation
activities; or the holder of an auto-for-hire permit issued by the City
Department of Transportation; and
WHEREAS, Licensee, desires to operate the previously described bus,
van, or limousine transportation service at Airport and to enter this License
Agreement with City in order to conduct such operations; and
WHEREAS, it is in the best interests of City and the traveling public
to make such services available;
NOW, THEREFORE, in consideration of the premises and of the covenants
and conditions hereinafter contained to be kept and performed by the parties
hereto, IT IS MUTUALLY AGREED AS FOLLOWS:
Sec. 1. Section Headings. The section headings appearing herein shall
not be deemed to govern, limit, modify or in any manner affect the scope,
meaning or intent of the provisions of this License Agreement.
Sec. 2. License. City gives Licensee, for the term and under the
conditions herein set forth, a non-exclusive license to transport passengers and
baggage by approved motor vehicles into and out of Airport in accordance with
Licensee's rights and duties under its P.U.C. Charter Party Carrier Permit,
similar
-1-
<PAGE> 2
(d) Laws of California. This License Agreement shall be construed and
enforced in accordance with the laws of the State of California.
(e) Executive Director's Approval. In each instance herein where
City's, Board's or Executive Director's approval or consent is required before
Licensee may act, such approval or consent shall not be unreasonably withheld.
(f) Gender. The use of any gender herein shall include all genders, and
the use of any number shall be construed as the singular or the plural, all as
the context may require.
(g) Section 308 . It is understood and agreed that nothing herein
contained shall be construed to grant or authorize the granting of an exclusive
right within the meaning of Section 308 of the Federal Aviation Act (49 USC
Section 1349a).
(h) Rights of U. S. Government. This License Agreement shall be
subordinate to the provisions and requirements of any existing or future
agreement between City and the United States relative to the development,
operation or maintenance of Airport.
(i) War and National Emergency. This License Agreement and all the
provisions hereof shall be subject to whatever right the United States
Government now has or in the future may have or acquire affecting the control,
operation, regulation and taking over of Airport or the exclusive or
non-exclusive use of Airport by the United States during the time of war or
national emergency.
IN WITNESS WHEREOF, City has caused this License Agreement to be
executed by Executive Director and Licensee has caused the same to be executed
by its duly authorized officers and its corporate seal to be hereunto affixed,
all as of the day and year first hereinabove written.
CITY OF LOS ANGELES
PROVED AS TO FORM By /s/ Illegible Signature
JAMES K. HAHN ---------------------------------
CITY ATTORNEY Executive Director
Department of Airports
JUL 1, 1997
/s/ Illegible Signature
- -----------------------
ASSISTANT DEPUTY
ATTEST:
By /s/ Tammy Casey By /s/ Stephen Allan
------------------------------- ---------------------------------
Secretary (Signature) (Signature)
Tammy Casey Stephen Allan
------------------------------- ---------------------------------
(Print Name)
President
---------------------------------
[SEAL] (Print Title)
- ----------------------------------
(1) If Licensee is a partnership, a general partner should sign. If
Licensee is a sole proprietorship or non-corporate business, an owner should
sign.
-12-
<PAGE> 1
EXHIBIT 10.24
NON-EXCLUSIVE LICENSE AGREEMENT BETWEEN
THE CITY OF LOS ANGELES AND
TAMARACK TRANSPORTATION, INC.
COVERING CHARTER PARTY CARRIER
TRANSPORTATION SERVICES TO AND FROM LOS
ANGELES INTERNATIONAL AIRPORT
THIS LICENSE AGREEMENT, made and entered into this 23rd day of October,
1995 by and between the CITY OF LOS ANGELES, a municipal corporation
(hereinafter referred to as "City"), acting by order of and through its Board
of Airport Commissioners (hereinafter referred to as "Board"), and Tamarack
Transportation, Inc. (hereinafter referred to as "Licensee"),
W I T N E S S E T H
WHEREAS, City owns and operates Los Angeles International Airport
(hereinafter referred to as "Airport"), in the City of Los Angeles, State of
California; and
WHEREAS, Licensee is the holder of a Charter Party Carrier Permit issued
by the Public Utilities Commission of the State of California (hereinafter
referred to as "P.U.C."), authorizing Licensee to transport passengers to and
from Airport on a pre-arranged charter basis with charges assessed on a vehicle
mileage or time of use basis, or a combination of the two or the holder of
authority granted by the Interstate Commerce Commission (hereinafter referred
to as "I.C.C.") to conduct similar transportation activities; or the holder of
an auto-for-hire permit issued by the City Department of Transportation; and
WHEREAS, Licensee, desires to operate the previously described bus, van,
or limousine transportation service at Airport and to enter this License
Agreement with City in order to conduct such operations; and
WHEREAS, it is in the best interests of City and the traveling public to
make such services available;
NOW, THEREFORE, in consideration of the premises and of the covenants and
conditions hereinafter contained to be kept and performed by the parties
hereto, IT IS MUTUALLY AGREED AS FOLLOWS:
Sec. 1. Section Headings. The section headings appearing herein shall
not be deemed to govern, limit, modify or in any manner affect the scope,
meaning or intent of the provisions of this License Agreement.
Sec. 2. License. City gives Licensee, for the term and under the
conditions herein set forth, a non-exclusive license to transport passengers
and baggage by approved motor vehicles into and out of Airport in accordance
with Licensee's rights and duties under its P.U.C. Charter Party Carrier Permit.
Similar ?????
<PAGE> 2
federal authority or City Department of Transportation authority. This License
Agreement, however, shall not entitle Licensee to operate a package express
service at Airport by either picking up or delivering packages at terminals, or
to operate any vehicle at Airport with a driver or agent carrying a firearm on
the person or within said vehicle.
Licensee shall not pick up passengers at Airport without first obtaining a
valid trip ticket from the charter holding lot when said lot is open.
Sec. 3. Term. The term of this License Agreement shall be on a
month-to-month basis commencing October 31, 1995; subject however, to earlier
termination, or suspension, as provided herein.
Sec. 4. Compensation to City.
(a) License Fees. As consideration for City entering into this License
Agreement, Licensee shall pay to City a per trip fee from the transportation of
passengers from and/or originating from Airport, or the offering of same.
Vehicles will be divided into two size categories as follows: Class 1 vehicles,
those seating less than 25 passengers, will pay $1.50 per trip. Class 2
vehicles, those seating 25 or more passengers, will pay $2.25 per trip. City
reserves the right to adjust the amounts of the per-trip fee up to two times per
year. Crew transportation pickups for signatory air carriers are excluded from
paying the fee.
(b) "Trip" Defined. "Trip" shall, subject to exceptions hereinafter
stated, be defined as any scheduled or unscheduled departure from Airport by a
vehicle of Licensee, with or without passengers. "Trip" shall also be defined
to include each occasion that a vehicle of Licensee circles the Central
Terminal Area, or a part thereof, after two complete or partial circuits of
World Way. (Note: One upper level passenger drop off operation shall not be
considered in calculating the number of circuits.)
(c) Other Fees. In addition to the fees mentioned above, Licensee shall
also pay all other charges, penalties or fees occasioned by its operations or
activities on or about Airport.
(d) Monthly Reports. City reserves the right to require Licensee, on forms
designated or approved by City, to account to City's Landside Operations Bureau
on or before the tenth (10) day of each month of the term hereof for all trips
operated and passengers carried both into and out of Airport during the prior
calendar month. Licensee understands that said report forms may from time to
time be modified by City and hereby agrees to use the latest report forms made
available for reporting its trips and passengers.
Upon request of the Executive Director, Licensee shall furnish City with a
detailed income statement prepared at the close of Licensee's fiscal or calendar
year reflecting all business transacted by Licensee from the transportation of
passengers and/or baggage to or from Airport. If requested, said
<PAGE> 3
income statement shall be certified by Licensee's independent certified public
accountant.
(e) Los Angeles Business Office, Records Retention, Right to Inspect.
Licensee shall at all times during the term for this License Agreement maintain
and keep permanent books, ledgers, journals and other records wherein are kept
entries accurately reflecting all gross revenue derived from the charter party
carrier business transacted to or from Airport. In addition, Licensee shall
keep and maintain a daily record of all "trips" and the passenger counts and
fares collected from each trip both to and from Airport with supporting
verifiable document showing the driver's name, actual arrival and departure
trip times, registration number of vehicle, and reservation numbers.
Such books and records must be maintained and kept in a location within
Los Angeles, Orange, Ventura or San Bernardino County by Licensee. Licensee may
elect to maintain the required records at a location outside said counties,
however, in doing so, Licensee accepts responsibility for reimbursing City for
all travel and incidental expenses incurred in connection with each audit.
It is agreed that examinations of the books, ledgers, journals and
accounts of Licensee will be conducted in accordance with generally accepted
auditing standards applicable in such circumstances and that such, said
examinations do not require a detailed audit of all transactions. Testing and
sampling methods may be used by City to verify reports submitted by Licensee.
Deficiencies ascertained by the use of such testing and sampling methods, by
applying the percentage of error obtained from such testing and sampling to the
entire period of reporting under examination will be binding upon Licensee and
to that end shall be admissable in court to prove any amounts due City from
Licensee.
Sec. 5. Right of Ingress and Egress. City hereby grants full and free
right of ingress to and egress from Airport to Licensee, its employees,
passengers, guests, invitees, suppliers of materials and furnishers of service,
without charge, subject to the provisions of Section 8(b) hereinafter and
City's operating rules and regulations.
Sec. 6. Loading Area. Licensee shall have the right to pick up and
unload its passengers at Airport only at those locations allocated to Licensee
for such purpose. All loading and unloading zones and waiting areas are subject
to the approval of Executive Director. Licensee shall not park its vehicles on
any road in Airport except for such period of time as may be necessary for the
immediate loading and unloading of its passengers and their baggage.
Sec. 7. Use of Airport and Demised Premises. Licensee shall use Airport
only in connection with its transport business of operating passenger bus, van,
or limousine, or auto-for-hire services between Airport and such points as the
P.U.C., I.C.C., or D.O.I. whichever is applicable, shall only and
????
<PAGE> 4
regularly designate through the issuance of Certificates of Convenience and
Necessity or other approvals.
Licensee shall file with the Airport a copy of its current P.U.C., I.C.C.
or D.O.T. authority, whichever is applicable.
Licensee shall not use sound amplifying or public address equipment at
Airport unless such use and equipment are approved in writing by the Executive
Director.
Sec. 8. Authorized Vehicles. Licensee shall report to the Executive
Director, on forms provided for that purpose, the Vehicle Identification Number
("VIN"), license plate number, company identification number, vehicle type,
passenger capacity and proof of commercial registration for each of Licensee's
vehicles used in its operation at Airport. Upon receipt of the requisite
information and performance of all other conditions precedent contained in this
License Agreement, Executive Director may issue identification stickers or
decals which shall be attached to each authorized vehicle.
Except for luxury-type, sedan style limousines, all of Licensee's vehicles
operated at the Airport shall possess identical color schemes and markings, so
as to be readily identifiable as belonging to Licensee; shall display the name
of Licensee, or its "d.b.a.", on the front, rear and sides of each vehicle, in a
type style and size so as to be readily identifiable; shall possess Licensee's
company fleet vehicle identification number; and shall possess a vehicle
identification City sticker or decal permanently affixed as instructed by
Executive Director. Limousines shall have front and rear TCP numbers affixed per
P.U.C. rules.
Licensee shall file with City a description (either photographic or
otherwise) adequate to identify the color scheme and markings common to
Licensee's vehicles and distinguish them visually from vehicles used by another
operator.
Sec. 9. Restrictions and Regulations.
(a) Licensee agrees to abide by any and all: (1) applicable rules,
regulations, orders and restrictions which are not in force or which may be
hereafter adopted by city with respect to the operations of Airport; (2) orders,
directives or conditions issued, given or imposed by Executive Director with
respect to the use of roadways, driveways, curbs, sidewalks and parking areas in
and about said Airport; (3) applicable laws, ordinances, statutes, rules,
regulations or orders of any ordinances, statutes, rules, regulations or orders
of any governmental authority, federal, state or municipal, lawfully exercising
jurisdiction over the Airport or Licensee's occupation or use of Airport; and
(4) applicable rules and regulations of City related to commercial passenger
vehicles operating at airport referred to in Section 13 hereinafter.
Nothing herein contained shall be deemed to impair Licensee's right to
contest any such rules, regulations, orders, restrictions, directives or
conditions or the reasonableness thereof. City shall not be liable to Licensee
for any damage to or for any diminution or ???? of Licensee's rights.
<PAGE> 5
hereunder on account of the exercise of any such authority, or as may arise from
Airport development of operation during the term of this License, unless the
exercise thereof shall so interfere with Licensee's operations herein created as
to constitute a termination, in whole or in part, of this License Agreement by
operation of law.
(b) Subject to (d) below, Licensee, its employees, agents and
representatives shall not in any manner pay, extend or give any type of
consideration, compensation, gratuity or reward to any Airport skycap, porter,
starter, ticket or information booth person at Airport, or other curbside or
terminal person at Airport, unless the latter be a uniformed employee of
Licensee for which Worker's Compensation benefits are paid by Licensee and whose
presence and activities on Airport property are approved by Executive Director.
(c) City reserves the right to require Licensee's vehicles to stop at
designated locations or use designated entry or departure routes so that City
may inspect or count said vehicles and determine passenger loads.
The Executive Director is also authorized to establish and construct a
staging area for commercial vehicles providing ground transportation services.
The Executive Director is authorized to require that all vehicles not actively
loading or unloading passengers shall be parked in a City staging area and the
right to charge a fee for use of such staging area is hereby reserved. Use of
the staging area shall be limited to such times as the Executive Director may
allow.
(d) Nothing in this License Agreement shall be construed as authorizing
Licensee to place starters, skycaps, porters, booth personnel, agents, or other
personnel on the curbs, or sidewalks or in the terminals at Airport without
first having obtained the written consent of Executive Director or his
authorized representative.
(e) Licensee agrees to operate its vehicles at Airport only when a current
and valid Airport decal or sticker has been permanently affixed to the vehicle
in the appropriate location. Failure to have a current and valid decal affixed
on a vehicle while operating on Airport premises shall mean that Licensee does
not have City approval to operate said vehicle on Airport. Licensee understands
that under said circumstances the driver of the vehicle is subject to citation,
the vehicle is subject to impound, and Licensee may receive a suspension or
termination of operating rights on Airport. City reserves the right to
determine the frequency of and occasions when new or replacement decals or
stickers may be issued.
Sec. 10. ASSIGNMENTS. Licensee shall not in any manner, directly or
indirectly, by operation of law or otherwise, assign, hypothecate, transfer or
encumber this License Agreement, in whole or in part, without the prior written
consent of Board. Consent to one assignment, transfer or encumbrance shall not
be deemed to be a consent to any subsequent assignment, transfer or encumbrance.
<PAGE> 6
When the proper consent has been received, this License Agreement shall be
binding upon and shall inure to the benefit of the heirs, successors,
executors, administrators and assigns of the parties hereto.
Sec. 11. City Held Harmless. In addition to the provisions of Section 12
herein, Licensee shall defend and keep and hold City, including its Board,
officers, agents, servants and employees, harmless from any and all costs,
liability, damage or expense (including costs of suit and fees and reasonable
expenses of legal services) claimed by anyone by reason of injury to or death
of persons, or damage to or destruction of property, including property of
Licensee, sustained in, on or about the Airport arising out of Licensee's use
or occupancy thereof, as a proximate result of the acts or omissions of
Licensee, its agents, servants or employees.
Sec. 12. Insurance.
(a) Licensee shall procure at its expense, and keep in effect at all times
during the term of this License Agreement, the types and amounts of insurance
specified on the Required Insurance page, attached hereto, marked "Exhibit A",
and made a part hereof. The specified insurance (except for Workers'
Compensation and Employers' Liability and fire and extended coverages) shall
also, either by provisions in the policies, by City's own endorsement form or
by other endorsement attached to such policies, include and insure City, its
Department of Airports, its Board, and all of its officers, employees and
agents, their successors and assigns, as insureds, against the areas of risk
described in "Exhibit A" hereof as respect Licensee's acts or omissions in its
operations, use and occupancy of the premises hereunder or other related
functions performed by or on behalf of Licensee at Airport.
(b) Each specified insurance policy (other than Workers' Compensation and
Employers' Liability and fire and extended coverages) shall contain a
Severability of Interest (Cross Liability) clause which states, "It is agreed
that the insurance afforded by this policy shall apply separately to each
insured against whom claim is made or suit is brought except with respect to
the limits of the company's liability," and a Contractual Endorsement which
shall state, "Such insurance as is afforded by this policy shall also apply to
liability assumed by the insured under insured's License Agreement with the
City of Los Angeles."
All such insurance shall be primary and noncontributing with any other
insurance held by City's Department of Airports where liability arises out of
or results from the acts or omissions of Licensee, its agents, employees,
officers, assigns, or any person or entity acting for or on behalf of Licensee.
Such policies may provide for reasonable deductibles and/or retentions
acceptable to the Executive Director based upon the nature of Licensee's
operations and the type insurance involved.
<PAGE> 7
(c) City shall have no liability for any premiums charged for such
coverage(s). The inclusion of the City, its Department of Airports, its Board,
and all of its officers, employees and agents, and their agents and assigns, as
insureds is not intended to, and shall not, make them, or any of them, a
partner or joint venturer with Licensee in Licensee's operations at Airport.
Upon failure of Licensee to provide and maintain the insurance required herein
after ten (10) days prior written notice to comply, City may (but shall not be
required to) procure such insurance at Licensee's expense.
City and Licensee agree that the insurance policy limits specified in
this Section and "Exhibit A" shall be reviewed for adequacy annually throughout
the term of this Licensee by Executive Director, who may thereafter require
Licensee to adjust the amounts of insurance coverage to whatever amount the
Executive Director deems to be adequate.
(d) Licensee shall provide proof of all specified insurance and related
requirements to City either by production of the actual insurance policy(ies),
by use of City's own endorsement form(s), by broker's letter acceptable to
Executive Director in both form and content in the case of foreign insurance
syndicates, or by other written evidence of insurance acceptable to the
Executive Director. The documents evidencing all specified coverages shall be
filed with city prior to Licensee occupying the demised premises. They shall
contain the applicable policy number, the inclusive dates of policy coverages
and the insurance carrier's name, shall bear an original signature of an
authorized representative of said carrier, and shall provide that such
insurance shall not be subject to cancellation, reduction in coverage or
nonrenewal except after written notice by certified mail, return receipt
requested, to the City Attorney of the City of Los Angeles at least thirty
(30) days prior to the effective date thereof. City reserves the right to have
submitted to it, upon request, all pertinent information about the agent and
carrier providing such insurance.
Sec. 13. Suspensions, Default, and Rights of Termination.
(a) Default and Termination. If either party shall fail to perform, keep
or observe any of the terms, covenants or conditions herein contained on its
part to be performed, kept or observed, the other party may give written notice
to correct such condition or to cure such default. If such condition or default
shall continue for ten (10) days after service of such notice, the party not in
default may give written notice of its election to terminate this License
Agreement and this License Agreement shall cease and terminate on the date
stated in the termination notice. Such election to terminate by either party
shall not be construed as a waiver of any claim it may have against the other
party, consistent with such termination; provided, however, that in the event
Licensee's Charter Party Carrier Permit or similar federal or City D.O.T.
authority, is suspended, cancelled or terminated, then this License Agreement
and all rights of Licences hereunder shall ????? cease and terminate.
<PAGE> 8
Licensee specifically covenants to immediately cease to operate on Airport
property if its state, federal and/or City D.O.T. authorization is suspended,
cancelled or terminated.
The foregoing provisions, however, shall not affect any rights of City if
there should be any default in the payment by Licensee of the rent, fees and
charges provided herein. If there be such default, City may give Licensee a ten
(10) day notice to pay all sums due, owing and unpaid, and if such payment be
not made within such ten (10) day period, this License Agreement and Licensee's
rights hereunder shall, at the election of City stated in such notice,
forthwith terminate.
(b) Suspension. Attached to this License Agreement as "Exhibit B" and by
this reference incorporated herein and made a part hereof is a copy of the
"Rules and Regulations of the City of Los Angeles, Department of Airports
Governing the Permit Program for the Operation of Commercial Vehicles
Transporting Passengers at Los Angeles International Airport" ("Rules and
Regulations").
The Rules and Regulations govern Licensee's operations at Airport and
Licensee agrees to strictly abide by and comply with said Rules and Regulations
and to ensure that Licensees' officers, employees, agents, drivers and vehicles
do also.
Violations by Licensee, its officers, employees, agents, drivers or
vehicles of said Rules and Regulations are subject to the imposition by City of
any or all of the following: oral or written warnings, suspensions of the
Licensee's right to operate on Airport property, and/or termination of this
License Agreement and all of Licensee's rights to operate to and from Airport.
Said Rules and Regulations provide for a progressive type of discipline
and suspension/termination system based upon the type, nature and number of
violations
Licensee agrees to abide by City's Rules and Regulations, and any future
amendments thereto, and further agrees to obey any suspension orders imposed by
City. City agrees to afford Licensee the right to contest any suspension orders
before an impartial hearing officer prior to imposing any suspensions. City
shall not be required to use a hearing officer or procedure if it intends to
terminate this License Agreement under the provision (a) above.
Licensee further covenants and agrees to only operate vehicles on Airport
which have affixed to the vehicle a valid and current City decal or sticker. In
addition to City's termination rights under (a) above, City may withhold
issuance of current decals or stickers if Licensee fails to file monthly
operating reports, pay the appropriate fees on time or keep insurance current.
Sec. 14. Attorney's Fees. If City shall, without any fault, be made a
party to any litigation commenced by or against Licensee arising out of
Licensee's operations and as a result of which Licensee is finally adjudicated
to be liable, then Licensee shall pay all costs and reasonable attorney's fees
incurred by or imposed upon City in connection with such litigation. In any
<PAGE> 9
action by City or Licensee for recovery of any sum due under this License
Agreement, or to enforce any of the terms, covenants or conditions contained
herein, the prevailing party shall be entitled to reasonable attorney's fees in
addition to costs and necessary disbursements incurred in such action. Each
party shall give prompt notice to the other of any claim or suit instituted
against it that may affect the other party.
Sec. 15. Waiver. The waiver by either party of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver of
any other term, covenant or condition, or of any subsequent breach of the same
term, covenant or condition. The subsequent acceptance of payments hereunder by
City shall not be deemed to be a waiver of any preceding breach by Licensee of
any term, covenant or condition of this License Agreement other than the
failure of Licensee to pay the particular payment so accepted, regardless of
City's knowledge of such preceding breach at the time of acceptance of such
payment.
Sec. 16. Nondiscrimination and Equal Employment Practices/Affirmative
Action Program.
(a) Licensee, in its operations at Airport, for itself, its personal
representatives, successors in interest and assigns, as part of the
consideration hereof, does hereby covenant and agree that: (1) no person on the
grounds of race, color or national origin shall be excluded from participation,
denied the benefits of or be otherwise subjected to discrimination in the use
of the facilities covered by this License Agreement; (2) that in the furnishing
of services and operations, no person on the grounds of race, color or national
origin shall be excluded from participation in, denied the benefits of or
otherwise be subjected to discrimination; and (3) that Licensee shall use
premises of Airport in compliance with all other requirements imposed by or
pursuant to Title 49, Code of Federal Regulations, Department of
Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination
in Federally-Assisted Programs of the Department of Transportation-Effectuation
of Title VI of the Civil Rights Act of 1964, and as said Regulations may be
amended.
(b) Licensee agrees that in the event of breach of any of the above
non-discrimination covenants, City shall have the right to terminate this
License Agreement and to reenter and repossess said land and the facilities
thereon, and hold the same as if said License Agreement had never been made or
issued. This provision does not become effective until the procedures of 49
CFR, Part 21, are followed and completed including expiration of appeal rights.
(c) Licensee assures that it will undertake an affirmative action program
as required by 14 CFR, Part 152, Subpart E, to ensure that no person shall on
the grounds of race, creed, color, national origin or sex be excluded from
participating in any employment activities covered in 14 CFR, Part 152, Subpart
B. Licensee assures that no person shall be excluded on these grounds from
participating in or receiving the
<PAGE> 10
services or benefits of any program or activity covered by this subpart.
Licensee assures that it will require that its covered suborganizations provide
assurances to Licensee that they similarly will undertake affirmative action
programs and that they will require assurances from their suborganizations, as
required by 14 CFR, Part 152, Subpart E, to the same effect.
(d) In addition, Licensee, during the term of this License Agreement,
agrees not to discriminate in its employment practices against any employee or
applicant for employment because of the employee's or applicant's race,
religion, national origin, ancestry, sex, age or physical handicap. Licensee
further agrees to abide by the provisions of Section 10.8.3 of City's
Administrative Code, a copy of which is printed on the CERTIFICATION FOR
CONTRACTS OF MORE THAN $500 BUT NOT IN EXCESS OF $5,000, which Certification
City acknowledges Licensee has previously submitted and which shall remain
valid for one (1) year from the date thereof.
(e) If applicable, Licensee also agrees to abide by the provisions of
Section 10.8.4 of City's Administrative Code, a copy of which is printed on the
CERTIFICATION FOR CONTRACTS OF MORE THAN $5,000, which Certification City
acknowledges Licensee has previously submitted along with a copy of its
Affirmative Action Plan. Said Plan, having been approved by City, shall remain
valid for one (1) year from the date of approval and, with said Certification,
shall be incorporated by reference in and become part of this License. Licensee
agrees that prior to the expiration of said Plan, Licensee will again submit to
City its revised and/or updated Affirmative Action Plan for approval as well as
another completed Certification.
(f) Licensee shall furnish its accommodations and/or services on a fair,
equal and not unjustly discriminatory basis to all users thereof and it shall
charge fair, reasonable and not unjustly discriminatory prices for each unit or
service; provided that Licensee may be allowed to make reasonable and
non-discriminatory discounts, rebates or other similar type of price reductions
to volume purchasers.
(g) Noncompliance with paragraph (f) above shall constitute a material
breach thereof, and in the event of such noncompliance, City shall have the
right to terminate this License Agreement without liability therefor, or at the
election of City or the United States, either or both said governments shall
have the right to judicially enforce the provisions in paragraphs (a) and (f)
above.
Sec. 17. Taxes and Licenses. Licensee shall pay all taxes of whatever
character that may be levied or charged upon Licensee's operations at Airport,
or upon Licensee's improvements, fixtures, equipment or other property thereon
or upon Licensee's use thereof. Licensee shall also pay all license or permit
fees necessary or required by law or regulation for the conduct of Licensee's
business or use of Airport. This obligation, however, shall not prevent
Licensee from contesting the validity and/or applicability of any of the above
charges and during the period of any such lawful contest, Licensee may
<PAGE> 11
refrain from making, or direct the withholding of, any such payment without
being in breach of the above provisions. Upon a final determination in which
Licensee is held responsible for such taxes and/or fees, Licensee shall promptly
pay the required amount plus all legally imposed interest, penalties and
surcharges.
In addition, by executing this License Agreement and accepting the benefits
thereof, a property interest may be created known as a "possessory interest." If
such possessory interest is created, Licensee, as the party in whom the
possessory interest is vested, shall be subject to the payment of the property
taxes levied upon such interest.
Sec. 18. NOTICES. Written notices to City hereunder and to the City
Attorney of the City of Los Angeles shall be given by registered or certified
mail, postage prepaid, and addressed to said parties at Department of Airports,
Post Office Box 92216, Los Angeles, California 90009, or to such other address
as these parties may designate by written notice to Licensee.
Written notices to Licensee hereunder shall be given by registered or
certified mail, postage prepaid, and addressed to Gene Hauck, Tamarack
Transportation, Inc. 531 Van Ness Ave, Torrance, CA 90501, or to such other
address as Licensee may designate by written notice to City.
The execution of any such notice by Executive Director shall be as
effective as to Licensee as if it were executed by Board or by Resolution or
Order of said Board, and Licensee shall not question the authority of Executive
Director to execute any such notice.
All such notices shall be delivered personally to Executive Director or to
the Office of the City Attorney, Airports Division, in the one case, or to
Licensee in the other case, or shall be deposited in the United States mail,
properly addressed as aforesaid with postage fully prepaid by certified or
registered mail, and shall be effective upon receipt.
Sec. 19. INTERPRETATION.
(a) FAIR MEANING. The language of this License Agreement shall be construed
according to its fair meaning, and not strictly for or against either City or
Licensee.
(b) VOID PROVISIONS. If any provision of this License Agreement is
determined to be void by any court of competent jurisdiction, then such
determination shall not affect any other provision of this License Agreement,
and all such other provisions shall remain in full force and effect.
(c) TWO CONSTRUCTIONS. It is the intention of the parties hereto that if
any provision of this License Agreement is capable of two constructions, one of
which would render the provision void and the other of which would render the
provision valid, then the provision shall have the meaning which renders it
valid.
<PAGE> 12
(d) Laws of California. This License Agreement shall be construed and
enforced in accordance with the laws of the State of California.
(e) Executive Director's Approval. In each instance herein where City's,
Board's or Executive Director's approval or consent is required before Licensee
may act, such approval or consent shall not be unreasonably withheld.
(f) Gender. The use of any gender herein shall include all genders, and the
use of any number shall be construed as the singular or the plural, all as the
context may require.
(g) Section 308. It is understood and agreed that nothing herein contained
shall be construed to grant or authorize the granting of an exclusive right
within the meaning of Section 308 of the Federal Aviation Act (49 USC Section
1349a).
(h) Rights of U.S. Government. This License Agreement shall be subordinate
to the provisions and requirements of any existing or future agreement between
City and the United States relative to the development, operation or maintenance
of Airport.
(i) War and National Emergency. This License Agreement and all the
provisions hereof shall be subject to whatever right the United States
Government now has or in the future may have or acquire affecting the control,
operation, regulation and taking over of Airport or the exclusive or
non-exclusive use of Airport by United States during the time of war or national
emergency.
IN WITNESS WHEREOF, City has caused this License Agreement to be executed
by Executive Director and Licensee has caused the same to be executed by its
duly authorized officers and its corporate seal to be hereunto affixed, all as
of the day and year first hereinabove written.
[STAMP]
APPROVED AS TO FORM CITY OF LOS ANGELES
JAMES K. HAHN
CITY ATTORNEY
OCT 23 1995
By Illegible Signature By Illegible Signature
-------------------- --------------------
ASSISTANT DEPUTY Executive Director
Department of Airports
ATTEST:
By V. Hauck By G. Hauck
- --------------------------- ----------------------------
Secretary (Signature) (Signature)
Violetta Hauck GENE HAUCK
- --------------------------- ----------------------------
(Print Name) (Print Name)
PRESIDENT
----------------------------
(Print Title)
[SEAL]
ARTICLES OF INCORPORATION ATTACHED
If Licensee is a partnership, a general partner should sign. If Licensee is
a sole proprietorship or non-corporate business, an owner should sign.
<PAGE> 13
[CITY OF LOS ANGELES DEPARTMENT OF AIRPORTS LOGO]
[CITY OF LOS ANGELES DEPARTMENT OF AIRPORTS LETTERHEAD]
RESOLUTION NO. 15959
WHEREAS, on recommendation of Management, there was presented for approval,
Blanket Resolution approving a ground transportation permit program, adopting
rules and regulations governing this program, and authorization for the
Executive Director to execute Non-exclusive License Agreements and to issue
vehicle permit decals to operators of commercial vehicles transporting
passengers to and from Los Angeles International Airport (LAX), and
authorization to amend Resolutions No. 15173, No. 15651, and Resolution No.
15958 to delete their application to LAX upon implementation of this program;
and
WHEREAS, the License Agreements shall be on a month-to-month basis. The fees
payable by each segment of the ground transportation industry will be effective
on the following schedule:
November 1 Charter Party Carriers (TCP)
December 1 Passenger Stage Corporations (PSC)
January 1 Courtesy Vehicle Operators; and
WHEREAS, Licensees will pay to City a per trip fee for the transportation of
passengers from and/or originating from Airport or for the offering of same.
Each segment of the ground transportation industry will be granted a license
agreement tailored to its specific operational requirements. Each segment of
the industry will pay fees based on the facilities and services it uses at the
Airport. Vehicles will be divided into two (2) size categories for fee
assessment:
Class 1 - Those seating less than 25 passengers
Class 2 - Those seating 25 or more passengers; and
WHEREAS, fees will be set at a cost recovery level and City reserves the right
to redetermine the appropriate per trip fee under each license agreement and
adjust said fee no more than twice annually. Notwithstanding the foregoing, the
Board reserves the right to impose additional fee assessment programs at a
future date. Initial fees will be paid in accordance with the following
schedule:
Passenger Stage Corporations (PSC)
Licensees shall have a Passenger Stage Certificate issued by the California
Public Utilities Commission or a similar authority
<PAGE> 14
Resolution No. 15959 -2-
granted by the Interstate Commerce Commission to serve LAX. Licensees will be
required to submit reports and fees on a monthly basis.
Class 1 $2.25 per trip
Class 2 $3.35 per trip
Charter Party Carriers (TCP)
Licensees shall have a Charter Party Carrier authority issued by the
California Public Utilities Commission or Auto-for-Hire authority
issued by the City of Los Angeles, Department of Transportation.
Licensees will be required to utilize a charter holding lot system
and pay the per trip fee at a booth before entering the central
terminal area of the Airport. Crew transportation pickups for signatory
air carriers are excluded from this per trip fee.
Class 1 $1.50 per trip
Class 2 $2.25 per trip
Courtesy Vehicle Operators
Licensees shall be operators of courtesy vehicles by or on behalf of a
hotel, motel, rent-a-car, travel agency, private parking lot company or
similar business. Licensees will be required to submit reports and fees
on a monthly basis. On-airport rental car operators will be excluded from
paying the fees.
Class 1 $.32 per trip
Class 2 $.48 per trip; and
WHEREAS, these rates and charges include the costs of providing and staffing
the Ground Transportation Information Booths and the Charter Party Carrier Fee
Collection Booths. It is anticipated that the Board will be requested to approve
a contract to operate these booths in the not too distant future; and
WHEREAS, in addition to the above mentioned fees, each Licensee except charter
party carriers and autos-for-hire will be assessed an administrative fee of $120
per year, payable at the rate of $10 per month. In instances where a Licensee
fails to make a fee payment within the required time frame provided in the
agreement, the Licensee shall also be required to pay interest charges at rates
which are in accordance with the laws of the State of California; and
<PAGE> 15
Resolution No. 15959
-3-
WHEREAS, Licensees except charter party carriers and autos-for-hire shall
maintain with the Department of Airports a security deposit in a form
acceptable to the Executive Director and in the amount of two months' payment
or $750, whichever is greater, against which the Department may deduct any
delinquent fees or interest charges; and
WHEREAS, the License Agreements shall be issued subject to such rules,
regulations and operating policies as the Executive Director shall specify; and
WHEREAS, the Non-exclusive License Agreements are categorically exempt from the
requirements of the California Environmental Quality Act as provided by Article
VII, Class 1 (14) of the Los Angeles City CEQA Guidelines;
NOW, THEREFORE, BE IT RESOLVED that the Board of Airport Commissioners
determined that this action is exempt from CEQA requirements, approved the
Ground Transportation Permit Program, further approved Adoption of the rules
and regulations governing this program, authorized the Executive Director to
execute the Non-exclusive License Agreements upon approval as to form by the
City Attorney and to issue vehicle permit decals, and further approved amending
Resolutions No. 15173, No. 15651 and No. 15958.
I hereby certify that the foregoing is a true
and correct copy of Resolution No. 15959
adopted by the Board of Airport Commissioners
at a regular meeting held Wednesday, September
2, 1987.
/s/ Sandra J. Miller
Acting Secretary
Elaine E. Staniec - Secretary
BOARD OF AIRPORT COMMISSIONERS
<PAGE> 16
[CITY OF LOS ANGELES DEPARTMENT OF AIRPORTS LETTERHEAD]
RESOLUTION NO. 17041
WHEREAS, at its meeting of September 2, 1987, the Board of Airport Commissioners
adopted Resolution No. 15959 approving a ground transportation permit program,
authorizing the Executive Director to execute non-exclusive license agreements
and to issue vehicle permit decals to operators of commercial vehicles
transporting passengers to and from Los Angeles International Airport (LAX),
and establishing a per trip fee for the transportation of passengers from
and/or originating from Airport; and
WHEREAS, Resolution No. 15959 established trip fees for Passenger Stage
Corporation (PSC) carriers according to two categories of vehicle size;
Class 1 - Those seating less than 25 passengers
Class 2 - Those seating 25 or more passengers; and
WHEREAS, Resolution No. 15959 established the following fees for vehicles
operated by licensees with Passenger Stage Certificates issued by the
California Public Utilities Commission, or a similar authority, granted by the
Interstate Commerce Commission to serve LAX:
Class 1 - $2.25 per trip
Class 2 - $3.35 per trip; and
WHEREAS, Management recommended charging fees to PSC licensees, on a per
circuit basis, for trips from and/or originating from the Airport, effective
May 1, 1990. A "circuit" is defined as a complete loop of the LAX central
terminal area, or any partial loop thereof, as designated by the Executive
Director. Circuit fees for PSC vehicles shall be as follows:
Class 1: $1.00
Class 2: $1.50; and
WHEREAS, this fee structure shall be subject to analysis by Management and
possible adjustment by the Board on or after July 1, 1990 and up to three times
each year; and
WHEREAS, the per trip fee structure set by Resolution No. 15959 for all other
ground transportation carriers shall remain in effect; and
<PAGE> 17
Resolution No. 1704]
-2-
WHEREAS, Resolution No. 17017 authorized the formation and operation of LAX
Shared-Ride Management, Inc. ("SRM") to operate a holding lot for Passenger
Stage Corporation (PSC) van operations at Los Angeles International Airport
(LAX) and to supervise activities at curbs; and
WHEREAS, each PSC van operator, while having the option to refuse to participate
as a member of SRM, shall cooperate and facilitate with SRM in the holding lot
and general operation at Airport. All PSC van operators shall obey the rules and
regulations of the Department of Airports for the operation of commercial ground
transportation vehicles at Airport; and
WHEREAS, this action, as a continuing administrative activity, is exempt from
the requirements of the California Environmental Quality Act as provided by
Article III, Section 2.f. of the Los Angeles City CEQA Guidelines;
NOW, THEREFORE, BE IT RESOLVED that the Board of Airport Commissioners
determined that this action is exempt from CEQA requirements, approved an
amendment to Resolution No. 15959 to change the basis for charging fees for PSC
licensee operations at LAX to per circuit fees of $1.00 for Class 1 vehicles and
$1.50 for Class 2 vehicles, effective May 1, 1990; and
BE IT FURTHER RESOLVED that the Executive Director is authorized to execute
amendments to the non-exclusive license agreements pursuant to the terms of this
Resolution.
I hereby certify that the foregoing is
a true and correct copy of Resolution
No. 17041 adopted by the Board of
Airport Commissioners at a regular
meeting held Wednesday, March 7, 1990.
/s/ Elaine E. Staniec
Elaine E. Staniec - Secretary
BOARD OF AIRPORT COMMISSIONERS
<PAGE> 1
EXHIBIT 10.25
DALLAS MARKET CENTER SERVICE AGREEMENT
This Agreement to provide Market Shuttle Services is made and entered into on
the 1st day of February, 1997, by and between Market Center Management Company,
Ltd. as manager for Dallas Market Center Company, Ltd., a Texas limited
partnership, herein referred to as "DMC" and SuperShuttle International, Inc., a
corporation of the state of Texas, herein referred to as "Supplier."
That for and in consideration of the mutual promises and covenants contained
herein, and for the further consideration of the payments herein provided to be
made by DMC to Supplier, the undersigned parties do hereby covenant and agree as
follows:
PREMISES
The term "Premises" heretofore will include:
World Trade Center 2050 Stemmons Frwy., Dallas, TX 75207
Dallas Trade Mart 2100 Stemmons Frwy., Dallas, TX 75207
Market Hall 2200 Stemmons Frwy., Dallas, TX 75207
Int'l Apparel Mart 2300 Stemmons Frwy., Dallas, TX 75207
Menswear Mart 2300 Stemmons Frwy., Dallas, TX 75207
Home Furnishings Mart 2000 Stemmons Frwy., Dallas, TX 75207
INDEMNIFICATION
SUPPLIER AGREES TO INDEMNIFY AND HOLD HARMLESS DALLAS MARKET CENTER COMPANY,
LTD., ITS PARTNERS, ITS AFFILIATED COMPANIES, THEIR OFFICERS, DIRECTORS,
SHAREHOLDERS, EMPLOYEES AND AGENTS FROM AND AGAINST ALL CLAIMS, DAMAGES LOSSES,
LIENS, CAUSES OF ACTION, SUITS, JUDGMENTS AND EXPENSES, INCLUDING ATTORNEY FEES
WHICH MAY ARISE OUT OF OR IN ANY WAY RELATE TO THE SERVICES PERFORMED BY
SUPPLIER FOR DALLAS MARKET CENTER COMPANY, LTD., SPECIFICALLY, PERSONAL INJURY
OR DEATH, EVEN IF CAUSED IN PART BY THE NEGLIGENCE OF DALLAS MARKET CENTER
COMPANY, LTD., ITS PARTNERS, ITS AFFILIATED COMPANIES, THEIR OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS.
INSURANCE
Supplier agrees to obtain, carry and maintain, at its expense, for the duration
of this Agreement, the following Insurance coverage:
a) Commercial General Liability Insurance with a minimum limit of
$2,000,000 Aggregate and Excess Liability with a minimum Aggregate
limit of $1,000,000.
b) Automobile liability for all owned and non-owned/hired vehicles with
minimum limits of $350,000 and $4,650,000 excess auto for a total of $5
million.
c) Supplier will continue the current "Employee Safety Program" this is in
effect at time this agreement is signed. Supplier will notify DMC of
any significant changes 30 days before they take place.
Dallas Market Center Company, Ltd. shall be named as an Additional Insured on
all Liability policies. Supplier shall furnish to DMC original Certificates of
Insurance reflecting this coverage prior to the signing of this Agreement.
ASSIGNMENT OR SUBCONTRACTING
Supplier shall not assign this Agreement or any interest herein or subcontract,
assign or delegate any portions of the work (performed on DMC property)
hereunder without DMC's prior written consent. DMC may assign this Agreement
without Supplier's prior written consent.
NOTICES
All notices, requests, demands and other communications under this Agreement or
in connection herewith shall be in writing and sent by certified mail to:
Dallas Market Center Company, Ltd.
2100 Stemmons Freeway
Dallas, TX 75207
Attn: Purchasing Manager
This Agreement shall be governed by the laws of the State of Texas. In the event
of any dispute hereunder, revenue shall lie in Dallas County, Texas.
This Agreement shall be subordinate to any mortgage financing of all or any
portion of DMC. Upon any foreclosure sale or acceptance of a deed in lieu
thereof under any such financing, the purchaser shall have the option at any
time following such sale to either terminate this Agreement, without cause or
payment of premium or penalty with sixty (60) days prior written notice, or
continue this Agreement in accordance with its terms.
TERM
This Agreement shall become effective for a primary term beginning February 1,
1997, and expiring January 31, 1999. DMC will have two additional one year
options. The prices will increase no more than 5% the first option year and no
more than 5% the second option year.
Any and all changes to this Agreement must be agreed to by both parties in
writing and added in amendment form.
[Illegible]
---------- -----------
DMC Supplier
Initials Initials
<PAGE> 2
2
GENERAL TERMS AND CONDITIONS
I. DEFINITIONS
Dallas Market Center Complex shall mean and include the Home Furnishing Mart,
World Trade Center, Trade Mart, Market Hall, The International Apparel Mart and
the Menswear Mart, singularly or collectively, as indicated by context;
Market shall mean any event, show, market or other similar event which is held,
produced or located in the Dallas Market Center complex and which Dallas Market
Center, in its sole discretion, shall designate as a Market.
Market Date shall mean the first calendar date of a Market.
Preferred Hotel shall mean a hotel selected and designated by DMC in its sole
discretion as a Preferred Hotel and which has executed and entered into a
Preferred Hotel Agreement with DMC.
Market Guest shall mean a Market attendee who is a guest of the Preferred Hotel
during the duration of a market which the guest is attending.
II. GENERAL REQUIREMENTS
A. Vehicles - All vehicles shall be supplied, maintained, and repaired by the
supplier in accordance with the prevailing law and industry standards.
Vehicle design and performance shall be in accordance with prevailing law
and industry standards. Buses shall be no more than ten years old. Vans
shall be no more than four years old and shall accommodate no more than 15
passengers. To be in service, any vehicle must provide heating and air
conditioning as needed by the prevailing weather, must provide working
doors and windows, and must provide working/marked emergency exits, and
must otherwise be in good, safe working condition. Supplier will have an
Americans with Disabilities ACT (ADA) vehicle available for charter during
all hours of market operations.
B. Drivers/Mechanics - All drivers and mechanics shall be licensed, trained
personnel consistent with prevailing law and industry standards. All
drivers must be in uniform. Staff must be trained and educated to provide
high service standards to DMC market guests.
C. Safety - Reasonable, prudent measures shall be taken by the service
supplier to ensure the safety of passengers and the general motoring public
at all times consistent with prevailing law and industry standards.
Safety concerns will prevail over any other requirements of this
description.
D. General License/Franchise Agreements - It is the sole responsibility of
the supplier to obtain the necessary franchise agreements, licenses or
other required permission from federal, state and local agencies to
operate as a transit provider. Supplier is responsible for compliance
with city ordinance and applicable filings with City and State.
E. Cleanliness - Buses shall be cleaned inside and out to a reasonable,
satisfactory level and on a periodic basis for the benefit of passengers.
F. Ridership Records - Ridership records of all transportation service must
be maintained on a daily basis for each route operated. Daily records shall
be reported to DMC within five (5) working days from the end of each Market
DMC may audit these records at any time with prior written notice. The
format of these records may be determined by DMC.
G. Modification of Service - Both DMC and the supplier may propose service
changes in writing and in advance. After mutual review, DMC shall make the
final approval or disapproval of said changes.
H. Communications - All vehicles must be equipped with two-way communication.
Supplier must provide a transportation dispatch to service all inbound
transportation calls and to monitor vehicle locations. Supplier must
provide one transportation coordinator for Markets requiring more than
eight vehicles.
I. Meetings - No less than four business days prior to any market, a
pre-conference meetings will be held to finalize all equipment needs, hours
of operation, coordinator location and hours, and dispatcher hours.
Supplier will operate all contracted vehicles according to the schedules
hours, as indicated in each pre-market meeting. The Transportation
Supervisor and DMC Manager will meet at the end of each market day to
review a daily update report comparing details from the pre-conference
meeting to actuals (hours of operation, observations, equipment out of
service, etc).
J. Services Provided - Supplier agrees to provide transportation from
selected Preferred Hotels to the Dallas Market Center Complex according
to a transportation schedule submitted to Supplier by DMC one month before
each market date. Only market guests may use the scheduled transportation.
Supplier will not provide transportation to guests of a Preferred Hotel who
are not market guests with any equipment contracted under this agreement.
[Illegible]
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DMC Supplier
Initials Initials
<PAGE> 3
K. Routes - All DMC approved routes will be adhered to by Supplier's drivers.
Supplier will have to authority to increase or decrease the quantity of vans or
buses according to the demand of the traffic flow, not exceeding the DMC cost
estimate, as indicated in the pre-Market meeting.
III. PRICING
Supplier shall not increase the bill rates during the primary term of this
agreement. However, a fuel surcharge will be added to the bill rates
commensurate with increased cost above $1.50 per gallon. The fuel surcharge
will be based only on actual increased fuel cost and invoices reflecting such
increases will be submitted to DMC with payment request prior to any contracted
show date.
Following are the bill rates:
Hourly Rates
<TABLE>
<S> <C>
Hourly rate for first five (5) 21-25 passenger mini-buses
each market ( 3 hour minimum) $40.00
Hourly rate for 21-25 passenger mini-buses $46.00
(3 hour minimum)
Hourly rate for 47-52 passenger bus $56.00
(3 hour minimum)
Hourly rate of ADA accessible van 32.00
(3 hour minimum)
Daily Rates
Daily rate for 14 passenger van (12 hours) $252.00
Additional hours $ 18.00
Hourly bill rate for Transportation Coordinator $ 12.00
ExecuCar service trip bill rate (each way to and from DMC $ 30.00
Complex or Preferred Hotels and either DFW or Love
Field airports.)
A 15 minute travel time each way will be charged
per vehicle on each trip.
Supplier will provide all portable two-way radios for transportation
coordinators at no charge to DMC.
</TABLE>
IV. PAYMENT
DMC Shall pay 50% of the estimated cost of each market no less than 5 days
prior to commencement date of each market and the balance 15 working days after
approved invoice has been received.
V. DMC's AGREEMENTS
A) DMC will provide signage for the complex, Preferred Hotels, and Supplier's
vehicles.
B) DMC will provide dispatch office and staging area for each Market.
C) DMC will provide two telephones to be utilized by Supplier's Dispatch Center.
D) DMC will provide staging area for Supplier's Airport transfer service.
Supplier shall be the exclusive airport transportation carrier with the
exception of taxi service.
VI. SUPPLIER's AGREEMENTS
A) Supplier assumes full responsibility for all DMC passengers transported and
carries a $350,000 auto insurance policy and a $4,650,000 excess auto policy
that covers all market dates and contracts requested by DMC. A copy of the
policy is attached.
B) Supplier will distribute transportation schedules and signage to each
Preferred Hotel at least three (3) days prior to each market. The
transportation coordinator will also review schedules with Hotel staff.
Supplier will also be responsible to pick up signage at the end of market.
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DMC Supplier
Initials Initials
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4
C) Supplier will educate and train staff to provide high service standards to
DMC customer base.
D) Supplier will pay DMC a $1.00 commission fee for each passenger transported
to DFW Airport or Love Field Airport from the Dallas Market Center.
VII. DEFAULT
The following shall constitute events of default by Supplier:
The failure of Supplier to fulfill or perform in whole or in part, any term,
condition, agreement or provision of this Agreement.
VII. TERMINATION
A. Upon the occurrence of any event of default, in addition to and cumulative
of any and all rights and remedies available to either party under this
agreement.
B. At the sole discretion of either party, DMC or Supplier may give notice of
intention to terminate this Agreement whereupon this Agreement shall terminate
upon the expiration of thirty (30) days after the giving of such notice. In
addition to and cumulative of the foregoing, upon the occurrence of any event
of default on the part of Supplier, fees and commissions and other sums then
due payable to either party under this Agreement shall be promptly paid.
IX. MISCELLANEOUS
A) Non-Waiver: - Any failure of DMC to declare any default immediately upon
occurrence thereof, any course of dealing between DMC and Supplier or any
other person, any delay on the part of DMC in exercising any rights under
this Agreement, any acceptance of Commission by DMC, or any failure to
enforce any provision of the Agreement, shall not operate as a waiver of
any rights of DMC except to the extent, if any, expressly waived in writing
by DMC. DMC shall have the right to declare any default or enforce any
provision of the Agreement at any time and take such action as may be
lawful or authorized hereunder, either at law or in equity.
B) Attorney's Fees - In the event Supplier defaults in the performance of any
of the terms, covenants, agreements or conditions herein contained and DMC
places the enforcement of this Agreement, or any part thereof, or the
collection of any commissions due or to become due in the hands of an
attorney, who files suit upon the same, Supplier agrees to pay DMC
reasonable attorneys' fees, which shall in no event be less than ten
percent (10%) of the outstanding amounts due to DMC.
C) Entire Agreement - No oral statements or prior written material not
specifically incorporated herein shall be of any force or effect. Supplier
agrees that in entering into this Agreement, it relies solely upon the
representations and agreements contained in this Agreement and no others.
D) Notices - Any notices or communication hereunder must be in writing, may
be given by registered mail or certified mail, shall be deemed to have been
given and received when a registered or certified letter containing such
notice, properly addressed, with postage prepaid, is deposited in the
United States Mail. Such notices or communications shall be given to the
parties hereto at the addresses sets forth on the signature page hereof
or at any other address of which one party notifies the other party in
writing.
E) Binding Effect - The provisions of this Agreement shall be binding upon
and inure to the benefit of DMC and Supplier, respectively, and to their
respective heirs, personal representatives, successors, and permitted
assigns.
F) Interpretation - The Agreement and the rights and obligations of the
parties hereto shall be interpreted, construed and enforced in accordance
with the laws of the State of Texas. The determination that one or more
provisions of this Agreement is invalid, void, illegal or unenforceable
shall not affect or invalidate the remainder. All obligations of either
party requiring any performance after the expiration of the Term shall be
fully enforceable.
[Illegible]
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DMC Supplier
Initials Initials
<PAGE> 5
ACCEPTANCE: ACCEPTANCE:
Dallas Market Center Company, Ltd. SuperShuttle International Inc.
By: DMC Holding, Inc.
/S/ ILLEGIBLE SIGNATURE
________________________________ ____________________________________
Authorized Agent Authorized Agent
Gen. Mgr.
________________________________ ____________________________________
Title Title
6/9/97
________________________________ ____________________________________
Date Date
<PAGE> 1
[DISNEYLAND LETTERHEAD]
EXHIBIT 10.26
AGREEMENT
FOR
CAST MEMBER SHUTTLE SERVICES
This Agreement ("Agreement") is entered into as of October 30th, 1997, by and
between DISNEYLAND (hereinafter referred to as "DISNEYLAND" or "Owner") located
at 1313 Harbor Blvd., Anaheim, CA 92803-3232 and PREFERRED TRANSPORTATION, INC.
dba SUPERSHUTTLE (hereinafter referred to as "Operator"), located at 1430 S.
Anaheim Blvd. Anaheim, CA 92805 with respect to the following facts:
RECITALS
A. Operator is in the business of providing shuttle and/or transportation
services.
B. Disneyland has the need for shuttle and/or transportation services.
C. Disneyland desires to obtain the transportation services of Operator
and all related services from Operator, subject to the terms and conditions
contained herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. SERVICES PROVIDED BY OPERATOR. DISNEYLAND hereby engages Operator to
provide the DISNEYLAND Resort with all necessary equipment and personnel
("Personnel") of the type and per the specifications designated by DISNEYLAND as
set forth on the Scope of Service attached and incorporated herein as Exhibit
"A".
a. Personnel. Operator shall supply DISNEYLAND with all equipment
and Personnel described in the Scope of Service.
i. If Disneyland determines, in its sole discretion, that
the quality of shuttle/transportation services being provided by Operator is not
satisfactory, Disneyland shall so notify Operator specifying areas of needed
improvement and providing Operator a reasonable time to correct. Of particular
importance to Owner is the requirement that Operator perform within the time
requirement which is the basis of this Agreement, that is, the five minutes
pickup and ten minutes delivery requirement.
b. Personnel are Operator's Employees. As more fully provided in
Paragraph 5.b hereof, Operator shall: (i) assure that all Personnel providing
services to Disneyland hereunder shall be employees of Operator, and not merely
Operator's consultants, independent contractors or subcontractors, and (ii)
compute and pay all Personnel wages and other compensation, and compute,
withhold and pay, as required by law, all statutory payments and payroll taxes
covering the services of such Personnel.
C. Interview and Selection. Prior to hiring any individual to be
provided to Disneyland as Personnel hereunder, Operator shall verify that
individual's: (i) employment eligibility, including proof of identity and legal
ability to work in the United States, and (ii) compliance with Disneyland's
requirements, including but not limited to grooming and appearance guidelines
and security requirements, as more fully described in Paragraph 5.d hereof.
<PAGE> 2
d. Control of Personnel. Day-to-day supervision and direction of
Personnel in the performance of their services for the benefit of DISNEYLAND
shall be the responsibility of Operator. Operator shall be exclusively
responsible for the hiring and all administrative matters including any
discipline deemed appropriate.
e. Amendment of Service Schedule. From time to time subsequent to
the execution of this Agreement the parties may mutually agree in writing to add
to or delete from the schedule included in the Scope of Service (Exhibit A).
Such written agreement shall include its effective date, shall reference this
Agreement and Exhibit A, and shall be subject to the terms and conditions of
this Agreement, and a copy thereof shall be sent to all addressees as provided
in Paragraph 11.d hereof. In the event such written agreement adds to the Scope
of Service, DISNEYLAND shall provide Operator with such information as may be
reasonably required in order for Operator to provide in such service to
Disneyland hereunder.
2. FEE AND PAYMENT. Subject to the provisions of this Agreement, on a
prorated monthly basis Disneyland shall compensate Operator for its services
hereunder pursuant to the fee schedule contained in Paragraph 9 of the Scope of
Services attached and incorporated by reference as Exhibit "A".
a. Fee for Services. The total fee (hereafter "contract sum") for
this Agreement shall be THREE MILLION ONE HUNDRED THOUSAND DOLLARS
($3,100,000.00) paid out by the following schedule: Ninety (90%) per cent of the
total contract sum shall be paid in twenty four (24) equal monthly installments.
The balance of the contract sum (10%) shall be awarded, if at all, based upon
Owner's evaluation of Operator's service each quarter, four times per contract
year, for the two year contract term. Criteria for receipt of the full ten
percent (referred to in the Scope of Work as "bonus" and also "discretionary
retention") shall be first and foremost successfully meeting the performance
standards of 5 minutes/10 minutes pickup/delivery; achieving the appearance and
vehicle maintenance criteria as set forth in the Scope of Work; and an overall
positive rating as evidenced in feedback on the Cast rider survey.
3. REPORTS. Operator shall provide Disneyland with reports of the type and
in the format as Owner may require. These may include the total number of riders
transported to Disneyland for the preceding calendar week, the total hours of
maintenance for each of the coaches services during that month, etc.
4. LIMITATIONS ON ADVERTISING AND PROMOTION. Operator shall not use or
reproduce Disneyland's name, logo, characters or other identifying designs
and/or symbols, or refer to Disneyland directly or indirectly, in connection
with any advertisement, news release or release to any professional or trade
publication without the prior written consent of Disneyland to the specific use
or reference. Operator shall acquire no right under this Agreement to use, and
shall not use, the name "Disney" (either alone or in conjunction with or as part
of any other word or name) or any fanciful characters or designs of The Walt
Disney Company or any of its related, affiliated or subsidiary companies: (i) in
any of its advertising, publicity or promotion; (ii) to express or imply any
endorsement by Disneyland or Disney of any services provided by Operator; or
(iii) in any other manner (whether or not similar to the uses hereinabove
specifically prohibited). The provisions of this Paragraph 4 shall survive the
expiration or earlier termination of this Agreement.
5. RELATIONSHIP OF PARTIES.
a. Independent Contractor. It is understood and agreed that
Operator is acting as an independent contractor in its provision of services and
performance of obligations hereunder, and nothing herein shall be deemed to
create an agency relationship between Disneyland and Operator.
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<PAGE> 3
b. Personnel are Operator's Employees. Operator acknowledges that
neither Operator nor its Personnel and other employees, officers and agents
shall be eligible to participate in any of Disneyland's employee benefit or
welfare plans. Operator shall advise and inform fully all of its Personnel and
other employees, officers and agents providing services to Disneyland hereunder
that they will be considered general employees of Operator and that Disneyland
shall not be liable to any of them as an Operator in any amount for any wages,
benefits, claims or causes of action arising out of or relating to their
assignment at or to Disneyland or the termination thereof.
c. Operator's Responsibility for Personnel's Wages and Benefits.
Operator shall have exclusive responsibility for the full payment of all wages
or other compensation, benefits, and of taxes and any and all other statutory
payments for all Personnel and other employees, officers or agents of Operator
supplied to Disneyland hereunder as provided in this Paragraph 5.c. With respect
to the hire, tenure or conditions of employment of Operator's Personnel and
other employees, officers and agents providing services to Disneyland, as well
as their respective hours of work, their rates of pay and the payment of their
wages, and the payment, collection, withholding and/or deduction of all federal,
state and local taxes and contributions, Operator shall be solely responsible
for: (i) making all payments, reports, collections and deductions, (ii) keeping
and having available for inspection and/or audit by Disneyland or its authorized
representatives all necessary records or reports, and (iii) otherwise doing any
and all things so as to comply fully with all federal, state and local laws,
ordinances and/or regulations in regard to said matters, including but not
limited to federal immigration laws, so as to relieve Disneyland fully from and
protect it against responsibility or liability for all of the foregoing. The
provisions of this Paragraph 5 shall survive the expiration or earlier
termination of the Agreement.
d. Compliance with Security Requirements. When providing services
hereunder, Operator, its Personnel and other employees, officers and agents
shall be subject to Disneyland' security regulations. Disneyland's security
regulations may require fingerprinting and background investigation (including
prior criminal record, if any) of all Personnel and other employees, officers
and agents of Operator having regular access to Disneyland's secured areas.
Operator hereby agrees that Operator's Personnel and other employees, officers
and agents shall submit to Disneyland's security procedures, as requested by
Disneyland, and shall comply in all respects with Disneyland's security
regulations. Disneyland shall reimburse Operator for any costs incurred by
Operator to comply with Disneyland's security regulations as provided herein. It
shall be Operator's responsibility to assure that drivers utilized by Operator
in providing services under this Agreement shall, while within the Riviera lot
and the Disneyland Resort, comply with: all traffic signs and all speed limits
established by Disneyland; all rules and regulations promulgated by Disneyland
with respect to traffic and parking; and all lawful instructions of Disneyland
Security and other authorized personnel concerning conduct of drivers or their
operation of vehicles.
6. CONFIDENTIALITY. Operator acknowledges that, during the course of
providing Personnel and Shuttle services to Disneyland hereunder, Operator may
have access to and/or acquire knowledge from confidential or proprietary
information of or regarding Disneyland, The Walt Disney Company or any of its
related, affiliated or subsidiary companies (collectively referred to at times
hereinafter as "Disney") or other information of advantage or value to a
competitor that is not accessible or known to the general public ("Confidential
Information").
a. Use of Confidential Information. Operator shall not (and shall
direct its Personnel and other employees, officers and agents not to) use for
its (or his) own benefit any Confidential Information, and Operator shall not
(and shall direct its Personnel and other employees, officers and agents not to)
disclose any Confidential Information that is disclosed to Operator or any of
its Personnel or other employees, officers or agents by Disney or any agent
thereof (whether or not authorized to disclose such
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<PAGE> 4
Confidential Information) to any person or entity other than those to whom
Disney has authorized Operator in writing to disclose such Confidential
Information. Notwithstanding the foregoing, Operator may use such Confidential
Information as may be or has been disclosed by Disney to Operator, pursuant to
the terms hereof or otherwise, for the sole purpose of providing the services
required to be performed by Operator as set forth in Paragraph 1 of this
Agreement. Operator shall not make copies of any Confidential Information
without first receiving written approval from Disney and marking such copies as
"Confidential and Proprietary Property of Disneyland." Nothing in this Agreement
shall be deemed or construed to grant to Operator a license to use, sell,
develop, exploit, copy or further develop any Confidential Information. Operator
shall direct Personnel not to disclose Confidential Information to Operator.
b. Limited Disclosure, Nondisclosure Agreement. Operator shall
disclose or permit access to any of the Confidential Information only to
Personnel and other employees, officers or agents of Operator having a specific
need-to-know in Operator's provision of Personnel and related services hereunder
and, with respect to third-party agents of Operator, only after obtaining the
prior written consent of Disneyland (which consent Disneyland may withhold in
its sole discretion). Operator also shall take all steps necessary to ensure
fulfillment of the obligations of this Paragraph 6, to inform its consultants,
employees (including Personnel), officers and agents of their obligations of
nondisclosure and confidentiality established herein, and to obtain their
agreement to the fulfillment of such obligations, by requiring all consultants
and all employees (including Personnel), officers and agents of Operator to sign
a confidentiality agreement prohibiting their disclosure of any Confidential
Information, which agreement shall be in the form of Exhibit B attached hereto
and incorporated herein by this reference. Operator shall provide a copy of each
such signed confidentiality agreement to Disneyland.
c. Cooperation Re Subpoenas and Misappropriation. In the event
that a subpoena or other legal process served on Operator in any way concerns
Confidential Information obtained by Operator, its Personnel and other
employees, officers or agents, Operator agrees to notify Disneyland immediately
upon receipt of such subpoena or other legal process and to cooperate with
Disney, at Disney's expense, in any lawful effort by Disney to contest the legal
validity of such subpoena or the legal process. Nothing herein shall limit
Operator's ability to satisfy any governmentally required disclosure of its
relationship with Disneyland. In the event Operator becomes aware of any
misappropriation or misuse by any person or entity of any Confidential
Information, Operator shall immediately advise Disney in writing and, in the
event of any legal action brought by Disney in connection therewith against
third parties, Operator agrees that it will, at Disney's expense, cooperate and
provide such assistance as may be reasonably necessary to enable Disney to
successfully prosecute such legal action.
d. Third-Party Information. Operator, its Personnel and other
employees, officers and agents shall not disclose to Disneyland any information
that such person or entity knows to be proprietary or confidential information,
data, development or a trade secret of a third party without the prior written
consent of such third party. Operator agrees to take all reasonable steps
necessary to ensure fulfillment of this obligation.
e. Remedies; Return of Documents. In view of the nature of
Operator's engagement hereunder and the Confidential Information Operator and
its Personnel and other employees, officers and agents are likely to receive
during the term of this Agreement, Operator agrees that Disney would be
irreparably harmed by any violation or threatened violation of this Agreement
and that therefore Disney shall be entitled to seek an injunction prohibiting
Operator and its Personnel and other employees, officers and agents from any
violation or threatened violation of this Paragraph 6. Upon the expiration or
earlier termination of this Agreement (or of any particular Personnel's
provision of services hereunder) for any reason, Operator shall immediately
return (or shall direct that said Personnel immediately returns) to
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<PAGE> 5
Disney any and all documents or other material of any kind, containing or
pertaining to any Confidential Information, together with any and all copies,
reproductions and samples of any of the foregoing.
f. Survival of Provisions. The provisions of this Paragraph 6
shall survive the expiration or earlier termination of this Agreement.
7. REPRESENTATIONS AND WARRANTIES.
a. Of Operator. Operator hereby represents and warrants to
Disneyland that Operator: (i) has the experience and skill to perform all of its
obligations hereunder; (ii) shall comply with all applicable federal, state and
local laws, including all professional registrations, consents, licenses and
permits (both corporate and individual for all disciplines required in
Operator's conduct of its business); (iii) shall perform its obligations
hereunder in accordance with generally accepted professional standards and in an
expeditious and economical manner consistent with the best interests of
Disneyland; (iv) has sufficient capital assets and is adequately financed to
meet all financial obligations it may be required to incur hereunder and under
its other obligations and commitments; (v) with respect to the hire, tenure or
conditions of employment of the Personnel and other employees, officers and
agents, will not discriminate on the basis of race, color, religion, sex,
national origin, age, disability, veteran status or any other basis precluded by
law; (vi) is either (A) exempt from the requirements of Executive Order 11246 or
similar federal, state or local laws, ordinances or regulations or (B) in
compliance with and will continue to abide by such federal, state or local laws,
ordinances or regulations, and particularly the Equal Opportunity Clause of 41
C.F.R. Section 60-1.4a, the provisions of which are specifically incorporated
herein by reference to have the same force and effect as if set out in their
entirety, during the term of this Agreement; and under the other obligations and
commitments (vii) has included or will include said Equal Opportunity Clause in
each of Operator's non-exempt subcontracts and purchase orders hereunder and
(viii) is not currently under the jurisdiction of any bankruptcy court. Operator
further represents and warrants that all Personnel supplied to Disneyland shall
be for all purposes employees of Operator, as more specifically provided in
paragraph 5.b hereof.
b. Of Disneyland. Disneyland hereby represents and warrants that
Disneyland shall operate its business in a lawful and commercially reasonable
manner, including maintaining in effect all business licenses, certificates and
operating permits required for the lawful conduct of its business; (ii) furnish
appropriate safety and hazardous material training and all tools and other
materials, including protective devices, apparel and instruments required for
Operator and other employees, officers and agents of Operator to provide their
services hereunder in compliance with all federal, state and local health and
environmental laws and regulations; (iii) comply with all applicable federal,
state and local laws and regulations relating to the hiring, tenure and
employment conditions of employees; and (iv) furnish to Operator, prior to
execution, any documents Disneyland desires Operator's Personnel and other
employees, officers and agents to sign.
8. INSURANCE AND INDEMNIFICATION
a. Operator's Insurance. Prior to the commencement of the term of
this Agreement, Operator shall provide a certificate or certificates of
insurance to Disneyland specifying that Operator has policies of insurance in
effect, carried by an insurer/or insurers with a BEST guide rating of B+VII or
higher and on forms and with companies acceptable to Disneyland covering
Operator's officers, employees (including Personnel), agents, servants and
subcontractors (if any) engaged in the provision of services under this
Agreement upon the following terms and conditions and for the specified amounts:
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i. statutory workers' compensation insurance covering
all of Operator's employees; and
ii. Operator's liability insurance with a minimum limit
of $5 million per occurrence with respect to any employee (including Personnel);
and
iii.
iv. occurrence basis commercial general liability
insurance, including non-owned and hired automobile liability coverage,
applicable to personal injury (including death) and property damage, with a
combined single limit of not less than $5 MILLION PER OCCURRENCE. The commercial
general liability insurance also shall contain: (A) provision or endorsement
naming Disneyland and its related, affiliated and subsidiary companies, and
their respective directors, officers, employees, representatives and other
agents, as additional insureds with respect to liability arising out of the
performance of any services by Operator or its Personnel or other employees,
officers, agents or servants under this Agreement and providing that such
insurance is primary insurance with respect to Disneyland's interests and that
any other insurance maintained by Disneyland is excess and not contributing
insurance with the insurance required hereunder; (B) a waiver of subrogation
with respect to the additional insureds; and (C) provision or endorsement
stating that such insurance shall include contractual liability specifically
referring to liability assumed by Operator under this Agreement, including
without limitation that set forth in Paragraph 8.c ("Indemnification") of this
Agreement.
All certificates called for by this Paragraph 8.a also shall specify that not
less than thirty (30) days' written notice shall be given to Disneyland prior to
cancellation, termination or modification of any policy of insurance required by
this Paragraph 8.a. In the event of any cancellation or reduction of coverage,
Operator shall obtain substitute coverage as required hereunder, without any
lapse of coverage to Disneyland whatsoever.
b. Workers' Compensation Understanding. For purposes of any and
all workers' compensation statutes, laws or regulations (collectively, "Workers'
Compensation"), Operator hereby acknowledges that a special employment
relationship exists between Disneyland and any Personnel or other employees,
officers or agents of Operator providing services to Disneyland under this
Agreement, and that Disneyland shall be considered the special employer of any
of such individuals providing services hereunder. Accordingly, Operator
acknowledges and agrees that in the event of any injury, illness, disability or
death to any such individual falling within the purview of Workers'
Compensation, such individual's rights and remedies (and those of such
individual's heirs, executors, administrators, successors and assigns) against
Disneyland or its related affiliated and subsidiary companies, and their
respective directors, officers, agents and employees (including, without
limitation, any other special employee and any corporation or any other entity
furnishing to Disneyland or any such affiliated entity the services of any such
other special employee) shall be governed by and limited to those provided by
Workers' Compensation, and, if not determined by a court or similar tribunal to
be so governed and limited, such rights and remedies shall be fully indemnified
against by Operator, as provided in Paragraph 8.c hereof.
c. Indemnification. Operator shall defend (if required by
Disneyland and with counsel selected by Disneyland), and hereby does indemnify
and hold harmless Disneyland, its related, affiliated and subsidiary companies,
and their respective officers, directors, employees and agents, from and against
any and all losses, damages, injuries, causes of action, claims, demands, suits,
judgments and expenses (whether based upon tort (including a tort action for
injury on the job), breach of contract, use in violation of Paragraph 4 hereof,
disclosure in violation of Paragraph 6 hereof, failure to pay employee taxes,
withholdings or benefits, or other violation of Paragraph 5.c hereof, failure to
obtain workers'
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compensation insurance or failure of special employer status to be recognized,
or otherwise), including legal fees and expenses, of whatever kind or nature
arising directly or indirectly out of or on account of, or resulting from claims
related to: (i) any error, omission or act of Operator or its subcontractors,
affiliates, officers, directors, employees (including Personnel),
representatives or agents; (ii) any of the foregoing relating to the performance
of Operator's obligations under this Agreement, or any breach or alleged breach
of any representation, warranty, obligation and/or covenant contained herein;
(iii) any failure of Operator to perform its services hereunder in accordance
with generally accepted professional standards; or (iv) any determination by a
court or governmental agency that any Personnel are employees of Disneyland,
except as otherwise provided in Paragraph 8.b hereof. The provisions of this
Paragraph 8.c shall survive the expiration or earlier termination of this
Agreement.
9. TERM AND TERMINATION.
a. Term. The term of this Agreement shall commence on October
30th, 1997, and shall expire on October 30th, 1999, unless earlier terminated as
provided herein. The term of this Agreement may be extended for an additional
term of one year upon the mutual agreement of the parties.
b. Termination on Notice. This Agreement may be terminated by
either party upon sixty (60) days' prior written notice to the other.
c. Termination for Cause. Either party shall have the right to
terminate this Agreement immediately in the event that the other party fails to
perform any material term, covenant or condition hereof.
d. This Agreement shall terminate immediately and automatically
if: Operator becomes insolvent, as defined in the California Uniform Commercial
Code, or makes an assignment for the benefit of creditors; or if any action is
brought by Operator seeking its dissolution or the liquidation of its assets or
seeking the appointment of a trustee, interim trustee, receiver or other
custodian for any of its property; or if Operator commences a voluntary
proceeding under the Federal Bankruptcy Code; or if any reorganization or
arrangement proceeding is instituted by Operator for the settlement,
readjustment, composition or extension of any of its debts upon any terms for
the purpose of avoiding insolvency; or if any action or petition is otherwise
brought by Operator seeking similar relief or alleging that it is insolvent or
unable to pay its debts as they mature; or if any action is brought against
Operator seeking its dissolution or liquidation of any of its assets, or seeking
the appointment of a trustee, interim trustee, receiver or other custodian for
any of its property, and any such action is consented to or acquiesced in by
Operator or is not dismissed within thirty (30) days after the date upon which
it was instituted; or if any proceeding under the Federal Bankruptcy Code is
instituted against Operator and an order for relief is entered in such
proceeding or such proceeding is consented to or acquiesced in by Operator or is
not dismissed within thirty (30) days after the date upon which it was
instituted; or if any reorganization or arrangement proceeding is instituted
against Operator for the settlement, readjustment, composition or extension of
any of its debts upon any terms, and such proceeding is consented to or
acquiesced in by Operator or is not dismissed within thirty (30) days after the
date upon which it was instituted; or if any action or petition is otherwise
brought against Operator seeking similar relief or alleging that it is
insolvent, unable to pay its debts as they mature or generally not paying its
debts as they become due, and such action or petition is consented to or
acquiesced in by Operator or is not dismissed within thirty (30) days after the
date upon which it was brought; if any assignment of Operator's interest in this
Agreement shall be made or deemed to be made without Disneyland's consent; or if
any judgment is entered in any litigation against Operator and/or any of
Operator's affiliates which judgment materially and adversely affects Operator's
ability to perform any of its obligations hereunder (or would result in
Operator being in default hereunder),
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<PAGE> 8
or (ii) any settlement of any litigation is entered into by any of the
foregoing, which settlement materially and adversely affects Operator's ability
to perform any of its obligations hereunder (or would result in Operator being
in default hereunder).
e. Other Continuing Obligations. Upon the expiration or earlier
termination of this Agreement, any provisions hereof that expressly or otherwise
by their intent are intended to survive beyond such expiration or earlier
termination, including without limitation those provisions hereof relating to
trademark and name usage limitations, non-liability of Disneyland to Personnel,
confidentiality, and indemnification and insurance (in Paragraphs 4, 5, 6, and
8, respectively), shall survive.
10. COMPLIANCE WITH LAWS. Operator shall, at its sole cost and expense,
promptly comply with all legal requirements applicable to the transportation
services provided by Operator hereunder. The phrase "legal requirements
applicable to the transportation services provided by Operator hereunder", as
used in this paragraph, shall mean and shall include all applicable federal,
state, county, municipal and other governmental constitutions, statutes,
ordinances, codes, regulations, resolutions, rules, requirements and directives
(and all decisions, judgments, writs, injunctions, orders, decrees or demands of
courts, administrative bodies and other authorities construing any of the
foregoing) (collectively, "LAWS") which relate in any manner to the services
provided by Operator hereunder, or to the operation or condition of the vehicles
used to transport Cast Members, including, but not limited to, Department of
Transportation regulations and similar requirements, use restrictions, safety
requirements, environmental requirements and requirements for the physically
challenged (including, without limitation, the American With Disabilities Act of
1990 (42 U.S.C. Section 12101 et. seq.), and the related implementing
regulations, codes, rules and accessibility guidelines, as such acts and related
regulations, codes, rules and guidelines may be amended from time to time
(collectively, the "ADA"). In addition, Operator shall at all times be in
compliance with all other governmental authorities and quasi-governmental
authorities having jurisdiction over the services provided by Operator
hereunder, and of all their respective departments, bureaus and officers, and of
the insurance underwriting board or insurance inspection bureau having
jurisdiction, or any other body exercising similar functions, and of all
insurance companies from time to time selected by Operator to write policies
covering the services. Such laws and regulations include, but are not limited to
those related to employment, occupational safety, and wages and hours, and in
particular employment opportunity laws such as the California Fair Employment
and Housing Act, the Federal Age Discrimination in Employment Act of 1976, Title
VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the
Rehabilitation Act of 1973 and the Employee Retirement Income Security Act of
1974, as any of them may be amended from time to time.
11. MISCELLANEOUS.
a. Cooperation. The parties hereto shall take such actions and
execute such documents as may be necessary to fulfill their respective
obligations under this Agreement and to otherwise effectuate the intent hereof.
Such cooperation shall include without limitation Disneyland's prompt
notification of Operator in the event that any Personnel or other employees,
officers or agents of Operator is injured while performing services to
Disneyland, as well as of any inspections or notices provided by any
governmental agencies to Disneyland that may affect the health, safety and/or
welfare of any such individuals.
b. Assignment. Operator shall not sell, assign or transfer this
Agreement or any of its rights and privileges hereunder or permit any such sale,
assignment or transfer to occur by operation of law, or
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<PAGE> 9
subcontract for the performance of any of the services to be provided by it
hereunder, without Disneyland's prior written approval, which approval may be
granted or withheld by Disneyland in the exercise of its sole discretion. The
issuance or the sale, transfer or other disposition of a sufficient number of
shares of stock (greater than 50%) in Operator shall be deemed an assignment of
this Agreement for purposes of this section. This Agreement shall inure to the
benefit of and be binding upon any of Disneyland's successors and assigns, and
Disneyland shall have the right to pledge, hypothecate, create a security
interest in, assign or otherwise transfer any or all of its rights under this
Agreement
c. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter of this
Agreement and supersedes any and all previous agreements between the parties,
whether written or oral, with respect to such subject matter.
d. Notices. Notices and approvals required or permitted to be
given hereunder shall be in writing and may be delivered personally, by
registered mail, return receipt requested, or by reliable air courier service,
marked and prepaid for overnight delivery and addressed as provided below; if
such notice is so deposited for overnight delivery, then such notice shall be
deemed to have been duly given one day following such deposit with such air
courier service. Any such notice or approval also may be given via facsimile
transmission, provided that a true and correct copy of any such notice or other
communication (along with any and all applicable attachments or enclosures)
shall be simultaneously therewith sent to the following address using any means
of delivery provided in this Paragraph 11.d or first class United States mail
(any such simultaneously sent copy referred to hereinafter as a "hard copy"):
As to Disneyland: Disneyland
1313 Harbor Boulevard
Anaheim, California 92803
Attention: Manager
Resort Administration
Fax No.: (714) 781-1195
With a copy to: Disneyland
1313 Harbor Boulevard
Anaheim, California 92803
Attention: Vice President-General Counsel
Fax No.: (714) 781-4017
As to Operator: SuperShuttle.
1430 S. Anaheim Blvd.
Anaheim, CA. 92805
Attention: Todd Emmons
Fax No.: (714) 517-6633
Notwithstanding any of the foregoing, in the event either party chooses to use a
facsimile transmission for any notice or approval under this Agreement, there
shall be no requirement to send any hard copy thereof as hereinabove provided.
e. Modification or Waiver. No waiver or modification of this
Agreement or of any covenant, condition or limitation herein shall be valid
unless set forth in writing and signed by both parties. Moreover, no waiver by
either party of the breach of any term or provision of this Agreement shall be
deemed or construed to be a waiver of any preceding or succeeding breach of the
same or any other term or provision.
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<PAGE> 10
f. Severability. If any term, provision, covenant or condition of
this Agreement is held by a court of competent jurisdiction to be void, invalid
or otherwise unenforceable, the remainder of the provisions shall not be
affected thereby and shall remain in full force and effect.
g. Governing Law, Determination of Disputes. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of
California. Any dispute or claim between Operator and Disneyland arising out of
or in connection with this Agreement that cannot be amicably resolved by the
parties through good faith negotiations shall be submitted to the Court in and
for Orange County, California (or, if the Court shall not have jurisdiction over
the subject matter thereof, then to such other court sitting in said county
having subject matter jurisdiction thereof) for trial and determination. The
parties hereby consent to the jurisdiction of such court and to the service of
process outside the State of California pursuant to the requirements of such
court.
h. Headings. All captions and headings in this Agreement are for
convenience only and shall not be utilized in construing this Agreement.
i. No Election of Remedies
Disneyland's pursuit of any remedy shall not constitute an election of
remedies excluding the election of another remedy or other remedies, or a
forfeiture or waiver of any damages or other sums accruing to Disneyland by
reason of Operator's failure to fully and completely keep, observe, perform,
satisfy and comply with all of the agreements, terms, covenants, conditions,
requirements, provisions and restrictions of this Agreement. Disneyland's
forbearance in pursuing or exercising one or more of its remedies shall not be
deemed or construed to constitute a waiver of any default by Operator or of any
remedy.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the date first above written.
DISNEYLAND:
By: /s/ John A. Cora
----------------------
Name: John A. Cora
Title: Vice President, Resort Operations Development
SUPERSHUTTLE:
By: /s/ Stephen D. Allan
----------------------
Name: Stephen D. Allan
Title: President
10
<PAGE> 1
Exhibit 10.27
AGREEMENT
Between
BROWARD COUNTY
AND
AAA WHEELCHAIR WAGON SERVICE, INC.
for
PARATRANSIT SERVICES
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 DEFINITIONS AND IDENTIFICATIONS 2
ARTICLE 2 SERVICE AREA 12
ARTICLE 3 SCOPE OF SERVICES AND SERVICE 12
DESCRIPTION
ARTICLE 4 SERVICE STANDARDS 30
ARTICLE 5 TRANSITION AND IMPLEMENTATION 44
ARTICLE 6 CONTRACTOR'S OBLIGATIONS 44
ARTICLE 7 COUNTY'S OBLIGATIONS 46
ARTICLE 8 REPORTS AND DOCUMENTS 48
ARTICLE 9 COMPUTERIZED TRIP MANAGEMENT SYSTEM 50
ARTICLE 10 COMPENSATION AND COLLECTION 54
ARTICLE 11 TERM OF AGREEMENT 55
ARTICLE 12 AGREEMENT COORDINATION AND 56
RESPONSIBILITIES
ARTICLE 13 RECORDS AND AUDIT 56
ARTICLE 14 CHANGES AND MODIFICATIONS 57
ARTICLE 15 TERMINATION 57
ARTICLE 16 INSURANCE AND INDEMNIFICATION 58
ARTICLE 17 ASSIGNMENT AND/OR TRANSFER 61
ARTICLE 18 NOTICES 61
ARTICLE 19 EQUAL EMPLOYMENT OPPORTUNITY 62
MINORITY BUSINESS PARTICIPATION AND
COMPLIANCE WITH FEDERAL CIVIL RIGHTS
REGULATIONS
ARTICLE 20 STATE LAW AND COUNTY ORDINANCES 65
ARTICLE 21 SPECIAL PROVISIONS 65
EXECUTION COUNTY 69
CONTRACTOR 70
</TABLE>
<PAGE> 3
AGREEMENT
Between
BROWARD COUNTY
and
AAA WHEELCHAIR WAGON SERVICE, INC.
for
PARATRANSIT SERVICES
This is an Agreement, made and entered into by and between: BROWARD
COUNTY, a political subdivision of the state of Florida, hereinafter referred to
as "COUNTY," through its Board of County Commissioners,
AND
AAA WHEELCHAIR WAGON SERVICE, INC., its successors and assigns,
hereinafter referred to as "CONTRACTOR."
WHEREAS, the Americans with Disabilities Act ("ADA") is a civil Rights Act
that was signed into law on July 26, 1990, which prohibits discrimination
against individuals with disabilities in the areas of employment, public
accommodations, transportation, communication, etc.; and
WHEREAS, the ADA requires that the COUNTY provide complementary
paratransit services within the mandates of the ADA to qualified individuals
with disabilities who are unable to use a fixed route system; and
WHEREAS, the ADA establishes criteria for the provision of such
paratransit services to qualified individuals with disabilities; and
WHEREAS, ADA-qualified individuals with disabilities who, because of a
functional impairment, are unable to utilize the fixed route system will be
eligible for this paratransit service; and
WHEREAS, COUNTY receives, from time to time, grant funds from the state
of Florida for the purpose of providing supplemental transportation
disadvantaged services; and
WHEREAS, COUNTY has entered into an Agreement for the provision of
transportation services under and in accordance with COUNTY'S Memorandum of
Agreement ("MOA") with the State of Florida Transportation Disadvantaged
Commission, wherein COUNTY is to coordinate services for the transportation
disadvantaged, as said term is defined in Chapter 427, Florida Statutes (1995);
and
<PAGE> 4
WHEREAS, COUNTY instituted the Competitive Procurement Process to choose
vendors to provide paratransit services for the transportation disadvantaged in
Broward County; and
WHEREAS, the Selection Negotiation Committee selected CONTRACTOR and
recommends award of the nonexclusive right to provide paratransit services in a
designated area for Broward County to CONTRACTOR; and
WHEREAS, CONTRACTOR is desirous of entering into an agreement with
COUNTY to provide reliable, dependable, cost-effective, and demand-responsive
ground transportation to ADA-qualified individuals with disabilities pursuant to
the mandates of the ADA and in accordance with Chapter 427, Florida Statutes
(1995), and to provide transportation services for the elderly, disabled, and
socially disadvantaged; NOW, THEREFORE,
IN CONSIDERATION of the mutual terms and conditions, promises,
covenants, and payments hereinafter set forth, COUNTY and CONTRACTOR hereby
agree as follows:
ARTICLE 1
DEFINITIONS AND IDENTIFICATIONS
For the purposes of this Agreement and the various covenants,
conditions, terms and provisions which follow, the Definitions and
Identifications set forth below will control and govern and are agreed upon by
the parties:
1.1 ADA Trip: "ADA Trip" shall mean a one-way trip provided to a client
certified eligible under the guidelines of the Americans With
Disabilities Act, which meets the service criteria defined herein.
1.2 Administrator: "Administrator" shall mean the County Administrator of
the Broward County government or his or her designee.
1.3 Advanced Reservation Service: "Advanced Reservation Service" shall mean
service which is reserved by the client up to fourteen (14) days in
advance under the ADA program.
1.4 Ambulatory: 'Ambulatory" shall mean any person who can enter, occupy,
and exit as a passenger in a motor vehicle with limited assistance and
does not require the use of special equipment such as wheelchair, or
scooter, or bodily lifting by the driver.
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<PAGE> 5
1.5 Americans With Disabilities Act of 1990 ("ADA"): "Americans with
Disabilities Act of 1990" ("ADA") shall mean the Civil Rights Act
signed into law on July 26, 1990, as Public Law 101-336, 104 Stat. 327,
40 U.S.C. 12101-12213 and 47 U.S.C. 225 and 661, as it is currently
enacted and as may be amended from time to time.
1.6 Annual Operating Report: "Annual Operating Report" shall mean an annual
report prepared by the Community Transportation Coordinator detailing
the designated area's operating and performance statistics for the most
recent operating year.
1.7 Availability: "Availability" shall mean a measure of the capability of
a transit system to be used by potential patrons, such as the hours the
system is in operation, the route spacing, the seating availability,
and the pick up and delivery time parameters.
1.8 Board: The "Board" shall mean the Board of County Commissioners of
Broward County, Florida, its successors and assigns, which is the
governing body of Broward County government.
1.9 Cancellations: "Cancellations" shall mean notification to the
CONTRACTOR, by the client, at least two (2) hours in advance of the
pick up time that a prearranged trip is no longer required.
1.10 Chapter 427, Florida Statutes: "Chapter 427, Florida Statutes" shall
mean the Florida Statute establishing the Commission for the
Transportation Disadvantaged and prescribing its duties and
responsibilities as currently enacted or as may be amended from time to
time.
1.11 Client (Passenger): "Client" shall mean an eligible recipient of the
service.
1.12 Community Transportation Coordinator (CTC) "Community Transportation
Coordinator" shall mean a transportation entity recommended consistent
with Section 427.015(1), Florida Statutes, and approved by the
Commission for the Transportation Disadvantaged, to ensure that
coordinated transportation services are provided to serve the
transportation disadvantaged population in a designated service area.
1.13 Companion: "Companion" shall mean a person, other than a personal care
attendant, traveling with an ADA eligible client and having the same
origin and destination as the eligible individual pursuant to 42 CFR
Section 37.123(f).
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<PAGE> 6
1.14 Complaint (Service Complaint): "Complaint (Service Complaint)" shall
mean a routine incident which may occur on a daily basis, as reported
to the Paratransit Customer Services staff, and is resolved within the
course of a reasonable time period. Examples of Complaints include, but
are not limited to, the following: Denial of Service, Scheduling
Errors, Late Pick Ups, Client Behavior, Driver Behavior, and Passenger
Discomfort.
1.15 Computerized Trip Management System (CTMS): "Computerized Trip
Management System" shall mean a system comprised of the following
components: a networked software package for real time paratransit
scheduling and dispatch, a file server, workstations, data
communication equipment (routers, hubs, modems, adapter cards, cabling,
etc. . .) and associated data (for example: GIS map, client, trip,
destinations, etc . . . ).
1.16 Contract Administrator: "Contract Administrator" shall mean the
Director of the Division of Mass Transit or his/her designee.
1.17 Contracting Officer: "Contracting Officer" shall mean the Director of
the Broward County Mass Transit Division, or those persons to whom
contractual authority has been delegated.
1.18 Coordinating Board: "Coordinating Board" shall mean an entity locally
known as the Broward County Coordinating Board (BCCB) composed of
representatives appointed by the Metropolitan Planning organization to
provide assistance to the Community Transportation Coordinator (CTC)
relative to the coordination of transportation services.
1.19 coordination: "Coordination" shall mean the arrangement for the
provision of transportation services to the transportation
disadvantaged in a manner that is cost effective, efficient, and
reduces fragmentation and duplication of services. Coordination is not
the same as total consolidation of transportation and transportation
disadvantaged services.
1.20 Coordination Contract: "Coordination Contract" shall mean a written
contract between the Community Transportation Coordinator and an
agency, which receives transportation funds and performs some, if not
all, of its own services, as well as services of others, under certain
conditions. The Contract reflects the specific terms and conditions
that will apply to those agencies who perform their own transportation
services to and from the coordinator.
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<PAGE> 7
1.21 Core service Area: "Core Service Area" shall mean the portion of the
complementary paratransit service area in which corridors with a width
of three-fourths (3/4) of a mile on each side of each fixed route merge
together, such that, with few and small exceptions, all origins and
destinations within the area would be served.
1.22 COUNTY: "County" shall mean Broward County, a body corporate and
politic and a political subdivision of the state of Florida.
1.23 Demand Response: "Demand Response" shall mean a transportation service
characterized by flexible routing and scheduling of relatively small
vehicles to provide door-to-door or point-to-point transportation at
the client's request.
1.24 Denial/Refusal of Service: "Denial/Refusal of Service" shall mean any
ride request which cannot be accommodated within the guidelines
outlined in this Agreement.
1.25 Dispatcher: "Dispatcher" shall mean the person responsible for having
every scheduled run leave from the designated originating location on
time, maintaining schedules, and monitoring of the work force and work
load on a minute-by-minute basis. In "Demand Response" transportation
"Dispatcher" shall mean the person who assigns the customers to
vehicles and notifies the appropriate drivers.
1.26 Door-to-Door Service: "Door-to-Door Service" shall mean transportation
service which requires the driver to assist the client(s) from the main
accessible door at the point of origin to the main door of the point of
destination. This may include assisting the client(s) to lock/unlock
the outside door at the origin-destination if requested by the
client(s). This does not include lifting of any client(s).
1.27 Drivers: "Drivers" shall mean all drivers providing services for
CONTRACTOR under this Agreement.
1.28 Escort/PCA: "Escort/PCA (Personal Care Attendant)" shall mean a person
traveling as an aide to facilitate travel by a person with a
disability. Personal care attendants may include, but are not limited
to, nurses, caretakers, and parents of clients. Pursuant to 42 CFR
Section 37.125(i), client shall indicate, at the time of
registration, whether or not he or she travels with a personal care
attendant. No fare shall be collected from an Escort/PCA.
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<PAGE> 8
1.29 Excessive Trip Length : "Excessive Trip Length" shall mean a one way
trip wherein the ride shall not exceed two (2) times the normal,
direct-route ride time for a particular trip.
1.30 FDOT: "FDOT" shall mean the Florida Department of Transportation.
1.31 Fixed Route (Fixed Schedule) "Fixed Route" (Fixed Schedule) shall mean
a system of transporting individuals on which a vehicle is operated
along a prescribed route according to a fixed schedule.
1.32 FTA: "FTA" shall mean the Federal Transit Administration (formerly
known as the Urban Mass Transportation Administration [UMTA]).
1.33 Grievance Process: "Grievance Process" shall mean a formal procedure,
as provided by the BCCB, that provides a channel for the resolution of
client disputes through discussion at progressively higher levels of
authority, culminating in arbitration if necessary.
1.34 In Service: "In Service" shall mean the time a vehicle begins the route
to provide transportation service to a client until the time the route
is completed.
1.35 Inadequate Service: "Inadequate Service" shall mean service which
includes, but is not limited to: rides that are over thirty (30)
minutes late, missed trips, discourteous operators or personnel,
vehicles that arrive more than fifteen (15) minutes early, excessive
trip length, clients dropped off at wrong addresses, and other
conditions, circumstances, or behaviors which have a substantial
adverse effect on the trip or the client.
1.36 Incident: "Incident" shall mean an accident, any moving violation for
which CONTRACTOR'S driver is issued a citation, or any event which
occurs while CONTRACTOR is providing service, which requires the
intervention of COUNTY, management of CONTRACTOR, and/or other
governmental agencies.
1.37 Individual with Disability: "Individual with Disability" shall mean an
individual who has a physical or mental impairment that substantially
limits one or more of the major life activities of such individual, a
record of such an impairment, or being regarded as having such an
impairment, and is as more particularly defined in 42 CFR Section
37.123(e).
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<PAGE> 9
1.38 Medicaid Transportation: "Medicaid Transportation" shall mean
transportation services to be provided for an eligible Medicaid
recipient to receive Medicaid compensable services from providers
including, but not limited to, physicians, clinics, dentists, or
hospitals.
1.39 Memorandum of Agreement: "Memorandum of Agreement" shall mean the State
of Florida Agreement for Transportation Disadvantaged Services
purchased by federal, state, or local government transportation
disadvantaged funds. The Agreement is between the Commission and the
Community Transportation Coordinator and recognizes the Community
Transportation Coordinator as being responsible for the arrangement of
the provision of transportation disadvantaged services for a designated
service area.
1.40 MTDAS PT: "MIDAS PT" shall mean the operating paratransit software and
data component of the CTMS.
1.41 Missed Trip: "Missed Trip" shall mean when a CONTRACTOR does not pick
up a client for a scheduled trip with the exception of a trip canceled
by a rider or a rider no show. Rides canceled by the CONTRACTOR shall
be considered a missed trip.
1.42 Mobility Aids: "Mobility Aids" shall mean a device or animal used by a
person to facilitate travel, including, but not limited to, Escort/PCA,
a wheelchair, walker or cane, or a service animal, such as a guide dog.
1.43 Multi-Loading: "Multi-Loading" shall mean the transportation of two or
more persons in a shared ride mode in a common vehicle.
1.44 Next Day Service: "Next Day Service" shall mean a trip provided on a
particular day in response to a request for service made by 5:00 p.m.
the day preceding the day travel is requested.
1.45 No Show: "No Show" shall mean failure of a rider to cancel a
prearranged trip within two (2) hours of the pick up time or failure to
appear at the designated point within five (5) minutes of the arrival
of the vehicle. Vehicle must arrive within fifteen (15) minutes before
or after the scheduled time.
1.46 Non-Ambulatory: "Non-Ambulatory" shall mean any person who is mobility
impaired and must be transported in a lift or ramp equipped vehicle.
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<PAGE> 10
1.47 On Time: "On Time" shall mean service vehicle arriving within fifteen
(15) minutes before or fifteen (15) minutes after the pick up time
recorded at the time of the scheduled trip request. For example, for a
pick up scheduled on the vehicle manifest as 10:15 a.m., riders shall
expect to be picked up between 10:00 a.m. and 10:30 a.m. The vehicle is
on time if it arrives no earlier than 10:00 a.m. and no later than
10:30 a.m.
1.48 Off Peak: "Off Peak" shall mean a period of a day or night during
which travel activity is generally low and a minimum of transportation
is operated.
1.49 Paratransit: "Paratransit" shall mean comparable public transportation
services required by the ADA for qualified individuals with
disabilities who are unable to use fixed route transportation services,
or service to other qualified individuals with disabilities, on demand,
by reservations, by subscription, and on a shared-ride basis.
1.50 Passenger Miles: "Passenger Miles" shall mean the number of miles each
individual fare-paying or sponsored passenger rides on the vehicles.
This is a duplicated mileage count. For example, if ten (10) people
ride together for ten (10) miles, there would be one hundred (100)
passenger miles.
1.51 Passenger Trip: "Passenger Trip" shall mean a unit of service which is
measured from the time a driver begins escort service for a passenger
pick up to the time when the passenger is escorted to the arranged
destination. Each different destination would constitute a passenger
trip. This unit of service is also known as a "one-way passenger trip".
1.52 Personal Belongings: "Personal Belongings" shall mean passenger
(client) property that can be carried by the passenger (client) and
safely stowed for transport with the passenger (client) at no
additional charge. "Personal Belongings" do not include for the
purposes of this definition wheelchairs, child seats, stretchers,
secured oxygen, or personal assistive devices.
1.53 Prescheduled Trip: "Prescheduled Trip" shall have the same definition
as "Advanced Reservation Service."
1.54 Qualified Client: "Qualified Client" shall be defined as an individual
with a disability who has been determined eligible for paratransit
service.
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<PAGE> 11
1.55 Reservation: "Reservation" shall have the same definition as "Advanced
Reservation Service."
1.56 Response Time: "Response Time" shall mean elapsed time between an
immediate request for service and the provision of service where the
provision of service is measured as the time the vehicle arrives to
pick up the client.
1.57 Revenue Miles: "Revenue Miles" shall mean the number of miles driven
while passengers are in the vehicle. For example, if ten (10)
passengers rode ten (10) miles together, there would be ten (10)
revenue miles.
1.58 Rider: "Rider" shall mean a person or client who reserves and receives
a trip through the operator.
1.59 Rider's Choice: "Rider's Choice" shall mean a paratransit system which
allows the rider to choose between two (2) or more carriers for a trip.
1.60 Road Call: "Road Call" shall mean a count of the "in-service"
interruptions caused by failure of some mechanical element of the
vehicle. "Road Call" excludes accidents.
1.61 Routing: "Routing" shall mean the organization of individual pick ups
and drop offs so as to maximize multi-loading and the efficient
utilization of drivers and vehicles without undue burden or excess
riding time for riders.
1.62 Rule 41-2, Florida Administrative Code: "Rule 41-2, Florida
Administrative Code" shall mean the rule adopted by the Commission for
the Transportation Disadvantaged to implement provisions established in
Chapter 427, Florida Statutes, as currently enacted or as may be
amended from time to time.
1.63 Same Day Service: "Same Day Service" shall mean the service that is
provided to a client on the same day that a request for service is
made.
1.64 Scheduling: "Scheduling" shall mean the assignment of a reservation to
a route and the estimating of a pick up time for a rider based upon the
rider's required arrival time at a designated location.
1.65 Service Animals: "Service Animals" shall mean any guide dog, signal
dog, or other animal individually trained to work or perform tasks for
an individual with a
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disability, personal care attendant, or companion, including, but not
limited to, guiding individuals with impaired vision, alerting
individuals with impaired hearing, providing minimal protection or
rescue work, pulling a wheelchair, or fetching dropped items.
1.66 Service criteria: "Service criteria" shall mean the six service
measures used to define comparability between fixed route service and
complementary paratransit service, which include service area, response
time, fares, trip purpose, hours and days of service, and capacity
constraints, as same are defined within the ADA.
1.67 Service Hours: "Service Hours" shall mean periods during which the
Broward County Transit fixed route system operates and other periods as
agreed to by the parties hereto.
1.68 Service Plan: "Service Plan" shall mean a three-year implementation
plan which contains the goals the Community Transportation Coordinator
plans to achieve and the means by which they plan to achieve them. The
plan shall be approved and used by the Coordinating Board to evaluate
the Community Transportation Coordinator.
1.69 Standee: "Standee" shall mean a rider who is allowed to ride the lift
on lift-equipped vehicles. Whenever a standee rides a lift, the driver
shall accompany the rider on the lift to ensure he/she does not slip or
fall, unless a companion or personal care attendant is available to
assist.
1.70 Standing Order: "Standing Order" shall mean a trip for which an
individual goes to and from the same origin and destination, at the
same time of day, at least once a week and requests the trip through a
standing reservation rather than a daily request. Also referred to as a
"Subscription Trip."
1.71 Stranded Passenger: "Stranded Passenger" shall mean a rider not picked
up within one hour of his/her scheduled pick up time.
1.72 Subscription Trip: "Subscription Trip" shall mean a trip for which an
individual goes to and from the same origin and destination, at the
same time of day, at least once a week and requests the trip through a
standing reservation rather than a daily request. Also referred to as a
"Standing Order."
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1.73 Transferable Passengers: "Transferable Passengers" shall mean any
person who uses a wheelchair who can enter, occupy, and exit a motor
vehicle with limited or no assistance, not requiring the use of special
equipment or bodily lifting by the chauffeur. For these trips, the
wheelchair is safely and securely stored in the trunk or interior of
the vehicle.
1.74 TD (Transportation Disadvantaged): "TD (Transportation Disadvantaged)"
shall mean those persons who because of physical or mental disability,
income status, or age are unable to transport themselves or to purchase
transportation and are, therefore, dependent upon others to obtain
access to health care, employment, education, shopping, social
activities, or other life-sustaining activities, or children who are
COMPREHENSIVE PARATRANSIT SERVICEcapped or high risk or at-risk as
defined in Section 411.202, Florida Statutes.
1.75 TDSP (Transportation Disadvantaged Service Plan): "TDSP (Transportation
Disadvantaged Service Plan)" shall mean Service Plan.
1.76 Transportation Contractor ("CONTRACTOR"): "Transportation Contractor
("CONTRACTOR")" shall mean one or more public, private for profit, or
private nonprofit entities engaged by the Community Transportation
Coordinator to provide service under the terms and conditions of this
project.
1.77 Trip Sheet: "Trip Sheet" shall mean a record kept of specific
information required by ordinance, rule, or operating procedure for a
period of time worked by the driver of a public passenger vehicle in
demand-response service. This is also known as a driver's log or
manifest.
1.78 Unauthorized client: "Unauthorized Client" shall mean any client who
does not meet the requirements of COUNTY'S paratransit eligibility
process.
1.79 Unauthorized Location: "Unauthorized Location" shall mean a location
outside the service boundaries in effect at the time of the trip,
unless the trip has been specifically authorized in writing by COUNTY.
1.80 Vehicle Hour: "Vehicle Hour" shall mean the in service of a
transportation vehicle for a period of one hour.
1.81 Vehicle Miles: "Vehicle Miles" shall mean the total number of miles
driven by a vehicle within a specified time period, with or. without
passengers aboard. This
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definition includes deadhead (mileage to/from a base location at the
beginning of the day and at the end of the service day), maintenance,
and non-revenue miles.
1.82 Will-Call: "Will-Call" shall mean a request for immediate response trip
not pre-scheduled.
1.83 Window: "Window" shall mean the period of time allowed prior to and
after the scheduled time of pick up of any rider(s).
ARTICLE 2
SERVICE AREA
2.1 Service Area: CONTRACTOR shall provide paratransit transportation
services in full compliance with the terms and conditions set forth in
Exhibit "A," attached hereto and incorporated herein by reference
thereto, describing the boundaries of the service area in which the
CONTRACTOR may provide service and the service components to be
provided by CONTRACTOR, as defined within MIDAS PT.
2.2 Service Area Adjustments: COUNTY, in its sole discretion, retains the
right to adjust the boundaries of CONTRACTOR's service area and service
components as described by Exhibit "A." Any such adjustments shall be
preceded by notice detailing such changes. Notice shall be provided
thirty (30) days prior to any such adjustments, or as otherwise agreed
to by the parties, and CONTRACTOR shall comply with said changes.
ARTICLE 3
SCOPE OF SERVICES AND SERVICE DESCRIPTION
3.1 Program Objectives: The purpose of this program is to provide
transportation services to qualified individuals with disabilities in
accordance with the mandates of the ADA, to the transportation
disadvantaged in accordance with the mandates of Chapter 427, Florida
Statutes (1995), and to those persons meeting the criteria as defined
by COUNTY (hereafter "Clients"). It is the COUNTY's intent that these
services be provided in a method that maximizes participation,
increases competition, is cost effective, and provides the best
possible quality service to the transportation disadvantaged and
individuals with disabilities. COUNTY reserves the right to enroll
additional service providers into the program to meet the herein stated
Program Objectives. Client's must be approved or certified by
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COUNTY. Only COUNTY shall provide certification information to
CONTRACTOR.
3.2 Memorandum of Agreement (MOA): CONTRACTOR agrees to comply with all of
the requirements of local, state, and federal laws relating to the
provisions of transportation services and in accordance with all of the
terms and conditions of the MOA, attached hereto as Exhibit "B" and
incorporated herein by reference thereto, as currently existing or as
may be amended from time to time.
3.3 CONTRACTOR Services: CONTRACTOR shall furnish at its sole cost and
expense all facilities, labor, materials, and equipment required to
provide all necessary service in the manner and form provided herein
for transportation and scheduling with the exception of those
facilities, labor, materials, and equipment provided for by COUNTY
pursuant to the terms of this Agreement. These services shall be
governed by the Memorandum of Agreement, the Transportation
Disadvantaged Service Plan (TDSP) , and the ADA Paratransit Service
Plan as currently enacted and as may be amended from time to time.
3.4 Scope of Work: CONTRACTOR shall provide services as per Exhibit "A".
The COUNTY Transportation Option Program includes two service
components: "Program Trips" and "Rider's Choice." Pursuant to the
mandates of the ADA, CONTRACTOR agrees that it will not discriminate as
to trip purpose and will comply with all local, state, and federal laws
and regulations that apply to the provision of transportation under the
ADA, transportation disadvantaged services required by Chapter 427,
Florida Statutes (1995), Rule 41-2, Florida Administrative Code, and
specific policies and procedures which relate to local sponsor agency
requirements.
3.4.1 "Program Trips": CONTRACTOR shall provide service to specific
large congregate sites and/or high volume agency locations as
designated by the COUNTY and as may be amended from time to
time. These are subscription trips which are based upon
geographically designated areas.
3.4.1.1. Program Trip Adjustments: COUNTY, in its sole
discretion, retains the right to adjust the Program
Trip assignments as provided for by Exhibit "A."
3.4.2 "Rider's Choice": CONTRACTOR shall provide a driver assisted,
door-to-door, advance reservation program, to clients who
choose their service.
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3.5 Client Certification and Scheduling: Certification of eligibility,
service, assignments, and authorization will be accomplished through
linking the COUNTY'S CTMS with the CONTRACTOR's reservation and
scheduling system. This system will provide a direct link between
CONTRACTOR and COUNTY.
3.6 Types of Trips Provided Via Service Components and Responsibilities of
the Parties per Type of Trip Provided: The following types of trips
will be provided as part of the "Program Trip," "Rider's Choice,"
service component program, and the parties hereto will have the
following responsibilities per type of trip provided:
3.6.1 "Pre-Scheduled Trips": These advanced reservation, demand
response, trips shall be provided on a first-come, first serve
basis.
3.6.2 "Subscription Trips": ADA Paratransit riders shall have
priority for subscription trips when subscription capacity is
inadequate to meet all requests for subscription service.
CONTRACTOR shall maintain a list of subscription clients by
funding component to document the level of subscription
service provided and shall provide information to COUNTY upon
request. Information requested may include listing the number
of subscriptions scheduled, the days of the week of the
subscriptions, the pick up times for the scheduled
subscriptions, and any other information requested. COUNTY
reserves the right to set limits on the number of daily
subscription trips allowed in accordance with ADA regulations.
COUNTY shall allow clients to change providers for
subscription trips only one (1) time per calendar month, with
the change in service provider beginning on the first day of
the subsequent month, except in special cases as determined by
COUNTY.
3.6.3 "Same Day Service": Requests for service made on the same day
may be provided at the discretion of CONTRACTOR. CONTRACTOR
shall make every reasonable effort to accommodate same day
trip requests.
3.6.4 "County Special Trips": Trips requested by COUNTY staff to be
provided to clients involved with special COUNTY activities
outside the scope of ordinary service provision. These may
include, but are not limited to, ADA Eligibility and Appeals
transportation.
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3.6.5 "Emergency Trips": During emergency circumstances, including
but not limited to hurricane evacuation, as determined solely
by, and at the discretion of COUNTY, CONTRACTOR shall be
required to provide transportation on a will-call basis to all
riders including those who may not otherwise be eligible for
these services.
3.7 Provision of Service: Transportation service will be provided by
CONTRACTOR as follows:
3.7.1 Eligibility Determinations: Determinations are made as to
client eligibility for service in the following manner:
3.7.1.1 ADA Paratransit Eligibility: COUNTY has established a
certification process for ADA Paratransit Eligibility
as required by the ADA. Only those clients whose
disabilities prevent them from using the fixed route
system are eligible for this service. Once
certification has been established on specific
clients, COUNTY will provide CONTRACTOR with a list
of eligible ADA riders. If an individual is
transported without certification by COUNTY, COUNTY
shall not provide reimbursement for such trip(s).
3.7.1.2 Transportation Disadvantaged (TD) Funded Trips:
COUNTY determines eligibility and provides
authorization, and preserves the right to limit the
number of trips and/or prioritize by trip purpose for
Transportation Disadvantaged Sponsored Trips in
accordance with the eligibility criteria established
by the Florida Commission for the Transportation
Disadvantaged. Once authorization has been
established on specific clients, COUNTY will provide
CONTRACTOR with a list of eligible TD riders. If an
individual is transported without authorization by
COUNTY, COUNTY will not provide reimbursement for
such trip(s):
3.7.1.3 Agency-Funded Trips: Various other local agencies may
participate in the purchase of service arrangements
under this Agreement. Each agency shall determine
eligibility and provide authorization for Agency
Funded Trips in accordance with the eligibility
criteria established by the appropriate funding
agency. The appropriate funding agency will reimburse
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CONTRACTOR for transportation services only if the
client was an eligible agency rider on the date of
the service.
3.7.2 Reservations:
3.7.2.1 Reservation Hours (Reservations): Requests for
Service shall be made available to caller by
CONTRACTOR, through the use of a telephone operator,
seven (7) days a week between the hours of 8:00 a.m.
and 5:00 p.m. Reservations shall be made available
to client by CONTRACTOR through the use of
reservation agents, an answering service, or some
operable mechanical device, such as an answering
machine, during Saturdays and Sundays. Eligible
clients may reserve paratransit service up to
fourteen (14) days prior to the date of the desired
trip. Pick up times may be negotiated, however, an
ADA Paratransit Client may not be required to
schedule a trip to begin more than one hour before or
after the client's desired pick up time.
3.7.2.2 Required Records: For each caller, the call taker
shall, at a minimum, record the following information
on the Computerized Trip Management System (CTMS)
reservation screen:
A. Name of Caller.
B. Appropriate funding component of service.
C. Caller's Paratransit Services Identification
Number.
D. Pick Up location.
E. Drop Off location.
F. Desired pick up time (if applicable).
G. Desired drop off time (if applicable).
H. Telephone number where caller can be
reached.
I. Number in party (PCA and/or Companion).
3.7.3 Scheduling and Dispatching: All trips must be scheduled and/or
dispatched through CONTRACTOR's
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local dispatch facility of the COUNTY supplied CTMS. The
COUNTY may within its sole discretion, under certain
circumstances, provide scheduling functions. The following are
requirements pertaining to scheduling and dispatching:
A. Clients will not be permitted to request a specific
driver.
B. CONTRACTORS shall use their best efforts to regularly
assign drivers to routes in order to best serve the
specific needs of their clientele.
C. CONTRACTOR shall not restrict or prioritize
scheduling based upon trip purpose unless otherwise
directed by the COUNTY.
D. All pick up and appointment times shall be confirmed
at the time the trip is reserved.
E. CONTRACTOR shall be responsible for routing vehicles
in stop order (discharge order).
F. If the CONTRACTOR fails to deliver a client to an
appointment on time, the client shall not be
penalized for the return trip when and if he/she
cannot be ready at the scheduled return pick up time.
A window of thirty (30) minutes will be given in
situations such as this from the time the client is
ready for his/her return trip.
G. CONTRACTOR shall consider service for "will calls".
3.7.4 Daily Service Hours: CONTRACTOR shall provide paratransit
transportation throughout CONTRACTOR's designated service area during
the hours of COUNTY'S operations and as may be changed from time to
time.
3.7.4.1 COUNTY'S Current Hours of Operation: Monday through Saturday,
5:30 a.m. to 10:00 p.m., and Sundays and Holidays, 7:30 a.m.
to 8:00 p.m.
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3.7.4.2 Specific Holidays: Paratransit service shall be provided as
per COUNTY'S holiday schedule for fixed route service on: New
Year's Day, Labor Day, Memorial Day, Thanksgiving,
Independence Day, and Christmas Day.
3.7.5 Client Pick Up: CONTRACTOR shall be required to provide door-to-door
service. Drivers must go into the lobbies or vestibules of buildings to
seek out and/or assist a client; however, drivers are prohibited from
entering residences. Sounding a horn at the curb shall be insufficient
notification of a ride's arrival. When the client boards the vehicle,
driver shall complete paperwork, or utilize an alternate automated
system, indicating that the pick up has been made. The following
information, at a minimum, shall be recorded by the driver:
A. Actual pick up time.
B. Actual vehicle odometer mileage.
C. Actual fare collected from the passenger.
D. Client signature on the ride ticket, manifest, and route
sheet.
E. Other information as may be required by COUNTY.
3.7.5.1 Failure to Respond on Vehicle Arrival: If the client does not
respond upon the vehicle's arrival at the pick up point, the
driver will immediately radio the dispatcher to assist in
making every attempt to contact the client. If the client does
not appear, the driver shall request instructions from the
dispatcher. After waiting five (5) minutes the dispatcher may
direct the driver to continue on to the next scheduled pick
up. Reasonable attempts should be made to reach the client by
telephone.
3.7.6 Cancellations, No Shows, Denials:
3.7-6.1 Cancellations: CONTRACTOR shall record cancellations in the
CTMS dispatch records on a daily basis. CONTRACTOR shall
notify the COUNTY of:
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A. Any instances of clients who establish a pattern of
cancellation of two hours or less prior to the
scheduled pick up time.
B. Clients who refuse to pay the initial user fare.
C. Clients who may need to be denied service due to
violent, seriously disruptive, or illegal behavior.
3.7.6.2 No Shows: CONTRACTOR shall record no shows in the CTMS
dispatch records as they occur.
3.7.6.3 Denials/Refusal of Service:
A. CONTRACTOR may refuse to provide contracted
paratransit service to clients if vehicle capacity is
insufficient to accommodate the users at the time
they wish to travel. When service is refused for
vehicle capacity reasons, CONTRACTOR shall: refer
program participants to another contractor, who
provides similar service for COUNTY under this
Agreement, by giving the telephone number(s) of such
contractors to the client or directly assist the
client by attempting to arrange the service with
another contractor. In the event that the client is
unable to arrange service for themselves after
contacting the alternative contractors, the COUNTY
reserves the right to make the service arrangements
for the client directly with a service provider.
B. CONTRACTOR may refuse to provide contracted
paratransit service to clients who engage in violent,
seriously disruptive, or illegal conduct.
In each of. these instances, CONTRACTOR shall document and
record all refusals in the CTMS as they occur. In addition to
logging the denial on the CTMS, CONTRACTOR may be requested to
submit to COUNTY a denial form/log, which shall detail
specifically the reason for the trip denial, the alternatives
offered to the caller, and all other information pertaining
thereto.
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C. CONTRACTOR may not deny services based upon trip
length, mobility device used by the client,
geographic location within the service area, or time
of day within the hours of service. All requests made
within a service area, during service hours, and with
vehicle capacity shall be honored.
D. Any trip denial or referral of trips which negatively
impacts the paratransit service may be cause for
corrective action including, but not limited to, the
enrollment of additional service providers into the
program, and may be considered a breach of contract
which will be handled in accordance with Article 15
herein.
3.7.7 Drugs, Alcohol, Smoking: Driving while under the influence of drugs
and/or alcohol, or smoking, shall be strictly prohibited. A client's
use of drugs, the consumption of alcoholic beverages, and the smoking
of any substance shall be strictly prohibited while on board as a
passenger utilizing paratransit service. CONTRACTOR shall:
A. Establish such anti-drug and alcohol programs as may
be required by federal regulations.
B. Certify compliance with Federal Transit
Administration Regulations, 49 CFR Part 653 and 49
CFR Part 654, as currently enacted or as may be
amended from time to time, which concern
pre-employment, reasonable suspicion, random testing,
post accident, return-to-duty, and follow-up drug and
alcohol testing of safety sensitive employees.
C. Report applicable testing summaries annually, or as
may be prescribed by COUNTY'S Contract Administrator
and or the COUNTY Program Manager for Drug and
Alcohol Testing.
3.7.8 Permissible Client Transportation Accompaniment/Requirements/
Reimbursable Expenses: The following is a list of categories which set
forth permissible accompaniments for paratransit
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clients during transportation, the requirements related thereto, and
reimbursable expenses for such accompaniments:
3.7.8.1 Personal Care Attendant: ADA Paratransit clients who are coded in
COUNTY'S eligibility file as "PCA" (Personal Care Attendants) may bring
a PCA with them during transportation. The reservation for a PCA must
be made at the time of the client's original trip request. An ADA
Paratransit client traveling with a PCA may also reserve space for a
Companion. A PCA does not pay a user-fare when riding with an ADA
Paratransit client, and PCA travel is not reimbursable as a separate
trip. ADA Paratransit clients who are coded "PCA" shall self-determine
the need for a PCA, whether occasionally or for every trip and,
pursuant to 49 CFR Part 37.5, shall not be required to bring a PCA. The
only exception to not requiring a PCA would be where a client would
otherwise be suspended from service and the presence of a PCA would
mitigate the need for suspension. PCAs may only ride at the same
time(s) and to and from the same destination(s), as the ADA Paratransit
client.
3.7.8.2 Companions: ADA Paratransit clients shall be allowed to reserve space
for one companion when they make their original reservation(s). This is
in addition to a PCA. Additional companions may travel when vehicle
capacity allows. Companions may only ride at the same time (s) , and to
and from the same origin (s) and destination(s), as the ADA Paratransit
client. Companions traveling pay the same user fare as the client and
are an eligible reimbursable trip for billing purposes.
3.7.8.3 Service Animals: Any animal which is identified and trained to be a
service animal needed by a client, PCA, or companion, to help with
daily activities shall be transported. Service animals are not allowed
to occupy seats. They must be leashed and either kept on the floor of
the vehicle or carried on the lap of the client. Service animals are
not reimbursable as a service trip.
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3.7.8.4 Personal Belongings: Personal Belongings as defined by Article
I herein may be transported with a paratransit client.
3.7.9 Driver Trip Tickets/Log Sheets: CONTRACTOR shall use driver trip
tickets/log sheets to record trip information. These forms shall be
specifically completed and maintained as documentation of service
provided. CONTRACTOR shall not be reimbursed, in the event that COUNTY
receives an incomplete trip ticket/log sheet, until such document is
completed to the satisfaction of the COUNTY. No reimbursement shall be
processed, or paid, after sixty (60) days of the actual trip date. In
the event that automated swipe-card procedures are installed by COUNTY,
such procedures shall replace any use of written trip tickets/log
sheets.
3.7.10 Drivers: CONTRACTOR is required to keep a daily record for each driver
indicating:
A. Driver's Name.
B. Date of Service.
C. Vehicle Number.
D. Time the driver leaves for in service transportation.
E. Odometer reading from the time the vehicle begins in service
transportation.
F. Time of the driver's first pick up.
G. Time of the driver's last pick up.
H. Odometer reading on arrival at the terminal.
I. Time of arrival back at the terminal.
Any form utilized by CONTRACTOR for this purpose shall be approved by
COUNTY and may be incorporated into the CONTRACTOR'S drivers log.
3.7.11 Identification Cards: In the event that COUNTY implements a policy
regarding identification cards which would require the clients to
present such card while using the service, CONTRACTOR agrees to
cooperate with COUNTY in the enforcement of said
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policy. COUNTY reserves the right the change the client identification
cards at any time, which may include, but not be limited to, cards
encased in plastic sealers, swipe card format, or picture
identification cards.
3.7.12 Telephone Information Services:
3.7.12.1 Courteous and Polite Dealings: CONTRACTOR shall ensure that
personnel assigned to service telephone lines maintain a
courteous and polite attitude in all dealings relating to the
provision of services.
3.7.12.2 Full Service: Clients (within the service area) shall be
provided full, easy, and toll-free access to paratransit
services. Full access shall include the provision of telephone
devices for the deaf ("TDD") . CONTRACTOR shall have staff
trained in TDD usage and available to answer this machine
during all call taking hours.
3.7.12.3 Exclusivity: Customer reservation telephone lines shall be
exclusively utilized for paratransit service customer
information and will not be used by CONTRACTOR for any other
purpose.
3.7.12.4 On-Hold Tines: CONTRACTOR shall establish a system to keep
on-hold time at a minimum while clients are booking
transportation. A minimum shall be defined as no more than
ninety (90) seconds.
3.7.12.5 Reporting Function: CONTRACTOR shall have a reporting function
on the phone system which measures the number of calls by
function, average length of call, hold times, abandoned calls,
cancellations, and other reporting capabilities.
3.7.12.6 Hotline: CONTRACTOR shall provide a "hotline" telephone number
(unpublished), for exclusive use by COUNTY staff. Such
telephone line shall provide for direct communication in
resolving day-to-day operational issues and shall be active
and functioning during all hours of service delivery. This
hotline telephone number shall be supplied to COUNTY prior to
initiating service.
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3.7.13 Unauthorized Service: CONTRACTOR shall not be reimbursed for service
provided to unauthorized clients or to unauthorized locations.
3.7.14 Coordination of Service: CONTRACTOR shall coordinate service with
COUNTY fixed route bus service and other public transportation services
where available and appropriate. The service dispatcher shall be
familiar with other public transportation services available in the
service area covered by this Agreement.
3.7.15 Assignment of Client: COUNTY reserves the right to assign specific
clients to designated contractors which may best serve a particular
client's special needs.
3.7.16 Wheelchair to Seat Transfer: CONTRACTOR may ask clients who use
wheelchairs if they wish to transfer from wheelchair to seat once
aboard a vehicle. Such transfer is entirely at the discretion of the
client and service may not be refused or denied based upon the decision
of the client.
3.7.17 Client Safety: All clients are required to be secured by a seatbelt and
the CONTRACTOR shall ensure that all clients utilize safety belts. Any
report of unsafe driving and unsafe or uncomfortable vehicles shall be
acted upon, and corrective action shall be taken, by CONTRACTOR and
COUNTY so as to achieve a solution consistent with satisfactory
performance of the objectives of this Agreement.
3.7.18 Grievance Procedure: A formal grievance procedure, pertaining to the
provision of service, has been established by the Broward County
Coordinating Board (BCCB) in accordance with Florida Commission for the
Transportation Disadvantaged requirements as per Rule 41-2, Florida
Administrative Code (1992). Copies are available upon request.
3.7.19 Equal Access to Service: CONTRACTOR shall provide services within its
service area to all program-eligible residents without regard to
location, cultural affiliation, race, religion, color, sex, sexual
orientation, or national origin. COUNTY reserves the right to require
CONTRACTOR to provide full documentation of all trips provided within
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these classifications. Failure to provide full and equal access of
paratransit services to clients may result in termination of this
Agreement as per Article 15 herein.
3.7.20 Subcontractors: CONTRACTOR may utilize direct service subcontractors
only with the written consent and approval of COUNTY. Names and
qualifications of all subcontractors shall be submitted to COUNTY at
any point where CONTRACTOR wishes to utilize the services of such
subcontractors.
3.7.21 Confidentiality: CONTRACTOR shall maintain as confidential all client
information, whether provided by COUNTY or otherwise obtained by
CONTRACTOR. Information concerning a COUNTY paratransit client shall
not be disclosed unless directly related to the administration of the
COUNTY'S or CONTRACTOR'S responsibilities with respect to services
provided under this Agreement and/or in accordance with applicable
public records laws, rules, and regulations, by Court Order, and by
written consent of the client, his/her attorney, responsible parent, or
guardian.
3.7.21.1 Solicitation Prohibited: Names and addresses of COUNTY
paratransit clients shall not be distributed for any purpose
without prior COUNTY approval. CONTRACTOR may not solicit or
entice clients with incentives, discounts, or gifts, in order
to increase ridership. Quality of service and performance of
CONTRACTOR shall be the only factor to attract clients.
3.8 Vehicles:
3.8.1 Accessibility: CONTRACTOR shall provide sufficient dedicated vehicles,
which shall include, but not be limited to, an appropriate number of
vehicles equipped with lift or ramp, wheelchair securement devices, and
spare vehicles to maintain service in case of vehicle breakdowns,
suitable for transportation of the clients to meet the requirements
specified in this Agreement. All vehicles, wheelchair lifts or ramps,
and wheelchair securement devices used for paratransit service shall
meet all applicable Americans with Disabilities Act regulations, be
approved by COUNTY, and are subject to annual COUNTY
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inspection. CONTRACTOR shall meet or exceed the standards and
requirements for accessible vehicles set forth in Architectural and
Transportation Barriers Compliance Board (ATBCB) as published in 49 CFR
Section 37.161, 37.163, 37.167, 37.169, 38.21, and 38.23-38.33, on
September 6, 1991. Failure to provide adequate vehicles to meet the
terms and conditions of this Agreement may result in termination of the
Agreement as provided by Article 15 herein.
3.8.2 Computerized Information Tracking System: COUNTY may, and reserves the
right to, require CONTRACTOR to install, at COUNTY expense, automatic
vehicle locator equipment in the CONTRACTOR'S vehicles.
3.8.3 Wheelchair Restraint System: A four-point tie down system with shoulder
strap such as "Q" Straint," "Kennedyne," or a COUNTY approved
equivalent, shall be located at each wheelchair area. Tiedowns
(wheelchair securement devices) shall be oriented to allow the client
to ride facing forward in the vehicle. Tiedowns are to be fully
adaptable so as to fit all size chairs. All vehicles shall be equipped
with operable seat belts and/or ADA approved tiedowns at all seating
and wheelchair locations. CONTRACTOR shall strongly encourage clients
to utilize their mobility devices as regulated by the ADA in vehicles.
3.8.4 Personal Property in Vehicles: Any personal property of a client found
in a vehicle shall be retained by CONTRACTOR for a minimum of sixty
(60) days after which, with the prior approval of the COUNTY, the
CONTRACTOR may dispose of said property.
3.8.5 Vehicle Insect Extermination: All vehicles shall undergo insect
extermination as necessary to eliminate the presence of insects. The
vehicle shall not be placed in service while any noxious fumes or
detectable odors remain.
3.8.6 Vehicle Standards: It is the responsibility of CONTRACTOR to ensure
that each vehicle meet the standards as established in the TDSP, MOA,
FCTD, and Chapter 341.061(2)(a), Florida Statutes, and Rules
thereunder. The following are the minimum standards which must be met
by CONTRACTOR at all times while providing the services:
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A. One operational seat belt per passenger available for
use at all times (except buses).
B. All vehicles must carry an effective fire
extinguisher aboard whenever passengers are on board.
C. Have a rear view mirror and dual side mirrors.
D. Have a functioning speedometer indicating speed in
miles per hour and a functioning odometer indicating
distance in miles to the nearest tenth of a mile.
E. Have a functioning interior light within the
passenger compartment.
F. The vehicles are to be equipped with an operable
air-conditioning system. If the air conditioning
system becomes inoperable during the day, the vehicle
may continue to provide service only for the
remainder of that day.
G. Vehicle exterior is to be free of grime, oil, or
other substance and be free from cracks, breaks,
dents, and damaged paint that noticeably detracts
from the overall appearance of the vehicle.
H. Body molding should be in place, or if removed, holes
filled and painted.
I. The interior shall be free from dirt, grime, oil,
trash, or other material which could soil items
placed therein and protruding metal or other objects
that could damage items placed therein.
J. Passenger compartment is to be clean, free of torn
upholstery or floor coverings, damaged or broken
seats, and protruding sharp edges.
K. Broward County Operating Permits, if required, shall
be displayed properly. CONTRACTOR shall bear the
production cost of the sticker or tag.
L. Vision to be unobstructed on all four (4) sides of
vehicles.
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M. Vehicle shall be equipped with a two-way mobile radio
in good working order which shall be audible to the
driver at all times.
N. No smoking in the vehicle.
0. All vehicles shall be cleaned, inside and out, daily.
P. CONTRACTOR shall, on the first day of each month,
supply COUNTY with a list of all vehicles to be used
in the subsequent month, shall have such vehicles
inspected annually, and shall certify to COUNTY that
maintenance has been performed as required by Rule
14-90.001, et seq., Florida Administrative Code
(1995).
Q. Each vehicle shall have the COUNTY'S telephone number
for complaints and CONTRACTOR'S emergency telephone
number posted in a conspicuous place in the vehicle,
and given verbally by the driver upon request.
R. Mini-vans, vans, demand-response sedans used in this
service, as well as any taxicabs which the COUNTY
authorizes, and which are used for backup services,
shall be governed by the requirements of the Broward
County Code of Ordinances. Van-type vehicles must
have windows in all client seating locations.
Retro-fitted/conversion "cargo" vans without added
windows are not acceptable.
S. CONTRACTOR shall affix to each vehicle the COUNTY
supplied program logo decal in a COUNTY approved
position and place on the vehicle.
Any vehicle found not to be in conformance with the above
standards must be removed from service until correction of the
deficiency. COUNTY further reserves the right to inspect
vehicles to be used in the Program at any time, and order
their removal from service if not found to be in conformity
with this Article. Vehicles will be subject to an annual
inspection performed by COUNTY or its agent. Failure to comply
with this requirement shall be cause for disallowance of
compensation for service rendered in the violating vehicle.
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3.8.7 Vehicle Maintenance: CONTRACTOR shall maintain all vehicles
and equipment used in the COUNTY paratransit service in
optimal working condition so as to minimize breakdowns and
decrease the possibility of accidents. COUNTY reserves the
right, in its sole discretion, at any time, to inspect
vehicles and maintenance facilities during normal working
hours, review CONTRACTOR'S maintenance records and inspect and
reject temporarily or permanently, by notice to the
CONTRACTOR, any vehicle CONTRACTOR proposes to use or
subsequently utilizes which deems unacceptable due to
uncleanliness, mechanical failure, or safety concerns.
3.9 Service Funding Sponsors: There are various Service Funding Sponsors
who assist in providing paratransit services to their clients.
CONTRACTOR shall ensure that all procedures of the various service
sponsors are followed and that a sensitive and responsive working
relationship is maintained with these groups.
3.9.1 Medicaid (AHCA) Trips: Pursuant to 42 C.F.R. 431.53, 42 C.F.R.
440.170(a), and Chapter 409, Florida Statutes, the Medicaid
Program office of the Agency for Health Care Administration is
currently the entity designated to contract for transportation
services on behalf of Medicaid recipients who would otherwise
be unable to access necessary medical services. Changes to
this program are currently under consideration by AHCA and
paratransit service may some time in the future be
incorporated into the services herein provided. COUNTY and
CONTRACTOR agree to incorporate Medicaid recipients into this
Agreement should this change be implemented.
3.9.2 CTC/TD Trips: Pursuant to Chapter 427, Florida Statutes,
COUNTY as the Community Transportation Coordinator (CTC) is
responsible for the coordination of funding and activities in
providing transportation for transportation disadvantaged (TD)
eligible recipients.
3.9.3 ADA Trips: Pursuant to the Americans with Disabilities Act of
1990 (ADA), COUNTY is responsible for providing complementary
paratransit services. Eligibility for clients under this
service is determined by Federal ADA Rules and Regulations.
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3.9.4 Other Community Sponsored Trips: Various other community
support agencies (such as the Division of Blind Services and
Vocational Rehabilitation) participate, through COUNTY, in
sponsoring eligible paratransit clients.
ARTICLE 4
SERVICE STANDARDS
4.1 Objectives of Service Standards: CONTRACTOR shall provide services, as
per this Agreement.
4.2 Service Standards: It is the responsibility of CONTRACTOR to comply
with all service standards established by COUNTY. The following service
standards established by the COUNTY shall be followed:
4.2.1 Dwell (Waiting) Time: Driver shall dwell (wait) for a client
at a pick up point for a minimum of five (5) minutes. In
addition, the Driver is required to wait for a client who is
within the eye sight of the vehicle operator and is clearly
making his/her way to the vehicle. The dwell time is to be
extended for clients to board the vehicle. If the vehicle
arrival is outside of the on time window (a late pick up) the
Driver shall dwell for a minimum of ten (10) minutes.
4.2.2 Door-to-Door Service: Clients shall be provided door-to-door
service as defined by Article I herein. Sounding of the horn
at the curb shall not be acceptable as sufficient notification
of a driver's arrival. Door, used herein, shall be the
building's door, not an individual office or apartment door
located within a given building.
4.2.3 Client Assistance: Boarding and disembarking assistance shall
be provided to any client. The driver shall go to the door,
announce his or her arrival (e.g., face-to-face or by
intercom), and provide any additional assistance which will
ensure the client's safe passage to and from the vehicle and
to and from the vehicle seat. Even if the client indicates
that he or she does not require the driver's assistance, the
driver shall take the necessary precautions to ensure the
client's safe passage.
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4.2.4 Transfers to other Services: Transfers to fixed route and
other paratransit services shall be provided and are
encouraged.
4.2.5 Client Ride Time: While the scheduler shall attempt to
schedule a series of pick ups so as to load the vehicle to the
highest safe and permissible capacity, and operate at the
highest possible level of efficiency and productivity, the
CONTRACTOR shall also attempt to minimize a client's ride time
to ensure that it is not excessive. Ride time shall not exceed
two (2) times the normal, direct-route ride time for a
particular trip. This requirement shall apply except in
circumstances beyond the CONTRACTOR'S control; such as,
inclement weather, unusually heavy traffic, and the like. It
shall be in the sole discretion of the COUNTY to opine and
determine excessive ride time and when circumstances are
beyond CONTRACTOR'S control. Rides provided where client ride
time exceeds two (2) times the normal ride time for that
specific trip shall be deemed excessive. CONTRACTOR shall
provide written explanation for additional travel time if
requested by COUNTY.
4.2.6 On Time Performance: CONTRACTOR shall maintain On Time
performance and shall not establish a pattern of untimely pick
ups. On Time is as defined in Article I herein. For scheduled
service requests, ninety-five percent (95%) shall be picked up
within the established On Time definition. COUNTY reserves the
right to arrange/provide transportation as it deems
appropriate for any client who has been waiting more than
sixty (60) minutes past their scheduled pick up time.
4.3 Disincentive Deductions: CONTRACTOR shall be assessed disincentive
deductions in the following circumstances:
4.3.1 Client Ride Time Disincentive Deduction: A disincentive
deduction of One Hundred Dollars ($100.00) per
occurrence/incident, shall be assessed against CONTRACTOR who
has been provided with two (2) or more written warnings by
COUNTY to correct the practice of excessive ride time lengths.
4.3.2 On Time Performance Disincentive Deduction: On Time
performance shall be determined based upon
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data provided by CONTRACTOR each calendar month. If On Time performance
falls below ninety-five percent (95%) two or more months in a row, or
below eighty-five percent (85%) in any one month, COUNTY'S Contract
Administrator shall meet with CONTRACTOR to review the matter and
determine what actions will be taken to resolve the problem.
Notwithstanding this effort, in the event that CONTRACTOR fails to meet
an on time performance level of ninety percent (90%) in any month of
service, in addition to applicable trip by trip disincentive deductions
as listed in subsection 4.3.3 herein, COUNTY shall apply a disincentive
deduction to CONTRACTOR as follows:
A. Three Hundred and Fifty Dollars ($350.00) for the
provision of up to four thousand (4,000) total trips
per month.
B. Seven Hundred Dollars ($700.00) for the provision of
over four thousand (4,000) total trips per month.
Repeated failures to meet on time performance standards may be deemed a
default in the sole discretion of COUNTY and cause for termination of
this Agreement as per Article 15 herein.
4.3.3 Tardiness Disincentive Deductions: For each instance where a client is
picked up outside of the minimum ninety-five percent (95%) on time
standard, the following disincentive deduction will be assessed:
A. 16-30 minutes - $1.50 per late trip.
B. 31-45 minutes - $2.00 per late trip.
C. 46-60 minutes - $2.50 per late trip.
D. 61 + minutes - $2.50 per late trip. No Collection of fare from
client.
Disincentive deductions will be waived during periods of severe weather
or when other conditions indicate that the delay was unavoidable, as
solely determined by the COUNTY. This determination is final. If
CONTRACTOR believes an event occurring in COUNTY may cause delays, it
is the responsibility of CONTRACTOR to notify COUNTY of
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the event and to obtain prior written concurrence that charges
will not be assessed.
4.3.4 Missed Trip Disincentive Deductions: For each missed trip the
reimbursement value of two similar trips shall be deducted
from CONTRACTOR's monthly reimbursements. CONTRACTOR shall
submit as part of the weekly written report to COUNTY, details
of all missed trips, including an explanation for the missed
trip, times and days of the missed trip, rider whose pick up
was missed, and origin and destination of the missed trip.
4.3.5 Driver Licensing and Registration Disincentive Deductions:
Failure to meet driver licensing and registration requirements
as stated herein shall result in a disincentive deduction of
Two Hundred and Fifty Dollars ($250.00) per incident, and
shall be assessed monthly and may result in Termination as per
Article 15 herein.
4.3.6 Accident/Incident Disincentive Deduction: If CONTRACTOR fails
to report an accident/incident within the required time period
as stated herein, CONTRACTOR will be charged a disincentive
deduction in the amount of One Hundred Dollars ($100.00) per
day the report is late.
4.4 Monitoring: COUNTY'S direct involvement in the day-to-day operations of
the service shall include, but not be limited to, on-street monitoring
of drivers and vehicles, inspections of equipment, customer service
functions, contract compliance oversight, and quality control. COUNTY
shall conduct unannounced periodic inspections to determine whether the
operations meet the required specifications and vehicles are in
compliance with standards. Full cooperation shall be provided by
CONTRACTOR for the COUNTY monitoring program. CONTRACTOR shall provide
full access to all driver records on or at the operating facility.
CONTRACTOR shall be required to make available a work station, desk,
telephone, and chair, for use by a COUNTY representative, if so
requested, at the CONTRACTOR'S facility. COUNTY'S on street monitoring
shall include, but not be limited to:
A. On Time performance.
B. Knowledge of the service area and routing.
C. Driver assistance.
D. Manifest accuracy and completeness.
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E. Driver appearance.
F. Vehicle appearance.
G. Wheelchair lift condition and operation.
H. Wheelchair securement systems condition and use thereof.
I. Safety equipment.
J. Driving habits.
K. Compliance with the Florida Motor Vehicle Regulations.
4.5 Quality Assurance Program: COUNTY shall measure the quality of service
through the use of an independent consultant firm. The established
service standards will be measured and summarized through various means
which may include, but are not limited to: mail-back surveys, mystery
riders, in-field interviews, and telephone surveys. CONTRACTOR shall
cooperate with survey techniques utilized.
4.6 Scheduling: CONTRACTOR shall accurately account for client trip
information and shall efficiently and effectively schedule trips. In so
doing, CONTRACTOR's personnel shall be knowledgeable as to all aspects
of service operations, which shall include, but not be limited to, the
MIDAS PT computerized reservation and scheduling system. The standards
for CONTRACTOR scheduling are:
A. One hundred percent (100%) of all standing orders will be
preassigned to routes on a daily basis.
B. One hundred percent (100%) of all wheelchair trips will be
scheduled to assigned routes on a daily basis.
C. Overall, ninety percent (90%) of all daily trips will be
scheduled to assigned vehicle routes, excluding same day
service requests.
D. Trips will be scheduled so that customers will arrive at their
destination on time.
E. No more than ten percent (10%) of all trips should be subject
to backup support. Backup support is considered those trips
which are not scheduled to paratransit routes.
F. Trips will be multi-loaded to achieve maximum efficiency.
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4.7 Clients Per Hour: As a shared ride, public transportation system, the
goal is to transport Clients as cost-effectively as possible by
multi-loading vehicles. In order to measure and monitor the efficiency
of the service, a system-wide goal of two (2) clients per hour is
established.
4.8 Call Taking: CONTRACTOR shall assign sufficient personnel to the
project to ensure that the following established goals are met:
A. Calls will be answered within five (5) rings.
B. No one will be put on hold for more than ninety (90) seconds,
cumulatively, per call.
4.9 Electronic Answering Device: CONTRACTOR may use or may be required to
use an automated or electronic answering device to receive trip
cancellation notices. However, use of such equipment does not relieve
the operator of his/her responsibility to ensure that no one is on hold
for longer than ninety (90) seconds.
4.10 Driver Training: CONTRACTOR must provide COUNTY with evidence that all
drivers have completed the training program offered by CONTRACTOR prior
to any such driver providing service. This training shall be included
as part of the monthly operating summary package. Additionally, drivers
shall be required to participate in a driver training program which may
be developed by COUNTY. CONTRACTOR will receive information regarding
any COUNTY program., CONTRACTOR shall require all personnel providing
transportation under the Agreement to possess the following, which
shall be filed with the COUNTY Contract Administrator prior to such
driver providing paratransit service.
A. A current, valid driver's license from the State of Florida
that meets the current state and federal requirements; and
B. A current, valid Broward County Chauffeur's Registration in
accordance with the requirements of Chapter 22 1/2, Broward
County Code of Ordinances.
COUNTY shall request State of Florida Motor Vehicle Reports (MVR) for
CONTRACTOR'S drivers on a periodic basis. In the event such a report
shows evidence of any violations, COUNTY shall promptly notify
CONTRACTOR and the Taxi Section of the COUNTY Consumer Affairs
Division. CONTRACTOR shall have procedures in place to periodically
review driver's MVRs. Compliance shall be monitored by COUNTY Mass
Transit Division staff.
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4.11 Complaints: CONTRACTOR shall be required to respond to COUNTY on all
complaints received concerning the service provided.
4.11.1 Complaint Procedure: A summary of the procedure for handling
complaints is as follows:
4.11.1.1 Referral: All client complaints shall be referred to
COUNTY Paratransit Customer Services. The CONTRACTOR
shall not respond directly to clients who desire to
file a service complaint. Clients contacting the
CONTRACTOR with a complaint shall be advised by
CONTRACTOR that the complaint shall be directed to
COUNTY Paratransit Customer services office.
4.11.1.2 Initial Contact: COUNTY personnel may make initial
contact with CONTRACTOR to obtain a verbal response
and to determine the validity and resolution of the
complaint.
4.11.1.3 Response: A copy of the complaint shall be forwarded
to CONTRACTOR for a written (or electronic) response
to COUNTY. The response shall be made within three
(3) days of receipt of the complaint by CONTRACTOR.
Complaints of a more serious nature, such as injury,
driver misconduct, and client safety issues shall be
responded to immediately.
4.11.2 Incentives: When CONTRACTOR receives no valid complaints, as
solely determined by COUNTY, within a calendar month,
CONTRACTOR shall receive an incentive bonus as follows:
A. Five Hundred Dollars ($500.00) for the provision of
up to four thousand (4,000) total trips per month.
B. One Thousand Dollars ($1,000.00) for the provision of
over four thousand (4,000) total trips per month.
4.12 Vehicles: The following are the vehicle standards relating to
location and contact, breakdowns, and availability.
4.12.1 Vehicle Location and Contact: It shall be the
responsibility of the CONTRACTOR to monitor the
location of each vehicle in service at all times. The
CONTRACTOR shall have knowledge of and be able
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to report on the status of every pick up. The driver shall
also immediately notify the dispatcher of all breaks, lunches,
breakdowns, accidents, or the like.
4.12.2 Vehicle Breakdowns: If a vehicle breaks down in service, the
CONTRACTOR is required to dispatch a backup vehicle to the
site of the breakdown. The backup vehicle shall arrive within
thirty (30) minutes of the breakdown.
4.12.3 Vehicle Availability: CONTRACTOR shall provide, at a minimum,
twenty-five percent (25%) of their entire vehicle fleet to
wheelchair accessible vehicles. CONTRACTOR shall have
sufficient wheelchair vehicles to ensure full equivalency of
service to all users of the service. CONTRACTOR will be
responsible for maintaining at all times a minimum of an
additional ten (10%) percent of the total vehicles in service
as spare vehicles.
4.13 Accidents: The following are the accident standards relating to
reporting and damage repairs.
4.13.1 Accident Reporting: Every accident, or any incident involving
a client, with or without bodily injury or property damage,
must be verbally reported to a member of the COUNTY
Paratransit Customer Services staff immediately and a written
report must be submitted within twelve (12) hours. A summary
of monthly accident occurrences shall be part of the monthly
operating summary.
4.13.2 Accident Damage Repairs: CONTRACTOR shall repair all accident
damage to vehicles within thirty (30) days from the date of
the accident. In the event that COUNTY determines that
CONTRACTOR has exceeded this limitation the vehicle shall be
removed from active service until such repairs are completed.
4.14 Suspension of Operations: CONTRACTOR may suspend all or a portion of
the services when said performance is made impossible by: inclement
weather, hurricane, earthquake, fire, flood, cloudburst, cyclone, or
other natural phenomenon of a severe and unusual nature, act of a
public enemy, epidemic, quarantine, restriction, embargo, or any other
unforeseeable cause beyond the control of CONTRACTOR. CONTRACTOR shall
request the written approval of COUNTY prior to suspending operations.
CONTRACTOR shall not be compensated for time or services provided while
operations have been officially
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suspended. Performance standards will be waived by COUNTY during
emergency situations as determined solely by COUNTY.
4.15 Child Restraints: As required by the Child Passenger Protection Act,
the following requirements apply when transporting children:
4.15.1 Children Under One Year of Age: Children under one year of age
must be buckled into a federally-approved child safety seat,
whether they ride in the front or in the back seat.
4.15.2 Children One to Four Years of Age/Front Seat: Children one to
four years of age, and/or within the body weight requirement
of the Act, must be in a child safety seat when they ride in
the front seat.
4.15.3 Children One to Four Years of Age/Back Seat: Children one to
four years of age must either use a child safety seat or use
regular seat belts when they ride in the back seat.
CONTRACTOR is not required to provide a child safety seat. CONTRACTOR
shall refuse to transport any child under one year of age when a child
safety seat is not provided by the client or responsible party. This
information shall be documented on an the drivers log form and shall be
considered a client no show. CONTRACTOR agrees to comply with any
subsequent provisions of this policy.
4.16 CONTRACTOR Personnel Requirements: CONTRACTOR shall ensure that all
personnel performing under this Agreement be knowledgeable about
paratransit services and the ADA, maintain a professional, courteous
attitude toward all passengers and individuals, and promote goodwill
toward the general public including answering to the best of their
ability all client questions. COUNTY encourages CONTRACTOR to consider
employment of persons with disabilities in fulfilling the terms and
conditions of this Agreement.
4.16.1 CONTRACTOR's RESPONSIBILITIES REGARDING PERSONNEL: The
following are various responsibilities of CONTRACTOR relating
to personnel for fulfilling the terms and conditions of this
Agreement:
4.16.1.1 Employee Compensation and Benefits: CONTRACTOR shall
be solely responsible for the payment of all of its
employees' wages and benefits and shall comply with
all of the requirements thereof including, but not
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limited to, worker's compensation, unemployment
insurance, social security, and any other mandated or
optional employee benefits.
4.16.1.2 Permitting and Licensing: CONTRACTOR shall obtain and
provide to the Contract Administrator all required
state and local permits and ensure that all drivers
are properly licensed for the service which they are
providing.
4.16.1.3 Multilingual Personnel: COUNTY encourages CONTRACTOR
to employ multilingual personnel to handle customer
calls. Multilingual shall mean speaking both English
and another language (Spanish, French, and/or
Creole).
4.16.1.4 Training: CONTRACTOR shall provide training to its
paratransit personnel as provided for by subsection
4.15.2 herein.
4.16.1.5 Trip Delivery: CONTRACTOR shall ensure that their
drivers comply with subsection 4.15.2.2 herein when
providing trip delivery service.
4.16.1.6 Required Personnel: CONTRACTOR shall, at a minimum,
have the personnel described below assigned to the
performance of this Agreement and shall provide the
names of such personnel to COUNTY prior to the
commencement of services hereunder:
A. Dispatching/Scheduling/Call Taking Staff:
CONTRACTOR shall have at least one
dispatcher on site and physically present in
the dispatch office whenever a vehicle is
in-service. Additionally, the CONTRACTOR
shall have sufficient staff assigned to meet
the requirements concerning dispatching,
scheduling, call taking, and demand for
service.
B. Operations Manager (General Manager):
CONTRACTOR shall assign an Operations
Manager who shall be responsible for all
segments of the day-to-day operation,
management of operating records, and liaison
with the COUNTY. The Operations Manager, or
a supervisory level designee, shall be
available by telephone or in
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person to make decisions as necessary at the
request of COUNTY, at any time during in
service hours.
4.16.2 Training: CONTRACTOR shall ensure that its employees receive
the training required to perform their jobs in a manner
consistent with the goals and requirements of this Agreement.
CONTRACTOR shall maintain training programs and written
documentation of same, which are subject to COUNTY approval,
for reservationists, dispatchers, and drivers. All employees
shall receive training developing their skills and increasing
their understanding of people with disabilities, people of all
sexual orientation, and people of diverse cultures, races, and
ages. All employees shall be required to receive additional
training, provided by COUNTY, in conjunction with local
agencies. Such training may include the development of skills
involved with special handling for visually impaired clients,
developmentally disabled clients, and regulations of abuse,
neglect, abandonment, and exploitation of minors, elderly, and
disabled adults. CONTRACTOR may be required to provide a
paratransit vehicle for use in certain segments of COUNTY
paratransit training.
4.16.2.1 Drivers: The Driver Training Program must include a
minimum of eighty (80) hours of training prior to
(scheduled classroom training such as Defensive Driving
and CPR may be accomplished during the first thirty [30]
days of employment, due to class scheduling
considerations) driving a service vehicle. All drivers
providing service under this Agreement must be employees
of the CONTRACTOR and the use of independent contractors
is not allowed. This training must include, in addition
to the training requirements for all employees as set
forth above, instruction in:
A. Passenger Assistance Technique (P.A.T.) Certification
or an equivalent course which must be approved by
COUNTY prior to service delivery. Training shall
include elderly and disabled client sensitivity,
awareness and communications, passenger relations and
assistance, hands-on assistance to the visually
impaired and dealing with service animals (guide
dogs), assistance in the use of mobility
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equipment including wheelchairs, scooters,
walkers, canes, crutches, braces, and the
like.
B. Defensive Driver Training, per National
Safety Council standards, or an equivalent
course approved by COUNTY.
C. Responding to client incidents,
driver/client sexual improprieties, response
to client abuse, neglect, exploitation, and
abandonment, vehicle breakdowns, accidents,
adverse weather, and other emergency/safety
procedures including, but not limited to,
emergency vehicle evacuation.
D. CPR (including instruction in administering
CPR to children), first aid and proper
response to emergency medical needs of
riders, including, but not limited to,
procedures for the disposal of hazardous
waste (blood borne pathogen protection).
E. Operation of vehicle, and all equipment
installed in the vehicle, including, but not
limited to, proper radio protocol,
wheelchair and scooter securement devices,
wheelchair lift, and/or ramp operation.
F. Address location ability including, but not
limited to, map reading or ability to
utilize any automated device installed in
the vehicle.
G. Familiarity with how trips are scheduled,
including, but not limited to, an
opportunity to meet schedulers in person.
H. Familiarity with the completion of
necessary paperwork including, but not
limited to, trip sheets (manifests),
pre-trip inspection forms, accident reports,
and incident reports.
I. Policy instruction, including, but not
limited to, wait time policy, fare
structure, transfer locations, and the
like.
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J. Refresher courses shall be given to each
driver a minimum of every two (2) years on
topics to include, but not be limited to,
policy updates, client sensitivity, and
client relations.
K. Driver meetings shall be held on a regular
basis and shall include an opportunity to
interact and communicate with different
staff which make up the operations team
including, but not limited to, schedulers,
dispatchers, reservationists, planners, and
maintenance personnel. Attendance at these
meetings shall be mandatory for drivers.
L. Any other requirements that COUNTY may
implement during the term of this Agreement.
4.16.2.2 Trip Delivery: Safety of the driver, riders, and the
public, and a positive experience for the rider and
driver, are of primary importance to the COUNTY. In
effectuating this concept CONTRACTOR shall ensure
that the drivers provide service as follows:
A. Wear either a company photo identification
or a name badge, patch, inscription with the
name of the company/driver and, at
CONTRACTOR's option, a company designated
uniform.
B Perform a pre-trip vehicle inspection.
C. Complete a pre-trip form.
D. Keep an accurate and operational clock or
watch while on duty.
E. Operate the vehicle and all of its equipment
with the highest attention to safety.
F. Collect cash, transfer and ticket fares, and
verify fares for each trip provided, as
applicable.
G. Record complete and accurate trip
information, which shall include, at a
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minimum, driver's name and/or ID number,
actual arrival and departure times,
beginning and ending mileage for each trip,
client signature if applicable, and
confirmation of fare collection.
H. Provide courteous and safe assistance to
riders.
I. Secure mobility device securement systems,
seat belts, and child safety restraint
systems according to manufacturer's
instruction.
J. Record information about a delivered trip
which would assist schedulers in trip
scheduling, for example, more detailed
instructions in finding addresses, client's
average time to board for a trip, and the
circumstances surrounding a no-show or late
trip.
K. Immediately report any alleged or confirmed
criminal offense, traffic charges,
violations (other than parking), or
incidents to the CONTRACTOR.
4.16.2.3 Refusal/Removal: CONTRACTOR shall refuse to permit a
driver to provide service where CONTRACTOR determines
that said driver is unacceptable for any reason
whatsoever. COUNTY shall be advised in writing, with
the findings included therein, once such a decision
is made.
4.16.2.4 Measurement: The training program shall include
methods for measuring the effectiveness of the
training in developing skill and improving
performance. The methods shall be based on
performance indicators which measure proficiency and
not solely on CONTRACTOR meeting minimum training
hours required herein. Such measurement procedure
shall be provided to COUNTY upon request.
4.17 Marketing: All marketing and promotional matters related to the
paratransit service shall be under the direction of, and approval of,
the COUNTY. COUNTY will provide various materials for CONTRACTOR to use
and disseminate. CONTRACTOR shall not utilize any independent means to
market paratransit services and will be restricted from advertising,
use of
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discounts, incentives, or other means to encourage clients to use their
services unless items are provided by, or approved by, the
COUNTY. CONTRACTOR may use the official program logo and other program
identification for items such as company uniforms, business cards, etc
. . ., with the prior written consent and approval of the COUNTY.
COUNTY may provide CONTRACTOR with camera ready artwork. CONTRACTOR
shall not be permitted to modify, add, or substitute the official
program logo or other required program identification.
4.18 Trip Limits: COUNTY reserves the right to establish trip limits. The
trip limit is the maximum number of trips for which CONTRACTOR may be
reimbursed on a particular day, week, or month. COUNTY may establish
limits that differ for weekdays, Saturdays, Sundays, and holidays, and
for different service areas. If trip limits are instituted, CONTRACTOR
shall not be reimbursed for any trips over this limit without the
prior written consent and approval of the COUNTY. CONTRACTOR will be
required to turn down a trip when it has exceeded the established trip
limit, including standing orders services, and shall be required to
refer the client to another CONTRACTOR who provide a similar service
for the COUNTY.
ARTICLE 5
TRANSITION AND IMPLEMENTATION
5.1 Transition and Implementation: COUNTY has implemented a procedure,
which is attached hereto as Exhibit "C" and incorporated herein by
reference thereto, to assign clients equitably (subscription and/or on
demand) to the rider's choice providers from December 16, 1996 to March
31, 1997.
5.2 Reservations: CONTRACTOR shall begin accepting reservations on December
16, 1996 for trip service to begin on the commencement date as set
forth in this Agreement.
5.3 Disincentive Deductions and Incentives: All disincentive deductions and
performance related incentives contained herein will become effective
on April 1, 1997, after the transition and implementation period is
completed.
ARTICLE 6
CONTRACTOR'S OBLIGATIONS
The following shall represent the CONTRACTOR's obligations under the terms and
conditions of this Agreement:
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6.1 Base Facility: CONTRACTOR shall be required to provide a base facility
or facilities, within Broward County, for vehicles, drivers, and
service operations.
6.2 Compliance: CONTRACTOR shall be required to comply with all operations,
equipment, and maintenance requirements and performance and safety
standards established by COUNTY and pursuant to this Agreement.
6.3 Personnel: CONTRACTOR shall be required to comply with the following
provisions pertaining to CONTRACTOR personnel:
6.3.1 Drivers: Hire, train, and supervise vehicle drivers.
6.3.2 Agreement Responsibilities: Provide all necessary personnel
with management, operation, and maintenance expertise required
to carry out the responsibilities of this Agreement.
6.3.3 Personnel Standards: Comply with all employee hiring and
training standards as specified herein.
6.3.4 Operational Supervision: Perform operational supervision in
cooperation with the COUNTY.
6.4 Communication: CONTRACTOR shall be required to provide a base radio
station and two-way mobile radios, and/or cellular telephones, for
CONTRACTOR owned vehicles, and sufficient portable two-way radios,
and/or cellular telephones, to enable office and field supervisors to
communicate with each other and dispatch staff.
6.5 Fares: CONTRACTOR shall be required to collect fares and comply with
the provisions of Article 10 herein.
6.6 Requests for Information: CONTRACTOR shall be required to respond to
the COUNTY'S requests for information within twenty four (24) hours or
as otherwise provided for herein.
6.7 Filing Information: CONTRACTOR shall be required to file operating,
financial, performance reports, invoices, and all required
documentation in a timely manner.
6.8 Compliance with the Law: CONTRACTOR shall be required to comply with
all federal, state, and local laws, rules, regulations, policies,
and/or procedures as currently enacted or as may be amended from time
to time.
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6.9 Develop Written Procedure: CONTRACTOR shall be required to develop and
maintain a current written procedure for the investigation of
accidents/incidents and unsafe practices.
6.10 Compliance with Monitoring and Auditing: CONTRACTOR shall be required
to comply with COUNTY'S monitoring and auditing programs.
6.11 Report Accidents/Incidents: CONTRACTOR shall be required to report to
the COUNTY any accidents/incidents, including client accidents, or any
other non-routine event, as required herein.
6.12 Communication with COUNTY: CONTRACTOR shall be required to communicate
daily with the COUNTY'S Mass Transit Division staff regarding vehicle
and driver availability, schedule adherence, and any other operational
issues.
6.13 Service Coordination: CONTRACTOR shall be required to participate in
service coordination meetings with COUNTY Mass Transit Division staff
and other contracted service operators. Additionally, CONTRACTOR will
be required to have a representative in attendance at the monthly
meeting of the BCCB.
6.14 Equipment and Training: CONTRACTOR shall be required to provide
necessary telephone and office equipment, phone lines for voice, fax,
TDD, and appropriate training on same equipment, for the provision of
services.
6.15 Cooperation: CONTRACTOR shall be required to work with COUNTY, by using
appropriate operating methods, procedures, and protocols, to implement
those policies which COUNTY deems integral to the efficient and
effective operation of the paratransit service.
6.16 CTMS: CONTRACTOR shall be required to utilize the COUNTY supplied CTMS
for the provision of all services required by the terms and conditions
of this Agreement.
6.17 Agreement: CONTRACTOR shall be required to comply with all terms and
conditions outlined in this Agreement.
ARTICLE 7
COUNTY'S OBLIGATIONS
The following shall represent the COUNTY'S obligations under the terms and
conditions of this Agreement:
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7.1 Operations Requirements: COUNTY shall establish the operating standards
and requirements for CONTRACTOR as per this Agreement.
7.2 Planning: COUNTY shall continue overall short and long range Mass
Transit Service planning and capital planning in accordance with the
Planning Policies and Procedures and the ADA Paratransit Plan as
adopted by COUNTY and/or the Board.
7.3 Coordination: COUNTY shall coordinate informational reports and manage
appropriate information systems, except as specifically set out as a
CONTRACTOR'S responsibility.
7.4 Fares: COUNTY shall establish and evaluate fare policies and fare
structure.
7.5 Service Provisions: COUNTY shall establish and identify geographic
service areas and schedule paratransit service hours.
7.6 Marketing: COUNTY shall develop and implement marketing techniques
including, but not limited to, publication of informational brochures
and materials that increase accessibility for visual and hearing
impaired persons in accordance with the ADA.
7.7 Compensation: COUNTY shall compensate the CONTRACTOR for services
rendered in full compliance with the terms and conditions of this
Agreement.
7.8 Agreement: COUNTY shall administer, monitor, and determine compliance
with the terms and conditions of this Agreement.
7.9 Auditing: COUNTY shall audit records in accordance with the terms and
conditions of this Agreement.
7.10 Investigation: COUNTY shall investigate, or cause others to
investigate, any reported unsafe practices of CONTRACTOR.
7.11 CTMS: COUNTY shall provide, install, and maintain the CTMS at the
CONTRACTOR'S operating facility as required by the terms and conditions
of this Agreement.
7.12 Participation: COUNTY and CONTRACTOR shall participate in all public
meetings regarding paratransit services. COUNTY shall notify CONTRACTOR
when CONTRACTOR'S attendance is required.
7.13 Eligibility: COUNTY shall be required to establish and enforce all
policies of COUNTY regarding the certification of passenger
eligibility.
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7.14 Sole Discretion: COUNTY shall be required to utilize a "reasonableness"
standard when enforcing the provisions of this Agreement providing for
action to be taken at COUNTY'S sole discretion.
ARTICLE E
REPORTS AND DOCUMENTS
8.1 Weekly Reports and Documents: CONTRACTOR shall provide COUNTY with
service data, via summary reports generated by the MIDAS PT
computerized system, and a weekly invoice for each component of service
for the previous week (Monday through Sunday) by close of business each
Wednesday. This information shall include, but not be limited to, the
following:
A. Number of one-way passenger trips by type of trip.
B. Total hours of total vehicle service.
C. Copies of the daily reports for driver activity or other daily
reports showing starting and ending times, and starting and
ending mileage, for each vehicle used by each driver.
D. Copies of trip tickets, log sheets, or drivers manifests.
E. Trip requests that are denied.
F. The weekly reimbursement charges for services rendered the
previous week.
8.2 Trip Request Denial Forms: CONTRACTOR shall keep separate denial/form
logs, by component, of all requests for service that cannot be
accommodated. CONTRACTOR shall fill out all information required on the
log for each ride request that could not be accommodated. A cumulative
denial/form log shall be filled out, showing all rides denied for the
week, and will also be included as part of the monthly service summary
returned to COUNTY.
8.3 Employee Information: Within one week prior to the commencement date of
this Agreement, CONTRACTOR shall furnish to COUNTY all information
required by COUNTY which evidences that CONTRACTOR'S personnel meet all
requirements of this Agreement.
8.4 Driver Roster: CONTRACTOR shall provide COUNTY with updated Driver
Rosters by the tenth (10th) calendar day of each month. Each roster
shall indicate driver's name, date of hire, training dates, last Drug &
Alcohol (D&A) test, Motor Vehicle
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Record (MVR) review date, and the date of the latest criminal record
check.
8.5 Section 15 Filing: Pursuant to the Federal Transit Administration's
standards for precision, accuracy, and accountability, COUNTY is
required to report data to the National Transit Database (Section 15
data). As may be required by the Federal Transit Administration or
COUNTY, CONTRACTOR shall collect Section 15 data and other "service
supplied" information or "service consumed" information, as said terms
are defined in Section 15 of the Federal Transit Administration
Regulations. CONTRACTOR shall be responsible for the collection of
financial and operational data, including on-board operational and
passenger related data, for transmittal to COUNTY on COUNTY approved
forms as follows:
A. Operational and passenger related data shall be submitted to
COUNTY no less than weekly.
B. Financial data shall be submitted to COUNTY no less than
quarterly.
C. Designated service supplied data shall be submitted to COUNTY
thirty (30) days prior to the termination of COUNTY'S fiscal
year.
All source documents for Section 15 filings shall be subject to audit
and shall be maintained by CONTRACTOR for five (5) years following
final payment under this Agreement.
8.6 Monthly Operating Summary: CONTRACTOR shall provide written monthly
reports to COUNTY by the tenth (10th) day of the month following the
month of service. All required information shall be collected and
reported individually for each funding component of service. Such
reports shall be submitted on a form developed by CONTRACTOR and
approved by COUNTY, and shall include, but not be limited to:
8.6.1 Brief Narrative: A brief narrative highlighting the month's
activities, any unusual events, trends, and other noteworthy
observations.
8.6.2 Ridership: Number of one-way passenger trips, PCAs and
Companions on a day-by-day basis, for each funding and fare
entity and category.
8.6.3 Miles and Hours: Total hours of service and vehicle miles on a
day-by-day basis.
8.6.4 Cost of Service: Total service revenue based upon the
contracted rates, collected fares, and net
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revenue to provide service (total revenue less imputed fares).
8.6.5 Service Quality Measures: on time performance data, trips
completed, missed trips, and trip denials with an explanation.
8.6.6 Efficiency Measures: Appropriate measures to include
passengers per mile, hour, or vehicle trip.
8.6.7 Fleet Data: Updated fleet listings and status of all vehicles.
8.6.8 Other: Accident reports/incident briefs/findings, training
activities/certifications, including sensitivity and
education, key personnel changes, and suggested improvements.
ARTICLE 9
COMPUTERIZED TRIP MANAGEMENT SYSTEM
9.1 Computerized Trip Management System ("CTMS") COUNTY will provide
CONTRACTOR with a Computerized Trip Management System ("CTMS")
consisting of proprietary software, hardware and peripheral equipment
and other items, such as hubs and routers, cabling, modems, and
printers solely for use by CONTRACTOR in COUNTY'S paratransit
operation. COUNTY retains title to the CTMS and no right, title, or
interest in the CTMS shall pass to CONTRACTOR except as expressly set
forth in this Agreement. CONTRACTOR shall not remove any markings, and
shall affix to the CTMS any markings requested by COUNTY, showing
COUNTY's interest. CONTRACTOR recognizes and agrees that use of the
CTMS is limited to scheduling and transportation operations involving
individuals determined by COUNTY to be eligible for such COUNTY
assisted paratransit services. CONTRACTOR further agrees that
CONTRACTOR will not use CTMS for its own business operations unrelated
to the above. Usage of CTMS for non COUNTY functions or operations may
result in the termination of this Agreement as provided for by Article
15 below.
9.2 Delivery and Installation of CTMS: COUNTY shall deliver the CTMS at a
time and to a location to be agreed upon by the parties. At the time of
delivery of the CTMS to CONTRACTOR'S site, the parties will execute a
written schedule setting forth the components, setting forth the serial
number where applicable, of the CTMS delivered and date of delivery. In
addition, CONTRACTOR shall note on such schedule any apparent damage to
the CTMS or component thereof. COUNTY will install the CTMS after
delivery. Before delivery and installation of
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the CTMS take place, CONTRACTOR shall prepare the installation site for
the CTMS to ensure that it provides a suitable operating environment
for the CTMS. CONTRACTOR shall comply with any specifications that
COUNTY may supply with respect to the utilities, temperature, and
humidity conditions required by the CTMS. The installation site shall,
at a minimum, be an appropriate typical business environment for
microcomputer storage and operation and be able to be locked, secure,
and free from flood potential. The actual location of the components of
the CTMS at the installation site shall be subject to final approval by
COUNTY. CONTRACTOR agrees to cooperate fully in the installation,
testing, and training related to CTMS subsequent to the effective date,
and prior to the commencement date, of this Agreement.
9.3 Maintenance and Repair of CTMS: COUNTY shall provide CONTRACTOR with
reasonable assistance in the maintenance and operation of the CTMS, by
responding to all inquiries and trouble reports concerning the
operation or condition of the CTMS, if placed by CONTRACTOR by
telephone to the designated representative of COUNTY during service
hours. Upon receiving such inquiries or trouble reports, COUNTY shall
either offer advice and propose possible solutions based on its
preliminary appraisal of CONTRACTOR'S description of the problem or
arrange for assistance from a maintenance-service representative.
CONTRACTOR shall bear the cost of all routine supplies required by CTMS
and all maintenance charges, including the cost of labor and parts,
imposed by any maintenance-service representative or by the COUNTY in
the event that maintenance is required by reason of:
A. Use of the CTMS or any component thereof in other than the
manner for which it was installed.
B. Damage to the CTMS by CONTRACTOR or its employees or agents.
C. Modification of the installed CTMS by CONTRACTOR not
authorized by COUNTY.
D. Maintenance performed by CONTRACTOR without the authorization
of COUNTY.
All maintenance services shall be provided by COUNTY and CONTRACTOR
shall not perform such without prior consent of COUNTY.
9.4 Risk of Loss: CONTRACTOR shall bear the entire risk of loss or damage
to the CTMS after its delivery to the installation site. CONTRACTOR
shall, at its own expense, obtain and maintain property and casualty
insurance for the CTMS against
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all risks of loss or damage as required by Article 16.1.4 herein.
9.5 Relocation of CTMS: All relocations of the CTMS or components thereof,
whether at the installation site or to a new site, shall be done by
COUNTY unless otherwise authorized by COUNTY in writing. CONTRACTOR
shall bear the cost and expenses incurred in the event of a relocation
of any component of the CTMS from the installation site to a new site.
CONTRACTOR shall give COUNTY a minimum of thirty (30) days prior
written notice in the event it wishes to relocate of any component of
the CTMS from the installation site to a new site, unless otherwise
agreed to between the parties.
9.6 Restrictions: The following restrictions shall apply to CONTRACTOR's
use of the CTMS.
9.6.1 CONTRACTOR shall keep the CTMS free and clear of all claims,
liens, and encumbrances. Any act of CONTRACTOR purporting to
create such a claim, lien, or encumbrance shall be void.
9.6.2 CONTRACTOR shall not use the CTMS in any manner or for any
purpose for which the CTMS is not designed or reasonably
suited.
9.6.3 CONTRACTOR shall not permit any physical alteration of the
CTMS without the prior written consent of COUNTY.
9.6.4 CONTRACTOR shall not affix, attach, or install any accessory,
equipment, or device to the CTMS without the prior written
consent of COUNTY.
9.6.5 CONTRACTOR shall not affix the CTMS to any real estate in such
a way that it may be deemed a fixture thereto.
9.6.6 CONTRACTOR shall not remove the CTMS from the installation
site without the prior written consent of COUNTY, except in
the event of an emergency..
9.7 Reservation of Title: This Agreement does not provide CONTRACTOR with
title or ownership of the Licensed Programs, but only a right of
limited use. The Licensed Programs are, and shall remain, the property
of the owner thereof, certain third-party licensors who have authorized
COUNTY to incorporate their software into the System. CONTRACTOR
acknowledges that the programs, data-base information, and user
materials included in the Licensed Programs contain confidential
information and trade secrets, which COUNTY has
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entrusted to CONTRACTOR in confidence to use only as expressly
permitted. CONTRACTOR acknowledges that owner thereof claims and
reserves all rights and benefits afforded under federal law in the
programs, data-base information, and user materials included in the
Licensed Programs as copyrighted works. CONTRACTOR shall protect the
programs, data-base information, and user materials included in the
Licensed Programs as confidential information and trade secrets.
CONTRACTOR shall not, at any time, disclose such confidential
information and trade secrets to any other person, firm, organization,
or employee that does not (consistent with CONTRACTOR's right of use
hereunder) need to obtain access to the Licensed Programs. CONTRACTOR
shall devote its best efforts to ensure that all CONTRACTOR's personnel
and all other persons afforded access to the Licensed Programs by
CONTRACTOR protect the Licensed Programs as trade secrets and
confidential information and refrain from any use or disclosure in any
manner not expressly permitted by this Agreement. These restrictions
shall not apply to information (1) generally known to the public or
obtainable from public sources; (2) previously in the possession of
CONTRACTOR or subsequently developed or acquired without reliance on
the Licensed programs; or (3) approved by COUNTY for release without
restriction. The programs, data-base information, and user materials
included in the Licensed Programs may not be decompiled, reverse
engineered, reprinted, transcribed, extracted, or reproduced, in whole
or in part, without the prior written consent of COUNTY. CONTRACTOR
shall not in any way modify or alter the Licensed Programs without the
prior written consent of COUNTY. CONTRACTOR further agrees that all
data enter into the data base of the CTMS by CONTRACTOR, statistical
information or data produced by CONTRACTOR through the use of the CTMS
or other data, information or material produced pursuant to this
Agreement is work made for hire under the laws of the United States.
9.8 Miscellaneous:
9.8.1 Data Files: CTMS will provide for a daily transfer of selected
data files between CONTRACTOR and COUNTY. The CTMS shall be
made available for such transfer of data files as established
by COUNTY. CONTRACTOR is responsible for maintaining and
storing in a safe and secure location backup copies of all
data files CONTRACTOR may place in the CTMS. Such backup shall
be performed nightly. In no event shall COUNTY be liable for
loss or destruction of data files for any reason.
9.8.2 Training: Once CONTRACTOR has selected personnel who are
qualified to operate the CTMS, COUNTY shall provide
CONTRACTOR's personnel with initial
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training in the Operation of such system. COUNTY may provide
further training on mutually acceptable terms.
ARTICLE 10
COMPENSATION AND COLLECTION
10.1 Compensation: CONTRACTOR shall be compensated for services delivered
pursuant to the terms and conditions of this Agreement as follows:
10.1.1 Payment: COUNTY will remit payment to the CONTRACTOR within
thirty (30) days from the date that each weekly Wednesday
report is received, pursuant to Article 7.1. COUNTY shall
comply with the provisions of the "Florida Prompt Payment Act"
as required by Section 1-51.6 of the Broward County Code of
Ordinances.
10.1.2 Disincentives: COUNTY shall reduce payment to CONTRACTOR by
any disincentive deduction assessed for failure to comply with
service, performance, or maintenance requirements as
specifically set forth by this Agreement.
10.1.3 Reimbursement: COUNTY shall not process or remit payment for
any reimbursement after sixty (60) days of the actual trip
date. The reimbursement schedule is attached hereto as Exhibit
"D" and incorporated herein by reference thereto.
10.1.4 Noncompliance: In the event of failure by CONTRACTOR to comply
with any requirement of this Agreement, COUNTY shall withhold
payment until CONTRACTOR is determined to be in compliance.
Noncompliance shall include, but not be limited to, the
following:
A. Services were improperly rendered.
B. CONTRACTOR failed to meet service specifications.
C. Services were otherwise questionable.
10.2 Fare Structure and Collection:
10.2.1 Fare Structure: COUNTY shall determine the client fare
structure for each service trip.
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COUNTY retains the right to implement, and CONTRACTOR shall
comply with, fare adjustments.
10.2.2 Fare Collection: The CONTRACTOR is responsible for collection
of fares due and owing from a client, and the maintenance of
records and deposit receipts for the fares collected, as per
the terms and conditions of this Agreement. CONTRACTOR shall
accept all means of payment approved from time to time by the
COUNTY, including, but not limited to, cash, passes, tickets,
transit punch cards, transfers, and electronic transit fare
cards. All fares are to be collected as the client boards the
vehicle. Clients must pay the exact fare when boarding and
vehicle operators are not permitted to make change. Clients
shall not be required to pay any fare to the vehicle operator
when the actual pick up service is over sixty (60) minutes
past the scheduled pick up time. COUNTY paratransit clients
will not be expected or requested to pay, and drivers will not
be permitted to accept, gratuities.
10.3 Billing Functions: Billing functions shall be performed through the
CTMS.
ARTICLE 11
TERM OF AGREEMENT
11.1 Effective Date: This Agreement shall be effective upon proper execution
by all parties hereto.
11.2 Commencement Date: The parties acknowledge that there are certain
requirements which are to begin subsequent to the effective date of
this Agreement. Notwithstanding those requirements, the paratransit
services to be provided by this Agreement shall commence at 12:01 a.m.
on December 29, 1996 and shall terminate at midnight on December 29,
1999, provided, however, that this Agreement may terminate earlier as
provided by Article 15 herein.
11.3 Renewal: This Agreement may be renewed for two consecutive one (1) year
terms unless either party elects not to do so. Election not to do so
shall be by written notice to the other party at least one hundred
twenty (120) days prior to the end of the then current term.
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ARTICLE 12
AGREEMENT COORDINATION AND RESPONSIBILITIES
12.1 COUNTY'S coordinator for the Agreement shall be the Contract
Administrator or his/her designee. CONTRACTOR, or designee, with the
exception of Agreement amendment or modification as per Article 14
herein, shall accept instructions, authorizations, and approvals from
the COUNTY'S Coordinator.
12.2 CONTRACTOR shall submit in writing to COUNTY the name of its Agreement
Coordinator who may be a designated corporate officer of CONTRACTOR.
12.3 As per Article 14 herein, COUNTY'S coordinator, or his/her designee, is
authorized to administratively approve changes in the terms of this
Agreement that do not affect the material Scope of Work, period of
Agreement performance, or amount of compensation within this Agreement.
ARTICLE 13
RECORDS AND AUDIT
13.1 CONTRACTOR shall maintain such separate records and accounts including
property, personnel, and financial records as are deemed necessary by
COUNTY to ensure a proper accounting record. The system of accounting
will be in accordance with generally accepted accounting principles and
practices. (Reference the manual "Transportation Accounting Consortium
Model Uniform Accounting System for Rural and Specialized
Transportation Providers," October 1986. See Section 412.007(6)),
Florida Administrative Code.
13.2 COUNTY shall approve CONTRACTOR'S forms that may be required in
addition to those required by the COUNTY'S CTMS.
13.3 At reasonable intervals during regular business hours, COUNTY, through
its duly authorized representatives and federal and state personnel,
shall have the right to audit, examine, and make excerpts and
transcripts from CONTRACTOR's records with respect to matters covered
in this Agreement.
13.4 In the event funds paid to CONTRACTOR under this Agreement are
subsequently disallowed by COUNTY because of accounting errors or
charges not in conformity with this Agreement, CONTRACTOR shall refund
promptly such disallowed amounts to COUNTY or COUNTY shall
appropriately deduct from reimbursement compensation as required.
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13.5 CONTRACTOR shall retain all financial records, supporting documents,
statistical records, and any other documents pertinent to this
Agreement for a period of five (5) years after termination of this
Agreement, or if an audit has been initiated and audit findings have
not been resolved at the end of five (5) years, the records shall be
retained until resolution of the audit findings.
ARTICLE 14
CHANGES AND MODIFICATIONS
14.1 Upon the execution and delivery of this Agreement, it is understood and
agreed that any and all previous agreements and understandings, both
written and oral, between the parties are canceled and have been
superseded by this Agreement and that this Agreement embodies and sets
forth all understandings between the parties.
14.2 Changes in the terms of this Agreement, or in the scope of work to be
performed hereunder may, from time to time, be deemed necessary and
desirable. Such changes, which are mutually agreed to, shall be
incorporated in written amendments to this Agreement pursuant to formal
negotiations and formal COUNTY requirements.
14.3 Changes in the terms of this Agreement that do not affect the material
Scope of Work, period of Agreement performance, or amount of
compensation within this Agreement, may be administratively approved by
the Contract Administrator, or his/her designee, and CONTRACTOR without
requiring a formal amendment.
ARTICLE 15
TERMINATION
15.1 Termination at Will: Either party shall have the right at any time to
terminate this Agreement upon ninety (90) days written notice to the
other party. In the event of termination, COUNTY shall pay CONTRACTOR
the compensation rate for actual services provided and described in
Article 10 of this Agreement up to the effective date of termination.
In that event, all finished and unfinished documents and other
materials as described in Articles 8, 9, and 13, shall become COUNTY
property.
15.2 Termination for Default:
15.2.1 CONTRACTOR Breach: If, through any cause within the reasonable
control of CONTRACTOR, CONTRACTOR
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shall fail to fulfill in a timely and proper manner, or
otherwise violate any of the covenants, agreements, or
stipulations specified and material to this Agreement, COUNTY
shall thereupon give written notice to CONTRACTOR of such
default and CONTRACTOR shall thereafter have fourteen (14)
days from the date of notice to cure such breach. If the
default cannot, with due diligence, be cured within the
fourteen (14) day period, COUNTY within its sole discretion,
has the right to extend such period as deemed appropriate. If
CONTRACTOR certifies that the default has been cured by such
date and COUNTY disagrees, COUNTY shall give written notice to
CONTRACTOR disputing the alleged curing of the default. In the
event CONTRACTOR shall not have cured said default to the
satisfaction of COUNTY by such effective date, then this
Agreement shall terminate on said date or as otherwise agreed
to by the Parties.
15.2.2 CONTRACTOR Liability: CONTRACTOR shall not be relieved of
liability to COUNTY for damages sustained by COUNTY by virtue
of any breach of the Contract by CONTRACTOR. COUNTY may
reasonably withhold compensation to CONTRACTOR for the
purposes of set-off until such time as the exact amount of
damages due COUNTY from CONTRACTOR is determined.
15.2.3 COUNTY Rights: CONTRACTOR agrees that termination of this
Agreement by COUNTY shall not waive any right or rights which
COUNTY may have against CONTRACTOR for the breach of any
term(s) of this Agreement.
15.3 Termination for Insolvency: COUNTY reserves the right to terminate this
Agreement in the event CONTRACTOR is placed either in voluntary or
involuntary bankruptcy or makes an assignment for the benefit of
creditors. In the event of involuntary bankruptcy, CONTRACTOR shall
have ninety (90) days to have same dismissed before COUNTY shall
declare CONTRACTOR in default. Under these circumstances, the rights
and obligations of the parties shall be the same as provided for in
Section 15.1 above.
ARTICLE 16
INSURANCE AND INDEMNIFICATION
16.1 Insurance: CONTRACTOR shall not commence work under this Agreement
until it has obtained all insurance required under
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this Article and such insurance has been approved by COUNTY. CONTRACTOR
shall maintain during the term of this Agreement the following
insurance:
16.1.1 Workers' Compensation Insurance: Workers' Compensation
Insurance to apply for all employees in compliance with the
"Workers' Compensation Law" of the state of Florida and all
applicable federal laws. In addition, the policy(ies) must
include:
A. Employers' Liability with a limit of One Hundred
Thousand Dollars ($100,000.00) per accident.
B. Notice of Cancellation and/or Restriction--The
Policy(ies) must be endorsed to provide COUNTY with
thirty (30) days' notice of cancellation and/or
restriction.
16.1.2 Automobile Liability Insurance: Business Automobile Liability
with minimum limits of Five Hundred Thousand Dollars
($500,000.00) per occurrence combined single limit for Bodily
Injury Liability and Property Damage Liability. Coverage must
be afforded on a form no more restrictive than the latest
edition of the Business Automobile Liability Policy, without
restrictive endorsements, as filed by the Insurance Services
Office and must include:
1. Owned Vehicles.
2. Hired and Non-owned vehicles.
3. Notice of Cancellation and/or Restriction--The
policy(ies) must be endorsed to provide COUNTY with
thirty (30) days' notice of cancellation and/or
restriction.
16.1.3 Self-Insurance Plan: CONTRACTOR may maintain the first One
Hundred Thousand Dollars ($100,000.00) insurance coverage
through a self-insurance plan approved by the Insurance
Commissioners of the state of Florida. Written proof of said
approval shall be submitted to COUNTY'S Risk Management
Division prior to execution of this Agreement.
16.1.4 Computer Equipment Insurance: The following types of computer
equipment insurance will be required for the MIDAS PT system:
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16.1.4.1 Property Insurance: Property Insurance shall be
written on an all risk form, at one hundred (100%)
percent of replacement value. Policy form may be
specific electronic data processing equipment form or
an inland marine floater. Where policy includes a
deductible, that deductible may not exceed Five
Hundred Dollars ($500.00) per occurrence. The policy
shall include COUNTY as an additional insured as well
as providing a thirty (30) day prior written notice
of cancellation and/or expiration provision.
16.1.5 Evidence of Insurance: CONTRACTOR shall provide to COUNTY
Certificates of Insurance evidencing the insurance coverage
specified above. If the initial insurance expires prior to the
completion of the work, renewal Certificates of Insurance
shall be furnished thirty (30) days' prior to the date of
their expiration. COUNTY reserves the right to request copies
of all of the actual policies.
16.2 Indemnification:
16.2.1 CONTRACTOR shall indemnify and hold harmless COUNTY, COUNTY'S
respective officers, employees, agents, and representatives
from and against any and all claims, losses, costs, damages,
and liability on account of injury to or death of any person,
or loss of or damage to any property arising from any act(s)
or omissions(s), of any kind or nature whatsoever, of
CONTRACTOR or its officers, employees, agents, or
representatives.
16.2.2 CONTRACTOR further agrees to indemnify and hold harmless
COUNTY, COUNTY'S respective officers, employees, agents, and
representatives against any and all claims or liability
arising from or based on the violation, or alleged violation,
of any federal, state, county or city laws, by-laws,
ordinances or regulations by CONTRACTOR, its officers,
employees, agents, or representatives..
16.2.3 The indemnification provided above will obligate the
CONTRACTOR to defend at its own expense or to provide for such
defense, at COUNTY'S option, any and all claims of liability
and all suits and actions of every name and description that
may be brought against COUNTY which may result from the
operations and activities under this Agreement, whether the
operations be performed by CONTRACTOR
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or anyone directly or indirectly employed by CONTRACTOR. The
execution of this Agreement by CONTRACTOR shall obligate
CONTRACTOR to comply with the foregoing indemnity provision;
however, the collateral obligation of insuring this indemnity
must be complied with as set forth in Section 15.1 above.
16.2.4 CONTRACTOR's obligations under the above sections shall
survive the expiration, termination, or cancellation of this
Agreement until the expiration of any applicable statute of
limitation for any such claim, demand, cause of action, or
proceeding of any kind or nature whatsoever.
ARTICLE 17
ASSIGNMENT AND/OR TRANSFER
17.1 CONTRACTOR shall not assign and/or transfer any interest in this
Agreement (whether by assignment or novation) without the prior written
consent of COUNTY.
17.2 CONTRACTOR is fully responsible to COUNTY for the acts and omissions of
persons directly employed by it, as well as the acts and omissions of
any subcontractors and of persons employed by any subcontractors.
Nothing contained in this Agreement shall create any contractual
relationship between any subcontractor and COUNTY.
ARTICLE 18
NOTICES
18.1 Whenever either party desires to give notice to the other, it must be
given by written notice, sent by registered or certified United States
mail, with return receipt requested, or by a commercial carrier
requiring a receipt, addressed to the party for whom it is intended, at
the place last specified, and the place for giving of notice shall
remain such until it shall have been changed by written notice in
compliance with the provisions of this paragraph. For the present, the
parties designate the following as the respective places for giving of
notice, to-wit:
FOR BROWARD COUNTY:
Contract Administrator
Division of Mass Transit
3201 West Copans Road
Pompano Beach, FL 33060
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FOR CONTRACTOR:
Karen Caputo
P.O. Box 2281
Hollywood FL 33022
ARTICLE 19
EQUAL EMPLOYMENT OPPORTUNITY
MINORITY BUSINESS PARTICIPATION AND
COMPLIANCE WITH FEDERAL CIVIL RIGHTS REGULATIONS
19.1 Equal Employment Opportunity: CONTRACTOR shall not discriminate against
any employee or applicant for employment because of race, religion,
color, sex, age, ancestry, marital status, disability, place of birth,
national origin, political affiliation, or sexual orientation.
CONTRACTOR shall take affirmative action to ensure that such applicants
are employed and that employees are treated during their employment
without regard to their race, religion, color, sex, age, ancestry,
marital status, disability, place of birth, national origin, political
affiliation, or sexual orientation. Such actions shall include, but not
be limited to, the following: employment, upgrading, transfer or
demotion; recruitment or recruitment advertising; layoff or
termination; rates of pay or other forms of compensation; and selection
for training, including apprenticeship. Evidence of such action will be
included in a written plan developed in accordance with the
requirements herein. CONTRACTOR agrees to furnish COUNTY with a copy of
its Affirmative Action Policy. CONTRACTOR agrees to post in conspicuous
places, available to employees and applicants for employment, notices
setting forth the provisions of this Equal Employment Opportunity
Program.
19.2 Nondiscrimination: During the performance of this Agreement, CONTRACTOR
agrees as follows:
19.2.1 Employee Solicitation: CONTRACTOR shall, in all solicitations
or advertisements for employees placed by or on behalf of
CONTRACTOR, state that all qualified applicants will receive
consideration for employment without regard to race, religion,
color, sex, age, ancestry, marital status, disability, place
of birth, national origin, or sexual orientation.
19.2.2 Collective Bargaining or Other Agreement: CONTRACTOR shall
send to each labor union or representative of workers with
which CONTRACTOR has a collective bargaining agreement or
other contract
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or understanding, as applicable, a notice advising the said
labor union or workers' representatives of CONTRACTOR's
commitments under this Section.
19.2.3 Access to Documentation and Information: CONTRACTOR shall
furnish all information and reports and will permit access to
CONTRACTOR's books, records, and accounts by COUNTY and
Compliance Review Agencies for purposes of investigation to
ascertain compliance with such rules, regulations, and orders.
19.2.4 CONTRACTOR Noncompliance: In the event of CONTRACTOR's
noncompliance with nondiscrimination clauses of this Agreement
or with any of the said rules, regulations, or orders,
CONTRACTOR may be subject to termination as provided for by
Article 15 herein.
19.3 SDBE: CONTRACTOR agrees to implement and conduct a program which will
enable small disadvantaged business enterprises ("SDBE"), as defined in
Broward County Ordinance No. 84-14 and related Resolutions enacted by
COUNTY, to be considered fairly as subcontractors and suppliers under
this Agreement. In this regard, CONTRACTOR agrees to exercise its best
efforts to affirmatively comply with COUNTY policy and goals fostered
by or established in conjunction with said Ordinance and Resolutions by
the use of minority vendors (subcontractors and suppliers) when
possible. CONTRACTOR agrees to:
A. Where applicable, implement procedures by which CONTRACTOR
will seek action on SDBE participation from suppliers or
subcontractors.
B. Where applicable, ensure that known SDBEs will have an
equitable opportunity to compete for subcontracts,
particularly by arranging solicitations, time for the
preparation of bids, quantities, specifications, and delivery
schedules so as to facilitate the participation of SDBEs.
C. Provide information and communication programs to make sure
SDBEs are aware of their opportunities, with such programs
being bilingual where appropriate.
D. Maintain records showing procedures which have been adopted to
comply with the policy set forth in this clause and specific
efforts to identify and award contracts to SDBEs.
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<PAGE> 66
E. Include the appropriate "utilization of SDBE" clauses in
subcontracts which offer subcontracting opportunities to
SDBEs.
F. Cooperate with COUNTY in any studies and survey of
CONTRACTOR'S small disadvantaged business enterprises
procedures and practices that COUNTY may from time to time
conduct.
G. Where no conflict of interest exists, CONTRACTOR shall provide
technical guidance and counseling to any SDBE which seeks or
needs assistance in competing for subcontracts or supplier
status, and make known to the minority group community in the
area of solicitation that these services are available.
19.4 Civil Rights Law: CONTRACTOR agrees to comply with the Civil Rights Law
as it relates to the provision of services pursuant to this Agreement.
CONTRACTOR shall assure compliance with the following Civil Rights
Statutes:
A. Title VI of the Civil Rights Act of 1964, as amended, 42
U.S.C. 2000d et seq., which prohibits discrimination on the
basis of race, color, or national origin in programs and
activities receiving or benefiting from federal financial
assistance.
B. Section 504 of the Rehabilitation Act of 1973, as amended, 29
U.S.C. 794, which prohibits discrimination on the basis of
COMPREHENSIVE PARATRANSIT SERVICEcap in programs and
activities receiving or benefiting from federal financial
assistance.
C. Title IX of the Education Amendments of 1972, as amended, 20
U.S.C. 1681 et seq., which prohibits discrimination on the
basis of sex in education programs and activities receiving or
benefiting from federal financial assistance.
D. The Age Discrimination Act of 1975, as amended, 42 U.S.C. 6101
et seq., which prohibits discrimination on the basis of age in
programs or activities receiving or benefiting from federal
financial assistance.
E. The Omnibus Budget Reconciliation Act of 1981, PL. 97-85,
which prohibits discrimination on the basis of sex and
religion in programs and activities receiving or benefiting
from federal financial assistance.
F. All regulations, guidelines, and standards lawfully adopted
under the above statutes.
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<PAGE> 67
21.11 Time is of the Essence: For the purposes herein, the parties agree that
time shall be of the essence of this Agreement and the representations
and warranties made are all material and of the essence of this
Agreement.
21.12 Captions and Paragraph Headings: Captions and paragraph headings
contained in this Agreement are for convenience and reference only and
in no way define, describe, extend, or limit the scope or intent of
this Agreement, nor the intent of any provisions hereof.
21.13 No Waiver: No waiver of any provision in this Agreement shall be
effective unless it is in writing, signed by the party against whom it
is asserted, and any such written waiver shall only be applicable to
the specific instance to which it relates and shall not be deemed to be
a continuing or future waiver.
21.14 Counterparts: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which shall constitute one and the same Agreement.
21.15 Gender: All terms and words used in this Agreement, despite the number
and gender in which used, shall be deemed to include any other gender
or number as the context or the use thereof may require.
21.16 Severability: In the event any term or provision of this Agreement
shall be determined by appropriate judicial authority to be illegal or
otherwise invalid, such provision shall be given its nearest legal
meaning or be construed or deleted as such authority determines, and
the remainder of this Agreement shall be construed to be in full force
and effect.
21.17 Governing Law: This Agreement shall be construed and interpreted
according to the laws of the State of Florida and venue with respect to
any litigation shall be Broward County, Florida, whether in state or
federal court.
21.18 Exhibits: All exhibits attached hereto contain additional terms and
conditions of this Agreement and are incorporated as if actually set
forth herein. Typewritten provisions inserted in this form or attached
hereto shall control all printed provisions in conflict therewith.
21.19 Relationship of the Parties: Except as set forth herein, no party to
this agreement shall have any responsibility whatsoever with respect to
services
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<PAGE> 68
provided or contractual obligations assumed by the other party.
CONTRACTOR is and shall be in the performance of all work, services,
and activities under this Agreement independent, and not an employee,
agent, or servant of COUNTY. All persons engaged in any of the work or
services performed pursuant to this Agreement shall at all times and in
all places be subject to CONTRACTOR'S sole discretion, supervision, and
control. CONTRACTOR shall exercise control over the means and manner in
which it and its employees perform the work, and in all respects
CONTRACTOR'S relationship and the relationship of its employees to
COUNTY shall be that of an independent and not as employees or agents.
21.20 Compliance with Law: The parties agree to conduct and execute the
Project in compliance with all applicable local, state, and federal
laws.
21.21 Conflicts: Where there is a conflict between any provision set forth
within this Agreement, and a more stringent state or federal provision
which is applicable to any services performed under this Agreement, the
more stringent state or federal provision shall prevail.
21.22 Public Entity Crimes: In accordance with the Public Entity Crimes Act
(Section 287.133, Florida Statutes) a person or affiliate who is a
consultant, who has been placed on the convicted vendor list following
a conviction for a public entity crime may not submit a bid on a
contract to provide any goods or services to the COUNTY, may not submit
a bid on a contract with the COUNTY for the construction or repair of a
public building or public work, may not submit bids on leases of real
property to the COUNTY, may not be awarded or perform work as a
contractor, supplier, subcontractor, or consultant under a contract
with the COUNTY, and may not transact business with the COUNTY in
excess of the threshold amount provided in Section 287.017, Florida
Statutes, for CATEGORY TWO for a period of 36 months from the date of
being placed on the convicted vendor list. Violation of this section by
CONTRACTOR shall result in cancellation and may cause CONTRACTOR
debarment.
21.23 Execution Date: The date of execution of this Agreement shall mean the
last day upon which it becomes fully executed by the parties.
21.24 Ownership of Documents: All reports, surveys, and other data provided
to CONTRACTOR and produced by CONTRACTOR during the course of this
Agreement are and shall remain the property of COUNTY.
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<PAGE> 69
AGREEMENT BETWEEN BROWARD COUNTY AND AAA WHEELCHAIR WAGON SERVICE, INC., FOR
PARATRANSIT SERVICES
CONTRACTOR
WITNESS: AAA WHEELCHAIR WAGON SERVICES, INC.
/s/ Luana Tringali By /s/ Karen Caputo, Pres.
/s/ Shirley Clary 18th day of October, 1996.
ATTEST:
(CORPORATE SEAL)
________________________________________
Corporate Counsel
[SEAL]
STATE OF FLORIDA )
) SS.
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this 18th day of
October, 1996, by Karen Caputo, as ____________________ of ____________________,
a Florida corporation, on behalf of the corporation. He/She is personally known
to me or has produced Fla. Driver's License as identification and who did take
an oath.
OFFICIAL NOTARY SEAL /s/ Donna Gail Person
DONNA GAIL PERSON ----------------------------------------
NOTARY PUBLIC STATE OF FLORIDA Notary Public, State of Florida
COMMISSION NO. CC282044
MY COMMISSION EXP. MAY 2, 1997
Donna Gail Person
----------------------------------------
Print or type name
My commission expires:
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<PAGE> 1
EXHIBIT 10.28
RESTATED AND AMENDED SHAREHOLDERS AGREEMENT
AMONG
WASHINGTON SHUTTLE, INC.
AND
ITS SHAREHOLDERS
<PAGE> 2
RESTATED AND AMENDED SHAREHOLDERS AGREEMENT
Among Washington Shuttle, Inc. and Its Shareholders
THIS RESTATED AND AMENDED SHAREHOLDERS AGREEMENT made this day of
March, 1997, by and among Barwood Operating Group, Inc., a Maryland
corporation, The Convention Store, Inc., a District of Columbia corporation,
Shuttle Express, Inc., a Maryland corporation, SuperShuttle Franchise
Corporation, Inc., a Delaware corporation, Transportation General, Inc., a
Virginia corporation, and The Union Labor Life Insurance Company, a Maryland
corporation, hereinafter referred to as the "Corporation".
WHEREAS, all of the parties to this Agreement, except for The Union Labor
Life Insurance Company (hereinafter "ULLICO"), have been shareholders of the
Corporation since the formation of the Corporation and are parties to an
Amended Shareholders Agreement among them and the Corporation, dated April 5,
1996 (hereinafter the "Prior Agreement"), which this Restated and Amended
Shareholders Agreement (hereinafter the "Agreement") is intended to replace in
its entirety; and
WHEREAS, there are currently 500,000 shares of common stock of the
Corporation issued and outstanding, of a total of one million shares of common
stock authorized to be issued by the Corporation; and
WHEREAS, the Corporation and its shareholders have agreed to issue to
ULLICO and ULLICO has agreed to purchase from the Corporation, upon certain
terms and conditions provided hereinbelow, authorized but unissued shares of
common stock of the Corporation representing, after issuance, sixteen percent
(16%) of the authorized and issued common stock of the Corporation, totaling
97,300 shares, for a total consideration of $1.5 million, or $15.42 per share,
payable in cash at the time of closing; and
WHEREAS, as a condition of the issuance of stock to ULLICO and the
purchase of the same by ULLICO, ULLICO is required and desires to become a
party to this Agreement and to nominate and have elected an additional member
of the Board of Directors of the Corporation; and
WHEREAS, in order to maintain the percentage ownership of the authorized
and issued shares of the Corporation of The Convention Store, Inc., at ten
percent (10%), as required by the terms of the Agreement, 10,808 additional
shares of stock of the Corporation are to be issued to The Convention Store,
Inc., as well, upon the terms and conditions set forth hereinbelow.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
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<PAGE> 3
1. Ratification of Agreement for Sale and Issuance of Stock.
1.1 The Shareholders and Corporation hereby ratify and affirm the
separate agreement between the Corporation and ULLICO for the sale to ULLICO
and the purchase by ULLICO of 97,300 shares of common stock of the Corporation,
representing after issuance of said shares of stock, and the issuance of
additional stock to The Convention Store, Inc., as provided hereinbelow,
sixteen percent (16%) of the authorized, issued and outstanding shares of stock
of the Corporation, for a total purchase price of One Million Five Hundred
Thousand Dollars ($1,500,000.00), or $15.42 per share. The Shareholders, in
ratifying and affirming the issuance of stock to ULLICO, and The Convention
Store, Inc., as provided hereinbelow, hereby decline to exercise and, thus,
waive (in this instance only) their respective rights of first refusal, under
Provision "3. Future Stock Issuances." of the Agreement, to purchase the
aforesaid additional shares issued to ULLICO and The Convention Store, Inc.
1.2 The Shareholders and Corporation also agree to ratify and affirm
the issuance by the Corporation of 10,808 additional shares of common stock of
the Corporation to The Convention Store, Inc., by separate agreement between
the Corporation and The Convention Store, Inc., in order that the percentage
ownership interest of The Convention Store, Inc. of all of the issued and
outstanding shares of the Corporation will not be less than ten percent (10%),
as provided in the Agreement. The Corporation and Shareholders have determined
that since The Convention Store, Inc. is not receiving the same favorable
rights to receive additional shares of stock of the Corporation upon the
occurrence of certain events or conditions, as is ULLICO, as set forth
hereinbelow, the full and fair consideration for the issuance of the additional
stock to The Convention Store, Inc., is One Dollar ($1.00) per share, to be
paid by The Convention Store, Inc.
1.3 The Corporation and Shareholders further agree that, in the
event that the Corporation does not substantially meet 1998 profit projections,
consistent with the pro forma numbers for the years 1998 and 1999 that have
heretofore been provided to ULLICO by the Corporation, copies of which are
attached hereto as Exhibits 1 and 2, ULLICO shall be entitled to be issued by
the Corporation, at ULLICO's option, and at no cost to ULLICO, such additional
shares of stock of the Corporation as will give to ULLICO an additional two
percent (2.0%) of the authorized, issued and outstanding shares of stock of the
Corporation after such additional shares are issued. Likewise, in the event
that the Corporation does not meet 1999 profit projections, consistent with the
pro forma numbers, ULLICO shall be entitled to be issued by the Corporation, at
ULLICO's option, and at no cost to ULLICO, an additional two percent (2.0%) of
the authorized, issued and outstanding share of stock of the Corporation after
such additional shares are issued.
1.4 The Corporation has agreed by separate agreement with ULLICO to
pay to ULLICO at the time of the issuance of the shares of stock being
purchased by ULLICO a one-time placement fee of Twenty-two Thousand Five
Hundred Dollars ($22,500.00), and the Corporation and Shareholders hereby
ratify and affirm said separate agreement and the payment by the Corporation of
said fee.
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<PAGE> 4
2. Restatement of Shareholders and Shares.
2.1. The Corporation is authorized to issue One Million (1,000,000)
shares of common stock, having a par value of One Dollar ($1.00) per share. The
parties hereby acknowledge and agree that the Shareholders of the Corporation
and the number of authorized and issued shares of common stock of the
Corporation are, upon issuance to ULLICO and The Convention Store, Inc., as
provided herein, are as indicated below:
Shareholder No. of Shares Percentage of Shares
----------- -------------- --------------------
ULLICO 97,300 Shares 16.0%
Barwood Operating
Group, Inc. 90,000 Shares 14.8%
Yellow Transportation 180,000 Shares 29.6%
SuperShuttle, Inc. 90,000 Shares 14.8%
The Convention Store, Inc. 60,808 Shares 10.0%
Transportation General, Inc. 90,000 Shares 14.8%
------------- ------
TOTAL 608,108 Shares 100.0%
3. Future Stock Issuances.
3.1. In the event the Board of Directors determines it is in the best
interests of the Corporation to issue additional authorized but unissued Shares
of stock of the Corporation, it may do so only upon an affirmative vote of a
majority of the Shares of the Corporation at a duly called meeting of the
Shareholders of the Corporation.
3.2. Any issuance of additional Shares of the Corporation shall first
be offered at the same price to the Shareholders in the same proportion as the
respective Shareholders' existing number of Shares bears to the total number of
Shares then issued and outstanding. In the event any one (or more) of the
Shareholders declines or fails to purchase its proportionate number of Shares
offered to it by the Corporation, then the remaining Shareholders shall have
the right to purchase the same, and if there is more than one Shareholder
exercising said right, said right to purchase shall be in the same proportion as
each said Shareholder's existing number of Shares bears to the total number of
Shares of the Shareholders exercising said right of purchase.
4. Management of the Corporation.
Shuttle Express, Inc. shall have the right and obligation to manage
and oversee the day-to-day
4
<PAGE> 5
operations of the business of the Corporation, subject to the control of the
Board of Directors as provided hereinbelow, including the employment of
management personnel, the acquisition of vehicles, machinery, equipment and
other assets to be used in said business, the implementation of policies and
procedures for the operation of the business, and to do and perform all of the
usual and customary acts and duties of oversight of the management of the
business of the Corporation. Shuttle Express, Inc. shall provide said management
and oversight services without salary or other compensation, except for such
reimbursements for reasonable and necessary expenses as are authorized by the
Board of Directors from time to time. Shuttle Express, Inc. shall not be held
responsible to the Corporation or the Shareholders for any loss or damage
resulting from any act or omission committed in the good faith performance of
its duties, except that loss or damage which is resulting from any fraud,
willful misconduct or the gross negligence of Shuttle Express, Inc. In further
consideration of the undertaking by Shuttle Express, Inc. to manage the
operation of the business, the Corporation agrees to indemnify and hold Shuttle
Express, Inc., and Mark L. Joseph, individually, and all other agents and
employees of Shuttle Express, Inc., harmless from all costs, expenses, claims,
demands or legal proceedings which may be brought against it by reason of or
arising out of its management of the business except that which is caused by the
fraud, willful misconduct or gross negligence of Shuttle Express, Inc. or Mark
L. Joseph.
5. Control of the Corporation.
5.1. Control of the affairs of the Corporation shall be vested in the
Board of Directors, which shall be comprised of six (6) Directors. Each of the
Shareholders shall have the right to nominate and have elected to the Board
one (1) of the Directors, and the Shareholders agree to vote their Shares to
elect the persons nominated by each of the Shareholders. In the event of a
vacancy on the Board of Directors, the Shareholder which nominated the Director
whose absence created the vacancy shall have the right to nominate his or her
successor, and the Shareholders agree to vote their Shares to elect the person
so nominated, who shall then serve out the remaining term of the Director who
created the vacancy.
5.2. Until the next annual election of the Board of Directors, the
Shareholders agree that the following persons, nominated as indicated
hereinbelow, shall serve as the initial Board of Directors:
Director Nominating Shareholder
Lee Barnes Barwood Operating Group, Inc.
Mark L. Joseph Shuttle Express, Inc.
Mitchell S. Rouse SuperShuttle, Inc.
M. Elaine Curl The Convention Store, Inc.
Neal C. Nichols Transportation General, Inc.
to be named by ULLICO ULLICO
6. Transfers of Shares.
6.1. No Shareholder may sell, transfer or in any manner convey all or
any part of its Shares of the Corporation except in accordance with the terms of
this Agreement. Each certificate for the shares
5
<PAGE> 6
issued or to be issued by the Corporation shall have affixed thereon a legend
indicating that it is issued subject to the restrictions of transfer set forth
herein.
6.2. In the event a Shareholder desires to sell, transfer or convey
in any manner all but not less than all of its Shares of the Corporation, it
may do so only after first offering to sell all but not less than all of its
Shares to the Corporation upon the same terms and conditions as set forth in
any bona fide written offer to purchase received by the Shareholder from any
third party. A copy of the bona fide written offer to purchase received by the
Shareholder from the third party shall be delivered by the Shareholder to the
President of the Corporation who shall promptly present the same to the Board
of Directors of the Corporation at a duly called meeting, and the Corporation
shall, for a period of sixty (60) days following delivery of the written offer
to the President of the Corporation, have the right of first refusal to
purchase the Shares upon said terms and conditions.
6.3. In the event the Corporation fails to exercise its right of first
refusal or earlier waives it right to exercise the same by affirmative action
of the Board of Directors, then each of the Shareholders shall have the same
right of first refusal, for a period of sixty (60) days following expiration of
the Corporation's sixty (60)-day period or earlier refusal or waiver, to
purchase all but not less than all of the Shares upon the same terms and
conditions. In the event more than one Shareholder exercises its right of first
refusal to purchase, each Shareholder electing to purchase shall have the right
to purchase that proportion in number of Shares being offered that the
Shareholder's existing number of Shares bears to the total number of existing
Shares held by those Shareholders exercising their right to purchase.
6.4. In the event neither the Corporation nor any Shareholder elects
to purchase the Shares being offered, the offering Shareholder shall be
entitled to complete the sale or transfer of its Shares to the bona fide third
party upon the same terms and conditions as set forth in the bona fide written
offer presented to the Corporation, provided such sale or transfer is completed
within sixty (60) days of the expiration of the Shareholders' rights of first
refusal. If the transfer or sale is not completed within said sixty (60) days,
the right of the Shareholder to sell or transfer its Shares shall lapse, and
the Shareholder may not thereafter sell or transfer its Shares to any third
party without again first offering the Shares to the Corporation and other
Shareholders as set forth above.
7. Notices.
All notices required under this Agreement shall be given to the
parties by certified mail, return receipt requested or hand delivery to the
individuals and at the addresses as follows:
Barwood Operating Group, Inc.: Mr. Lee Barnes
4900 Nicholson Court
Kensington, Maryland 20895
The Convention Store, Inc.: Ms. M. Elaine Curl
2981 Solomons Island Road
Edgewater, Maryland 21037
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<PAGE> 7
Shuttle Express, Inc.: Mr. Mark L. Joseph
2100 Huntington Avenue
Baltimore, Maryland 21211
SuperShuttle, Inc. Mr. Mitchell S. Rouse
4610 South 35th Street
Suite 1
Phoenix, Arizona 85040
Transportation General, Inc.: Mr. Neal C. Nichols
3251 Washington Boulevard
Arlington, Virginia 22201
Washington Shuttle, Inc.: Mr. Mark L. Joseph
(the Corporation) c/o Yellow Transportation, Inc.
2100 Huntingdon Avenue
Baltimore, Maryland 21211
The Union Labor Life Mr. Robert Kennedy
Insurance Company (ULLICO) The Union Labor Life Insurance
Company
111 Massachusetts Avenue, N.W.
Washington, D.C. 20001
8. Amendment to Articles of Incorporation.
The Corporation and Shareholders agree to proceed forthwith to amend
the Articles of Incorporation of the Corporation to include a provision giving
to each shareholder of the Corporation the preemptive right to purchase or
subscribe for any unissued stock or any class or any additional shares of any
class to be issued by reason of any increase of the authorized capital stock of
the Corporation of any class, or bonds, certificates of indebtedness, debentures
or other securities convertible into stock of the Corporation, or carrying any
rights to purchase stock of any class, whether said unissued stock shall be
issued for cash, property, or any other lawful consideration.
9. Miscellaneous.
9.1. This Agreement shall be interpreted according to the laws of the
Commonwealth of Virginia.
9.2. This Agreement shall be binding upon each of the parties'
successors and permitted assigns.
9.3. This Agreement contains the complete and final understanding of
the parties with
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respect to the subject matter set forth herein.
9.4. This Agreement may be executed in several counterparts, each of
which shall be deemed an original and all of which together shall constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have set their signatures below.
Attest: Barwood Operating Group, Inc.
____________________________ By:_______________________________
Lee Barnes
Attest: Shuttle Express, Inc.
____________________________ By:_______________________________
Mark L. Joseph
Attest: SuperShuttle, Inc.
____________________________ By:_______________________________
Mitchell S. Rouse
Attest: The Convention Store, Inc.
____________________________ By:_______________________________
M. Elaine Curl
Attest: Transportation General, Inc.
____________________________ By:_______________________________
Neal C. Nichols
8
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Attest: The Union Labor Life Insurance Company
____________________________ By:___________________________________
Robert Kennedy
Attest: Washington Shuttle, Inc.
____________________________ By:____________________________________
Mark L. Joseph
9
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EXHIBIT 10.29
BLUE VAN
JOINT VENTURE AGREEMENT
This BLUE VAN JOINT VENTURE AGREEMENT (hereinafter the "Agreement," the
"Joint Venture" or "JV") is entered into on this 21st day of July, 1997, by and
between TAMARACK TRANSPORTATION, INC. a California corporation which is also
known as SUPER SHUTTLE LOS ANGELES (hereinafter "SSLA"), PREFERRED
TRANSPORTATION, INC., a California corporation which is also known as SUPER
SHUTTLE ORANGE COUNTY (hereinafter "SSOC"), ARCADIA TRANSIT, INC., a California
corporation which is also known as SUPER SHUTTLE BURBANK (hereinafter "SSB") and
MINI-BUS SYSTEMS, INC., a California corporation which is also known as SUPER
SHUTTLE ONTARIO (hereinafter "SSO"), hereinafter also referred to individually
as a "Joint Venturer" and collectively as the "Joint Venturers."
RECITALS
A. Each of the Joint Venturers is a common carrier licensed by the
California Public Utilities Commission that owns, controls and operates its
separate business pursuant to various franchise, and related agreements with
Super Shuttle International, a Delaware corporation (hereinafter "SSI"), and
through various cooperative and coordinating agreements between each other.
B. The Joint Venturers desire to jointly apply for a concession for a
certain allotment of shared ride van service from and to Los Angeles
International Airport (LAX"), pursuant to a Request for Proposal ("RFP") issued
by the Los Angeles Airport Commission (the "Commission") dated March 28,1997, as
amended.
C. It is the intent and purpose of each of the Joint Venturers to
jointly apply for a concession from the Commission and to conduct its business
operation under such concession that may be granted to the Joint Venture,
pursuant to this terms and conditions of this Agreement.
AGREEMENT
Now therefore, in exchange for the mutual covenants and consideration
set forth herein, the parties hereto hereby represent, warrant and agree as
follow:
1. Name of Joint Venture. The name of the Joint Venture created by this
Agreement shall be the BLUE VAN JOINT VENTURE.
2. Managing Partner of Joint Venture. In compliance with the RFP
requirement that a single party be responsible for the concession granted by the
Commission, the parties agree a Managing Partner shall be elected to manage and
direct the affairs and operation of the joint
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Venture and to be responsible and exercise all authority for the Joint Venture
with respect to applying for, receiving, administering, and operating under the
LAX concession. The concession contract shall be carried out and performed on
behalf of the Joint Venture under the direction of the Managing Partner, acting
through such of its officers, employees or agents as it may designate. The
parties hereby authorize the performance of the concession contract under the
direction of the officers, employees and agents of the Managing Partner so
designated.
a. Election and Removal of Managing Partner and Secretary. The
Joint Venturers shall annually nominate and elect one of their number to serve
as Managing Partner, and a different Joint Venturer to serve as Secretary.
Candidates for Managing Partner must meet all of the requirements for a
responsible party established by the Commission. The Managing Partner and
Secretary shall each be elected by a vote of three out of four votes of the
Joint Venturers and shall serve in the capacity of Managing Partner and
Secretary, respectively, for an indefinite term until such time as the Joint
Venturers vote, three out of four, to remove and replace the Managing Partner
and/or Secretary with other Joint Venturers.
b. Authority of Managing Partner. The Managing Partner shall have
the sole authority and discretion to deal with all matters and questions in
connection with the performance of the LAX concession contract. The Managing
Partner shall have the full and complete authority to act on behalf of the Joint
Venture in relation to any and all matters and things in connection with such
contract or arising from it, and to act for and by the Joint Venture in all
matters and things involving the performance of the LAX concession contract. The
Managing Partner shall serve without a fee or other compensation. The authority
and discretion of the Managing Partner shall be limited to the extent that the
activities of the Joint Venture shall be directed in a manner that will give as
full and complete effect as possible to the franchise and related and collateral
agreements which the Joint Venturers individually and collectively have with
SSI. The Managing Partner shall have authority to bind the Joint Venture to
contracts or transactions not exceeding an obligation of the Joint Venture of
$10,000 for any single, contract or transaction; any contract or transaction
with an obligation of the Joint Venture exceeding $10,000 shall require the
signature of both the Managing Partner and the Secretary.
c. Voting Matters. Aside from the election and removal of the
Managing Partner, the only matters on which the Joint Venturers shall be
entitled to vote shall be those related to the establishing an operating budget
for the Joint Venture and modifying the terms and conditions of this Agreement.
On these matters, a majority vote of the Joint Venturers Shall decide all
issues. In the event of a two to two tie vote, the Managing Partner shall have
the right to cast an additional tie-breaker vote in addition to its regular vote
as a Joint Venturer.
3. Allocation and Operation of Concession. Any LAX concession that may
be granted to the Joint Venture by the Commission shall be allocated, operated,
and managed by the Managing Partner and Joint Venturers in a manner entirely
consistent with the franchise and related and collateral agreements which the
Joint Venturers individually and collectively have with SSI. The SSI franchise
and collateral agreements grant rights to each Joint Venturer to operate its
business within a specifically described geographic territory, and each Joint
Venturer
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shall derive from the LAX concession the same aliquot share of business arising
from LAX that each Joint Venturer would otherwise be entitled to receive under
the existing SSI agreements, which proportion shall hereinafter be referred to
as each Joint Venturer's "JV Share."
4. Cost Sharing. The Joint Venture is formed for the sole and exclusive
purpose of the parties' jointly obtaining and participating in the LAX
concession through an allocation of passenger trips arising therefrom. Each
Joint Venturer shall be solely responsible for realizing its own revenues and
bearing its own expenses. No revenue or profit sharing by or between the Joint
Venturers is contemplated by this Agreement. Each Joint Venturer shall ratably
bear its proportionate JV Share of the aggregate amount of the costs and
expenses arising from the operation of the Joint Venture.
a. Disbursement Account. The Managing Partner shall establish a
disbursement account at a financial institution, acceptable to a majority of the
Joint Venturers, from which the Managing Partner shall make disbursements to pay
for the expenses of the Joint Venture. The Managing Partner shall make periodic
accountings of the disbursement account to the Joint Venturers and shall provide
the Joint Venturers with an annual statement of aggregate expenses.
b. Deposits to Disbursement Account. The Joint Venturers shall
agree on a quarter by quarter operating budget The budget for each forthcoming
calendar quarter shall be based upon the number of "circuit fees" for the LAX
concession operation experienced during the preceding calendar quarter. Upon
establishment of an operating budget, each Joint Venturer shall make
proportionate deposits of its JV Share of such budget twice a month.
5. Concession Guaranty. In compliance with the RFP, the Managing
Partner shall commit to a $1,000,000 minimum fee guaranty required under the
concession agreement, and shall seek and obtain a surety bond in an amount
sufficient to fulfill the requirements of the Commission. The cost of the surety
bond shall constitute an expense of the Joint Venture that shall be allocated
equally among the Joint Venturers, without regard to each party's JV Share. Each
Joint Venturer hereby agrees to an equal share of the guaranty, surety bond, and
liabilities arising therefrom, without regard to its JV Share, and hereby agrees
to indemnify the Managing Partner from and against any and all liabilities,
claims, costs, and expenses to the extent of its equal share of the guaranty.
6. Limitations of Joint Venture, The relationship between the parties
to this Agreement is limited to the performance of the LAX concession contract
in accordance with the term of this Agreement. This Agreement shall be construed
and deemed to be a joint venture for the sole purpose of carrying out the LAX
concession contract.
a. Nothing contained in this agreement shall be construed to
create a general partnership or other permanent relationship between the
parties, or to authorize either party to act as general agent for the other
party, or to permit any party to bid for or to undertake any contracts for the
other party.
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b. Nothing in this agreement is to be construed as a limitation
of the powers or rights of any party to this agreement to carry on its separate
business for its sole benefit except, however, that the parties shall cooperate
with each other according to the terms and spirit of this agreement in the
performance of the LAX concession contract.
7. Cross Indemnification. Except as may be otherwise specifically set
forth in this Agreement, each of the Joint Venturers shall be solely responsible
for its own costs, expenses, claims, damages, obligations and other liabilities
arising from the conduct of its separate business whether related or unrelated
to the Joint Venture. Accordingly, each Joint Venturer hereby agrees to defend,
indemnify and hold harmless each of the other Joint Venturers from and against
any and all costs, expenses, claims, damages, obligations and other liabilities,
including without limitation reasonable attorneys' fees, that may arise from the
conduct such Joint Venturer's business.
8. Assignments and Transfers. During the term of this Agreement, no party
may assign or transfer that party's rights or interests in the Joint Venture
without the prior written consent of each of the other Joint Venturers, which
consent shall not be unreasonably withhold. For purposes of this Agreement, the
parties hereto shall be deemed to have consented to any assignment or transfer
of a Joint Venturer's franchise rights to another party permissible under its
agreements with SSI.
9. Insolvency or Bankruptcy of a Party. If, during the term of this
Agreement, a Joint Venturer should become insolvent or bankrupt, the remaining
parties shall have the option to mutually agree to continue the Joint Venture,
excluding the insolvent or bankrupt party. If the Managing Partner should become
insolvent or bankrupt or otherwise unable or unwilling to serve or continue to
serve in that capacity, the remaining Joint Venturers shall unanimously elect
from among their number a successor to the Managing Partner, which successor
shall fulfill and comply with any and all qualifying requirements which may be
set forth by the Commission.
10. Term. The term of Agreement shall run concurrently with the term of
any LAX concession contract that may be granted to the Joint Venture by the
Commission. The Agreement shall terminate concurrently with the conclusion of
any such concession contract, or at such time as the Joint Venturers shall
otherwise agree. Upon such termination, the Managing Partner shall wind up and
dissolve the joint venture in accordance with the provisions of the Uniform
Partnership Act, except insofar as such provisions may be at variance with the
terms of this Agreement.
11. General Provisions.
a. Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties respecting the subject matter hereof, and
supersedes all prior and collateral agreements and understandings, regardless of
form or nature between the parties respecting that subject matter.
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b. Extensions and Modifications. No extension, modification or
supplement to this Agreement will be effective unless made in writing and signed
by a duly authorized officer of each party, except as otherwise permitted
herein.
c. Binding Effect. Except as otherwise provided in this
agreement, this agreement shall inure to the benefit of, and be binding on the
parties, their successors, trustees, receivers, and assigns, but shall not inure
to the benefit of any other person, firm, or corporation.
d. Notices. Any notice required, permitted or contemplated by
this Agreement must be in writing, sent by telegram, telex, telecopier or
certified or registered mail, return receipt requested, prepaid, addressed to
the other party as set forth below, or to such other address as may from time to
time be substituted therefor by notice, or delivered in person to such other
party. Except as otherwise provided in this Agreement, notices sent by mail in
the aforementioned manner will be effective on the date deposited in the U.S.
mail by the party giving notice, otherwise, the notice will be effective on the
date received by the other party. For purposes of notices, the addresses of the
parties will be:
SSLA: SSOC:
Gene Hauck, President Steve Allan, President
Tamarack Transportation, Inc. Preferred Transportation, Inc.
531 Van Ness Avenue 1430 Anaheim Blvd.
Torrance, CA 90501 Anaheim, CA 92805
(310) 222-5500 (714) 517-6610
SSB: SSO:
Timmy Mardirossian, President Fazi Bostajani, General Manager
Arcadia Transit, Inc. Mini-Bus Systems, Inc.
1014 W. Burbank Blvd. 1222 E. Holt Blvd.
Burbank, CA 91506 Ontario, CA 91761
(818) 558-3177 (909) 984-0040
e. Waivers. No delay or failure by either party to enforce or
take advantage of any provision of this Agreement for non-performance or breach
of any obligation hereunder by the other party, or to exercise any right
hereunder, will constitute a waiver of the right of such party subsequently to
enforce or take advantage of such provision or any other provision hereof
(unless performance has been resumed or the breach has been cured by the other
party) or to exercise such right or any other right hereunder, unless such
waiver is in writing signed by a duly authorized officer of the party against
whom the waiver is claimed to apply, or unless the respective period for
enforcement, taking advantage or exercise, as the case may be, has expired by
the express terms of this Agreement.
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f. Governing Law. This Agreement has been entered into and will
be deemed to be made under the laws of the State of California, and for all
purposes will be governed by, enforced under and construed in accordance with
the laws of said state. Venue for any controversy arising under this Agreement
shall be the Superior Court of California for the County of Los Angeles.
g. Costs and Attorneys Fees. In the event it becomes necessary
for any party to this Agreement to bring a legal action to interpret, enforce,
or defend any provision herein, the prevailing party shall be entitled to
recover from the losing party any and all of its expenses and costs incurred in
bringing such legal action, including reasonable attorneys fees, in addition to
any other award of damages and remedies to which the prevailing party may be
entitled.
h. Severability. If any provision of this Agreement is rendered
or declared unlawful by reason of any existing or subsequently enacted law or by
decree or order of a court of last resort, the remaining provisions of this
Agreement will continue in full force and effect. The parties will promptly meet
and negotiate substitute provisions for those rendered or declared unlawful,
retaining as much of the intent of the original provisions as is practicable
without the effects which caused them to be unlawful.
i. Further Acts. Each of the parties to this Agreement agrees to
take such further acts and execute such other documents as may be necessary and
appropriate to effectuate the purposes of this Agreement.
j. Counterparts. This Agreement may be executed in multiple
counterparts, of which will constitute an original, but all of which together
will constitute one and the Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
"SSLA" "SSOC"
Tamarack Transportation, Inc. Preferred Transportation, Inc.
by /s/ G. Hauck by /s/ Steve Allan
--------------------------------- ------------------------------
Gene Hauck, President Steve Allan, President
"SSB" "SS0"
Mini-Bus Systems, Inc. Arcadia Transit, Inc.
by /s/ F.D. Bostajani by /s/ Timmy Mardirossian
------------------------------------ ------------------------------
Fazi Bostajani, General Manager Timmy Mardirossian, President
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Exhibit 10.31
PURCHASE OF SHARED RIDE DISPATCH SYSTEMS
TERMS AND CONDITIONS OF SALE
THIS PURCHASE AGREEMENT made as of the 28 day of June 1995 between Digital
Dispatch Systems Inc. ("DDS"), with an office at 7100 River Road Richmond, B.C.
V6X 1X5 and SuperShuttle Franchise Corporation (the "Customer"), with an office
at 4610 South 35th Street, Phoenix, AZ 85040.
WHEREAS:
A. DDS has developed a Taxi Dispatch System and will modify this system to
meet the exact needs of the Customer and create the Shared Ride
Dispatch System, and
B. DDS has agreed to sell such systems to the Customer for aid in the
business operations of the Customer, on the terms and conditions set
out in this Agreement.
C. DDS has agreed to license the Software to the Customer for its use in
the System.
THIS AGREEMENT WITNESSES that in consideration of the premises and the
obligations of the parties set out in this Agreement, the parties agree as
follows:
1. DEFINITIONS
As used in this Agreement, unless the context otherwise requires, the
following terms shall have the meanings set out below;
(a) "Application Software" means all software developed by DDS,
other than the operating system software and software provided
by other vendors like Microsoft, and Computer Associates, and
excludes all software which doesn't reside on the Host Server
or workstations for reservation agents, supervisors or
dispatchers. The Application Software is provided under a
Software License Agreement attached hereto as Attachment E.
The Application Software will include all functions and
features listed in the Functional Specifications Document
(b) "Contract" means the agreement between DDS and the Customer,
as evidenced by the Contract Documents;
(c) "Contract Documents" means those documents set forth in
Subsection 4.2, which documents collectively and exclusively
constitute the Contract;
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
(d) "Deliverables" means the items listed in Attachment A;
(e) "Delivery Point" means the location of the Customer's Office,
or the location here the System is to be installed;
(f) "Documentation" means any documentation, including manuals,
DDS is obligated to provide to the Customer, under this
Agreement, as set out in Attachment D;
(g) "Functional Specifications Document" means the document to be
prepared by DDS and the customer, describing features and
functions in the system, associated with implementation of the
System, that are not capable of resolution at the time of
execution of this Agreement;
(h) "FOB" means free on board at the Delivery Point; the price
quoted includes delivery at the expense of DDS to the Delivery
Point;
(i) "Hardware" means the hardware to be supplied by DDS under the
terms of this Agreement;
(j) "Premises" means those physical sites, or vehicles, under the
control of the Customer or which the customer has access to,
in which the various components of the System are to be
installed;
(k) "Products" means the Hardware and Software to be supplied by
DDS under the terms of the Agreement;
(l) "Proposal" means the quotation of DDS for a Shared Ride
Dispatch system dated June 7, 1994;
(m) "Purchase Order" means a purchase order, in respect of the
System issued by the Customer to DDS;
(n) "Services" means all services to be performed by DDS under the
terms of this Agreement;
(o) "Software" means all the software provided by DDS, other than
operating system software.
(p) "System Service Agreement" means any written agreement entered
into by the parties, with respect to the service of the
Hardware and Software;
(q) "System" means the Shared Ride Dispatch system the components
of which are described in Attachment A, resulting from the
performance of Services and the installation and turn on of
Products.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
The System will also mean a subsequent system purchased by the
Customer as defined in section 2, purchased for a location
other than Phoenix, which will have it's own Deliverables and
System Price;
(r) "System Acceptance Date" means date of Customer acceptance of
the System, as defined in Subsection 13.0.
(s) "System Price" means the sum of US$255,050 for the Phoenix
System, subject to adjustment as provided in this Agreement;
(t) "Software Development Cost" means the sum of US$275,000 which
will cover the costs of developing the Application Software in
accordance with the Functional Specifications Document and
also give the Customer 1000 pre-paid run-time licenses for the
Application Software.
2. PURCHASE AND SALE OF SYSTEM AND PRODUCTS
DDS will sell the System to the Customer and the Customer will purchase
the System and the pre-paid run-time licenses from DDS upon the terms
and conditions set forth in this Agreement. In addition the Customer
may purchase other or more components of the System as priced in
Attachment F of this Agreement.
The Customer will purchase additional Systems for locations other than
Phoenix, by composing a complete System from the individual components
listed in Attachment F. The prices listed in Attachment F will be valid
till Dec. 31, 1995, after which time these prices will be adjusted to
reflect increase in Consumer Price Index ("CPI") for 1995 for DDS
manufactured products. The prices listed in Attachment F will be
subject to price increases and decreases by various vendors of DDS for
DDS supplied products which are not manufactured by DDS.
Each and every one of these new Systems will be considered as a
separate purchase and all the terms and conditions in this Agreement
will apply to them.
The 1000 pre-paid run-time licenses for the Application Software may
used, re-sold or distributed by the Customers in other SuperShuttle
franchises or locations. The Customer has the right to charge a license
fee for these licenses which fee will be kept by the Customer.
3. FUNCTIONAL SPECIFICATIONS
After the execution of this Agreement, DDS shall finalize the
Functional Specifications Document in consultation with the Customer
which will detail all the functions and features required for the Super
Shuttle dispatch operations. A draft copy of the Functional
Specifications is attached as Attachment G. DDS will develop all the
features listed in this document.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
If DDS and the Customer cannot agree to the contents of the Functional
Specifications Document three weeks from the date of signing this
Agreement, then either party may cancel this Agreement without any
penalties to either party. Once the Functional Specifications Document
has been signed off by both parties, this Agreement may not be
canceled.
4. CONTRACT DOCUMENTS AND THEIR PRECEDENCE
4.1 DDS shall not be responsible for delivering any materials, labor,
equipment, consultation, Application Software, software or any other
item not explicitly referenced in, or required for meeting, the terms
of the Contract Documents.
4.2 The Contract Documents collectively and exclusively constitute the
Contract governing the relationship between the parties. The Contract
Documents are as follows:
(a) this Agreement and any amendments to it;
(b) the Functional Specifications Document;
(c) Letter of Intent dated November 2, 1994
In the event of an inconsistency between or among Contract Documents,
the priority of documents shall be in the order set forth above.
5. REQUEST FOR CHANGES
5.1 CHANGES TO HARDWARE CONFIGURATION
The Customer shall deliver to DDS, in writing, any request for
additions, modifications or changes to the System. Provided the request
is within the general scope of the contract, DDS shall, within a
reasonable period of time from receipt of request, issue to the
Customer a written quotation detailing the effect, if any, on the
implementation schedule and the System Price. If the Customer does not
accept the quotation, in writing, within ten days of receipt of the
quotation, the quotation shall be deemed to have been withdrawn. If the
Customer accepts the quotation in writing, this Agreement shall be
deemed to be amended in accordance with the quotation and the parties
shall set out, in writing, to be signed by the parties, the amendment
agreed upon as above.
5.2 CHANGES TO FUNCTIONAL SPECIFICATIONS DOCUMENT
The Customer may make as many changes as he wants, without an increase
in the Software Development Costs, to the Functional Specifications
Document till it is approved in writing by both parties. Significant
changes to the Functional Specifications will however cause delays in
delivery of the Application Software from the agreed upon schedule as
outlined in Attachment H.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
After the approval of the Functional Specifications Document by both
parties in writing, the Customer shall deliver to DDS, in writing, any
request for additions, modifications or changes to the Functional
Specifications. DDS shall, within a reasonable period of time from
receipt of request, issue to the Customer a written quotation detailing
the effect, if any, on the implementation schedule and any additional
Software Development Costs. If the Customer does not accept the
quotation, in writing, within ten days of receipt of the quotation, the
quotation shall be deemed to have been withdrawn. If the Customer
accepts the quotation in writing, this Agreement shall be deemed to be
amended in accordance with the quotation and the parties shall set out,
in writing, to be signed by the parties, the amendment agreed upon as
above. Any additional software development costs will be paid in full
30 days after the delivery of such functionality and the costs will be
computed at the rate of US$40 per hour for the year 1995, subject to
annual national CPI increases.
6. PURCHASE ORDERS
Any Purchase Order issued in respect of this Agreement will be subject
to the terms and conditions contained in this Agreement and, in the
event of any inconsistency between this Agreement and such Purchase
Order, this Agreement will govern unless DDS expressly in writing
consents to a term of the Purchase Order overriding this Agreement.
If any Purchase Order introduces a term or condition not covered by
this Agreement, then DDS shall not be bound by such term or condition
unless DDS expressly in writing consents to such term or condition.
7. TAXES
The Customer is responsible for and will pay all Federal State and
other Taxes associated with the System after delivery to the Delivery
Point. The Customer will, upon receipt of an invoice therefor,
reimburse DDS for all such taxes which DDS may elect or be required to
collect or pay upon the sale or delivery of the System.
8. RISK OF LOSS
Risk of loss or damage to the System will pass to the Customer upon the
delivery of the System to the Delivery Point. Confiscation,
destruction, theft or other loss of, or any damage to, the System will
not diminish or release the liability of the Customer to pay for such
System except where due to the negligence, intentional act or omission
to act, of DDS.
9. INSURANCE
The Customer shall provide and maintain insurance on the System against
all risks of loss or damage, in an amount not less than their full
replacement value, with loss payable to DDS and the Customer as their
interests may appear, from the date that risk of loss passes to the
Customer, until such time as title passes to the Customer and the
System Price has
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
been paid in full. The insurance will provide for ten (10) days
written minimum cancellation notice to DDS, and the Customer will
provide DDS with a certificate or other evidence of this insurance
prior to the shipment of the System by DDS to the Customer. DDS will
notify customer or customer's representative seven (7) days prior to
delivery of the system to the delivery point.
10. DELIVERY OF PRODUCTS AND DOCUMENTATION
10.1 DDS will deliver the System and Documentation to the Delivery Point no
later than the dates agreed upon by the parties for the delivery of
these items and will pay all costs of transportation, rigging and
drayage connected with such delivery and all charges for insurance,
while the System and Documentation are in transit to the Delivery
Point.
10.2 The Customer shall inspect all System and Documentation upon receipt of
them and shall notify DDS immediately when there is evidence of
shipping loss or visible physical damage. DDS shall file all claims
with the carrier when there is evidence of such loss or damage.
10.3 The Phoenix System will be delivered in phases as described in the
Functional Specifications. The current schedule which is subject to
change as per section 5.2 is described in Attachment H.
a) The first phase will be delivered 4 months after the written
approval of the Functional Specifications for Phase I
deliverable and features and upon receipt of payments as
outlined in Section 12.2(a) and, payments which are due as
described in Section 12.5.
b) The subsequent phases will be delivered as mutually agreed upon
in writing in the Functional Specifications. Upon installation
and written approval of Phase I, the phase II development will
be undertaken and delivered.
11. TITLE TO AND SECURITY INTEREST IN THE SYSTEM
11.1 Until all installments of the System Price are paid in full, which are
the three payments described in Section 12.2, DDS shall retain title to
and a security interest in the System and each unit thereof, all
additions and accessories thereto and all replacements, products and
proceeds thereof, each of which shall remain personal property
regardless of the manner of its attachment to any other property. The
Customer agrees that DDS will have the right to file financing
statements or other documentation pursuant to applicable law to secure
evidence of or perfect DDS' title to and security interest in the
System and the Customer shall perform all acts and execute and deliver
all documents that DDS may request to perfect and retain such title and
security interest. Upon payment in full of the System Price, title to
the Deliverables, as described in Attachment A hereto, will pass to the
Customer.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
11.2 Until the title to the System passes to the Customer, the Customer will
not, without prior consent of DDS, sell the System, or any part
thereof, or create, or permit to exist, any encumbrances or security
interests upon the System, and will promptly pay the full amount of,
and discharge, all encumbrances and security interests which arise in
respect of the System.
12. SYSTEM PRICE AND PAYMENT TERMS
12.1 The System Price is exclusive of all applicable taxes which may be
applicable to the supply of the subject matter of the Agreement and is
FOB the Delivery Point.
12.2 Upon receipt of invoices from DDS, the Customer, or it's leasing
company, will pay the System Price to DDS as follows:
(a) 30% of the System Price upon execution of this Agreement;
(b) 50% of the System Price upon shipment of the Products to the
Delivery Point;
(c) 20% of the System Price upon acceptance of the System by the
Customer as outlined in Section 13. The Application Software
is being developed in Phases and has it's own payment schedule
as detailed in section 12.5 and the System Price payment,
including the final payment is not subject to acceptance of
the Application Software.
12.3 Each invoice presented by DDS to the Customer in accordance with this
Agreement (other than the invoice for the initial payment upon
execution of this Agreement which will be due and payable upon receipt)
will be due and payable by the Customer within 30 days after the date
of such invoice. In the event that there are partial shipments of
Products to the Delivery Point, payments as outlined in 12.2(b) will be
pro-rated.
12.4 The Customer will make payment of invoices by check.
12.5 The Software Development Cost is exclusive of all applicable taxes
which may be applicable and is payable as follows:
The total development cost of US$275,000 will be paid in installments
without interest. The first installment of $10,000 to be paid
immediately upon execution of this Agreement, US$15,000 upon acceptance
of Functional Specifications Document and the remaining 10 equal
installments of US$25,000 each to be paid quarterly starting 90 days on
the date the Phase I of the Application Software is delivered at
Phoenix and continuing for the next 9 consecutive quarters.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
13. ACCEPTANCE TESTING
13.1 After installing the System and at a time mutually agreed upon by the
parties, DDS will conduct Acceptance testing, according to the
acceptance test procedures prepared by DDS and approved by the
Customer.
13.2 The Customer shall, within 15 days, from completion of acceptance
testing, identify in writing any deficiencies in the System. DDS shall
diligently cure any deficiencies identified by the Customer,
immediately upon receipt of notice of such deficiencies.
13.3 Upon completion of acceptance testing, the delivery and performance by
DDS of the Services, and the curing of any deficiencies in the System,
identified by the Customer in writing, the Customer will indicate its
acceptance of the System by executing and delivering to DDS a
certificate of acceptance. The Customer will not reject the System
solely for the reason that it fails to conform with the specifications,
requirements and functions set out in the Contract in an insignificant
respect, provided that DDS cures such insignificant non-conformity with
reasonable dispatch after receipt by DDS of notice in writing of such
non-conformity.
14. WARRANTY
14.1 DDS SUPPLIED HARDWARE
DDS warrants that, for a period of 6 months from the date of delivery
at the Delivery Point, the Hardware supplied under this Agreement will
be free of defects resulting from defective materials or workmanship.
DDS will provide, at its option and without charge, replacement parts
or repairs for Hardware which fails as a direct result of defective
materials or workmanship within the warranty period. DDS shall provide
warranty service either at a DDS service center or the Customer's site,
at the option of DDS. If defective Hardware is returned to DDS, the
Customer will bear the cost of returning such Hardware to a DDS service
center and DDS will bear the cost of delivering the repaired or
replacement Hardware to the Customer. The Customer will be responsible
for all damage to returned Hardware or components resulting from
improper packing or handling by the Customer, and for loss in transit,
notwithstanding any defect or non-conformity in the Hardware.
14.2 APPLICATION SOFTWARE
DDS warrants that, for a period of 6 months from the date of System
acceptance of the two phases of the Application Software as described
in the Functional Specifications, Application Software supplied under
this Agreement will be free of bugs and deficiencies in conforming to
the Functional Specifications. DDS will fix deficiencies and provide
bug fixes on a timely manner during the warranty period.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
There is no warranty for the run-time licenses and they are being sold
on a 'as is' basis. The run-time licenses can be supported under a
separate Service Agreement, at prices as set forth in Attachment F.
14.3 LIMITED WARRANTY FOR HARDWARE
The warranty provided above is a limited warranty and does not apply in
the following circumstances:
(a) the Hardware has been damaged by misuse, accident, negligence
or failure to provide and/or maintain the environmental
requirements specified for such Hardware;
(b) the Hardware has been damaged by modifications, alterations or
attachments, made by the Customer, and not authorized by DDS;
or
(c) the Hardware has not been installed and/or operated in
accordance with DDS's instructions.
14.4 The warranties in Subsection 14.1 and 14.2 are the sole warranties made
by DDS with respect to the System and DDS makes no other warranties or
representations, express or implied, with respect to the System. The
Customer acknowledges that there are no warranties that extend beyond
the warranties described in this Agreement.
14.5 DDS does not warrant radio coverage. However, DDS will assist the
Customer in determining the radio coverage and acknowledges that radio
coverage for data transmissions should be very close to radio coverage
for clear voice transmissions.
15. REMEDIES OF DDS
Default by the Customer under this Agreement shall include:
(a) Non-payment of any invoice when due or non-performance of any
obligation under this Agreement or breach by the Customer of
any warranty or representation contained in this Agreement;
(b) Sale encumbrance, seizure or attachment of the System or any
part thereof prior to the passing of the title to the
Customer;
15.1 If the Customer is in default of this Agreement, the following shall
apply:
(a) DDS may withhold further delivery of Hardware and Services
until the default is remedied; and
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
(b) If the Customer is in default of this Agreement and has not
cured the default within thirty (30) days, unless the said
default is a dispute over an invoice that is being researched
or discussed, all warranties and obligations of DDS relating
to the System shall automatically be suspended until the
default is cured.
In the event that the default is not cured by the Customer
within sixty (60) days, all warranties and obligations of DDS
relating to the System shall be terminated.
(c) DDS shall also have the right to declare the entire amount of
the unpaid balance of the System Price and any other charges
to be immediately due and payable and to exercise any other
remedy existing at law or in equity, including entering the
premises where the System is located and taking possession of
the System and all related documentation without notice or
demand, and the sale, lease or other disposition of the
System, without prejudice to any further or other claims which
DDS may have against the Customer. The Customer shall pay DDS
all costs and expenses, including legal fees, incurred in
exercising its rights and remedies.
15.2 If the Customer fails to pay an invoice within 30 days of the date of
the invoice, DDS may charge the Customer interest on the overdue
amount, from the date such amount became due, at the rate of 1.5% per
month, compounded monthly or the maximum rate applicable by law,
whichever is lower.
15.3 If a petition in bankruptcy shall be filed by or against the Customer
or the Customer shall be adjudicated a bankrupt or insolvent or shall
have made an assignment for the benefit of creditors or shall take
advantage of any law for the benefit of debtors or if any action is
commenced against the Customer to cause its assets to be placed under
trusteeship or receivership or liquidated for the benefit of creditors
of if the Customer voluntarily or by operation of law shall lose
control of the operation of its business, except pursuant to a bona
fide merger or acquisition, then DDS may immediately terminate this
Agreement by notice to the Customer and DDS may, at its option take
exclusive possession of the System wherever found and remove the System
without legal process and the Customer shall pay all removal costs and
any payments which have therefore been made on account of the System
Price shall be retained by DDS and applied to such costs and charges,
without prejudice to the right of DDS to recover any further damages
which it may suffer from any cause.
15.4 The rights granted to DDS under this Agreement shall be cumulative and
are in addition to rights provided to DDS by law or otherwise. To the
extent permitted by law, DDS may exercise its rights concurrently or
separately and exercise of any one remedy shall not be deemed an
exclusive election of such remedy or to preclude the exercise of any
other remedy.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
16. REMEDIES OF THE CUSTOMER
Default by DDS under this Agreement shall include:
(a) Non-delivery of the Hardware components as identified in
Attachment A in a scheduled period, unless the delays are caused
by the Customer and this non-delivery continues for a period of
30 days from the date of written notice by the Customer;
(b) Non-performance by DDS relating to performance problems of the
Hardware and the System which are left unattended or not
corrected by DDS for a period of 30 days from the date of the
written notice by the Customer;
16.1 If DDS is in default of this Agreement, the following shall apply:
(a) The final payment, which is the payment as described in section
12.2 (c), is subject to all of the provisions relating to DDS's
obligations being met;
(b) Any non-payment of an invoice or invoices related to the above
listed defaults will not constitute a default on the part of the
Customer.
16.2 If a petition in bankruptcy shall be filed by DDS, or DDS shall be
adjudicated a bankrupt or insolvent or shall have made an assignment
for the benefit of creditors or shall take advantage of any law for the
benefit of debtors of if any action is commenced against DDS to cause
its assets to be placed under trusteeship of receivership or liquidated
for the benefit of creditors or if DDS voluntarily or by operation of
law shall lose control of the operation of its business, except
pursuant to a bona fide merger or acquisition, then the Customer may
immediately terminate this Agreement by notice to DDS, without further
liability.
16.3 The rights granted to the Customer under this Agreement shall be
cumulative and are in addition to rights provided to the Customer by
law or otherwise. To the extent permitted by law, the Customer may
exercise its rights concurrently or separately and the exercise of any
one remedy shall not be deemed an exclusive election of such remedy or
preclude the exercise of any other remedy.
16.4 If DDS sells or otherwise makes available the Application Software to
any operators in the Airport Ground Transportation business in North
America for a period of 10 years from the date of this Agreement, as
detailed in section 29, then the Customer, in addition to all other
remedies available to him at law or in equity, will be entitled as a
matter of right to apply to a court of competent, equitable
jurisdiction for such relief by way of restraining order, injunction or
decree.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
17. LIMITATION OF LIABILITY
17.1 DDS's liability for damage to the Customer for any cause whatsoever,
and regardless of the forms of action, whether in contract or in tort,
including negligence, shall be limited to direct damage suffered by the
Customer, and any damages payable by DDS shall not exceed the amount of
money paid by the Customer to DDS.
17.2 DDS will not be liable to the Customer or any other person for any of
the following:
(a) any special, indirect or consequential damage, including lost
profits, lost revenues, failure to realize expected savings,
or other commercial or economic losses, even if DDS has been
advised of the possibility of such damage;
(b) any damage caused by the failure of the Customer to meet the
responsibilities of the Customer set out in the Contract; or
(c) any loss or damage to any property or for any personal injury
or economic damage caused by the connection System to devices
or systems not supplied or approved by DDS.
18. INSTALLATION
18.1 Each of the parties will perform and bear the cost of performing the
installation responsibilities assigned to it in Attachment B.
18.2 DDS will supply the Customer with the information necessary to prepare
the Premises for installation of the System. The Customer shall pay all
expenses necessary to prepare a suitable place for installation of each
part of the System with all necessary facilities, including electrical
and communications wiring.
18.3 If the Customer or its nominee is to install any part of the System,
the preparations of the Premises for installation of such part shall be
completed before delivery.
19. EDUCATION AND TRAINING
19.1 DDS shall provide training and training materials to the Customer as
set out in Attachment C.
19.2 If the Customer requires training or training materials in addition to
that referred to in Attachment C, DDS shall provide such training or
materials, upon receipt of written request from the Customer, on a time
and materials basis at times and places to be agreed upon by the
parties.
19.3 The Customer shall make available a sufficient number of its personnel
to be trained for the various jobs connected with the System.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
20. DOCUMENTATION
20.1 DDS will provide Documentation to the Customer as described in
Attachment D, which Documentation shall become the property of Customer
upon delivery. The Customer is responsible for documentation listed
under Customer's responsibilities. However, DDS will provide the
Customer with the existing Taxi manuals in Microsoft Word format and
the Customer will modify for it's own use.
20.2 The Customer may reproduce all Documentation provided by DDS to the
Customer, provided that such reproduction is made solely for the
internal use of the Customer and its employees, agents and
subcontractors, and that such reproduction is subject to the obligation
of confidentiality set forth in Section 24.
21. SERVICE OF HARDWARE
Following expiration of the applicable warranty periods provided that
there is no System Service Agreement in effect between the two parties,
DDS if requested, will provide, at rates and terms of DDS then in
effect, service and parts for the Hardware, so long as such service and
parts are generally available.
22. PATENT AND COPYRIGHT INDEMNITY
22.1 DDS will defend the Customer from any claim that Products or
Documentation infringe third party proprietary rights and will
indemnify the Customer against any loss, damage and expense arising
from any such action and all negotiations for its settlement of
compromise provided that DDS is notified promptly in writing by the
Customer and given full and complete authority, information and
assistance for the defense of such claim and that no compromise of any
claim is made without the prior written consent of DDS.
22.2 Notwithstanding the provisions of Subsection 23.1, DDS shall have no
liability to the Customer for any claim of infringement where such
claim results from any one of the following:
(a) combination of Products with hardware and/or software not
supplied or authorized by DDS;
(b) alteration or modification of Products by or for the Customer,
by a person other than DDS, if a claim of infringement could
have been avoided by the absence of such alteration or
modification;
(c) any hardware or software that is not supplied by DDS; or
(d) compliance by DDS with designs or specification or change
orders which originate with and are furnished by the Customer.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
22.3 THE FOREGOING STATES THE ENTIRE LIABILITY OF DDS UNDER THIS AGREEMENT
WITH RESPECT TO INFRINGEMENT OF PATENTS, COPYRIGHTS, DESIGNS AND OTHER
PROPRIETARY RIGHTS.
22.4 The Customer shall indemnify and hold DDS harmless against any expense,
judgment or loss arising out of, based upon, or in connection with
infringement or claims of infringement of any third party proprietary
rights which are based upon results from any one or more of the
following:
(a) the Customer's unauthorized modification or alteration of any
Product; or
(b) use of any Product in a manner not authorized or contemplated
by DDS.
23. CHANGES TO PRODUCTS
DDS may, without prior approval from or notice to the Customer, at no
cost to the Customer, make changes to the Products, which do not affect
physical or functional interchangeability, or performance at a higher
level of assembly, in the following circumstances:
(a) when required for safety purposes; or
(b) to meet present or future product specifications of DDS.
24. PROPRIETARY RIGHTS AND CONFIDENTIALITY
24.1 DDS reserves for itself all proprietary rights and to all designs,
engineering details, an other data pertaining to the Products and to
all discoveries, inventions, patent rights, trade secrets, know-how or
other proprietary data arising out of work done in connections with
manufacturing, installing, testing and operating the Products.
24.2 Each of the parties will keep confidential and protect from
unauthorized disclosure by its employees, agents or customers, any
confidential information or know-how which may be disclosed to it by,
or otherwise learned from, the other party. Information will not be
considered confidential if such information can be demonstrated to have
been in the public domain prior to this disclosure to the receiving
party or to have been in the public domain by any means other than an
unauthorized act of disclosure on the part of the recipient or any of
its employees, agents or customers. In the event of any breach of this
Section, the party whose information has been disclosed will be
entitled as a matter or right to apply to a court of competent,
equitable jurisdiction for such relief by way of restraining order,
injunction, decree or otherwise as may be appropriate to ensure
compliance with this Section.
24.3 DDS acknowledges that in the development of the Functional
Specifications for the Application Software for the Customer, the
Customer may disclose its trade secrets to DDS and some of these trade
secrets may result in a feature or function of the System.
PAGE 14
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
Therefore, DDS agrees not to sell such systems to the Customer's
competitors as described in section 29.
24.4 The Customer acknowledges that prior to the signing of this Agreement,
DDS had developed a comprehensive specifications for the Para-Transit
industry and that a large portion of the Functional Specifications
Document is based upon the Para-Transit specifications and existing
technologies from the Taxi and Courier products of DDS, Therefore,
nothing in this Agreement will imply that DDS cannot sell similar
systems to the operating companies in the Para-Transit, Taxi and
Courier industries.
25. ACCESS TO PREMISES
The Customer will provide timely access to all premises, according to
agreed upon schedules, for design, installation and testing purposes.
26. EXCUSABLE DELAYS
Neither party will be responsible for any delay in performance or
failure to perform, if such delay or failure results from causes beyond
the control of that party, including acts of God, delay or failure of
transportation, governmental acts or other reason of a like nature not
being the fault of the delaying party. All periods fixed for the
performance of obligations of the parties will be extended for a period
of time equal to any such delay in performance or failure to perform.
27. GENERAL PROVISIONS
27.1 Neither party will assign this Agreement without the consent of the
other party and any attempt to do so will render this Agreement void,
except that a party may assign this Agreement to a successor in
ownership of all or substantially all of the assets of this assigning
party.
27.2 If any provision of this Agreement is wholly or partially invalid or
unenforceable, such invalid or unenforceable provision will be
severable from the remainder of this Agreement and such remainder will
be interpreted as if the invalid or unenforceable provision had not
been a part of it.
27.3 All questions concerning the construction, validity and operation of
this Agreement will be governed by the laws of the jurisdiction in
which the Customer is located and the courts of such jurisdiction will
have jurisdiction (but not exclusive jurisdiction) to hear and
determine all questions relating to this Agreement.
27.4 The Contract represents the entire agreement between the parties with
respect to the subject matter or this Agreement and no documents or
representations other than the Contract Documents shall be used in
interpreting it.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
27.5 This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the parties.
27.6 Any notices required to be given under this Agreement will be given in
writing and either mailed by prepaid registered mail or sent by telex
or other visible form of electronic media or delivered to the addresses
stated below or to such other address as either party may substitute by
written notice to the other. Any such notice will be deemed to be
received, if mailed, when in the ordinary course of transmission it
should have been delivered but in no event later than five business
days after the time of mailing, if sent by telex or other visible form
of electronic media, upon the date of receipt, and, if delivered upon
the date of delivery. If normal mail service is interrupted by postal
dispute or force majeure, notice will be delivered and not mailed.
27.7 All dollar amounts are stated in the legal currency of the Government
of the United States of America.
27.8 Controlling Law. This Agreement, including all matters relating to the
validity, construction, performance, and enforcement thereof, shall be
governed by the laws of Arizona.
28. CONFLICTS WITH THE UNIFORM COMMERCIAL CODE
If the terms of this contract or any remedies provided hereunder are
deemed to be in conflict with any provision of the Uniform Commercial
Code or other commercial statue of Canada or of any state or Federal
enactment of the United States, the terms and remedies of the contract
shall be deemed to supersede and control.
29. EXCLUSIVITY USE OF SOFTWARE
DDS will not sell the Application Software to any of the operators in
the Airport transportation business for a period of 10 years from the
date of this Agreement. Provided the Customer is not in breach of this
Agreement and has paid for the System and the Application Software in
full then, DDS acknowledges that the Customer is currently in the
airport ground transportation business on a national basis and that the
Customer's plans to expand are a primary motivation for them to enter
this Agreement.
30. SOURCE CODE
DDS will provide the source code for the Application Software to the
Customer on an 'as is' basis for the sole use to maintain, modify or
enhance the System upon payment by the Customer of the Software
Development Costs in fill as described in section 12.5. Under no
circumstances will the Customer be able to sell or transfer title of
the source code of the Application Software to any other party.
PAGE 16
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
All intellectual property rights, including without imitation all
derivative works and modifications. in and to the Application Software
by the Customer, will remain the property of DDS. The terms of this
section shall survive the termination of this Agreement.
31. REPRESENTATIONS AND WARRANTIES OF DDS
31.1 DDS represents that it has developed a multiple transmitter and
receiver site Network Controller which will be used in the Phoenix
system.
31.2 DDS represents that it has developed a Digital Signal Processing based
high speed modem which works at 4800 bits per second data speeds of
transmission on data quality radios like the Motorola Spectras.
These modems will be used in the new KST 260 MDT.
31.3 DDS represents that the KST 260 MDT and the associated Redundant Base
Controller are capable of at least 8000 inbound and outbound messages
per hour per radio channel, when the Customer supplied mobile radios
have an transmitter attack time of 35 milliseconds or less. For a fleet
of 135 vehicles, this allows for at least 1 message per vehicle every
two minutes, or 30 messages per hour per vehicle. Each message can be
inbound to the host with an outbound answer from the host, or an
outbound instruction from the host with its inbound acknowledgment.
For bigger fleets additional radio frequencies will be required.
31.4 DDS will implement the capability of supporting the Motorola MDC 4800
protocol on the KST 260, 8 months after the delivery of complete
documentation by either the Customer or Motorola to DDS. Development
time frame for this protocol will be finalized upon delivery of the
documentation pertaining to the MDC 4800 protocol. The Customer may use
MDC 4800 compatible KST 260 or Motorola 7100 MDTs in other SuperShuttle
locations where the MDC 4800 network is currently available.
There will be a one time lump sum charge to the Customer for the
development of the MDC 4800 protocol on the KST 260 which is currently
estimated at $80,000.
31.5 DDS will implement an interface for the NCP, such that the existing MDC
4800 networks can be utilized by the SuperShuttle franchises. However,
the functionality of Application Software may be limited to the
functionality and connectivity of the Motorola KDT 440 or the Motorola
7100 CP terminals. This includes limitations of connectivity with a
GPS receiver or magnetic swipe reader. Any changes required in the KDT
440 or 7100 CP will not be the responsibility of DDS.
There will be a one time lump sum charge to the Customer for the
development of the NCP interface, which currently estimated at $15,000.
DDS will implement this Interface, 2 months from receiving a Purchase
Order for this work.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
37. REPRESENTATIONS AND WARRANTIES THE CUSTOMER
The Customer represents that as long as DDS delivers the Application
Software as described in the Functional Specifications Document and
Hardware as described in this Agreement and continues to offer to the
Customer competitively priced state-of-the-art technologies including
R.F. modem technology, while providing agreed to service quality, and
DDS is not in breach of any of its representations made in section 31,
then the Customer will purchase additional Systems for SuperShuttle
owned locations and make available the System for purchase to
SuperShuttle franchises, where appropriate, exclusively from DDS.
IN WITNESS WHEREOF the parties have executed this Agreement by their duly
authorized representatives as of the day and year first above written.
Super Shuttle International Inc. DIGITAL DISPATCH SYSTEMS INC.
By: /s/ Edward V. Hatler By: Illegible Signature
------------------------------ --------------------------------
(Authorized Signatory)
Name: Edward V. Hatler Name: Illegible Signature
---------------------------- ------------------------------
Title: Vice President/CIO Title: President
---------------------------- ------------------------------
Date: June 28, 1995 Date: May 19, 95
---------------------------- ------------------------------
Address for Notice: Address for Notice:
4610 South 35th Street 7100 River Road
Phoenix, AZ 85040 Richmond, B.C., Canada
U. S. A. V6X IX5
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
ATTACHMENT A
SYSTEM DELIVERABLES
<TABLE>
<CAPTION>
NO. DESCRIPTION QTY UNIT Extended
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
HARDWARE
1 DEC Pentiums Host Servers 2 9,000 18,000
2 Report Printer LA 310 1 685 685
3 Terminal Server 16 ports 1 1,340 1,340
4 Modems for Credit Card & Support 2 170 340
5 KST-260 Mobile Data Terminals 120 900 108,000
6 Cable for MDT 110 50 5,500
7 Trimble internal GPS receivers 120 355 42,600
8 Multiple site Network Controller 1 10,000 10,000
9 Redundant Base Controller Multisite 3 7,100 21,300
10 V.32 9600 bps Land line Moderns 6 800 4,800
11 Call Out H/W (4 lines) 2 1,300 2,600
12 Credit Card Swipes 110 45 4,950
SOFTWARE LICENSES
13. License for SCO Unix & Ingres 2 2,600 5,200
14. License for maps of Arizona 1 995 995
15. Shared Ride Dispatch License AU 2 n/c n/c
OTHER SERVICES
16. Travel, shipping, hotels, Material lot 8,740 8,740
17. Project Implementation Services lot 20,000 20,000
TOTAL PHOENIX PRICE 255,050
</TABLE>
ADDITIONAL HARDWARE AND SOFTWARE
(TO BE SUPPLIED BY CUSTOMER):
HARDWARE
1. Res Agent workstations 486 DX2-50, 8MB, 250MB disk Ethernet card, 14"
SVGA monitor
2. Mapping & Dispatcher stations 486 DX2-50, 12MB, 250MB disk Ethernet
card, 17" or 21" SVGA monitor
SOFTWARE
3. FIT TCP/IP S/W license one per Res Agent or Dispatcher workstation,
Micro-soft windows 95 or WFWG 3.1.1
4. Andyne GQL for each Report generation workstation
PAGE 19
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
ATTACHMENT B
INSTALLATION RESPONSIBILITIES
DDS
1. Install all System components supplied, including:
- Install base station controller
- Install data modems & Telephone line co-ordination
- Install all DDS Supplied Dispatch Center equipment
- Installation support to customer on MDTs
CUSTOMER
1. Provide all land lines.
2. Installation site preparation as below:
- power requirements
- ambient environment
- temperature
- humidity
- vibration
- dust
- static electricity
3. Install and provide adequate power to the Dispatch Center and
Administrative Office.
4. Install MDTs in vehicles.
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
ATTACHMENT C
TRAINING AND TRAINING MATERIALS
DDS
1. Mobile Data Terminal Installer Course
2. Driver Training Course
3. Reservation Agent Course preparation assistance
4. Supervisor's Course preparation assistance
5. System Manager's Course
CUSTOMER
1. Driver Training
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
ATTACHMENT D
DOCUMENTATION
DDS RESPONSIBILITIES
1. Functional Specifications Document
2. Acceptance Test Procedures
3. System Manual
4. Drivers Instructor's Manual
CUSTOMER RESPONSIBILITIES
1. Dispatcher & Supervisor's Manual
2. System Administrator's Manual
3. Reservation Agent's Manual
PAGE 22
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SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
ATTACHMENT E
USER SOFTWARE LICENSE FOR
SHARED RIDE DISPATCH SYSTEM
THIS AGREEMENT is made as of the __________ day of___________ 1995. BETWEEN:
DIGITAL DISPATCH SYSTEMS INC.
7100 River Road
Richmond, B.C.
Canada V6X IX5
(herein called "DDS")
OF THE FIRST PART
AND:
SuperShuttle Franchise Corporation
4610 South 35th Street
Phoenix, AZ 85040
(herein called the "Licensee")
OF THE SECOND PART
WHEREAS:
A. DDS has the right to sub-license and sell the software (machine
executable code) and documentation relating to computer aided dispatch
and/or digital communications systems, which proprietary software and
documentation (hereinafter collectively referred to as the "Licensed
Software") is generally known and described as:
SHARED RIDE DISPATCH SYSTEM
B. DDS and the Licensee have agreed that the Licensee will license the
Licensed Software from DDS to use on the following computer equipment
("System") only:
<TABLE>
<CAPTION>
TYPE MODEL SERIAL NO.
<S> <C> <C>
DEC Pentium 90 MHz __________
DEC Pentium 90 Mhz __________
</TABLE>
PAGE 23
<PAGE> 24
SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the sum of
$1.00 and other good and valuable consideration now paid by the Licensee to DDS
(the receipt and sufficiency of which is hereby acknowledged), the parties agree
as follows:
1. DDS does hereby grant to the Licensee the non-exclusive right as
licensee, for so long as the Licensee is the exclusive owner of the
System, to use the Licensed Software, Shared Ride Dispatch Software,
including any subsequent improvements or updates, for the sole purpose
of operating and maintaining the System for its own internal business
purposes. This right is restricted to use of the Licensed Software on
the System and does not extend to operating the Licensed Software on
any other equipment owned or used by the Licensee or any third party.
2. The Licensee shall not have the right to loan, lease, sell or otherwise
transfer to a third party all or any part of the Licensed Software, for
use by that or any other party.
3. The Licensed Software may only be copied in whole or in part (with the
proper inclusion of copyright notice on the Licensed Software) for use
on the System.
4. This Agreement does not transfer to the Licensee any title or ownership
to the Licensed Software or any of its parts.
5. The Licensee, its employees, officers and agents shall, for so long as
the licensee is an owner of System and thereafter, keep the Licensed
Software secret and shall not communicate any part of it, directly or
indirectly, to any third party without the prior written consent of
DDS, which consent may be arbitrarily withheld.
6. The License granted by this Agreement will terminate upon the Licensee
ceasing to use the System or failing to comply with the terms of this
License or at the option of DDS, if the Licensee is in default of any
other written agreements with DDS, and the Licensee will return all
Licensed Software to DDS within 72 hours of termination of the license
granted by this Agreement.
7. This Agreement shall be governed, at the option of DDS, either by the
laws of the Province of British Columbia, Canada or the jurisdiction in
which the address of the Licensee as detailed on page 1 is located and
the courts of the Province of British Columbia will have the
jurisdiction (but not exclusive jurisdiction) to hear and determine all
questions relating to this Agreement.
8. The Licensed Software shall not be used in any manner beneficial to the
licensee at any sites other than those listed below.
PAGE 24
<PAGE> 25
SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
DIGITAL DISPATCH SYSTEMS INC.
Per: /s/
-----------------------------
Authorized Signature
CUSTOMER NAME:
(Licensee)
Per: /s/
----------------------------------
Authorized Signature
Per: /s/
----------------------------------
Authorized Signature
PAGE 25
<PAGE> 26
SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
ATTACHMENT F
COMPONENT PRICING
<TABLE>
<CAPTION>
UNIT MONTHLY
NO. DESCRIPTION PRICE MAINT.
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
HARDWARE
1. DEC Pentiums Servers 32MB mem, I Gb disk, Tape, Ethernet 9,000
2. Report Printer LA 310 685
3. Terminal Server 16 ports 1,340
4. Modems for Credit Card & Support US Robotics 14,400 bps 170
5. KST-260 Mobile Data Terminal 900 6
6. Cable for MDT 50
7. Trimble internal GPS receivers 355 3
8. Network Communications Controller 5,000-1 75
9. Redundant Base Controller 7,100-2 75
10. V.32 9600 bps Land line Modems 800-4 20
11. Automatic Reservation Agent H/W 1,300-2 25
12. Credit Card Swipes track II only 45-
13. Multiple Sites Network Controller 10,000 100
SOFTWARE LICENSES
14. License for SCO Unix & Ingres 2,600
15. License for Map drawing s/w per work station pre-paid
16. MapInfo database for site 995
17. Shared Ride Dispatch License (All Dispatch functions) pre-paid 650
18. Hot Standby Software pre-paid 250
OTHER SERVICES
19. Travel, shipping, hotels, Material 5,000 to 10,000
20. Project Implementation Services 15,000 to 30,000
</TABLE>
PAGE 26
<PAGE> 27
SUPERSHUTTLE INTERNATIONAL INC. TERMS AND CONDITIONS OF SALE
ATTACHMENT H
DELIVERY SCHEDULE FOR APPLICATION SOFTWARE
Subject to conditions as mentioned in section 10.3 (a) and 10.3 (b)
<TABLE>
<S> <C>
1. Phase I of Functional Specifications 5 months from date of approval of
Functional Specifications
2. Phase II of Functional Specifications 4 months from date of Acceptance of
Phase I software
</TABLE>
PAGE 27
<PAGE> 1
Exhibit 10.32
STANDARD INDUSTRIAL LEASE - NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO]
PARTIES. This Lease, dated, for reference purposes only, September 8,
1989, is made by and between DONALD L. MORI, a widower, (herein called
"Lessor") and SUPER SHUTTLE ARIZONA, INC., an Arizona corporation, (herein
called "Lessee")
2. PREMISES. Lessor hereby leases to Lessee and Lessee leases from Lessor for
the term, at the rental, and upon all of the conditions set forth herein, that
certain real property situated in the County of Maricopa State of Arizona,
commonly known as South 35th Street, Phoenix, Arizona, and described as
approximately 14,400 square foot office/industrial building located on
approximately two acres of land at the above stated address together with
parking area of 54,670 square feet. Said real property including the land and
all improvements therein, is herein called "the Premises".
3. TERM.
3.1 TERM. The term of this Lease shall be for ten (10) years commencing on
November 1, 1989 and ending on October 31, 1999 unless sooner terminated
pursuant to any provision hereof.
3.2 DELAY IN POSSESSION. Notwithstanding said commencement date, if for
any reason Lessor cannot deliver possession of the Premises to Lessee on said
date, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the obligations of Lessee
hereunder or extend the term hereof, but in such case, Lessee shall not be
obligated to pay rent until possession of the Premises is tendered to Lessee;
provided, however, that if Lessor shall not have delivered possession of the
Premises within sixty (60) days from said commencement date, Lessee may, at
Lessee's option, by notice in writing to Lessor within ten (10) days
thereafter, cancel this Lease, in which event the parties shall be discharged
from all obligations hereunder, provided further, however, that if such written
notice of Lessee is not received by Lessor within said ten (10) day period,
Lessee's right to cancel this Lease hereunder shall terminate and be of no
further force or effect.
3.3 EARLY POSSESSION. If Lessee occupies the Premises prior to said
commencement date, such occupancy shall be subject to all provisions thereof,
such occupancy shall not advance the termination date, and Lessee shall pay
rent for such period at the initial monthly rates set forth below.
RENT. Lessee shall pay to Lessor as rent for the Premises, monthly payments
of $7,200.00, in advance, on the 1st day of each month of the term hereof.
Lessee shall pay Lessor upon the execution hereof $7,200 per month as rent for
the month of November, 1989.
This lease is a triple net lease.
Rent for any period during the term hereof which is for less than one
month shall be a pro rata portion of the monthly installment. Rent shall be
payable in lawful money of the United States to Lessor at the address stated
herein or to such other persons or at such other places as Lessor may designate
in writing.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof $ 1
month's rent as security for Lessee's faithful performance of Lessee's
obligations hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
Lessor may use, apply or retain all or any portion of said deposit for the
payment of any rent or other charge in default or for the payment of any other
sum to which Lessor may become obligated by reason of Lessee's default, or to
compensate Lessor for any loss or damage which Lessor may suffer thereby. If
Lessor so uses or applies all or any portion of said deposit, Lessee shall
within ten (10) days after written demand therefor deposit cash with Lessor in
an amount sufficient to restore said deposit to the full amount hereinabove
stated and Lessee's failure to do so shall be a material breach of this Lease.
If the monthly rent shall, from time to time, increase during the term of this
Lease, Lessee shall thereupon deposit with Lessor additional security deposit
so that the amount of security deposit held by Lessor shall at all times bear
the same proportion to current rent as the original security deposit bears to
the original monthly rent set forth in paragraph 4 hereof. Lessor shall not be
required to keep said deposit separate from its general accounts. If Lessee
performs all of Lessee's obligations hereunder, said deposit, or so much
thereof as has not theretofore been applied by Lessor, shall be returned,
without payment of interest or other increment for its use, to Lessee (or, at
Lessor's option, to the last assignee, if any, of Lessee's interest hereunder)
at the expiration of the term hereof, and after Lessee has vacated the
Premises. No trust relationship is created herein between Lessor and Lessee
with respect to said Security Deposit.
6. USE.
6.1 USE. The Premises shall be used and occupied only for office and base
for airport ground transportation, driver training, parking, maintenance,
repair, fueling, and washing of vehicles involved in airport ground
transportation, and for all reasonable accessory uses thereto or any other use
which is reasonably comparable and for no other purpose.
6.2 COMPLIANCE WITH LAW. See paragraph 25 to addendum to Lease.
(b) Except as provided in paragraph 6.2(a), Lessee shall, at Lessee's
expense, comply promptly with all applicable statutes, ordinances, rules,
regulations, orders, covenants and restrictions of record, and requirements in
effect during the term or any part of the term hereof, regulating the use by
Lessee of the Premises. Lessee shall not use nor permit the use of the Premises
in any manner that will tend to create waste or a nuisance or, if there shall
be more than one tenant in the building containing the Premises, shall tend to
disturb such other tenants.
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the Premises to Lessee clean and free of
debris on Lease commencement date (unless Lessee is already in possession) and
Lessor further warrants to Lessee that the plumbing, lighting, air
conditioning, heating, and loading doors in the Premises shall be in good
operating condition on the Lease commencement date. In the event that it is
determined that this warranty has been violated, then it shall be the
obligation of Lessor, after receipt of written notice from Lessee setting forth
with specificity the nature of the violation, to promptly, at Lessor's sole
cost, rectify such violation. Lessee's failure to give such written notice to
Lessor within thirty (30) days after the Lease commencement date shall cause
the conclusive presumption that Lessor has complied with all of Lessor's
obligations hereunder. The warranty contained in this paragraph 6.3(a) shall be
of no force or effect if prior to the date of this Lease, Lessee was the owner
or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby accepts the
Premises in their condition existing as of the Lease commencement date or the
date that Lessee takes possession of the Premises, whichever is earlier,
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Premises, and any
covenants or restrictions of record, and accepts this Lease subject thereto and
to all matters disclosed thereby and by any exhibits attached hereto. Lessee
acknowledges that neither Lessor nor Lessor's agent has made any representation
or warranty as to the present or future suitability of the Premises for the
conduct of Lessee's business.
7. MAINTENANCE, REPAIRS AND ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS. Lessee shall keep in good order, condition and
repair the Premises and every part thereof, structural and non Structural,
(whether or not such portion of the Premises requiring repair, or the means of
repairing the same are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises) including, without
limiting the generality of the foregoing, all plumbing, heating, air
conditioning. (Lessee shall procure and maintain, at Lessee's expense, an air
conditioning system maintenance contract) ventilating, electrical, lighting
facilities and equipment within the Premises, fixtures, walls (interior and
exterior), foundations, ceilings, roofs (interior and exterior), floors,
windows, doors, plate glass and skylights located within the Premises, and all
landscaping, driveways, parking lots, fences and signs located on the Premises
and sidewalks and parkways adjacent to the Premises.
7.2 SURRENDER. On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same
condition as when received, ordinary wear and tear excepted, clean and free of
debris. Lessee shall repair any damage to the Premises occasioned
<PAGE> 2
by the installation or removal of Lessee's trade fixtures, furnishings and
equipment. Notwithstanding anything to the contrary otherwise stated in this
Lease, Lessee shall leave the air lines, power panels, electrical distribution
systems, lighting fixtures, space heaters, air conditioning, plumbing and
fencing on the premises in good operating condition.
7.3 LESSOR'S RIGHTS. If Lessee fails to perform Lessee's obligations under
this Paragraph 7, or under any other paragraph of this Lease, Lessor may at its
option (but shall not be required to) enter upon the Premises after ten (10)
days' prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform such obligations on Lessee's
behalf and put the same in good order, condition and repair, and the cost
thereof together with interest thereon at the maximum rate then allowable by
law shall become due and payable as additional rental to Lessor together with
Lessee's next rental installment.
7.4 LESSOR'S OBLIGATIONS. See Paragraph 26 to Addendum to Lease
7.5 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, or Utility Installations in, on or about
the Premises, except for nonstructural alterations not exceeding $2,500 in
cumulative costs during the term of this Lease. In any event, whether or not in
excess of $2,500 in cumulative cost, Lessee shall make no change or alteration
to the exterior of the Premises nor the exterior of the building(s) on the
Premises without Lessor's prior written consent. As used in this Paragraph 7.5
the term "Utility Installation" shall mean carpeting, window coverings, air
lines, power panels, electrical distribution systems, lighting fixtures, space
heaters, air conditioning, plumbing, and fencing. Lessor may require that Lessee
remove any or all of said alterations, improvements, additions or Utility
Installations at the expiration of the term, and restore the Premises to their
prior condition. Lessor may require Lessee to provide Lessor, at Lessee's sole
cost and expense, a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such improvements, to insure Lessor
against any liability for mechanic's and materialmen's liens and to insure
completion of the work. Should Lessee make any alterations, improvements,
additions or Utility Installations without the prior approval of Lessor, Lessor
may require that Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility Installations in,
or about the Premises that Lessee shall desire to make and which requires the
consent of the Lessor shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent, the consent shall be
deemed conditioned upon Lessee acquiring a permit to do so from appropriate
governmental agencies, the furnishing of a copy thereof to Lessor prior to the
commencement of the work and the compliance by Lessee of all conditions of said
permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of
any work in the Premises, and Lessor shall have the right to post notices of
non-responsibility in or on the Premises as provided by law. If Lessee shall,
in good faith, contest the validity of any such lien, claim or demand, then
Lessee shall, at its sole expense defend itself and Lessor against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof against the Lessor or the Premises, upon the
condition that if Lessor shall require, Lessee shall furnish to Lessor a surety
bond satisfactory to Lessor in an amount equal to such contested lien claim or
demand indemnifying Lessor against liability for the same and holding the
Premises free from the effect of such lien or claim. In addition, Lessor may
require Lessee to pay Lessor's attorneys fees and costs in participating in
such action if Lessor shall decide it is to its best interest to do so.
(d) Unless Lessor requires their removal, as set forth in Paragraph
7.5(a), all alterations, improvements, additions and Utility Installations
(whether or not such Utility Installations constitute trade fixtures of
Lessee), which may be made on the Premises, shall become the property of
Lessor and remain upon and be surrendered with the Premises at the expiration
of the term. Notwithstanding the provisions of this Paragraph 7.5(d), Lessee's
machinery and equipment, other than that which is affixed to the Premises so
that it cannot be removed without material damage to the Premises, shall remain
the property of Lessee and may be removed by Lessee subject to the provisions
of Paragraph 7.2.
8. INSURANCE INDEMNITY.
8.1 INSURING PARTY. As used in this Paragraph 8, the term "insuring party"
shall mean the party who has the obligation to obtain the Property Insurance
required hereunder. The insuring party shall be designated in Paragraph 46
hereof. In the event Lessor is the insuring party, Lessor shall also maintain
the liability insurance described in paragraph 8.2 hereof, in addition to, and
not in lieu of, the insurance required to be maintained by Lessee under said
paragraph 8.2, but Lessor shall not be required to name Lessee as an additional
insured on such policy. Whether the insuring party is the Lessor or the
Lessee, Lessee shall, as additional rent for the Premises, pay the cost of all
insurance required hereunder, except for that portion of the cost attributable
to Lessor's liability insurance coverage in excess of $1,000,000 per
occurrence. If Lessor is the insuring party Lessee shall, within ten (10) days
following demand by Lessor, reimburse Lessor for the cost of the insurance so
obtained.
8.2 LIABILITY INSURANCE. Lessee shall, at Lessee's expense obtain and keep
in force during the term of this Lease a policy of Combined Single Limit,
Bodily Injury and Property Damage insurance insuring Lessor and Lessee against
any liability arising out of the ownership, use, occupancy or maintenance of
the Premises and all areas appurtenant thereto. Such insurance shall be a
combined single limit policy in an amount not less than $500,000 per
occurrence. The policy shall insure performance by Lessee of the indemnity
provisions of this Paragraph 8. The limits of said insurance shall not,
however, limit the liability of Lessee hereunder.
8.3 PROPERTY INSURANCE.
(a) The insuring party shall obtain and keep in force during the term
of this Lease a policy or policies of insurance covering loss or damage to the
Premises, in the amount of the full replacement value thereof, as the same may
exist from time to time, which replacement value is now $400,000, but in no
event less than the total amount required by lenders having liens on the
Premises, against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, flood (in the event same is
required by a lender having a lien on the Premises), and special extended
perils ("all risk" as such term is used in the insurance industry). Said
insurance shall provide for payment of loss thereunder to Lessor or to the
holders of mortgages or deeds of trust on the Premises. The insuring party
shall, in addition, obtain and keep in force during the term of this lease a
policy of rental value insurance covering a period of one year, with loss
payable to Lessor, which insurance shall also cover all real estate taxes and
insurance costs for said period. A stipulated value or agreed amount
endorsement deleting the coinsurance provision of the policy shall be procured
with said insurance as well as an automatic increase in insurance endorsement
causing the increase in annual property insurance coverage by 2% per quarter.
If the insuring party shall fail to procure and maintain said insurance the
other party may, but shall not be required to, procure and maintain the same,
but at the expense of Lessee. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $1,000 per occurrence, and
Lessee shall be liable for such deductible amount.
(b) If the Premises are part of a larger building, or if the Premises are
part of a group of buildings owned by Lessor which are adjacent to the
Premises, then Lessee shall pay for any increase in the property insurance of
such other building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
(c) If the Lessor is the insuring party the Lessor will not insure
Lessee's fixtures, equipment or tenant improvements unless the tenant
improvements have become a part of the Premises under paragraph 7, hereof. But
if Lessee is the insuring party the Lessee shall insure its fixtures, equipment
and tenant improvements.
8.4 INSURANCE POLICIES. Insurance required hereunder shall be in companies
holding a "General Policyholders Rating" of at least B plus, or such other
rating as may be required by a lender having a lien on the Premises, as set
forth in the most current issue of "Best's Insurance Guide". The insuring party
shall deliver to the other party copies of policies of such insurance or
certificates evidencing the existence and amounts of such insurance with loss
payable clauses as required by this paragraph 8. No such policy shall be
cancellable or subject to reduction of coverage or other modification except
after thirty (30) days' prior written notice to Lessor. If Lessee is the
insuring party Lessee shall, at least thirty (30) days prior to the expiration
of such policies, furnish Lessor with renewals or "binders" thereof, or Lessor
may order such insurance and charge the cost thereof to Lessee, which amount
shall be payable by Lessee upon demand. Lessee shall not do or permit to be done
anything which shall invalidate the insurance policies referred to in Paragraph
8.3. If Lessee does or permits to be done anything which shall increase the cost
of the insurance policies referred to in Paragraph d.3 then Lessee shall
forthwith upon Lessor's demand reimburse Lessor for any additional premiums
attributable to any act or omission or operation of Lessee causing such increase
in the cost of insurance. If Lessor is the insuring party, and if the insurance
policies maintained hereunder cover other improvements in addition to the
Premises, Lessor shall deliver to Lessee a written statement setting forth the
amount of any such insurance cost increase and showing in reasonable detail the
manner in which it has been computed.
8.5 WAIVER OF SUBROGATION. Lessee and Lessor hereby release and relieve the
other, and waive their entire right of recovery against the other for loss or
damage arising out of or incident to the perils insured against under paragraph
8.3, which perils occur in, on or about the Premises, whether due to the
negligence of Lessor or Lessee or their agents, employees, contractors and/or
invitees. Lessee and Lessor shall, upon obtaining the policies of insurance
required hereunder, give notice to the insurance carrier or carriers that the
foregoing mutual waiver of subrogation is contained in this Lease.
8.6 INDEMNITY. Lessee shall indemnify and hold harmless Lessor from and
against any and all claims arising from Lessee's use of the Premises, or from
the conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease, or arising from
any negligence of the Lessee, or ??? of Lessee's agents, contractors, or
employees, and from and against all costs, attorney's fees, expenses and
liabilities incurred in the defense of ??? such claim or any action or
proceeding brought thereon; and in case any action or proceeding be brought
against Lessor by reason of any such claim, Lessee upon notice from Lessor
shall defend the same at Lessee's expense by counsel satisfactory to Lessor.
Lessee, as a material part of the consideration to Lessor, hereby assumes all
risk of damage to property or injury to persons, in, upon or about the Premises
arising from any cause and Lessee hereby waives all claims in respect thereof
against Lessor.
8.7 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that Lessor
shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other property of
Lessee. Lessee's employees, invitees, customers, or any other person in or
about the Premises, nor shall Lessor be liable for injury to the person of
Lessee, Lessee's employees, agents or contractors, whether such damage or
injury is caused by or results from fire, steam, electricity, gas, water or
rain, or from the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures,
or from any other cause, whether the said damage or injury results from
conditions arising upon the Premises or upon other portions of the building of
which the Premises are a part, or from other sources or places and regardless
of whether the cause of such damage or injury or the means of repairing the
same is inaccessible to Lessee Lessor shall not be liable for any damages
arising from any act or neglect of any other tenant, if any, of the building in
which the Premises are located.
Initials:
<PAGE> 3
9. Damage or Destruction.
9.1 DEFINITIONS.
(a) "Premises Partial Damage" shall herein mean damage or destruction
to the Premises to the extent that the cost of repair is less than 50% of the
then replacement cost of the Premises. "Premises Building Partial Damage" shall
herein mean damage or destruction to the building of which the Premises are a
part to the extent that the cost of repair is less than 50% of the then
replacement cost of such building as a whole.
(b) "Premises Total Destruction" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is 50% or more
of the then replacement cost of Premises. "Premises Building Total Destruction"
shall herein mean damage or destruction to the building of which the premises
are a part to the extent that the cost of repair is 50% or more of the then
replacement cost of such building as a whole.
(c) "Insured Loss" shall herein mean damage or destruction which was
caused by an event required to be covered by the insurance described in
paragraph 8.
9.2 PARTIAL DAMAGE -- INSURED LOSS. Subject to the provisions of paragraphs
9.4, 9.5 and 9.6, if at any time during the term of this Lease there is damage
which is an Insured Loss and which falls into the classification of Premises
Partial Damage or Premises Building Partial Damage, then Lessor shall, at
Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements unless the same have become a part of Premises pursuant to
Paragraph 7.5 hereof as soon as reasonably possible and this Lease shall
continue in full force and effect Notwithstanding the above, if the Lessee is
the insuring party, and if the Insurance proceeds received by Lessor are not
sufficient to effect such repair, Lessor shall give notice to Lessee of the
amount required in addition to the insurance proceeds to effect such repair.
Lessee shall contribute the required amount to Lessor within ten days after
Lessee has received notice from Lessor of the shortage in the insurance. When
Lessee shall contribute such amount to Lessor, Lessor shall make such repairs as
soon as reasonably possible and this Lease shall continue in full force and
effect. Lessee shall in no event have any right to reimbursement for any such
amounts so contributed.
9.3 PARTIAL DAMAGE -- UNINSURED LOSS. Subject to the provisions of
Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease there
is damage which is not an Insured Loss and which falls within the classification
of Premises Partial Damage or Premises Building Partial Damage, unless caused by
a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee's expense). Lessor may at Lessor's option either (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written notice
to Lessee within thirty (30) days after the date of the occurrence of such
damage of Lessor's intention to cancel and terminate this Lease, as of the date
of the occurrence of such damage. In the event Lessor elects to give such notice
of Lessor's intention to cancel and terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's intention to repair such damage at Lessee's
expense, without reimbursement from Lessor, in which event this Lease shall
continue in full force and effect, and Lessee shall proceed to make such repairs
as soon as reasonably possible. If Lessee does not give such notice within such
10-day period this Lease shall be cancelled and terminated as of the date of the
occurrence of such damage.
9.4 TOTAL DESTRUCTION. If at any time during the term of this Lease there
is damage, whether or not an Insured Loss, (including destruction required by
any authorized public authority), which falls into the classification of
Premises Total Destruction or Premises Building Total Destruction, this Lease
shall automatically terminate as of the date of such total destruction.
9.5 DAMAGE NEAR END OF TERM.
(a) If at any time during the last months of the term of this Lease
there is damage, whether or not an Insured Loss, which falls within the
classification of Premises Partial Damage, Lessor may at Lessor's option cancel
and terminate this Lease as of the date of occurrence of such damage by giving
written notice to Lessee of Lessor's election to do so within 30 days after the
date of occurrence of such damage.
(b) Notwithstanding paragraph 9.5(a), in the event that Lessee has an
option to extend or renew this Lease, and the time within which said option may
be exercised has not yet expired, Lessee shall exercise such option, if it is to
be exercised at all, no later than 20 days after the occurrence of an insured
Loss falling within the classification of Premises Partial Damage during the
last six months of the term of this Lease if Lessee duly exercises such option
during said 20 day period, Lessor shall, at Lessor's expense, repair such damage
as soon as reasonably possible and this Lease shall continue in full force and
effect. If Lessee fails to exercise such option during said 20 day period, then
Lessor may at Lessor's option terminate and cancel this Lease as of the
expiration of said 20 day period by giving written notice to Lessee of Lessor's
election to do so within 10 days after the expiration of said 20 day period,
notwithstanding any term or provision in the grant of option to the contrary.
9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event of damage described in paragraphs 9.2 or 9.3, and
Lessor or Lessee repairs or restores the Premises pursuant to the provisions of
this Paragraph 9, the rent payable hereunder for the period during which such
damage, repair or restoration continues shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. Except for abatement
of rent, if any, Lessee shall have no claim against Lessor for any damage
suffered by reason of any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence such repair or
restoration within 90 days after such obligations shall accure, Lessee may at
Lessee's option cancel and terminate this Lease by giving Lessor written notice
of Lessee's election to do so at any time prior to the commencement of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
9.7 TERMINATION -- ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor, Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.8 WAIVER. Lessor and Lessee waive the provisions of any statutes which
relate to termination of Leases when leased property is destroyed and agree that
such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessee shall pay the real property tax, as defined
in paragraph 10.2, applicable to the Premises during the term of this Lease. All
such payments shall be made at least ten (10) days prior to the delinquency date
of such payment. Lessee shall promptly furnish Lessor with satisfactory evidence
that such taxes have been paid. If any such taxes paid by Lessee shall cover any
period of time prior to or after the expiration of the term hereof, Lessee's
share of such taxes shall be equitably prorated to cover only the period of time
within the tax fiscal year during which this Lease shall be in effect, and
Lessor shall reimburse Lessee to the extent required. If Lessee shall fail to
pay any such taxes, Lessor shall have the right to pay the same, in which case
Lessee shall repay such amount to Lessor with Lessee's next rent installment
together with interest at the maximum rate then allowable by law.
10.2 DEFINITION OF "REAL PROPERTY TAX". As used herein, the term "real
property tax" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on the Premises by any authority having the direct or
indirect power to tax, including any city, state or federal government, or any
school, agriculture, sanitary, fire, street, drainage or other improvement
district thereof, as against any legal or equitable interest of Lessor in the
Premises or in the real property of which the Premises are a part, as against
Lessor's right to rent or other income therefrom, and as against Lessor's
business of leasing the Premises. The term "real property tax" shall also
include any tax, fee, levy, assessment or charge (i) in substitution of,
partially or totally, any tax, fee, levy assessment or charge hereinabove
included within the definition of "real property tax," or (ii) the nature of
which was hereinbefore included within the definition of "real property tax," or
(iii) which is imposed for a service or right not charged prior to June 1, 1978,
or, if previously charged, has been increased since June 1, 1978, or (iv) which
is imposed as a ??? transfer, either partial or total, of Lessor's interest in
the Premises or which is added to a tax or charge hereinbefore included within
the definition of real property tax by reason of such transfer, or (v) which is
imposed by reason of this transaction, any modifications or changes hereto, or
any transfers hereof.
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property ???
all of the land and improvements included within the tax parcel assessed, such
proportion to be determined by Lessor from the respective valuations assigned in
the assessor's work sheets or such other information as may be reasonably
available. Lessor's reasonable determination thereof, in good faith, shall be
conclusive.
10.4 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere. When possible, Lessee
shall cause said trade fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxed attributable to Lessee
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.
11. UTILITIES. Lessee shall pay for all water, gas, light power, telephone and
other utilities and services supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered to Lessee, Lessee shall
pay a reasonable proportion to be determined by Lessor of all charges jointly
metered with other premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's request for consent hereunder in a
timely manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a breach of
this Lease.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof without
Lessor's consent, to any corporation which controls, is controlled by or is
under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, provided that said assignee assumes, in full, the
obligations of Lessee under this ??? Any such assignment shall not, in any way,
affect or limit the liability of Lessee under the terms of this Lease even if
after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
be necessary.
12.3 NO RELEASE OF LESSEE. Regardless of Lessor's consent, no subletting or
assignment shall release Lessee of Lessee's obligation or after the primary
liability of Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rent by Lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision hereof.
Consent to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting. In the event of default by any assignee of
Lessee of any successor of Lessee, in the performance of any of the terms
hereof, Lessor may proceed directly against Lessee without the necessity of
exhausting remedies against said assignee. Lessor may consent to subsequent
assignments or subletting of this Lease or amendments or modifications to this
Lease with assignee.
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of Lessee, without notifying Lessee, or any successor of Lessee, and without
obtaining its or their content thereto and such action shall not relieve Lessee
of liability under this Lease.
12.4 ATTORNEY'S FEES. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or
Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable attorneys fees incurred in connection
therewith, such attorneys fees not to exceed $350.00 for each such request.
13. DEFAULTS; REMEDIES.
13.1 DEFAULTS. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three days after written notice thereof
from Lessor to Lessee. In the event that Lessor serves Lessee with a Notice to
Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes such Notice
to Pay Rent or Quit shall also constitute the notice required by this
subparagraph.
(c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed
by Lessee, other than described in paragraph (b) above, where such failure
shall continue for a period of 30 days after written notice thereof from Lessor
to Lessee; provided, however, that if the nature of Lessee's default is such
that more than 30 days are reasonably required for its cure, then Lessee shall
not be deemed to be in default if Lessee commenced such cure within said 30-day
period and thereafter diligently prosecutes such cure to completion.
(d)(i) The making by Lessee of any general arrangement or assignment
for the benefit of creditors; (ii) Lessee becomes a "debtor" as defined in 11
U.S.C Section 101 or any successor statute thereto (unless, in the case of a
petition filed against Lessee, the same is dismissed within 60 days); (iii) the
appointment of a trustee or receiver to take possession of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where possession is not restored to Lessee within 30 days, or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where
such seizure is not discharged within 30 days. Provided, however, in the event
that any provision of this paragraph 13.1(d) is contrary to any applicable law,
such provision shall be of no force or effect.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any
successor in interest of Lessee or any guarantor of Lessee's obligation
hereunder, and any of them, was materially false.
13.2 REMEDIES. In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter, with or without notice or demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach.
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In such event
Lessor shall be entitled to recover from Lessee all damages incurred by Lessor
by reason of Lessee's default including but not limited to, the cost of
recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorney's
fees, and any real estate commission actually paid; the worth at the time of
award by the court having jurisdiction thereof of the amount by which the
unpaid rent for the balance of the term after the time of such award exceeds
the amount of such rental loss for the same period that Lessee proves could be
reasonably avoided; that portion of the leasing commission paid by Lessor
pursuant to Paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease
shall continue in effect whether or not Lessee shall have abandoned the
Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent
as becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid installments of rent and other unpaid monetary obligations of
Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and thereafter
diligently prosecutes the same to completion.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor or incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Lessor by the
terms of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent or any other sum due from Lessee shall not be received by
Lessor or Lessor's designee within ten (10) days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a
late charge equal to 6% of such overdue amount. The parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason of late payment by Lessee. Acceptance of such late charge
by Lessor shall in no event constitute a waiver of Lessee's default with respect
to such overdue amount, nor prevent Lessor from exercising any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding paragraph 4 or any
other provision of this Lease to the contrary.
13.5 IMPOUNDS. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) installments of rent or any other
monetary obligation of Lessee under the terms of this Lease, Lessee shall pay
to Lessor, if Lessor shall so request, in addition to any other payments
required under this Lease, a monthly advance installment, payable at the same
time as the monthly rent, as estimated by Lessor, for real property tax and
insurance expenses on the Premises which are payable by Lessee under the terms
of this Lease. Such funds shall be established to insure payment when due,
before delinquency, of any or all such real property taxes and insurance
premiums. If the amounts paid to Lessor by Lessee under the provisions of this
paragraph are insufficient to discharge the obligations of Lessee to pay such
real property taxes and insurance premiums as the same become due. Lessee shall
pay to Lessor, upon Lessor's demand, such additional sums necessary to pay such
obligations. All moneys paid to Lessor under this paragraph may be intermingled
with other moneys of Lessor and shall not bear interest. In the event of a
default in the obligations of Lessee to perform under this Lease, then any
balance remaining from funds paid to Lessor under the provisions of this
paragraph may, at the option of Lessor, be applied to the payment of any
monetary default of Lessee in lieu of being applied to the payment of real
property tax and insurance premiums.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain, or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the floor area of the
building on the Premises, or more than 25% of the land area of the Premises
which is not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing only within ten (10) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such position. If Lessee does not terminate this Lease in accordance with
the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the rent shall be reduced in the
proportion that the floor area of the building taken bears to the total floor
area of the building situated on the Premises. No reduction of rent shall occur
if the only area taken is that which does not have a building located thereon.
Any award for the taking of all or any part of the Premises under the power of
eminent domain or any payment made under threat of the exercise of such power
shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any award for loss of or damage to Lessee's trade fixtures and removable
personal property. In the event that this Lease is not terminated by reason of
such condemnation, Lessor shall to the extent of severance damages received by
Lessor in connection with such condemnation, repair any damage to the Premises
caused by such condemnation except to the extent that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall pay any amount in excess of
such severance damages required to complete such repair.
15. ESTOPPEL CERTIFICATE.
(a) Lessee shall at any time upon not less than ten (10) days' prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and
the date to which the rent and other charges are paid in advance, if any, and
(ii) acknowledging that there are not, to Lessee's knowledge, any uncured
defaults on the part of Lessor hereunder, or specifying such defaults if any
are claimed. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Premises.
(b) At Lessor's opinion, Lessee's failure to deliver such statement
within such time shall be a material breach of this Lease or shall be
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conclusive upon Lessee (i) that this Lease is in full force and effect, without
modification except as may be represented by Lessor, (ii) that there are no
uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance or such failure may be considered by
Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises, or any
part thereof, Lessee hereby agrees to deliver to any lender or purchaser
designated by Lessor such financial statements of Lessee as may be reasonably
required by such lender or purchaser. Such statements shall include the past
three years' financial statements of Lessee. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and
shall be used only for the purposes herein set forth.
16. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only the
owner or owners at the time in question of the fee title or a lessee's interest
in a ground lease of the Premises, and except as expressly provided in
Paragraph 15, in the event of any transfer of such title or interest, Lessor
herein named (and in case of any subsequent transfers then the grantor) shall
be relieved from and after the date of such transfer of all liability as
respects Lessor's obligations thereafter to be performed, provided that any
funds in the hands of Lessor or the then grantor at the time of such transfer,
in which Lessee has an interest, shall be delivered to the grantee. The
obligations contained in this Lease to be performed by Lessor shall, subject as
aforesaid, be binding on lessor's successors and assigns, only during their
respective periods of ownership.
17. SEVERABILITY. The invalidity of any provision of this Lease as determined
by a court of competent jurisdiction, shall in no way affect the validity of
any other provision hereof.
18. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law from the date due. Payment of such interest shall not
excuse or cure any default by Lessee under this Lease, provided, however, that
interest shall not be payable on late charges incurred by Lessee nor on any
amounts upon which late charges are paid by Lessee.
19. TIME OF ESSENCE. Time is of the essence.
20. ADDITIONAL RENT. Any monetary obligations of Lessee to Lessor under the
terms of this Lease shall be deemed to be rent.
21. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
agreement or understanding pertaining to any such matter shall be effective.
This Lease may be modified in writing only, signed by the parties in interest
at the time of the modification. Except as otherwise stated in this Lease,
Lessee hereby acknowledges that neither the real estate broker listed in
Paragraph 15 hereof nor any cooperating broker on this transaction nor the
Lessor or any employees or agents of any of said persons has made any oral or
written warranties or representations to Lessee relative to the condition or
use by Lessee of said Premises and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable
laws and regulations in effect during the term of this Lease except as
otherwise specifically stated in this Lease.
22. NOTICES. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal delivery or by certified mail, and if
given personally or by mail, shall be deemed sufficiently given if addressed to
Lessee or to Lessor at the address noted below the signature of the respective
parties, as the case may be. Either party may by notice to the other specify a
different address for notice purposes except that upon Lessee's taking
possession of the Premises, the Premises shall constitute Lessee's address for
notice purposes. A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate by notice to
Lessee.
23. WAIVERS. No waiver by Lessor or any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
24. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
25. HOLDING OVER. If Lessee, with Lessor's consent, remains in possession of the
Premises or any part thereof after the expiration of the term hereof, such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Lessee, but all options and rights of
first refusal, if any, granted under the terms of this Lease shall be deemed
terminated and be of no further effect during said month to month tenancy.
26. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
27. COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
28. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of Paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
wherein the Premises are located.
29. SUBORDINATION.
(a) This Lease, at Lessor's option, shall be subordinate to any ground
lease, mortgage, deed of trust, or any other hypothecation or security now or
hereafter placed upon the real property of which the Premises are a part and to
any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall given written
notice thereof to lessee, this Lease shall be deemed prior to such mortgage,
deed of trust, or ground lease, whether this Lease is dated prior or subsequent
to the date of said mortgage, deed of trust or ground lease or the date of
recording thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be. Lessee's failure
to execute such documents within 10 days after written demand shall constitute
a material default by Lessee hereunder, or, at Lessor's option, Lessor shall
execute such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee
does hereby make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute such
documents in accordance with this paragraph 29(b).
30. ATTORNEY'S FEES. If either party or the broker named herein brings an
action to enforce the terms hereof or declare rights hereunder, the prevailing
party in any such action, on trial or appeal, shall be entitled to his
reasonable attorney's fees to be paid by the losing party as fixed by the
court. The provisions of this paragraph shall inure to the benefit of the
broker named herein who seeks to enforce a right hereunder.
31. LESSOR'S ACCESS. Lessor and Lessor's agents shall have the right to enter
the Premises at reasonable times for the purpose of inspecting the same,
showing the same to prospective purchasers, lenders, or lessees, and making
such alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises any ordinary "For Sale"
signs and Lessor may at any time during the last 120 days of the term hereof
place on or about the Premises any ordinary "For Lease" signs, all without
rebate of rent or liability to Lessee.
32. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
33. SIGNS. Lessee shall not place any sign upon the Premises without Lessor's
prior written consent except that Lessee shall have the right, without the
prior permission of Lessor to place ordinary and usual for rent or sublet signs
thereon.
34. MERGER. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to
Lessor of any or all of such subtenancies.
35. CONSENTS. Except for paragraph 33 hereof, wherever in this Lease the
consent of one party is required to an act of the other party such consent
shall not be unreasonably withheld.
36. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
37. QUIET POSSESSION. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are duly authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Premises.
38. OPTIONS.
(a) DEFINITION. As used in this paragraph the word "Options" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (2) the option of right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of
first refusal to lease other property of Lessor or the right of first offer to
lease other property of Lessor; (3) the right or option to purchase the
Premises, or the right of first refusal to purchase the Premises, or the right
of first offer to purchase the Premises or the right or option to purchase
other property of Lessor, or the right of first refusal to purchase other
property of Lessor or the right of first offer to purchase other property of
Lessor.
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<PAGE> 6
2. OPTIONS PERSONAL. Each Option granted to Lessee in this Lease are
personal to Lessee and may not be exercised or be assigned voluntarily or
involuntarily by or to any person or entity other than Lessee, provided,
however, the Option may be exercised or assigned to any Lessee Affiliate as
defined in paragraph 12.2 of this Lease. The Options herein granted to Lessee
are not assignable separate and apart from this Lease.
3. MULTIPLE OPTIONS. In the event that Lessee has any multiple options to
extend or renew this Lease a later option cannot be exercised unless the prior
option to extend or renew this Lease has been so exercised.
4. EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary, (i) during the ????
commencing from the date Lessor gives to Lessee a notice of default pursuant to
paragraph 13.1(b) or 13.1(c) and continuing until the default alleged in said
notice of default is cured, or (ii) during the period of time commencing on the
day after a monetary obligation to Lessor is due from Lessee and unpaid (without
any necessity for notice thereof to Lessee) continuing until the obligation is
paid, or (iii) at any time after an event of default described in paragraphs
13.1(a), 13.1(d) or 13.1(e) (without any necessity of Lessor to give notice of
such default to Lessee), or (iv) in the event that Lessor has given to Lessee
three or more notices of default under paragraph 13.1(b), where a late charge
has become payable under paragraph 13.4 for each of such defaults, or paragraph
13.1(c), whether or not the defaults are cured, during the 12 month period prior
to the time that Lessee intends to exercise the subject Option.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due
and timely exercise of the Option, if, after such exercise and during the term
of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of 30 days after such obligation becomes due (without any necessity
of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to commence to
cure a default specified in paragraph 13.1(c) within 30 days after the date
that Lessor gives notice to Lessee of such default and/or Lessee fails
thereafter to diligently prosecute said cure to completion, or (iii) Lessee
commits a default described in paragraph 13.1(a) 13.1(d) or 13.1(e) (without
any necessity of Lessor to give notice of such default to Lessee), or (iv)
Lessor gives to Lessee three or more notices of default under paragraph
13.1(b), where a late charge becomes payable under paragraph 13.4 for each such
default, or paragraph 13.1(c), whether or not the defaults are cured.
39. MULTIPLE TENANT BUILDING. In the event that the Premises are part of a
larger building or group of buildings then Lessee agrees that it will abide by,
keep and observe all reasonable rules and regulations which Lessor may make
from time to time for the management, safety, care, and cleanliness of the
building and grounds, the parking of vehicles and the preservation of good
order therein as well as for the convenience of other occupants and tenants of
the building. The violations of any such rules and regulations shall be deemed
a material breach of this Lease by Lessee.
40. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of Lessee, its agents and
invitees from acts of third parties.
41. EASEMENTS. Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or
desirable, and to cause the recordation of Parcel Maps and restrictions, so
long as such easements, rights, dedications, Maps and restrictions do not
unreasonably interfere with the use of the Premises by Lessee. Lessee shall
sign any of the aforementioned documents upon request of Lessor and failure to
do so shall constitute a material breach of this Lease.
42. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment, and there shall survive the right
on the part of said party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said party
to pay such sum or any part thereof, said party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
43. AUTHORITY. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said entity. If Lessee is a corporation, trust
or partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
44. CONFLICT. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
45. INSURING PARTY. The insuring party under this lease shall be the Lessee.
46. ADDENDUM. Attached hereto is an addendum or addenda containing paragraphs 1
through 26 which constitutes a part of this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL NO REPRESENTATION OR RECOMMENDATION IS MADE
BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING
THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL
COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
THE PARTIES HERETO HAVE EXECUTED THIS LEASE AT THE PLACE ON THE DATES SPECIFIED
IMMEDIATELY ADJACENT TO THEIR RESPECTIVE SIGNATURES.
Executed at Phoenix, Arizona
------------------------------ ---------------------------------
on September 8, 1989 By Donald L. Mori
--------------------------------------- -------------------------------
Address By /s/ Donald L. Mori
---------------------------------- -------------------------------
- ----------------------------------------- "LESSOR" (Corporate seal)
Executed at SUPER SHUTTLE ARIZONA, INC.
------------------------------ ----------------------------------
on By /s/ [Illegible Signature]
--------------------------------------- -------------------------------
Address By
---------------------------------- -------------------------------
"LESSEE" (Corporate seal)
- -----------------------------------------
NOTE: THESE FORMS ARE OFTEN MODIFIED TO MEET CHANGING REQUIREMENTS OF LAW AND
NEED OF THE INDUSTRY. ALWAYS WRITE OR CALL TO MAKE SURE YOU ARE UTILIZING
???????????????????????????????????????????????????????????????????????????
<PAGE> 7
SECOND AMENDMENT TO STANDARD INDUSTRIAL LEASE - NET
This Second Amendment to Standard Industrial Lease is entered into this
FIRST day of FEB. , 1990, by and between DONALD L. MORI, a widower, Lessor,
and SUPPER SHUTTLE ARIZONA, INC., an Arizona corporation, widower, Lessor , and
SUPER SHUTTLE ARIZONA, INC., an Arizona corporation, Lessee;
RECITALS:
On or about September 8, 1989, the above named parties entered into a
Lease entitled Standard Industrial Lease - Net and an Addendum thereto dated
September 8, 1989.
The Lease and Addendum thereto, among other things, provided that Lessor
was leasing to Lessee approximately 14,400 square feet of office/ industrial
space. The Lease further provided that the minimum monthly rental was $7200 per
month and the Lease is a triple net lease.
The said Lease and Addendum thereto were amended by First Amendment dated
November 14, 1989, increasing the leasehold space by approximately 2700 square
feet and increasing the monthly rental to a total of $7866 per month commencing
November 1, 1989.
The parties now wish to further amend said Lease;
NOW, THEREFORE, in consideration of the mutual promises, conditions and
covenants hereinafter contained, it is hereby agreed as follows:
1. The amount of square footage of office/industrial space is amended
to increase said space by approximately 6000 square feet, being that space
located adjoining and immediately south of the present leasehold space as
amended and being 53 feet wide, north and south, and the full width of the
building east and west.
2. For and in consideration of the additional space the monthly rental
is hereby amended to increase the said total monthly rental to $9066 per month
commencing February 1, 1990, and for the entire remaining term of the original
Lease and Addendum as amended.
This Amendment is hereby incorporated into the original Lease subject
to all the terms and conditions of said Lease which other terms and conditions
of said Lease and Addendum and this Amendment thereto are hereby affirmed,
ratified and approved.
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment to Standard Industrial Lease-Net, the day and Year First Above
Written.
/s/DONALD L. MORI
DONALD L. MORI
(Lessor)
SUPER SHUTTLE ARIZONA, INC.,
an Arizona corporation,
By /s/W. L. MEYERS
Its President
(Lessee)
<PAGE> 9
FIRST AMENDMENT
TO
STANDARD INDUSTRIAL LEASE - NET
This First Amendment to Standard Industrial Lease is entered into by
and between Donald L. Mori, a widower, Lessor and Super Shuttle Arizona, Inc.,
an Arizona corporation, Lessee.
R E C I T A L S
On or about September 8, 1989, the above named parties entered into a
lease entitled Standard Industrial Lease - Net and an addendum thereto dated
September 8, 1989.
The Lease and Addendum thereto, among other things, provided that
Lessor was leasing to Lessee approximately 14,400 square feet office/industrial
space. The Lease further provided that the minimum monthly rental was $7200.00
per month and the Lease is a triple net lease.
The parties now wish to amend said Lease.
N0W, THEREFORE, in consideration of the mutual promises, conditions and
covenants hereinafter contained, it is hereby agreed as follows:
1. The amount of square footage of office/industrial space is amended
to increase said space by approximately 2700 square feet, being that space
located adjoining and immediately south of the original space and being 30 foot
wide, north and south, and the full width of the building in length.
2. For and in consideration of the additional space the minimum monthly
rental is hereby amended to increase the said monthly rental to $7,866.00
per month commencing November 1, 1989.
<PAGE> 10
3. Paragraph 3 of the Addendum is amended by adding to said paragraph 3
the following:
"The Lessee shall have the right to remove all storage tanks and
fueling facilities at Lessee's expense at the expiration or earlier
termination of the lease provided Lessee shall repair in good
workmanlike fashion any and all damage resulting from the removal of
Lessee's storage tanks and refueling facilities environmental free from
any contaminants."
This Amendment is hereby incorporated in the original Lease subject to
all the terms and conditions of said Lease which other terms and conditions of
said Lease and Addendum and this Amendment thereto are hereby affirmed,
ratified, and approved.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
this 14th day of November, 1989.
/s/Donald L. Mori
Donald L. Mori
LESSOR
SUPER SHUTTLE ARIZONA, INC.
By /s/W. L. MEYERS
Its: President
LESSEE
2
<PAGE> 11
ADDENDUM TO STANDARD INDUSTRIAL LEASE
Dated: September 8, 1989
By and Between: DONALD L. MORI, a widower,
(Lessor) and SUPER SHUTTLE ARIZONA, INC., an Arizona corporation, Lessee
This Addendum to Standard Industrial Lease is attached to and made a part
of that certain Standard Industrial Lease - Net, dated September 8, 1989,
between Lessor and Lessee (the Lease and this Addendum are collectively referred
to herein as the "Lease").
1. The premises shall include both the approximately 14,400 square foot
office/industrial and the approximately 54,670 net square feet of land
underlying and adjacent to the building at the address of the premises, which
land and building is owned in Fee by Lessor.
2. Lessee shall have the right to install equipment for the purpose of
a noncommercial car wash to be used to clean the vehicles used by Lessee. Lessee
shall have the right to remove all car wash equipment and structures related
thereto at the expiration or earlier termination of the Lease, provided that
Lessee shall repair, in good and workmanlike fashion, any and all damage
resulting from the removal of Lessee's car wash equipment.
3. Subject to full compliance with all applicable federal, state, and
local laws and regulations and the obtaining of all necessary approvals or
permits therefor, Lessor grants to Lessee the right to install and maintain
underground gasoline and/or diesel fuel tanks and pumping facilities for
refueling the vehicles utilized in Lessee's airport ground transportation
system. Subject to the same regulatory and permit compliance, Lessee may also
install below ground waste oil storage tank. Installation of all such equipment
shall be accomplished at Lessee's expense. Upon expiration or earlier
termination of the Lease, Lessor may require Lessee to remove all storage tanks
and fueling facilities at Lessee's expense and to restore at Lessee expense the
premises to substantially the same condition in which they existed at delivery
of possession to Lessee and environmentally free from any contaminants.
4. Paragraph 7.5 is modified to allow Lessee to make all reasonable
installation of carpet, floor coverings, curtains, drapes, and window coverings,
electrical and telephone wiring, computers, plumbing, and room partitions and
painting and wallcovering without Lessor's consent provided: (i) no liens are
allowed to attach to the premises; (ii) Lessee complies with the bonding
provisions of paragraph 7.5 or providing other assurance satisfactory to Lessor;
(iii) all alterations or improvements are done in a good and workmanlike manner;
(iv) no existing wiring or plumbing is removed; (v) all necessary governmental
approvals and permits are obtained by Lessee, at Lessee's expense, to allow the
alterations or improvements; (vi) Lessee agrees to remove all such alterations,
installations, and improvements at the expiration or termination of the Lease
and restore the premises to substantially the same condition as existed at
delivery of possession of the premises if Lessor requests such removal; (vii) no
structural alteration will be made without the consent required by the
provisions of paragraph 7.5
<PAGE> 12
5. Paragraph 8.7 of the lease is modified to provide that Lessor shall
be liable any of the items mentioned in that Paragraph which result from
Lessor's or Lessor's agents willful acts or gross negligence.
6. Paragraph 9.6 is modified to provide that Lessee may cancel and
terminate the Lease if Lessor fails to commence repair or restoration within 30
days.
7. The time frame set forth in paragraph 13.l(b) is revised to read
"three (3) business days".
8. Lessor and Lessee agree that paragraph 14 of the Lease is to be read
as providing that in the event of partial condemnation of the premises, the
Lease shall terminate as to the portion taken as of the date the condemning
authority takes title or possession. The termination option in favor of Lessee
set forth in Paragraph 14 shall relate to the remainder of the premises. Tenant
shall be entitled to any separate award made for loss of business or moving
expenses.
9. Paragraph 22 is modified to provide that notices shall be effective
upon personal delivery or in the case of mailed notices, 48 hours after deposit,
postage prepaid, in the United States mail service.
10. With respect to Paragraph 29 (b), Lessor and Lessee understand that
Lessee's obligation to execute attornment or subordination documents is
conditioned upon the inclusion of such documents of the non-disturbance
protection set forth in Paragraph 29 (a).
11. Lessor shall not make any alterations, repairs, improvements, or
additions to the premises pursuant to Paragraph 31 of the Lease, except those
which are otherwise Lessor's responsibility under the terms and provisions of
the Lease.
12. Except as modified or amended specifically in this Addendum, the
Lease shall be unaffected by this Addendum and all of its terms and provisions
are hereby ratified.
13. In the event of any conflict between the provisions of this
Addendum and the provisions of the Lease, the provisions of this Addendum shall
be controlling.
14. Provided the Lessee is not otherwise in default, Lessee shall have
the right and option upon the expiration of this Lease to renew said Lease upon
the same terms and conditions for an additional term of five years. Lessee shall
notify Lessor in writing not later than 12 months before the expiration of the
Lease that Lessee has exercised the option.
15. After the expiration of the first five years, the Minimum Rental as
set forth in paragraph 4 of the Lease shall be increased annually if the
Consumer Price Index U.S. City average All Urban Consumers (Index) as published
by the United States Department of Labor's Bureau of Labor Statistics increases
over a base period Index. The base period Index shall be the Index for the
calendar month which is four months prior to the end of the first five years.
The base period Index shall be compared with the Index for the same calendar
month for each subsequent year (comparison month). If the Index for any
comparison month is higher than the base period Index, then the minimum rental
for the next year shall by the identical percentage commencing with the next
rental commencement month provided in no event shall the increase be greater
than 4% of the previous year. In no event shall a Minimum Rental be less than
that set forth in 4 above. Should the Bureau discontinue the publication of the
above Index, or publish same less frequently, or alter same in some other
manner, then Landlord shall adopt a substitute index or substitute procedure
which reasonably reflects and monitors consumer prices.
<PAGE> 13
16. Lessee shall have the right to substitute evaporative coolers for
air conditioning subject to complying with all government requirements and
coordinating it's Lessor. Lessee has the right to remove any substituted
evaporative coolers from the premises at the expiration of the term or any
earlier termination of the Lease.
17. Lessor shall deliver the premises to Lessee with the air
conditioning, plumbing and electrical systems in good working order.
18. Lessee shall have the right to install and maintain a guard house
and motor gate at the location indicated on the attached plat or such other
locations as Lessor and Lessee may agree. Lessee shall have the right also to
install or erect canopy to the West of the building in compliance with any
governmental requirements and in the manner that it will not interfere with any
other tenants of the Lessor.
19. Lessor shall, prior to the occupancy of the premises by Lessee:
1. Pave all areas of the demised premises not now paved.
2. Subject to governmental approval, erect a fence or wall as
indicated on the attached plat.
3. Re-roof the subject building with a roof having 20 year
specifications and install appropriate whirly birds and sky lights as Lessor and
Lessee may agree.
4. Install reasonable rear parking lot out door lighting.
5. Construct fire wall between the area to be occupied by
Lessee and the area occupied by Advance Terrazzo Company.
6. Furnish and install gate giving Lessee access to the area
West of the building (but Lessee to furnish and install motor or other
attachments required by Lessee).
7. Lessee shall have access for egress and ingress at all
times during the life of the lease to both East Corona Avenue and South 35th
Street.
8. Clean out existing dry wells.
20. Lessee shall have the first right of refusal to purchase parcel
122-72-048B and parcel 122-72-048B and parcel 122-72-048L from Lessor at the
same price and terms that the Lessor is willing to sell to a third party. Parcel
122-72-048B is part of Lot 43 described as follows:
<PAGE> 14
Beginning at the southeast corner of said lot, THENCE west
224.08 feet along the south line of said lot; north 289.85
feet; west 131.50 feet; north 206.42 feet; to point on north
line of said Lot 43, THENCE east 335.36 feet along said north
line to point of curve; THENCE southerly along curve 31.11
feet; THENCE south 479.98 feet to point of beginning.
Parcel 122-72-048L is part of Lot 43 described as follows:
Beginning at the southeast corner of said lot, THENCE south 88
degrees 22 minutes west 224. 08 feet to true point of
beginning; THENCE north 289.85 feet; THENCE west 131.50 feet;
THENCE south to south line of said Lot 43; THENCE east 131.50
feet to the true point of beginning.
Lessor shall give Lessee notice of any such proposed sale and Lessee shall have
15 days from date of notice to exercise its option of right of first refusal to
purchase. Lessee shall give Lessor written notice of its election and if Lessor
receives no such notice, it shall be deemed that Lessee's right of first refusal
has been waived. If Lessee does, elect to purchase, the sale shall be placed in
escrow with a mutually acceptable title company upon the same terms and
conditions as that which Lessor was willing to sell to a third party and Lessee
shall have 30-days in which to close the escrow.
21. This lease is entered into subject to the demised premises being
zoned C-3 and the escrow for the purchase of the property by the Lessor closing
on or before September 15, 1989. Lessor herein agrees to pay fifty per cent
(50%) of all expenses incurred to downzone the property to Commerce Park if
necessary to conform to the stipulations required in the document entitled
Summary of ZHO Hearing dated August 14, 1989 for Application No. 106-89-8.
22. The parties hereto agree that no broker brought about this lease or
was involved in the negotiation thereof, and that no brokerage commission will
be payable under the Lease or in the event of a sale pursuant to paragraph 20 of
this Addendum.
23. All construction undertaken by the Lessor pursuant to the Lease
shall comply with all local, state, and federal governmental requirements.
24. Lessor shall indemnify, defend (by counsel reasonably acceptable
to Lessee), protect, and hold Lessee, and each of Lessee's officers and
directors, employees, agents, attorneys, successors and assigns, free and
harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including attorney's fees) or death of or
injury to any person or damage to any property whatsoever, arising from or
caused in whole or in part, directly or indirectly, by (A) the presence in, on,
under or about the Premises, or any building thereof, or discharge in or from
the Premises or any building of any hazardous materials on the commencement date
of this Lease from Lessor's use, analysis, storage, transportation, disposal,
release, threatened release, discharge or generation of hazardous materials to,
in, on, under, about or from, the Premises or any building thereon, or (B)
lessor's failure to comply with any hazardous material law. Lessor's obligations
hereunder shall include, without limitation, and whether foreseeable or
unforeseeable, all costs of any required or necessary repair, cleanup or
detoxification or decontamination of the Premises or any building thereon, and
the preparation and implementation of foreclosure, remedial action, or other
required plans in connection therewith, shall
<PAGE> 15
survive the expiration or earlier termination of the term of this lease. For
purposes of the release and indemnity provisions hereof, any acts or omissions
of Lessor, or of employees, agents, assignees, contractors or subcontractors of
Lessor or others acting for or on behalf of Lessor (whether or not they are
negligent, intentional, wilful or unlawful), shall be strictly attributable to
Lessor. For purposes herein, the word "hazardous waste" shall mean any oil,
flammable explosives, asbestos, urea formaldehyde, radioactive materials or
waste, or other hazardous, toxic, contaminated or polluting materials,
substances or waste, including, without limitation, any "hazardous substances",
"hazardous materials", or "toxic substances" under any federal, state or local
law, ordinances or regulations.
25. 6.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises, in its state existing
on this date that the Lease term commences, but without regard to the use for
which Lessee will use the premises, does not violate any covenants or
restrictions of record, or any applicable building code, regulation or ordinance
in effect on such Lease term commencement date. In the event it is determined
that this warranty has been violated, that it shall be the obligation of the
Lessor, after written notice from Lessee or any governmental agency, to
promptly, at Lessor's sole cost and expense rectify act such violation. In the
event Lessee or any governmental agency does not give to Lessor written notice
of the violation of this warranty within six months from the date that the Lease
term commences, the correction of same shall be the obligation of the Lessee at
Lessee's sole cost.
26. 7.4 Lessor's Obligations. Lessor shall have an obligation to repair
any structural defect in the premises, the cost of which repair is in excess of
$15,000, which defect is shown to have been in existence at the commencement of
the Lease, and which defect could not be reasonably discovered by an inspection
of the premises. Except for this obligation and except for the obligations of
Lessor under paragraph 6.2 (a) and 6.3 (a) (relating to Lessor's warranty),
paragraph 9 (relating to destruction of the premises) and under Paragraph 14
(relating to condemnation of the premises), it is intended by the parties hereto
that Lessor have no obligation, in any manner whatsoever, to repair and maintain
the Premises nor the building located thereon nor the equipment therein, whether
structural or nonstructural, all of which obligations are intended to be that
of the Lessee under Paragraph 7.1 hereof. Lessee expressly waives the benefit of
any statute now or hereafter in effect which would otherwise afford Lessee the
right to make repairs at Lessor's expense or to terminate this Lease because of
Lessor's failure to keep the premises in good order, condition and repair.
<PAGE> 1
Exhibit 10.33
LOAN AGREEMENT
DATED AS OF AUGUST 15, 1994
BETWEEN
MESA HOLDING CO.
AND
SUPERSHUTTLE INTERNATIONAL, INC.
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS AND ACCOUNTING TERMS .......................... 1
1.1 Certain Defined Terms ................................... 1
1.2 Computation of Time Periods ............................. 7
1.3 Accounting Terms ........................................ 7
ARTICLE II - AMOUNTS AND TERMS OF THE LOANS ........................... 7
2.1 The NGV Loan ............................................ 7
2.2 The Bridge Loan ......................................... 7
2.3 Principal and Interest .................................. 8
2.4 Prepayments ............................................. 8
2.5 Payments and Computations ............................... 9
ARTICLE III - CONDITIONS OF LENDING ................................... 9
3.1 Condition Precedent to the Bridge Loan .................. 9
3.2 Condition Precedent to the Initial NGV Loan ............. 11
3.3 Conditions Precedent to Subsequent NGV Loans ............ 12
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SSI ..................... 13
4.1 Organization and Qualification; Subsidiaries ............ 13
4.2 Power and Authority ..................................... 13
4.3 Enforceability .......................................... 13
4.4 Financial Statements .................................... 13
4.5 Default ................................................. 14
4.6 Title to Assets; Liens .................................. 14
4.7 Payment of Taxes ........................................ 14
4.8 Absence of Conflicts .................................... 14
4.9 Compliance with Laws .................................... 14
4.10 Litigation .............................................. 15
4.11 Margin Stock ............................................ 15
4.12 Patents, Etc ............................................ 15
4.13 Employee Benefits ....................................... 15
4.14 Consents, Etc ........................................... 15
4.15 Fiscal Year ............................................. 15
-i-
<PAGE> 3
PAGE
4.16 Location of Assets ..................................... 16
4.17 Subordinated Debt Documents ............................ 16
4.18 Invoices ............................................... 16
4.19 Solvency ............................................... 16
4.20 Information ........................................... 16
ARTICLE V - AFFIRMATIVE COVENANTS .................................. 17
5.1 Information of SSI ..................................... 17
5.2 Books and Records ...................................... 17
5.3 Insurance .............................................. 17
5.4 Loss Payable Endorsements .............................. 17
5.5 Maintenance of Property ................................ 18
5.6 Inspection of Property and Records ..................... 18
5.7 Laws, Obligations ...................................... 18
5.8 Existence .............................................. 18
5.9 Application of Proceeds ................................ 18
5.10 Subsidiary Cash Flows .................................. 19
5.11 Subsidiary Sales ....................................... 19
5.12 Termination Statements ................................. 19
ARTICLE VI - NEGATIVE COVENANTS ....................................... 19
6.1 Capital Expenditures ................................... 19
6.2 Liens .................................................. 19
6.3 Indebtedness ........................................... 20
6.4 Transactions with Affiliates ........................... 20
6.5 Accounts ............................................... 20
6.6 Merger, Consolidation, Sale of Assets, Etc ............. 20
6.7 Investments, Laws, Advances, etc ....................... 21
6.8 Guarantees ............................................. 21
6.9 Dividends, Etc ......................................... 21
6.10 NGV Leases ............................................. 21
ARTICLE VII - EVENTS OF DEFAULT ........................................ 21
7.1 Events of Default ...................................... 21
-ii-
<PAGE> 4
PAGE
ARTICLE VIII - MISCELLANEOUS .......................................... 23
8.1 Amendments, Etc ......................................... 23
8.2 Notices, Etc ............................................ 23
8.3 No Waiver, Remedies ..................................... 24
8.4 Costs and Expenses of Enforcement ....................... 25
8.5 Binding Effect .......................................... 25
8.6 Limitation on Agreements ................................ 25
8.7 Severability ............................................ 26
8.8 Governing Law and Consent to Jurisdiction ............... 26
8.9 Execution in Counterparts ............................... 27
8.10 Right to Factor Loan .................................... 27
8.11 Final Agreement ......................................... 27
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INDEX OF EXHIBITS AND SCHEDULES
Exhibit A Promissory Note
Exhibit B Security Agreement
Exhibit C Guaranty
Exhibit D Pledge and Security Agreement
Exhibit E Bridge Promissory Note
Schedule 1. 1 Vehicles to be Converted
Schedule 2.3(a) Principal and Interest
Schedule 6.2(d) Existing Liens
Schedule 6.3(c) Existing Indebtedness
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LOAN AGREEMENT
Dated as of August 15, 1994
SuperShuttle International, Inc., a Delaware corporation
("SSI"), and Mesa Holding Co., a Delaware corporation ("Mesa') hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1 Certain Defined Terms. As used in this Loan Agreement (the
"Agreement"), the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Account Debtor" means the Person who is obligated on or under
an Account.
"Accounts" means, with respect to any Person, all present and
future rights, howsoever evidenced, of such Person to payment for goods sold or
leased or for services rendered, and whether or not they have been earned by
performance, including, without limitation, all "accounts" as such term is
defined in the Uniform Commercial Code in effect in any applicable jurisdiction.
"Affiliate" means, with respect to any specified Person, any
other Person that, directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such specified
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct, or cause the direction, of the
management or policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Bridge Loan" has the meaning specified in Section 2.2.
"Bridge Note" has the meaning specified in Section 2.2.
"Business Day" means any day other than Saturday, Sunday and
any other day on which commercial banks are authorized by law to close in the
State of Taxes.
"Capital Expenditures" means, with respect to any Person, any
current expenditures (including, without limitation, any such amounts financed
by entering into a Capital Lease) made by such Person for the acquisition,
construction, repair, maintenance or replacement of fixed or capital assets of
such Person which should, in accordance with GAAP, be capitalized on the balance
sheet of such Person.
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"Capital Lease" means, with respect to any Person, any lease
in respect of which the obligations of such Person as the lessee thereunder
constitute Capitalized Lease Obligations of such Person.
"Capitalized Lease Obligations" means, with respect to any
Person, all lease obligations of such Person which have been or should be
capitalized on the books of such Person in accordance with GAAP.
"Cash Flow" of any person means, for any period, the sum
(without duplication) for such person and its subsidiaries on a consolidated
basis of the following for such period: (i) operating income (loss) before
minority interest and extraordinary items, (ii) depreciation and amortization
expense and (iii) other non-cash items decreasing operating income, less other
non-cash items increasing operating income.
"Dated Invoice" means, with respect to any Account, the
initial invoice relating to such Account which is dated as of the date on which
(i) the goods giving rise to such Account were delivered to the Account Debtor
under such Account, or (ii) the services giving rise to such Account were
rendered to the Account Debtor under such Account.
"Demand Date" means the third Business Day after SSI receives
a written demand from Mesa for payment of the Bridge Note, and shall be a date
no later than the date nine months after the Bridge Loan Date.
"Default" means any event which, with the lapse of time or
giving of notice, or both, would constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Events of Default" has the meaning specified in Section 7.1.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America as set forth in the
opinions and pronouncements -A 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 is approved by a significant segment of the
accounting profession.
"Guarantor" means Wilmington Cab Company of California, a
California corporation and a principal stockholder of SSI.
"Guaranty" means the guaranty of Guarantor of the obligations
of SSI under this Agreement and the Notes, executed pursuant to Section 3.1(a)
of this Agreement and
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substantially in the form attached hereto as Exhibit C, as such Guaranty may be
amended, modified, supplemented, restated or reaffirmed from time to time.
"Highest Lawful Rate" means the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken. reserved, charged, or received with respect to any Note or on other
amounts, if any, due to Mesa pursuant to this Agreement or any other Loan
Document under laws applicable to Mesa which are presently in effect or, to the
extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws allow as of the date hereof.
"Indebtedness" means, when used with respect to any Person,
all indebtedness, obligations and liabilities of such Person, contingent or
otherwise, direct or indirect and howsoever evidenced or incurred that should be
reflected as a liability on the balance sheet of such Person prepared in
accordance with GAAP.
"Initial NGV Loan" means the first NGV Loan made hereunder.
"Investment" means any direct or indirect purchase or other
acquisition by SSI of, or beneficial interest in, any marketable direct
obligations, certificates of deposit or time deposits, money market accounts,
commercial paper, stock, instruments, bonds, debentures or other securities or
debt instruments of any other Person or any direct or indirect loan, advance
(other than advances to employees of SSI for moving, travel or payroll expenses
or similar expenditures in the ordinary course of SSI's business) or capital
contribution by SSI to any other Person, including, without limitation, all
Indebtedness of such other Person owing to or guaranteed by SSI or its
subsidiaries and all Accounts owing by such other Person to SSI or its
subsidiaries which did not arise from sales or the rendition of services to such
other Person in the ordinary and usual course of SSI's business. At any time any
determination thereof is to be made, the amount of any Investment shall be the
original cost of such Investment, without any adjustments for appreciation,
non-cash dividends, accretions, increases or decreases in value or write-ups,
write-downs, write-offs or charge-offs to or with respect to such Investment;
provided however, that, in the case of any Investment, the original amount of
such Investment shall be reduced by the amount of any repayments or other cash
distributions made to SSI or its subsidiaries with respect to such Investment.
"JWI Franchisee" means the shuttle business operated at John
Wayne International Airport and the surrounding area pursuant to a franchise
agreement between SSI and Preferred Transportation, Inc., a California
corporation.
"LAX Franchisee" means the shuttle business operated at Los
Angeles International Airport and the surrounding area pursuant to a franchise
agreement between SSI and SuperShuttle of Los Angeles, Inc., a California
corporation.
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"Legal Requirement" means any federal, state, local, foreign
or international law, treaty, ordinance, statute, code, rule or regulation of
any Tribunal or any decision, judgment, order, writ, injunction, decree, award
or determination of any Tribunal.
"Lessees" means, collectively, the LAX Franchisee, the JWI
Franchisee and Phoenix Sub.
"Lien" when used with respect to any Person shall mean any
mortgage, lien, charge, pledge, security interest or encumbrance of any kind
(whether voluntary or involuntary, affirmative or negative, and whether imposed
or created by operation of law or otherwise) upon, or pledge of, any of the
property of such Person, whether such property or assets are now owned or
hereafter acquired and wheresoever located, and any conditional sale agreement,
Capital Lease or other tide retention agreement.
"Loan Documents" means this Agreement, the Notes, the Security
Agreement, the Guaranty, the Pledge Agreement and any other document or
instrument executed in connection with any of the foregoing.
"Loans" means the Bridge Loan and the NGV Loans, collectively.
"Master Agreement" means the Master Agreement, dated as of the
date hereof between Mesa and SSI.
"NGVs" means the 185 1995 Dodge B-250 Ram vans with factory
compressed natural gas option to be purchased by SSI with the proceeds of the
Loan.
"NGV Conversion House" means a facility capable of installing
equipment on (i) the NGVs which SSI deems necessary, in SSI's sole discretion,
for SSI or the Lessees, as applicable, to conduct its or their respective
businesses including additional compressed natural gas tank and shroud with
associated hardware or (ii) certain gasoline-powered fleet vehicles currently
owned and operated by Phoenix Sub indentified on Schedule 1.1 hereto necessary
to convert such vehicles to be capable of operating on compressed natural gas.
"NGV Insurance" means any insurance policy obtained by SSI,
its franchisees, subsidiaries or affiliates covering any of the NGVs.
"NGV Invoice" means any invoice received by SSI from Chrysler
Corporation, an authorized dealer for Chrysler Corporation or a NGV Conversion
House.
"NGV Lease" means each lease agreement pursuant to which SSI
will lease to the LAX Franchisee, the JWI Franchisee and the Phoenix Sub, 80, 65
and 40 NGVs, respectively, substantially in the form attached to the Master
Agreement as Exhibit C.
"NGV Loan" has the meaning specified in Section 2.1.
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"NGV Loan Date" has the meaning specified in Section 2.1.
"NGV Notes" has the meaning specified in Section 2.1.
"Notes" means the NGV Notes and the Bridge Note, collectively.
"Permitted Investments" means (i) marketable direct
obligations issued or unconditionally guaranteed by the United States government
or any agency thereof and backed by the full faith and credit of the United
States of America, in each case maturing within 180 days from the date of
acquisition thereof, (ii) certificates of deposit, repurchase agreements or
bankers' acceptances maturing within 180 days from the date of acquisition
thereof, issued by my bank organized under the laws of the United States of
America or any state thereof or the District of Columbia which is a member of
the Federal Reserve System and has, as of the date of the investment, a short
term deposit rating P-1 or A-1 from Moody's Investors Service, Inc. or Standard
& Poor's, respectively, and a long term deposit rating of A from Moody's
Investors Service, Inc. or Standard & Poor's, (iii) any debt instrument with a
maturity of 90 days or less rated A-1 or P-1 by Moody's Investor Service or
Standard & Poor's, respectively, and (iv) money market funds organized under the
laws of the United States of America or any state thereof that invest solely in
any of the investments permitted under the immediately preceding clauses (i)
through (iii).
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Phoenix Sub" means SuperShuttle Arizona, Inc., an Arizona
corporation and a wholly owned subsidiary of SSI.
"Plan" means, with respect to any Person, an employee benefit
plan of such Person or any Affiliate of such Person subject to ERISA.
"Pledge Agreement" means the Pledge and Security Agreement,
dated as of the date hereof between SSI, as pledgor, and Mesa, as secured party,
executed pursuant to Section 3.1(a) of this Agreement, substantially in the form
attached hereto as Exhibit D, as such Pledge Agreement may be amended, modified,
supplemented, restated or extended from time to time.
"Property" means any interest or right in any kind of property
or asset, whether real, personal, or mixed, owned or leased, tangible or
intangible, and whether now held or hereafter acquired.
"Refueling Agreement" means the Refueling Agreement, dated as
of the date hereof, among Mesa, SSI, the JWI Franchisee, the LAX Franchisee and
the Phoenix Sub, substantially in the form attached to the Master Agreement as
Exhibit B.
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"Reportable Event" shall mean a reportable event as defined by
ERISA.
"Rouse" means Mitchell S. Rouse, a principal stockholder and
Chief Executive Officer of SSI.
"Security Agreement" means the Security Agreement, dated as of
the date hereof, between SSI, as debtor, and Mesa, as secured party, executed
pursuant to Section 3.1(a) of this Agreement, substantially in the form attached
hereto as Exhibit B, as such Security Agreement may be amended, modified,
supplemented, restated or extended from time to time.
"Security Documents" means the Security Agreement and the
Pledge Agreement and any other document or instrument executed in connection
with any of the foregoing.
"Stated Maturity Date" means the third anniversary of the date
of each NGV Loan.
"Subordinated Debt" shall mean all Indebtedness of SSI which
is incurred on or after the date hereof with the prior written consent of Mesa
(which Mesa shall have no obligation to give) and which, by the terms of the
instrument evidencing or creating such Indebtedness (which agreements, documents
and instruments shall be satisfactory to Mesa in form and substance), is
validly, effectively and expressly made subordinate and subject in right of
payment, to whatever extent Mesa may require in its sole discretion, to the
prior payment in full, in cash or cash equivalents, of all indebtedness of SSI
in respect of the principal of, and interest on, the Loan and all other
indebtedness and payment obligations of SSI to Mesa under the Loan Documents.
"Subsidiaries" means, collectively, the Phoenix Sub,
SuperShuttle DFW, Inc., a Texas corporation ("SuperShuttle DFW"), SuperShuttle
of San Francisco, Inc, a California corporation ("SuperShuttle San Francisco"),
SuperShuttle Franchise Corporation, a Delaware corporation, and LAX Franchisee,
each of which is a wholly owned subsidiary of SSI.
"Subsidiary Sale" means the completion of the sale of all of
the assets or stock of SuperShuttle San Francisco and/or SuperShuttle DFW.
"Termination Date" means the earlier to occur of (a) the
Stated Maturity Date or (b) any earlier maturity date resulting from
acceleration of the outstanding principal amount of the NGV Loans pursuant to
Section 7.1 hereof.
"Trade Debt" means, with respect to any Person, indebtedness
of such Person incurred in the ordinary course of business to trade creditors of
such Person.
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"Tribunal" means any government, any arbitration panel, any
court or any governmental department, commission, board, bureau, agency or
instrumentality of the United States or any foreign or domestic state, province,
commonwealth, nation, territory, possession, country, parish. town, township,
village or municipality or any non-governmental regulatory body to the extent
that the rules, regulations or orders of such body have the force of law.
"Union Bank Loan" means the loan from Union Bank to SSI the
terms of which were modified by the letter agreement dated May 25, 1994, between
SSI and Union Bank.
1.2 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
unless otherwise specified herein the word "from" means "from and including" and
the words "to" and "until" each means "to but excluding".
1.3 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
2.1 The NGV Loan. Mesa agrees, on the terms and conditions
hereinafter set forth, to make loam (collectively, the "NGV Loans" and
individually, a "NGV Loan") to SSI from time to time within five business days
of the date that SSI receives an NGV invoice (each such date shall be
hereinafter referred to as a "NGV Loan Date") during the period from the date
hereof until the first anniversary of the date hereof in an aggregate amount not
to exceed $4,500,000, on a senior secured and guaranteed basis. Each NGV Loan
will be evidenced by a promissory note (the "NGV Note"), substantially in the
form attached as Exhibit A hereto, and will be secured by the Security Documents
and will be guaranteed pursuant to the Guaranty. SSI may borrow and prepay
amounts as provided in this Article II, however Borrower shall not have the
right to reborrow any amounts repaid hereunder.
2.2 The Bridge Loan. Mesa agrees, on the terms and conditions
hereinafter set forth, to loan to SSI on a senior secured and guaranteed basis
an aggregate amount (the "Bridge Loan Amount") not to exceed $1,000,000 (the
"Bridge Loan") on the date hereof. The Bridge Loan will be evidenced by a
promissory note (the "Bridge Note"), substantially in the form attached as
Exhibit E hereto, and will be secured by the Security Documents, and will be
guaranteed pursuant to the Guaranty.
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2.3 Principal and Interest.
(a) The NGV Loans. SSI shall repay the unpaid principal
amount outstanding on each NGV Loan, and all accrued and unpaid interest thereon
from the applicable NGV Loan Date until such principal amount shall be paid in
full, at the rate per annum (the "Interest Rate") equal at all times to the
lesser of (i) 12% and (ii) the Highest Lawful Rate. Such principal and interest
shall be payable by SSI to Mesa monthly, on the dates and in the amounts
indicated in Schedule 2.3(a) attached hereto. To the extent permitted by
applicable law, SSI shall pay interest on overdue accrued and unpaid interest at
the Interest Rate. On each Termination Date SSI shall repay the unpaid principal
amount outstanding of the applicable NGV Loan and all accrued and unpaid
interest thereon.
(b) The Bridge Loan. SSI shall repay on the Demand Date,
the unpaid principal amount outstanding on the Bridge Loan, and all accrued and
unpaid interest thereon from the date hereof until such principal amount shall
be paid in full, at the Interest Rate. Interest on the Bridge Loan shall be due
and payable by SSI to Mesa monthly, on the last business day of each month,
commencing on August 31, 1994, with the last payment payable on the Demand Date.
To the extent permitted by applicable law, SSI shall pay interest on overdue
accrued and unpaid interest at the Interest Rate.
2.4 Prepayments.
(a) Optional Prepayments. SSI may, upon at least ten
Business Days' notice to Mesa stating the proposed date (which shall be a
Business Day) and aggregate principal amount of a prepayment, prepay the
outstanding principal amount of the Loans in whole or in part, together with
accrued interest to the date of such prepayment on the principal amount prepaid;
provided however, that all such prepayments shall be made together with accrued
interest to the date of such prepayments on the principal amount prepaid without
premium or penalty thereon. Such notice shall be irrevocable and the payment
amount specified in such notice shall be due and payable on the prepayment date
described in such notice, together with waved and unpaid interest on the amount
prepaid.
(b) Mandatory Prepayments. In the event SSI completes one
or more Subsidiary Sales prior to the Demand Date, SSI shall use the net cash
proceeds received from the first such sale solely to prepay the outstanding
principal amount of the Bridge Loan, in whole or in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid.
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2.5 Payments and Computations.
(a) SSI shall make each payment hereunder and under the
Notes not later than 12:00 Noon (Dallas, Texas time) on the day when due
in U.S. dollars to a bank designated in advance, in writing by Mesa, for
the account of Mesa, in same day funds.
(b) All computations of interest shall be made on the
basis of the actual number of days (including the first day but excluding
the last day) elapsed computed on the basis of a 360-day year consisting
of twelve 30-days months (unless such calculation would result in
interest exceeding the Highest Lawful Rate in which event such interest
shall be calculated on the basis of a year of 365 or 366 days, as the
case may be). Each determination by Mesa of the Interest Rate hereunder
shall be conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder or under the Notes
shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of
payment of interest.
ARTICLE III
CONDITIONS OF LENDING
3.1 Condition Precedent to the Bridge Loan. The obligation of
Mesa to make the Bridge Law is subject to the condition precedent that Mesa
shall have received on or before the date hereof the following, in form and
substance satisfactory to Mesa:
(a) this Agreement, the Bridge Note payable to the order
of Mesa, the Security Agreement, the Guaranty and the Refueling
Agreement, in each case duly executed by an authorized officer of SSI,
the Guarantor and/or the Lessees, as applicable;
(b) a legal opinion of Stein, Kahan & Rosenberg, counsel
to SSI, in form and substance satisfactory to Mesa with respect to each
of the following:
(i) the due incorporation and existence of each of SSI
and its Subsidiaries under the laws of the state of its
incorporation;
(ii) the corporate power and authority of SSI and its
Subsidiaries (A) to own its properties and conduct its business as
now conducted and (B) to execute and deliver the Loan Documents to
which it is a party and to perform its obligations thereunder.
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(iii) the due authorization, execution and delivery by
SSI of each Loan Document to which it is a party;
(iv) the enforceability against SSI of each Loan
Document to which SSI is a party;
(v) that there is no material litigation pending or,
to the knowledge of such counsel (after due investigation),
threatened by or against SSI or any of its subsidiaries;
(vi) that the execution and delivery by SSI of the
Loan Documents to which it is a party and the performance by SSI
of its obligations thereunder will not (A) violate any provision
of the Certificate of Incorporation or bylaws of SSI, (B) conflict
with, breach or cause a default under any agreement, document or
instrument known to such counsel (after due investigation) and to
which SSI is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject, or (C)
violate any Legal Requirement;
(vii) the perfection of the liens granted by the
Security Agreement and the Pledge Agreement; and
(viii) such other matters as Mesa may request
(including similar opinions with respect to any subsidiaries party
to any Loan Documents).
(c) a legal opinion of Armour, Goodin, Schlotz & MacBride,
special counsel to SSI, in form and substance satisfactory to Mesa with
respect to each of the following:
(i) that each of SSI and the Guarantor is not a public
utility subject to the California Public Utilities Code;
(ii) that the execution and delivery by each of SSI of
the Loan Documents to which it is a party, the NGV Leases and the
Refueling Agreement, the execution and delivery by the
Guarantor of the Guaranty, and the execution and delivery by
each of the Franchisees of the NGV Leases to which it is a party
and the Refueling Agreement and the performance by SSI, the
Guarantor and the Franchisees thereunder will not require any
consent, approval. authorization or order of or filing with,
recording, or notification to the California Public Utilities
Commission.
(d) a certificate of the Secretary or Assistant Secretary
and the President or a Vice President of SSI certifying (i) the bylaws of
SSI as in effect as of
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the date hereof (ii) the accuracy of an attached copy of the resolutions
of the Board of Directors of SSI authorizing the execution, delivery and
performance of each of the Loan Documents, the NGV Leases and the
Refueling Agreements, (iii) the names, true signatures and offices held
by officers of SSI authorized to execute and deliver the Loan Documents
to which SSI is a party, (iv) that as of the date hereof no Default or
Event of Default has occurred and is continuing, (v) that the
representations and warranties set forth in the Loan Documents to which
SSI is a party are true and correct as of the date hereof, (vi) that SSI
has not taken any proceedings for the dissolution or liquidation of SSI
or any of its Subsidiaries, (vii) that there has been no amendment of the
Certificate of Incorporation of SSI approved by the Board of Directors of
SSI or the stockholders of SSI or filed with the Secretary of State of
the State of Delaware since May 9, 1988 and (viii) that SSI has complied
with all agreements and conditions required to be complied with by it as
of the date hereof under this Agreement and the other Loan Documents to
which SSI is a party;
(e) a certificate of the Secretary of State of the state
of incorporation of each of SSI and the Subsidiaries as to the continued
existence and good standing of SSI and the Subsidiaries;
(f) certificates for the shares of each of the
Subsidiaries pledged by SSI pursuant to the Pledge Agreement;
(g) evidence of the filing of security instruments and
UCC-1 financing statements and all other documents reasonably required by
Mesa; and
(h) evidence of releases of Liens held by Chrysler Credit
Corporation and Orix Credit Alliance, Inc. and terminations of the
financing statements evidencing such Liens.
3.2 Condition Precedent to the Initial NGV Loan. The
obligation of Mesa to make the Initial NGV Loan is subject to the condition
precedent that Mesa shall have received on or before the Initial NGV Loan Date
the following, in form and substance satisfactory to Mesa:
(a) the applicable NGV Note payable to the order of Mesa,
and the NGV Leases, in each case duly executed by an authorized officer
of SSI or the Lessees, as applicable;
(b) the legal opinion, dated as of the Initial NGV Loan
Date, referred to in Section 3.1(b) hereof;
(c) the legal opinion, dated as of the Initial NGV Loan
Date, referred to in Section 3.1(c) hereof;
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(d) the certificate of the Secretary or Assistant
Secretary and the President or a Vice President of SSI, dated as of the
Initial NGV Loan Date, referred to in Section 3.1(d);
(e) the certificates of the Secretary of State referred to
in Section 3.1(e);
(f) the evidences of filing of amendments to the filings
referred to in Section 3.1(g) to include the vehicle identification
numbers of the applicable NGVs;
(g) copies of the insurance policy or insurance policies
on the NGVs to by purchased with the proceeds of the Initial NGV Loan;
and
(h) all necessary federal, state or local government
permits, licenses, consents, certificates and other authorizations
necessary for Mesa to finance, construct and operate the Refueling
Stations (as defined in the Refueling Agreement).
In addition, Mesa shall have entered into any necessary
contractual arrangements satisfactory to it (i) regarding the construction,
maintenance and operation of the Refueling Stations, including lease
arrangements with Los Angeles International Airport, John Wayne International
Airport and Sky Harbor International Airport for suitable sites on which to
construct the Refueling Stations and (ii) with gas suppliers, intrastate
pipeline companies and the applicable local distribution company in order to
acquire and have transported to the Refueling Stations the necessary supplies of
natural gas via high pressure lines for delivery of such gas as compressed
natural gas to SSI, its Franchisees and the Phoenix Sub, as applicable.
3.3 Conditions Precedent to Subsequent NGV Loans. The
obligation of Mesa to make each NGV Loan subsequent to the Initial NGV Loan is
subject to the condition precedent that Mesa shall have received on or before
each subsequent NGV Loan Date the following, in form and substance satisfactory
to Mesa:
(a) the applicable NGV Note payable to the order of Mesa,
duly executed by an authorized officer of SSI;
(b) the certificate of the Secretary or Assistant
Secretary and the President or a Vice President of SSI, dated as of the
applicable NGV Loan Date, as to the matters referred to in Section
3.1(d);
(c) the certificates of the Secretary of State referred to
in Section 3.1(e);
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(d) the evidences of filing of amendments to the filings
referred to in Section 3.1(g) to include the vehicle identification
numbers of the applicable NGVs; and
(e) copies of the insurance policy or insurance policies
on the NGVs to by purchased with the proceeds of the applicable NGV Loan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SSI
In consideration of and in order to induce Mesa to enter into
this Agreement and to make the Loans to SSI, SSI represents and warrants as of
the date hereof as follows:
4.1 Organization and Qualification; Subsidiaries. SSI and each
of its subsidiaries (a) is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation, (b) has the
corporate power to own its properties and to carry on its business as now
conducted and as proposed to be conducted, and (c) is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the conduct of its business or the ownership of its assets requires such
qualification, except where its failure to be so qualified would not have a
material adverse effect on its business, financial condition or operations. The
only subsidiaries of SSI are the Subsidiaries.
4.2 Power and Authority. Each of SSI, the Phoenix Sub, the LAX
Franchisee and the JWI Franchisee has all necessary corporate and other power
and authority to enter into and perform its obligations under the Loan Documents
to which it is a party and all such action has been duly authorized by all
necessary corporate proceedings on its part.
43 Enforceability. Each of the Loan Documents to which SSI or
any of the Subsidiaries is a party have been or will be duly executed and when
delivered by SSI and my applicable Subsidiary will be, the, legal, valid and
binding obligations of SSI or the applicable Subsidiary, enforceable against SSI
or the applicable Subsidiary in accordance with their respective terms, except
as enforcement many be (i) limited by applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization,
or similar laws, or general equitable principles from time to time effecting
rights of creditors generally, and (ii) subject to the general effect of general
principles of equity.
4.4 Financial Statements. SSI has furnished Mesa with
unaudited consolidated financial statements of SSI and its subsidiaries as at
and for the fiscal years ended September 30, 1992 and September 30, 1993 and for
the seven mouth period ended
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April 30, 1994. These financial statements fairly present the financial position
of SSI at the dates thereof and the results of operations of SSI for the periods
then ended (subject, as to interim statements, to changes resulting from audits
and year-end adjustments, which in the aggregate are not material) and have been
prepared in conformity with GAAP consistently applied throughout the periods
involved. There has been no material adverse change in the business, financial
condition or operations of SSI since April 30, 1994.
4.5 Default. Neither SSI nor any of its subsidiaries is in
default under the provisions of any agreement, document or instrument to which
it is a party or by which it or any of its properties is bound or in violation
of any order, writ, injunction or decree of any Tribunal or in default under, or
in violation of, any order, regulation or demand of any governmental
instrumentality, which default or violation would, individually or in the
aggregate, materially and adversely affect the business, financial condition or
operations of SSI and its subsidiaries.
4.6 Title to Assets, Liens. SSI and each of its subsidiaries
has good and marketable title to its assets. The assets of SSI and each of its
subsidiaries are not subject to any Liens except those permitted under Section
6.2.
4.7 Payment of Taxes. SSI and each of its subsidiaries has
filed all federal and state income, franchise and other tax returns which are
required to be filed and has paid all taxes shown on said returns and all
assessments which are due. SSI and each of its subsidiaries and their respective
officers know of no claims by any governmental authority for any unpaid taxes.
4.8 Absence of Conflicts. The execution, delivery and
performance by SSI of this Agreement and by SSI and any of its subsidiaries of
the Loan Documents to which they are a party and the consummation of the
transactions contemplated hereby and thereby, will not (a) conflict with or
result in any violation of any provision of the Certificate of Incorporation or
the Bylaws, each as amended to date, of SSI or any applicable subsidiary, (b)
conflict with or result in any violation of any of the terms or provisions of,
or constitute a default under, or give any other party a right to terminate any
of its obligations under, or result in the acceleration of any obligation under,
any indenture, mortgage, deed of trust, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or other agreement
or instrument to which SSI or any applicable subsidiary is a party or by which
SSI or any applicable subsidiary or any of their respective properties are bound
or affected or (c) violate any term of any Legal Requirement applicable to SSI
or any applicable subsidiary or their respective properties or assets except as
provided in the opinion of Armour, Goodin, Schlotz & MacBride referred to in
Section 3.1(c) hereof.
4.9 Compliance with Laws. SSI and each of its subsidiaries is
in compliance with all Legal Requirements applicable and necessary for the
conduct of its business.
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4.10 Litigation. There are no actions, suits or proceedings
pending or, to the best of SSI's knowledge, threatened against or affecting SSI
or any of its subsidiaries or any of their respective assets before any Tribunal
(a) in which an adverse determination might have a material adverse effect on
the business, financial condition or operations of SSI or any of its
subsidiaries, or (b) which in any manner draws into question the validity or the
enforceability of any Loan Document to which SSI or any of its subsidiaries is a
party. There are no judgments, orders or decrees outstanding against or
affecting SSI or any of its subsidiaries or any of their respective assets
before any Tribunal.
4.11 Margin Stock. SSI does not own, directly or indirectly,
any "margin stock" within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System (herein called "margin stock"). None of the
proceeds of the Loan will be used for the purpose of purchasing or carrying any
margin stock or for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry margin stock or for any other
purpose which might constitute this transaction a "purpose" credit within the
meaning of said Regulation U, as now in effect or as it may hereafter be
amended.
4.12 Patents, Etc. SSI has all patents, patent rights,
licenses, trademarks, trademark rights, trade names, trade name rights,
copyrights, permits and consents which are required in order for it to conduct
its business as now conducted and as proposed to be conducted, without known
conflict with the rights of others.
4.13 Employee Benefits. No Reportable Event has occurred with
respect to any Plan of SSI or its subsidiaries. SSI has not incurred any
material accumulated funding deficiency within the meaning of ERISA or incurred
any material liability to the Pension Benefit Guaranty Corporation established
under ERISA (or any successor thereto under ERISA) in connection with any Plan
of SSI or its subsidiaries.
4.14 Consents, Etc. Except for (a) the filing of any and all
UCC-1 financing statements required pursuant to any of the Loan Documents in the
Office of the Secretary of State of the State of Texas, the Office of the
Secretary of State of the State of California, or the Office of the Secretary of
State of the State of Arizona and (b) any consent which may be required under
the California Public Utilities Code for SSI to transfer control of the shares
of its Subsidiaries to Mesa pursuant to the terms of the Pledge Agreement, no
authorization, approval or other action by, and no notice to, filing with or
consent of any Person is required to be taken, made or obtained by SSI in
connection with the execution, delivery and performance by SSI of its
obligations under the Loan Documents to which it is a party or the consummation
of the transactions contemplated thereby.
4.15 Fiscal Year. The last day of SSI's fiscal year is
September 30.
4.16 Location of Assets. The Collateral (as defined in the
Security Agreement) is and will be located solely at the locations specified on
Schedule I to the
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Security Agreement and at such other locations specifically permitted by the
terms and provisions of the Security Agreement. The only states where assets of
SSI or any of its Subsidiaries are located are California, Arizona and Texas.
4.17 Subordinated Debt Documents. There are no agreements,
documents or instruments evidencing or relating to any Subordinated Debt of SSI
or its subsidiaries and neither SSI nor any of its subsidiaries has any
Subordinated Debt outstanding.
4.18 Invoices. Each Account of SSI and any of its subsidiaries
is evidenced by a Dated Invoice.
4.19 Solvency. As of the date hereof, and after giving affect
to the Loans and the other Loan Documents, (i) the assets of SSI, at a fair
valuation, will exceed its liabilities, including contingent liabilities; (ii)
the remaining capital of SSI will not be unreasonably small to conduct its
business; and (iii) SSI has not incurred debts, and does not intend to incur
debts, beyond its ability to pay such debts as they mature. For purposes of this
Section 4.19, "debt" means any liability on a claim and "claim" means (x) any
right to payment, whether or not such right is reduced to judgement, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (y) any right to an equitable remedy
for breach of performance if such breach gives rise to payment. whether or not
such right to any equitable remedy is reduced to judgement. fixed, contingent,
matured, unmatured disputed, undisputed, secured or unsecured. After giving
effect to this Agreement and the other Loan Documents to which SSI is a party,
SSI is solvent.
4.20 Information. All information heretofore or
contemporaneously furnished by or on behalf of SSI to Mesa for purposes of or in
connection with this Agreement or any other Loan Document or any transaction
contemplated hereby or thereby is, and all other such information hereafter
furnished by or on behalf of SSI in writing to Mesa (i) will be true and
accurate in all material respects on the date as of which such information is
dated or certified, and (ii) will not be incomplete by omitting to state any
material fact necessary to make such information not misleading in light of the
circumstances under which such information was provided. There is no fact known
to SSI which is reasonably likely to have a material adverse effect on the
business, financial condition, properties, prospects or operations of SSI or on
the ability of SSI to perform any of its obligations under this Agreement or any
other Loan Document to which SSI is a party which has not been disclosed, in
writing, to Mesa for use in connection with the transactions contemplated hereby
or by any other Loan Document.
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ARTICLE V
AFFIRMATIVE COVENANTS
Until payment in full of the Loans and all other amounts due to Mesa
under the Loan Documents:
5.1 Information of SSI.
(a) SSI shall deliver to Mesa promptly after any
executive officer of SSI has, or should have, knowledge of the
occurrence of a Default or an Event of Default, a certificate of the
President, a Vice President of the Chief Financial officer of SSI
setting forth the details of such Default or Event of Default.
(b) SSI shall deliver to Mesa, with reasonable
promptness, such financial or other information regarding SSI and its
subsidiaries as Mesa from time to time may reasonably request,
including monthly, quarterly and annual financial statements.
(c) SSI shall deliver to Mesa, no later than one
business day after the completion of a Subsidiary Sale, written notice
of such sale.
5.2 Books and Records. SSI shall maintain proper books of
record and account in accordance with sound accounting practices in which true,
full and correct entries will be made of all of its dealings and business
affairs.
5.3 Insurance. SSI shall maintain (a) insurance covering the
business and assets of SSI and its subsidiaries with responsible companies in
such amounts and against such risks as is customarily carried by owners of
similar businesses and properties, including, without limitation, the
maintenance at all times on and after the date hereof of insurance coverage of
the type and in the amounts in effect as of the due hereof and (b) an umbrella
liability policy covering the business and assets of SSI and its subsidiaries
with liability coverage in the amount of a minimum of S2,000,000 per occurrence,
on terms and with an insurer acceptable to Mesa. In addition, SSI shall maintain
or require each of the Lessees to maintain, an insurance policy or policies on
the NGVs with liability coverage in the amount of a minimum of $1,000,000 per
occurrence per NGV, on terms and with an insurer acceptable to Mesa. SSI hereby
agrees to add Mesa as an additional insured on all such insurance policies, and
all such insurance policies shall provide for not less than 30 days prior
written notice to Mesa for any cancellation, change of coverage or amendment.
SSI shall not change the type or decrease the amount of insurance maintained by
it as of the date hereof without Mesa's prior written consent.
5.4 Loss Payable Endorsements. With respect to any NGV
Insurance acquired by SSI or the Lessees on or after the date hereof SSI shall
or shall require each
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of the Lessees to (a) promptly deliver to Mesa written confirmation from the
applicable insurance company that Mesa has been named as additional insured and
loss payee with respect to such NGV Insurance, and (b) deliver to Mesa, within
ten Business Days after it acquires any such NGV Insurance a loss payable
endorsement, in form and substance satisfactory to Mesa, with respect to such
NGV Insurance.
5.5 Maintenance of Property. SSI shall, at its own expense,
cause the NGVs to be maintained, preserved, protected and kept in good repair,
working order and condition, ordinary wear and tear excepted. SSI shall make all
replacements and additions to its property as may be reasonable necessary to
conduct its business properly and efficiently. Without limiting the foregoing,
SSI shall comply with the requirements of Sections 7, 9 and 10 of the Security
Agreement relating to the NGVs and shall require that the LAX Franchisee, the
JWI Franchisee and its Subsidiaries comply with such provisions and the
provisions of Sections 5.2, 5.3, 5.4, 5.5, 5.6 and 5.7 hereof.
5.6 Inspection of Property and Records. SSI shall permit any
Person designated by Mesa to visit, inspect and audit any of its properties,
corporate books and financial records, to make copies of such books and records
or extracts therefrom, and to discuss the same with its principal officers, all
at such times as Mesa may reasonably request and all at SSI's expense.
5.7 Laws, Obligations. SSI shall (a) comply with all
applicable statutes and governmental regulations, and (b) pay all taxes,
assessments, governmental charges, claims for labor, supplies, rent and other
obligations which if unpaid might become or result in a Lien against its assets,
except any such liabilities being contested in good faith by appropriate
proceedings and for which it maintains adequate reserves in accordance with
GAAP.
5.8 Existence. SSI shall at all times preserve and keep in
full force and effect its corporate existence. SSI shall at all times preserve
and keep in full force and effect the corporate existence of each of its
Subsidiaries (unless merged into SSI or a Subsidiary) and all rights and
franchises of SSI and its Subsidiaries unless, in the good faith judgment of SSI
the termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise would not have a materially adverse
effect on the business, operations, affairs, financial condition, properties or
assets of SSI and its Subsidiaries taken as a whole. Notwithstanding the
foregoing, SSI may complete a Subsidiary Sale and the sale of LAX Franchisee as
long as such sale is an arms' length transaction and is on terms that are fair
to SSI.
5.9 Application of Proceeds. SSI shall use the proceeds of the
NGV Loan solely for the purpose of purchasing the NGVs directly from Chrysler
Corporation or an authorized dealer of Chrysler Corporation and subject to the
provisions of the other Loan Documents and the NGV Leases, to modify (a) such
NGVs in a manner deemed necessary by SSI for SSI, or the Lessees, to conduct its
or their respective businesses and (b) the
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gasoline-powered vehicles identified on Schedule 1.1 hereto to enable such
vehicles to operate on compressed natural gas. SSI shall use the proceeds of the
Bridge Loan solely for the purpose of paying in full all amounts owing by SSI
pursuant to the Union Bank Loan.
5.10 Subsidiary Cash Flows. Commencing on the Bridge Loan Date
up to and including the Demand Date, SSI shall reserve 75% of the Cash Flow from
each of the Subsidiaries to repay, when due, the outstanding principal amount of
the Bridge Loan and all accrued and unpaid interest thereon.
5.11 Subsidiary Sales. In the event that SSI completes a
Subsidiary Sale or the sale of LAX Franchisee subsequent to the Demand Date and
prior to the Termination Date, SSI shall use the net proceeds from such
Subsidiary Sale solely to invest in the business of SSI or its subsidiaries and
not for any other purpose.
5.12 Termination Statements. SSI shall deliver to Mesa a
file-stamped copy of the termination of the financing statements evidencing the
releases of Liens held by Chrysler Credit Corporation and Orix Credit Alliance,
Inc. referred to in Section 3.1(h) hereof promptly after the receipt by SSI
thereof.
ARTICLE VI
NEGATIVE COVENANTS
6.1 Capital Expenditures. Prior to the second anniversary of
the last NGV loan, and as long as no Default or Event of Default has occurred
and is continuing the Capital Expenditures of SSI and its subsidiaries on a
consolidated basis, shall not exceed $20O,000 annually in the aggregate.
Notwithstanding this Section 6.1, SSI may in the ordinary and regular course of
its business and in a manner consistent with past practice, purchase fleet
vehicles to replace fleet vehicles currently owned, or operated by SSI or its
subsidiaries or franchisees and (ii) acquire and develop certain communications
software and hardware to be used by SSI, its subsidiaries and franchisees for
reservations and dispatching. Any Capital Expenditures to be made by SSI and its
subsidiaries on a consolidated basis which will exceed $200,000 annually, in the
aggregate, shall be submitted, in writing, to Mesa for its prior approval, which
approval shall not be unreasonably withheld.
6.2 Liens. Neither SSI nor any of its subsidiaries shall
create or permit to exist any Lien upon any of its assets or properties, whether
now owned or hereafter acquired, or assign or otherwise convey to any Person any
right to receive any of its income, except:
(a) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings and for which it
maintains adequate reserves;
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(b) Other Liens incidental to the conduct of its
business or the ownership of its assets which are not incurred in
connection with the borrowing of money or the obtaining of advances or
credit and which do not individually or in the aggregate (i) materially
detract from the value of its assets or materially impair the use
thereof in the operation of its business, or (ii) materially and
adversely affect its business, financial condition or operations;
(c) Liens in favor of Mesa; and
(d) Liens, if any, existing on the date hereof and
described on Schedule 6.2(d) attached hereto and made a part hereof.
6.3 Indebtedness. Prior to the second anniversary of the last
NGV Loan, and as long as no Default or Event of Default has occurred and is
continuing, neither SSI nor any of its subsidiaries shall create, assume, incur,
guarantee or permit to exist at any time any Indebtedness, except:
(a) Indebtedness under the Loan Documents, including
all renewals, extensions, replacements, refundings and refinancings
thereof, from time to time, in whole or in part;
(b) Trade Debt that is not due and payable at such
time; and
(c) Indebtedness existing on the date hereof and
reflected on Schedule 6.3(c) hereto.
6.4 Transactions with Affiliates. Neither SSI nor any of its
subsidiaries shall engage in any transaction with any of its Affiliates an terms
less favorable to SSI or the applicable subsidiary than would have been
obtainable in an arm's-length transaction with an unrelated third party,
provided, however, that the foregoing restriction shall not apply to
transactions between SSI and its wholly owned subsidiaries.
6.5 Accounts. Prior to the second anniversary of the last NGV
Loan, and as long as no Default or Event of Default has occurred and is
continuing, no Account of SSI or any of its subsidiaries shall be evidenced by
an invoice dated as of a date other than the date on which (a) the goods giving
rise to such Account were delivered to the Account Debtor under such Account, or
(b) the services giving rise to such Account were rendered to the Account Debtor
under such Account.
6.6 Merger, Consolidation, Sale of Assets, Etc. Prior to the
second anniversary of the last NGV Loan, and as long as no Default or Event of
Default has occurred and is continuing, neither SSI nor any of its subsidiaries
shall (a) merge or consolidate with or into any other Person, or (b) sell,
lease, transfer or otherwise dispose of (whether in one transaction or a series
of transactions) any of its assets.
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6.7 Investments, Loans, Advances, etc. Prior to the second
anniversary of the last NGV Loan, and as long as no Default or Event of Default
has occurred and is continuing, neither SSI nor any of its subsidiaries shall
make, or permit to exist, any Investment in any Person except for Permitted
Investments.
6.8 Guarantees. Prior to the second anniversary of the last
NGV Loan, and as long as no Default or Event of Default has occurred and is
continuing, except for endorsements of instruments for deposit or collection in
the ordinary course of business, neither SSI nor any of its subsidiaries shall
guarantee, or permit to exist any guarantee by it of, any obligations,
liabilities or indebtedness of any Person.
6.9 Dividends, Etc. Prior to the second anniversary of the
last NGV Loan, and as long as no Default or Event of Default has occurred and is
continuing, SSI shall not declare or pay any dividend or distribution in respect
of any capital stock of SSI or purchase, redeem or otherwise acquire or retire
for value or permit any of its subsidiaries to purchase or otherwise acquire for
value any capital stock of SSI.
6.10 NGV Leases. Commencing on the date hereof up to and
including the Termination Date, SSI shall not cancel, pledge, assign or
otherwise encumber the NGV Leases, and SSI shall not enter into any lease with
respect to the NGVs except for the NGV Leases, without the prior written consent
of Mesa.
ARTICLE VII
EVENTS OF DEFAULT
7.1 Events of Default. If any of the following events ("Events
of Default") shall occur:
(a) SSI shall fail to pay any principal of, or
interest on, the NGV Notes when the same become due and payable; or
(b) SSI shall fail to pay any principal of, or
interest on, the Bridge Note when the same becomes due and payable and
such failure continues for a period of 60 days after such payment
became due; or
(c) SSI or its subsidiaries shall fail to perform or
observe any other term, covenant or agreement contained in any Loan
Document on its part to be performed or observed if such failure shall
remain unremedied for 15 days after notice of such event is given by
Mesa to SSI; or
(d) SSI shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a
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general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against SSI or any of its subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, arrangement, adjustment, protection, relief,
or composition of SSI or any of its subsidiaries or SSI's or any of its
subsidiaries' debts under any law relating to bankruptcy or insolvency
or relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar
official for SSI or any of its subsidiaries or for any substantial part
of its or their Property and, in the case of any such proceeding
instituted against SSI or any of its subsidiaries (but not instituted
by SSI or any of its subsidiaries), either such proceeding shall remain
undismissed or unstayed for a period of 30 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of
an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, SSI or any of its subsidiaries
or for any substantial part of SSI or any of its subsidiaries'
Property) shall occur;
(e) Any judgment or order for the payment of money in
excess of $50,000 shall be rendered against SSI and there shall be any
period of 30 consecutive days during which such judgment is not
satisfied through insurance payments or otherwise or a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(f) SSI or any of its Franchisees or Phoenix Sub
shall fail to perform or observe any term, covenant or agreement
contained in the Refueling Agreement on its part to be performed or
observed if such failure shall remain unremedied for 15 days after
notice of such event is given by Mesa to SSI;
(g) SSI or any of its Franchisees or Phoenix Sub
shall fail to perform or observe any term, covenant or agreement
contained in the NGV Leases on its part to be performed or observed if
such failure shall remain unremedied for 15 days after notice of such
event is given by Mesa to SSI;
(h) (i) SSI shall fail to pay any principal of or
premium or interest on its Indebtedness which is outstanding when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness; (ii) any other
event shall occur or condition shall exist under any agreement or
instrument relating to such Indebtedness so in default, and shall be
continuing after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition it to
accelerate, or to permit the acceleration of, the maturity of such
Indebtedness; or (iii) any such Indebtedness shall be declared to be
due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
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(i) Any Security Document shall for any reason,
except to the extent permitted by the terms thereof, cease to create a
valid and perfected first priority security interest in any of the
Collateral (as defined in the Security Agreement) purported to be
covered thereby or any provision of the Guaranty shall for any reason
cease to be valid and binding on the Guarantor; or
(j) Rouse ceases to own at least a majority of the
outstanding capital stock of SSI;
then, and in any such event, Mesa may, by notice to SSI, declare the Notes, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Note, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by SSI; provided however, that in the event of an actual or deemed entry
of an order for relief with respect to SSI under the Federal Bankruptcy Code,
the Note, all such interest and all such amounts shall automatically become and
be due and payable, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by SSI.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendments, Etc. No amendment or waiver of any provision
of this Agreement or the Notes, nor consent to any departure by SSI therefrom,
shall, in any event be effective unless the same shall be in writing and signed
by Mesa, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
8.2 Notices, Etc. All notices and other communications
provided in connection with this Agreement to a party to this Agreement shall,
be in writing (including by facsimile transmission) unless oral notice is
otherwise expressly permitted hereunder, and shall be given to the intended
recipient at the address specified below, or such address as may be provided by
written notice in accordance with this Section 8.2. All such notices and other
communications shall be effective (a) if delivered by facsimile transmission,
when received and telephonically confirmed, (b) if delivered, when delivered at
the address of the recipient specified below, (c) if given orally, at the time
given, provided that written confirmation of such notice shall have been
received in accordance with this Section 8.2 promptly thereafter, and in no
event more than 12 hours after such oral notice has been received, and (d) if
mailed, on the third calendar day after being deposited in the U.S. mail, by
certified mail, postage prepaid, return receipt requested:
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(i) If to SSI
SuperShuttle International, Inc.
1225 West 190th Street, Suite 450
Gardena, California 90248
Fax: 310/769-6925
Attention: Chief Executive Officer
with a copy to:
Stein, Kahan & Rosenberg
1299 Ocean Avenue, Fourth Floor
Santa Monica, California 90401
Fax: 310/394-4759
Attention: Robert L. Kahan
(ii) If to Mesa:
Mesa Holding Co.
2600 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Fax: 214/969-2220
Attention: Chief Financial Officer
with a copy to:
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
Fax: 214/953-6503
Attention: Carlos A. Fierro
8.3 No Waiver; Remedies; No failure on the part of Mesa to
exercise, and no delay in exercising, any right under any Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
8.4 Costs and Expenses of Enforcement. SSI agrees to pay
promptly on demand all costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
the Loan Documents and the other documents to be delivered
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under the Loan Documents, including, without limitation, reasonable counsel
fees and expenses in connection with the enforcement of rights under this
Section 8.4.
8.5 Binding Effect. This Agreement shall become effective when
it shall have been executed by SSI and Mesa and thereafter shall be binding upon
and inure to the benefit of SSI and Mesa and their respective successors and
assigns, except that SSI shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of Mesa.
8.6 Limitation on Agreements.
(a) All agreements between SSI or Mesa, whether now
existing or hereafter arising and whether written or oral, are hereby
expressly limited so that in no contingency or event whatsoever,
whether by reason of demand being made in respect of an amount due
under any Loan Document or otherwise, shall the amount paid, or agreed
to be paid, to Mesa for the use, forbearance, or detention of the money
to be loaned under this Agreement, the Note or any other Loan Document
or otherwise or for the payment or performance of any covenant or
obligation contained herein or in any other Loan Document exceed the
Highest Lawful Rate. If, as a result of any circumstances whatsoever,
fulfillment of any provision hereof or of any of such documents, at the
time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by applicable usury law,
then, ipso facto, the obligation to be fulfilled shall be reduced to
the limit of such validity, and if, from any such circumstance, Mesa
shall ever receive interest or anything which might be deemed interest
under applicable law which would exceed the Highest Lawful Rate, such
amount which would be excessive interest shall be applied to the
reduction of the principal amount owing on account of the Note or the
amounts owing on other obligations of SSI to Mesa under any Loan
Document and not to the payment of interest, or if such excessive
interest exceeds the unpaid principal balance of the Note and the
amounts owing on other obligations of SSI to Mesa under any Loan
Document, as the case may be, such excess shall be refunded to SSI. All
sums paid or agreed to be paid to Mesa for the use, forbearance, or
detention of the indebtedness of SSI to Mesa shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of such indebtedness until payment in
full of the principal (including the period of any renewal or extension
thereof) so that the interest on account of such indebtedness shall not
exceed the Highest Lawful Rate. Notwithstanding anything to the
contrary contained in any Loan Document, it is understood and agreed
that if at any time the rate of interest which accrues on the
outstanding principal balance of the Note shall exceed the Highest
Lawful Rate, the rate of interest which accrues on the outstanding
principal balance of the Note shall be limited to the Highest Lawful
Rate, but any subsequent reductions in the rate of interest which
accrues on the outstanding principal balance of the Note shall not
reduce the rate of interest which accrues on the outstanding principal
balance of the Note below the Highest
-25-
<PAGE> 31
Lawful Rate until the total amount of interest accrued on the outstanding
principal balance of the Note equals the amount of interest which would
have accrued if such interest rate had at all times been in effect. The
terms and provisions of this Section 8.6 shall control and supersede every
other provision of all Loan Documents.
(b) To the extent that Texas law is applicable to the determination of
the Highest Lawful Rate, Mesa and SSI agree that (i) if Article 1.04,
Subtitle 1, Title 79 of the Revised Civil Statutes of Texas, 1925, as
amended, is applicable to such determination, the indicated rate ceiling
computed from time to time pursuant to Section (a) of such Article shall
apply, provided that, to the extent permitted by such Article, Mesa may
from time to time by notice to SSI revise the election of such interest
rate ceiling as such ceiling affects the then current or future balances of
the Advance; and (ii) the provisions of Chapter 15 of Subtitle 3, Title
79, of the Revised Civil Statutes of Texas, 1925, as amended, shall not
apply to this Agreement or the Note.
8.7 Severability. In case any one or more of the provisions contained in
any Loan Document or in any instrument contemplated thereby, or any application
thereof, shall be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
therein, and any other application thereof, shall not in any way be affected or
impaired thereby. Each covenant contained in any Loan Document shall be
construed (absent an express contrary provision herein) as being independent of
each other covenant contained therein, and compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants
8.8 Governing Law and Consent to Jurisdiction. THIS AGREEMENT AND THE
NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
(AS OPPOSED TO CONFLICTS OF LAW PRINCIPLES) AND JUDICIAL DECISIONS OF THE STATE
OF TEXAS AND APPLICABLE UNITED STATES FEDERAL LAW, AND IS INTENDED TO BE
PERFORMED IN ACCORDANCE WITH, AND ONLY TO THE EXTENT PERMITTED BY SUCH LAWS. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, SSI HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF ANY TEXAS STATE COURT, OR ANY UNITED STATES FEDERAL COURT,
SITTING IN THE CITY OF DALLAS, TEXAS, AND TO THE NONEXCLUSIVE JURISDICTION OF
ANY STATE OR UNITED STATES COURT SITTING IN ANY STATE IN WHICH ANY OF THE NGVs
ARE LOCATED, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. SSI HEREBY
IRREVOCABLY APPOINTS BRIAN WIER (THE "PROCESS AGENT"), WITH AN OFFICE ON THE
DATE HEREOF AT 729 EAST DALLAS ROAD, GRAPEVINE, TEXAS 76051 AS ITS AGENT TO
RECEIVE ON BEHALF OF SSI AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING.
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<PAGE> 32
SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO SSI
IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, AND SSI
HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH
SERVICE ON ITS BEHALF. AS AN ALTERNATIVE METHOD TO SERVICE, SSI ALSO
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SSI AT ITS ADDRESS
SET FORTH IN SECTION 8.2 HEREOF. SSI AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
SSI FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO
ANY ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS.
NOTHING IN THIS SECTION 8.8 SHALL AFFECT THE RIGHT OF MESA TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF MESA TO
BRING ANY ACTION OR PROCEEDING AGAINST SSI OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION.
8.9 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different 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.
8.10 Right to Factor Loan. Mesa may sell, factor, assign or offer
participations in its rights in the Loans at such times and upon such terms as
Mesa considers appropriate. Upon any such sale, or other transaction, Mesa shall
promptly disclose to SSI the identification of each purchaser or other party.
8.11 Final Agreement. THE LOAN DOCUMENTS AND THE MASTER AGREEMENT
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES, THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES.
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<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
SUPERSHUTTLE INTERNATIONAL, INC.
By: /s/ Mitchell S. Rouse
-------------------------------
Mitchell S. Rouse
Chief Executive Officer
MESA HOLDING CO.
By: /s/ Stephen K. Gardner
-------------------------------
Stephen K. Gardner
Vice President, Chief Financial Officer
<PAGE> 1
Exhibit 10.34
================================================================================
CREDIT AGREEMENT
by and between
SUPERSHUTTLE INTERNATIONAL, INC.
and its Subsidiaries
and
IMPERIAL BANK ARIZONA
Dated as of
March 17, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS .........................................................................................................1
ARTICLE 1 DEFINITION OF TERMS.........................................................................2
1.1 Definitions.................................................................................2
1.2 References..................................................................................8
1.3 Accounting Terms............................................................................8
ARTICLE 2 THE RLC.....................................................................................9
2.1 RLC Commitment..............................................................................9
2.2 Revolving Line of Credit....................................................................9
2.3 RLC Advances................................................................................9
2.4 RLC Payments................................................................................9
2.5 Principal Prepayments; Excess Balance Payment..............................................10
2.6 Method of Payment..........................................................................10
2.7 Conditions.................................................................................10
2.8 Other RLC Advances by Lender...............................................................10
2.9 Assignment.................................................................................11
2.10 Fees.......................................................................................11
ARTICLE 3 SECURITY...................................................................................12
3.1 Security...................................................................................12
3.2 Security Documents.........................................................................12
ARTICLE 4 CONDITIONS PRECEDENT.......................................................................13
4.1 Initial or any Subsequent Advance..........................................................13
4.2 No Event of Default........................................................................14
4.3 No Material Adverse Change.................................................................15
4.4 Representations and Warranties.............................................................15
ARTICLE 5 REPRESENTATIONS AND WARRANTIES.............................................................16
5.1 Recitals...................................................................................16
5.2 Organization and Good Standing.............................................................16
5.3 Authorization and Power....................................................................16
5.4 Security Documents.........................................................................16
5.5 No Conflicts or Consents...................................................................16
5.6 No Litigation..............................................................................16
5.7 Financial Condition........................................................................17
5.8 Taxes......................................................................................17
5.9 No Stock Purchase..........................................................................17
5.10 Advances...................................................................................17
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
5.11 Enforceable Obligations....................................................................17
5.12 No Default.................................................................................17
5.13 Significant Debt Agreements................................................................17
5.14 ERISA......................................................................................18
5.15 Compliance with Law........................................................................18
5.16 Solvent....................................................................................18
5.17 Investment Company Act.....................................................................18
5.18 Title......................................................................................18
5.19 Survival of Representations, Etc...........................................................18
5.20 Environmental Matters......................................................................18
5.21 Subsidiary.................................................................................18
5.22 Licenses, Tradenames.......................................................................18
ARTICLE 6 AFFIRMATIVE COVENANTS......................................................................20
6.1 Financial Statements, Reports and Documents................................................20
6.2 Maintenance of Existence and Rights; Conduct of Business;
Management.................................................................................21
6.3 Operations and Properties..................................................................21
6.4 Authorizations and Approvals...............................................................21
6.5 Compliance with Law........................................................................21
6.6 Payment of Taxes and Other Indebtedness....................................................21
6.7 Compliance with Significant Debt Agreements and Other Agreements...........................22
6.8 Compliance with Credit Documents...........................................................22
6.9 Notice of Default..........................................................................22
6.10 Other Notices..............................................................................22
6.11 Books and Records; Access..................................................................22
6.12 ERISA Compliance...........................................................................22
6.13 Further Assurances.........................................................................22
6.14 Insurance..................................................................................23
6.15 New Subsidiaries...........................................................................23
6.16 Other Bank Services........................................................................24
ARTICLE 7 NEGATIVE COVENANTS.........................................................................25
7.1 Existence..................................................................................25
7.2 Amendments to Organizational Documents.....................................................25
7.3 Margin Stock...............................................................................25
7.4 Fiscal Year................................................................................25
7.5 Liens......................................................................................25
7.6 Transfer Collateral........................................................................25
7.7 Merger; Sale of Assets.....................................................................25
7.8 Dividends; Loan; Affiliate Payments........................................................26
7.9 Financial Covenants........................................................................26
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 8 EVENTS OF DEFAULT..........................................................................28
8.1 Events of Default..........................................................................28
8.2 Remedies Upon Event of Default.............................................................30
8.3 Performance by Lender......................................................................31
ARTICLE 9 MISCELLANEOUS..............................................................................32
9.1 Modification...............................................................................32
9.2 Waiver.....................................................................................32
9.3 Payment of Expenses........................................................................32
9.4 Notices....................................................................................32
9.5 Governing Law; Jurisdiction, Venue.........................................................33
9.6 Waiver of Jury Trial.......................................................................33
9.7 Invalid Provisions.........................................................................33
9.8 Binding Effect.............................................................................34
9.9 Entirety...................................................................................34
9.10 Headings...................................................................................34
9.11 Survival...................................................................................34
9.12 No Third Party Beneficiary.................................................................34
9.13 Time.......................................................................................34
9.14 Indemnity..................................................................................34
9.15 Schedules and Exhibits Incorporated........................................................34
9.16 Counterparts...............................................................................35
</TABLE>
EXHIBIT "A" Form of Borrowing Notice
EXHIBIT "B" Form of Compliance Certificate
EXHIBIT "C" Form of Borrowing Base Certificate
EXHIBIT "D" Form of Security Agreement
EXHIBIT "E" Form of Assumption Agreement
-iii-
<PAGE> 5
CREDIT AGREEMENT
BY THIS CREDIT AGREEMENT (together with any amendments or
modifications, the "Credit Agreement"), entered into as of this 17th day of
March, 1998 by and between SUPERSHUTTLE INTERNATIONAL, INC., a Delaware
corporation (the "Company"), SUPERSHUTTLE OF SAN FRANCISCO, INC., a California
corporation, SUPERSHUTTLE ARIZONA, INC., an Arizona corporation, SUPERSHUTTLE
DFW, INC., a Texas corporation, SUPERSHUTTLE FRANCHISE CORPORATION, a Delaware
corporation, and SHUTTLE EXPRESS, INC., a Maryland corporation (collectively
with any new Subsidiaries of the Company, the "Borrower" and individually a
"Borrower"), and IMPERIAL BANK ARIZONA, an Arizona banking corporation (the
"Lender"), in consideration of the mutual promises herein contained and for
other valuable consideration, the parties hereto do hereby agree as follows:
RECITALS
A. Borrower has applied to Lender for a revolving line of credit
facility (the "RLC") in the principal amount of ONE MILLION TWO HUNDRED THOUSAND
AND NO/100 DOLLARS ($1,200,000.00) (the "RLC Commitment") for the purpose of
funding the Company's expansion into New York City and its operating expenses
pending the collection of its accounts receivable.
B. As a condition for extending such financial accommodations, Lender
has required that Borrower enter into this Credit Agreement, establishing the
terms and conditions thereof.
<PAGE> 6
ARTICLE 1
DEFINITION OF TERMS
1.1 Definitions. For the purposes of this Credit Agreement, unless
the context otherwise requires, the following terms shall have the respective
meanings assigned to them in this Article 1 or in the Section hereof referred to
below:
"Advance" means an RLC Advance.
"Affiliate" of any Person means any Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"Authorized Officer" means one or more officers of Borrower
duly authorized (and so certified to Lender by the corporate secretary of
Borrower pursuant to a certificate of authority and incumbency from time to time
satisfactory to Lender in the exercise of Lender's reasonable discretion),
acting alone, to request Advances under the provisions of this Credit Agreement
and execute and deliver documents, instruments, agreements, reports, statements
and certificates in connection herewith.
"Banking Day" means a day of the year on which banks are not
required or authorized to close in Inglewood, California and Phoenix, Arizona.
"Borrower": See the Preamble hereto.
"Borrowing Base" means the sums of (i) eighty percent (80.0%)
of the Eligible Accounts plus (ii) eighty percent (80.0%) of the then unpaid
principal balance of the Sale Notes.
"Borrowing Base Certificate" means a certificate substantially
in the form attached hereto as Exhibit "C".
"Change in Control" means the occurrence or existence of
either of the following events or conditions without the prior written consent
of Lender, if different than the state of affairs as of the Closing Date:
(a) the acquisition by any Person or two or more
Persons acting in concert of "beneficial ownership" (within
the meaning of Rule 13d-3 promulgated by the SEC under the
Exchange Act or as otherwise specified under the provisions of
this Credit Agreement) of securities of the Company
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<PAGE> 7
having more than 50% of the ordinary voting power for the
election of directors; or
(b) the acquisition by any Person or two or more
Persons acting in concert of Control of the Company.
"Closing Date" means the date of delivery of this Credit
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property subject to the Security
Documents.
"Company" means SuperShuttle International, Inc., a Delaware
corporation.
"Control" when used with respect to any Person means the
power, directly or indirectly, to direct the management policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Controlled Group" means, severally and collectively, the
members of the group controlling, controlled by and/or in common control of
Borrower, within the meaning of Section 4001(b) of ERISA.
"Credit Agreement": See the Preamble hereto.
"Credit Documents" means this Credit Agreement, the Note
(including any renewals, extensions and refundings thereof), the Security
Documents and any written agreements, certificates or documents (and with
respect to this Credit Agreement and such other written agreements and
documents, any amendments or supplements thereto or modifications thereof)
executed or delivered pursuant to the terms of this Credit Agreement.
"Default Rate" means at any time five percent (5%) over the
then applicable interest rate.
"Dollars" and the sign "$" mean lawful currency of the United
States of America.
"Eligible Accounts" means those accounts receivable of
Borrower as Lender in its sole discretion shall determine are eligible from time
to time. Eligible Accounts shall not include any of the following:
(a) Account balances over ninety (90) calendar days
from invoice date.
-3-
<PAGE> 8
(b) Accounts with respect to which the account debtor
is an officer, director, shareholder, employee, subsidiary or
affiliate of Borrower.
(c) Accounts with respect to which 25% or more of the
account debtor's total accounts or obligations outstanding to
Borrower are more than 90 calendar days from invoice date.
(d) As to Accounts representing more than 20% of
Borrower's total accounts receivable, the balance in excess of
20% is not eligible.
(e) Accounts with respect to international
transactions unless insured by an insurance company acceptable
to Lender in its sole discretion or covered by letters of
credit issued or confirmed by a bank acceptable to Lender or
unless otherwise acceptable to Lender, in its sole and
absolute discretion.
(f) Credit balances greater than ninety (90) calendar
days from invoice date.
(g) Accounts where the account debtor is a seller to
Borrower, whereby a potential offset (contra) exists, to the
extent of the offset.
(h) Consignment or guaranteed sales.
(i) Bill and hold accounts.
(j) Contracts receivable.
(k) Progress billings.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, together with all final and permanent regulations issued
pursuant thereto. References herein to sections and subsections of ERISA are
deemed to refer to any successor or substitute provisions therefor.
"Event of Default": See Article 8.
"Exchange Act" means the Securities Exchange Act of 1934.
"Financial Covenants": See Section 7.9 hereof.
-4-
<PAGE> 9
"GAAP" means those generally accepted accounting principles
and practices which are recognized as such by the American Institute of
Certified Public Accountants acting through its Accounting Principles Board or
by the Financial Accounting Standards Board or through other appropriate boards
or committees thereof and which are consistently applied for all periods after
the date hereof so as to properly reflect the financial condition, and the
results of operations and changes in the financial position, of Borrower,
including without limitation accounting rules promulgated pursuant to
Regulations SX and SK, except that any accounting principle or practice required
to be changed by the said Accounting Principles Board or Financial Accounting
Standards Board (or other appropriate board or committee of the said Boards) in
order to continue as a generally accepted accounting principle or practice may
be so changed.
"Governmental Authority" means any government (or any
political subdivision or jurisdiction thereof), court, bureau, agency or other
governmental authority having jurisdiction over Borrower or any of its business,
operations or properties.
"Indebtedness" of a Person means each of the following
(without duplication): (a) obligations of that Person to any other Person for
payment of borrowed money, (b) capital lease obligations, (c) notes and drafts
drawn or accepted by that Person payable to any other Person, whether or not
representing obligations for borrowed money (but without duplication of
indebtedness for borrowed money), (d) any obligation for the purchase price of
property the payment of which is deferred for more than one year or evidenced by
a note or equivalent instrument, (e) guarantees of Indebtedness of third
parties, and (f) a recourse or nonrecourse payment obligation of any other
Person that is secured by a Lien on any property of the first Person, whether or
not assumed by the first Person, up to the fair market value (from time to time)
of such property (absent manifest evidence to the contrary, the fair market
value of such property shall be the amount determined under GAAP for financial
reporting purposes).
"IPO" means an initial public offering of equity interests in
the Company.
"Lender": See the Preamble hereto.
"Lien" means any lien, mortgage, security interest, tax lien,
pledge, encumbrance, conditional sale or title retention arrangement, or any
other interest in property designed to secure the repayment of Indebtedness
whether arising by agreement or under any statute or law, or otherwise.
"Loan" or "Loans" means the RLC.
"Material Adverse Effect" means any circumstance or event
which (i) has any material adverse effect upon the validity or enforceability of
any Credit Document, (ii) materially impairs the ability of Borrower to fulfill
its obligations under the Credit Documents, or (iii) causes an Event of Default
or any event which, with notice or lapse of time or both, would become an Event
of Default.
-5-
<PAGE> 10
"Mesa" means Mesa Holding Company, Mesa Operating Company, a
Delaware corporation, and/or Perkins Fuel Corp., a California corporation, as
applicable.
"Mesa Note" means that note executed by the Company for the
benefit of Mesa with respect to the Vehicle Notes.
"Note" or "Notes" means the RLC Note.
"Note Security Agreements": See Section 3.1(b) hereof.
"Obligation" means all present and future indebtedness,
obligations and liabilities of Borrower to Lender, and all renewals and
extensions thereof, or any part thereof, arising pursuant to this Credit
Agreement or represented by the Notes, including without limitation the Loans
and all interest accruing thereon, and attorneys' fees incurred in the
enforcement or collection thereof, regardless of whether such indebtedness,
obligations and liabilities are direct, indirect, fixed, contingent, joint,
several or joint and several; together with all indebtedness, obligations and
liabilities of Borrower evidenced or arising pursuant to any of the other Credit
Documents, and all renewals and extensions thereof, or part thereof.
"Payment Date" with respect to a Loan means the first day of
each month, commencing the first day of the first month after the first Advance
applicable to such Loan shall have been made, provided that if any such day is
not a Banking Day, then such Payment Date shall be the next successive Banking
Day.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or substantially all of the Pension Benefit Guaranty
Corporation's functions under ERISA.
"Permitted Liens" means:
(a) Liens in Lender's favor.
(b) Liens for taxes not delinquent.
(c) Liens resulting from purchase money financing as
to the personal property so financed and any sale proceeds
therefrom.
(d) Liens on vehicles of the Borrower and any sale
proceeds therefrom held by Mesa.
"Person" includes an individual, a corporation, a joint
venture, a partnership, a trust, a limited liability company, an unincorporated
organization or a government or any agency or political subdivision thereof.
-6-
<PAGE> 11
"Plan" means an employee defined benefit plan or other plan
maintained by Borrower for employees of Borrower and covered by Title IV of
ERISA, or subject to the minimum funding standards under Section 412 of the
Code.
"Preferred" means Preferred Transportation, Inc., a California
corporation.
"Preferred Note" means that Secured Promissory Note in the
original principal amount of $1,309,048.00 dated as of June 15, 1994 from
Preferred for the benefit of the Company and SuperShuttle of Los Angeles, Inc.
"Prime Rate" means the interest rate per annum publicly
announced by Imperial Bank, a California banking corporation, or its successors,
as its "prime rate" as in effect from time to time. Borrower acknowledges that
the Prime Rate is not necessarily the best or lowest rate offered by Lender and
Lender may lend to its customers at rates that are at, above or below its Prime
Rate.
"Regulation U" means Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other
regulation hereafter promulgated by said Board to replace the prior Regulation U
and having substantially the same function.
"Reportable Event" means any "reportable event" as described
in Section 4043(b) of ERISA with respect to which the thirty (30) day notice
requirement has not been waived by the PBGC.
"RLC" means that revolving line of credit made available by
Lender to Borrower pursuant to Article 2 hereof.
"RLC Advance" means a disbursement of the proceeds of the RLC.
"RLC Commitment" means One Million Two Hundred Thousand And
No/100 Dollars ($1,200,000.00).
"RLC Fee": See Section 2.10 hereof.
"RLC Maturity Date" means March 16, 1999.
"RLC Note" means that Revolving Promissory Note of even date
herewith in the amount of the RLC, executed by Borrower and delivered pursuant
to the terms of this Credit Agreement, together with any renewals, extensions,
modifications or replacements thereof.
"Sale Notes" means the Preferred Note and Tamarack Note.
"SEC" means the Securities and Exchange Commission.
"Security Agreement": See Section 3.1(a) hereof.
-7-
<PAGE> 12
"Security Documents": See Section 3.2 hereof.
"Significant Debt Agreement" means all documents, instruments
and agreements executed by Borrower, evidencing, securing or ensuring any
Indebtedness of Borrower or any guaranty in excess of $100,000.00 in outstanding
principal (or principal equivalent) amount.
"Subsidiary" means any business association directly or
indirectly controlled by the Company.
"Tamarack" means Tamarack Transportation, Inc., a California
corporation.
"Tamarack Note" means that Secured Promissory Note in the
original principal amount of $809,723.02 dated as of September 2, 1994 from
Tamarack for the benefit of the Company.
"Variable Rate" means the rate per annum equal to (i) the
Prime Rate per annum as in effect from time to time, plus (ii) one percent
(1.0%). The Variable Rate will change on each day that the "Prime Rate" changes.
"Variable Rate RLC Advance" means an RLC Advance that bears or
that is requested to bear interest at the Variable Rate.
"Vehicle Notes" means those promissory notes executed
respectively by Tamarack and Preferred for the benefit of Borrower.
1.2 References. Capitalized terms shall be equally applicable to both
the singular and the plural forms of the terms therein defined. References to
"Credit Agreement," "this Agreement," "herein," "hereof," "hereunder," or other
like words mean this Credit Agreement as amended, supplemented, restated or
otherwise modified and in effect from time to time.
1.3 Accounting Terms. Except as expressly provided to the contrary
herein, all accounting terms shall be interpreted and all accounting
determinations shall be made in accordance with GAAP, except as otherwise
specifically provided for herein. To the extent any change in GAAP affects any
computation or determination required to be made pursuant to this Credit
Agreement, such computation or determination shall be made as if such change in
GAAP had not occurred unless Borrower and Lender agree in writing on an
adjustment to such computation or determination to account for such change in
GAAP.
-8-
<PAGE> 13
ARTICLE 2
THE RLC
2.1 RLC Commitment. Lender agrees to loan to or at the direction of
Borrower, and Borrower agrees to draw upon and borrow, in the manner and upon
the terms and conditions contained in this Credit Agreement, amounts that in the
aggregate at any time outstanding shall not exceed the lesser of the RLC
Commitment or the Borrowing Base.
2.2 Revolving Line of Credit.
(a) Subject to the terms and conditions set forth in this
Credit Agreement, the RLC shall be a revolving line of credit, against
which RLC Advances may be made to Borrower, repaid by Borrower and new
RLC Advances made to Borrower, as Borrower may request, provided that
(i) no RLC Advance shall be made if an Event of Default shall be
continuing, (ii) no RLC Advance shall be made that would cause the
outstanding principal balance of the RLC to exceed the lesser of the
RLC Commitment or the Borrowing Base, and (iii) no RLC Advance shall be
made on or after the RLC Maturity Date.
(b) The RLC shall be evidenced by the RLC Note.
2.3 RLC Advances. An RLC Advance shall be made by Lender to Borrower
upon written notice from Borrower in substantially the form attached hereto as
Exhibit "A" from an Authorized Officer hereof (which notice Borrower hereby
authorizes Lender to accept by telefacsimile) and shall include the date and the
amount of the requested RLC Advance and shall be in a minimum amount of
$25,000.00 with integral multiples of $1,000.00 in excess thereof. If such
notice is received by Lender before noon (Inglewood, California local time) on
any Banking Day, Lender agrees to make such RLC Advance no later than the next
Banking Day.
2.4 RLC Payments. The RLC shall bear interest and be payable to Lender
upon the following terms and conditions:
(a) Interest on an RLC Advance shall accrue at the Variable
Rate.
(b) All accrued interest on an RLC Advance shall be due and
payable on the Payment Date.
(c) If any payment of interest and/or principal is not
received by Lender when such payment is due, then in addition to the
remedies conferred upon the Lender under the Credit Documents, a late
charge of five percent (5%) of the amount of the installment due and
unpaid will be added to the delinquent amount to compensate the Lender
for the expense of handling the delinquency for any payment past due,
regardless of any notice and cure period.
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(d) Upon the occurrence of an Event of Default and after
maturity, including maturity upon acceleration, the unpaid principal
balance, all accrued and unpaid interest and all other amounts payable
hereunder shall bear interest at the Default Rate.
(e) The unpaid principal balance, all accrued and unpaid
interest and all other amounts payable hereunder with respect to the
RLC shall be due and payable in full on the RLC Maturity Date.
2.5 Principal Prepayments; Excess Balance Payment.
(a) Borrower may prepay the outstanding principal balance of
the RLC in whole or in part at any time prior to the RLC Maturity Date
without penalty or premium as stated in such notice by Borrower,
provided that such prepayment also includes accrued interest to the
date of such prepayment on the principal amount prepaid.
(b) There shall be due and payable from Borrower to Lender,
and Borrower shall immediately repay to Lender, without notice or
demand, from time to time, any amount by which the outstanding
principal balance of the RLC exceeds the lesser of the RLC Commitment
or the Borrowing Base.
2.6 Method of Payment. All payments of principal of, and interest on,
the RLC Note shall be made to Lender before 2:00 p.m. (Inglewood, California
local time), in immediately available funds. All payments made on the RLC Note
shall be credited, to the extent of the amount thereof, in the following manner:
(i) first, to the payment of costs, fees or other charges incurred in connection
with the RLC; (ii) second, to the payment of accrued interest on the RLC; and
(iii) third, to the reduction of the principal balance of the RLC.
2.7 Conditions. Lender shall have no obligation to make any RLC Advance
unless and until all of the conditions and requirements of this Credit Agreement
are fully satisfied. However, Lender in its sole and absolute discretion may
elect to make one or more RLC Advances prior to full satisfaction of one or more
such conditions and/or requirements. Notwithstanding that such an RLC Advance or
RLC Advances are made, such unsatisfied conditions and/or requirements shall not
be waived or released thereby. Borrower shall be and continue to be obligated to
fully satisfy such conditions and requirements, and Lender, at any time, in
Lender's sole and absolute discretion, may stop making RLC Advances until all
conditions and requirements are fully satisfied.
2.8 Other RLC Advances by Lender. Lender, after giving written notice
to Borrower, from time to time, may make RLC Advances in any amount in payment
of (i) insurance premiums, taxes, assessments, liens or encumbrances existing
against property encumbered by the Security Documents, (ii) interest accrued and
payable upon the RLC, (iii) any charges and expenses that are the obligation of
Borrower under this Credit Agreement or any Security Document, and (iv) any
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charges or matters necessary to preserve the property encumbered by the Security
Documents or to cure any Event of Default.
2.9 Assignment. Borrower shall have no right to any RLC Advance other
than to have the same disbursed by Lender in accordance with the disbursement
provisions contained in this Credit Agreement. Any assignment or transfer,
voluntary or involuntary, of this Credit Agreement or any right hereunder shall
not be binding upon or in any way affect Lender without its written consent;
Lender may make RLC Advances under the disbursement provisions herein,
notwithstanding any such assignment or transfer.
2.10 Fees.
(a) Upon receipt of the first draft of the Credit Documents,
Borrower shall pay to Lender an application fee (the "Application Fee")
equal to two percent (2.0%) of the RLC Fee. On the Closing Date, the
Application Fee shall be credited by Lender against Borrower's
obligation to pay Lender the RLC Fee.
(b) In connection with the RLC, Borrower agrees to pay to
Lender on the Closing Date a non-refundable commitment fee in the
amount of two percent (2.0%) of the RLC Commitment (the "RLC Fee").
(c) In connection with the RLC, in the event that the Company
shall not have completed an IPO prior to September 30, 1998, Borrower
agrees to pay to Lender on September 30, 1998 a non-refundable fee in
the amount of one percent (1.0%) of the RLC Commitment.
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ARTICLE 3
SECURITY
3.1 Security.
(a) So long as any Loan is outstanding, Borrower shall cause
such Loan and Borrower's obligations under this Credit Agreement to be
secured at all times by a valid and effective security agreement
(collectively, the "Security Agreement") substantially in the form
attached hereto as Exhibit "D", duly executed and delivered by or on
behalf of each Borrower, granting Lender a valid and enforceable
security interest in all of its personal property as described therein,
subject to no prior Liens except for Permitted Liens. Personal property
leased by Borrower from a third party pursuant to an operating lease as
determined under GAAP shall not be subject to said security interest on
behalf of Lender and any lease agreement related to such leased
personal property shall, for purposes of this Credit Agreement, not be
deemed a Lien.
(b) So long as any Loan is outstanding, Borrower shall cause
such Loan and Borrower's obligations under this Credit Agreement to be
secured at all times by a valid and effective security agreement
(collectively, the "Note Security Agreements"), duly executed and
delivered by or on behalf of the Company, granting Lender a valid and
enforceable security interest in the Company's right, title and
interest in the Preferred Note and in the Tamarack Note, subject to no
prior Liens.
3.2 Security Documents. All of the documents required by this Article 3
shall be in form satisfactory to Lender and Lender's counsel, and, together with
any Financing Statements for filing and/or recording, and any other items
required by Lender to fully perfect and effectuate the liens and security
interests of Lender contemplated by the Security Agreement, and this Credit
Agreement, may heretofore or hereinafter be referred to as the "Security
Documents."
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ARTICLE 4
CONDITIONS PRECEDENT
The obligation of Lender to make any Loan and to make each and any
Advance hereunder is subject to the full prior satisfaction at each such time of
each of the following conditions precedent:
4.1 Initial or any Subsequent Advance. Prior to its making the initial
Advance or any subsequent Advance, Lender shall have received the following each
in form and substance satisfactory to Lender:
(a) This Credit Agreement. This Credit Agreement, duly
executed and delivered to Lender by Borrower.
(b) The RLC Note. The RLC Note, duly executed, drawn to the
order of Lender and otherwise as provided in Article 2 hereof.
(c) Organizational Documents. A copy of the current Articles
of Incorporation (or other charter documents, however named) of
Borrower, including all amendments thereto, certified as current and
complete by the appropriate authority of the state of said
corporation's incorporation, together with evidence of said
corporation's good standing in said corporation's state of
incorporation and in every other state in which it is doing business or
the conduct of said corporation's business requires such standing for
the enforcement of material contracts.
(d) Secretary Certificate. A certificate of the corporate
secretary of Borrower, signed by the duly appointed secretary thereof
and issued as of the Closing Date, certifying that (i) attached thereto
is a true and complete copy of the corporate by-laws of said
corporation in effect on the date of passage of the corporate
resolutions described immediately below and at all subsequent times to
and including the date of the certificate, (ii) attached thereto is a
true and complete copy of the resolutions adopted by the Board of
Directors of said corporation authorizing the RLC, the execution,
delivery, and performance of this Credit Agreement, the RLC Note, the
Credit Documents, and all advances of credit hereunder, and that such
resolutions have not been modified, rescinded, or amended and are in
full force and effect, (iii) no change has been made to said
corporation's charter documents other than as reflected in the
certified copies submitted in connection with the delivery of this
Credit Agreement or as approved in writing by Lender, and (iv) set
forth therein and appropriately identified are the names, current
official titles, and signatures of the officers of said corporation
authorized to sign this Credit Agreement and other documents to be
delivered hereunder and/or to act as Authorized Officers hereunder.
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(e) Security Agreement. The Security Agreement, duly executed
and delivered to Lender by Borrower.
(f) Note Security Agreements. The Note Security Agreements
duly executed and delivered to Lender by the Company together with the
original Sale Notes, endorsed to Lender, any stock pledged to the
Company as security therefor, copies of all security documents related
to the Sale Notes and such other documents related thereto as Lender
may reasonably require.
(g) Lender's Fees and Costs. Payment of the RLC Fee in the
amount of $48,000.00 plus Lender's other fees and costs.
(h) Compliance Certificate. A Compliance Certificate
substantially in the form of Exhibit "B" attached hereto, indicating
that Borrower is in compliance with the Financial Covenants as of
September 30, 1997.
(i) Financing Statements. Financing Statements, duly executed
and delivered to Lender by Borrower.
(j) Other Indebtedness. Evidence that Mesa has released its
liens from all assets of Borrower, other than Permitted Liens, from all
stock of the Company's Subsidiaries and from the Sale Notes and all
collateral securing the Sale Notes.
(k) Accounts Receivable. A listing and aging of the Accounts
Receivable of Borrower as of November 30, 1997.
(l) Sale Note Obligors. Receipt of financial information
satisfactory to Lender with respect to the obligors of the Sale Notes.
(m) Borrower's Financial Statements. Review satisfactory to
Lender with Borrower's accountants of Borrower's draft 1997 fiscal year
end financial statements.
(n) Landlord Waivers. Lien waivers executed by the landlord of
each leased premises where Collateral is located.
(o) Additional Information. Such other information and
documents as may reasonably be required by Lender or Lender's counsel.
4.2 No Event of Default. No Event of Default known to Borrower shall
have occurred and be continuing, or result from Lender's making of any Loan.
4.3 No Material Adverse Change. Since the date of the most recent
financial statements provided to Lender by Borrower, no change shall have
occurred in the business or financial condition of Borrower that could have a
Material Adverse Effect.
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<PAGE> 19
4.4 Representations and Warranties. The representations and warranties
contained in Article 5 hereof shall be true and correct in all material
respects, with the same force and effect as though made on and as of the Closing
Date (other than those of such representations which by their express terms
speak to a date prior to that date, which representations shall, in all material
respects, be true and correct as of such respective date).
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loans, Borrower represents and warrants to
Lender that:
5.1 Recitals. The recitals and statements of intent appearing in this
Credit Agreement are true and correct.
5.2 Organization and Good Standing. It is duly organized, validly
existing and in good standing in all states in which the nature of its business
and property makes such qualifications necessary or appropriate. It has the
legal power and authority to own its properties and assets and to transact the
business in which it is engaged and is or will be qualified in those states
wherein the nature of its proposed business and property will make such
qualifications necessary or appropriate in the future.
5.3 Authorization and Power. It has the power and requisite authority
to execute, deliver and perform this Credit Agreement, the Notes and the other
Credit Documents to be executed by it; it is duly authorized to, and has taken
all action, corporate or otherwise, necessary to authorize it to, execute,
deliver and perform this Credit Agreement, the Notes and such other Credit
Documents and is and will continue to be duly authorized to perform this Credit
Agreement, the Notes and such other Credit Documents.
5.4 Security Documents. The liens, security interests and assignments
created by the Security Documents will, when granted, be valid, effective and
enforceable liens, security interests and assignments, except to the extent (if
any) otherwise agreed in writing by Lender.
5.5 No Conflicts or Consents. Neither the execution and delivery of
this Credit Agreement, the Notes or the other Credit Documents to which it is a
party, nor the consummation of any of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or with the
terms and provisions thereof, (a) will materially contravene or conflict with:
(i) any provision of law, statute or regulation to which it is subject, (ii) any
judgment, license, order or permit applicable to it, (iii) any indenture, credit
agreement, mortgage, deed of trust, or other agreement or instrument to which it
is a party or by which it may be bound, or to which it may be subject, or (b)
will violate any provision of its organizational documents. No consent,
approval, authorization or order of any court or Governmental Authority or other
Person is required in connection with the execution and delivery by it of the
Credit Documents or to consummate the transactions contemplated hereby or
thereby, or if required, such consent, approval, authorization or order shall
have been obtained.
5.6 No Litigation. Except for those matters that have been previously
disclosed to Lender in writing, there are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending, or to its actual knowledge
overtly threatened, against Borrower that would, if adversely determined, have a
Material Adverse Effect.
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<PAGE> 21
5.7 Financial Condition. It has delivered to Lender copies of the
Borrower's most recent financial statements. Such financial statements, in all
material respects, fairly and accurately present the financial position of
Borrower as of such date, have been prepared in accordance with GAAP and neither
contain any untrue statement of a material fact nor fail to state a material
fact required in order to make such financial statement not misleading. Since
the date thereof, Borrower has not discovered any obligations, liabilities or
indebtedness (including contingent and indirect liabilities and obligations or
unusual forward or long-term commitments) which in the aggregate are material
and adverse to the financial position or business of Borrower that should have
been but were not reflected in such financial statements. No changes having a
Material Adverse Effect have occurred in the financial condition or business of
Borrower since the date of such financial statements.
5.8 Taxes. It has filed or caused to be filed all returns and reports
which are required to be filed by any jurisdiction, and has paid or made
provision for the payment of all taxes, assessments, fees or other governmental
charges imposed upon its properties, income or franchises, as to which the
failure to file or pay would have a Material Adverse Effect, except such
assessments or taxes, if any, which are being contested in good faith by
appropriate proceedings.
5.9 No Stock Purchase. No part of the proceeds of any financial
accommodation made by Lender in connection with this Credit Agreement will be
used to purchase or carry "margin stock," as that term is defined in Regulation
U, or to extend credit to others for the purpose of purchasing or carrying such
margin stock.
5.10 Advances. Each request for an Advance or for the extension of any
financial accommodation by Lender whatsoever shall constitute an affirmation
that the representations and warranties contained herein are, true and correct
as of the time of such request. All representations and warranties made herein
shall survive the execution of this Credit Agreement, all advances of proceeds
of the Loans and the execution and delivery of all other documents and
instruments in connection with the Loans and/or this Credit Agreement, so long
as Lender has any commitment to lend hereunder and until the Loans have been
paid in full and all of Borrower's obligations under this Credit Agreement, the
Notes and all Security Documents have been fully discharged.
5.11 Enforceable Obligations. This Credit Agreement, the Notes and the
other Credit Documents are the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except
as limited by bankruptcy, insolvency or other laws or equitable principles of
general application relating to the enforcement of creditors' rights.
5.12 No Default. No event or condition has occurred and is continuing
that constitutes an Event of Default.
5.13 Significant Debt Agreements. It is not in default in any material
respect under any Significant Debt Agreement.
5.14 ERISA. (a) No Reportable Event has occurred and is continuing with
respect to any Plan; (b) PBGC has not instituted proceedings to terminate any
Plan; (c) neither the Borrower, any
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<PAGE> 22
member of the Controlled Group, nor any duly-appointed administrator of a Plan
(i) has incurred any liability to PBGC with respect to any Plan other than for
premiums not yet due or payable or (ii) has instituted or intends to institute
proceedings to terminate any Plan under Section 4041 or 4041A of ERISA; and (d)
each Plan of Borrower has been maintained and funded in all material respects in
accordance with its terms and in all material respects in accordance with all
provisions of ERISA applicable thereto. Neither the Borrower nor any of its
Subsidiaries participates in, or is required to make contributions to, any
Multi-employer Plan (as that term is defined in Section 3(37) of ERISA).
5.15 Compliance with Law. It is in substantial compliance with all
laws, rules, regulations, orders, writs, injunctions and decrees that are
applicable to it, or its properties, noncompliance with which would have a
Material Adverse Effect.
5.16 Solvent. It (both before and after giving effect to the Loans
contemplated hereby) is solvent, has assets having a fair value in excess of the
amount required to pay its probable liabilities on its existing debts as they
become absolute and matured, and has, and will have, access to adequate capital
for the conduct of its business and the ability to pay its debts from time to
time incurred in connection therewith as such debts mature.
5.17 Investment Company Act. It is not, and is not directly or
indirectly controlled by, or acting on behalf of, any person which is, an
"Investment Company" within the meaning of the Investment Company Act of 1940,
as amended.
5.18 Title. It has good and marketable title to the Collateral.
5.19 Survival of Representations, Etc. All representations and
warranties by Borrower herein shall survive the making of any Loan and the
execution and delivery of any Note; any investigation at any time made by or on
behalf of Lender shall not diminish Lender's right to rely on the
representations and warranties herein.
5.20 Environmental Matters. Except as previously disclosed to Lender in
writing, it, to the best of its knowledge after due investigation, is in
compliance in all material respects with all applicable environmental, health
and safety statutes and regulations and Borrower does not have any material
contingent liability in connection with any improper treatment, disposal or
release into the environment of any hazardous or toxic waste or substance.
5.21 Subsidiary. It has no existing Subsidiary that conducts any
business or operations that is not a party to this Credit Agreement.
5.22 Licenses, Tradenames. It, as of the date hereof, possesses all
necessary trademarks, tradenames, copyrights, patents, patent rights, and
licenses to conduct its business as now operated, without any known conflict
with valid trademarks, tradenames, copyright patents and license rights of
others.
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ARTICLE 6
AFFIRMATIVE COVENANTS
Until payment in full of the Loans and the complete performance of the
Obligation, Borrower agrees that:
6.1 Financial Statements, Reports and Documents. It shall deliver, or
cause to be delivered, to Lender each of the following:
(a) Consolidated Annual Statements of Borrower. As soon as
available and in any event within ninety (90) days after the close of
each fiscal year of Borrower, audited consolidated financial statements
of Borrower, including its consolidated balance sheet as of the close
of such fiscal year and consolidated statements of income of Borrower
for such fiscal year, in each case setting forth in comparative form
the figures for the preceding fiscal year, all in reasonable detail and
accompanied by an unqualified opinion thereon of independent public
accountants of recognized national standing selected by Borrower and
acceptable to Lender, to the effect that such financial statements have
been prepared in accordance with GAAP.
(b) Consolidated Monthly Statements of Borrower. As soon as
available, and in any event within thirty (30) days after the end of
each month (except for that at the close of the fiscal year), copies of
the consolidated and consolidating balance sheets of Borrower as of the
end of such month, and consolidated and consolidating statements of
income of Borrower for that month and for the portion of the fiscal
year ending with such month, in each case setting forth in comparative
form the figures for the corresponding period of the preceding fiscal
year, all in reasonable detail and fairly stated, certified by Borrower
and prepared by Borrower in accordance with GAAP.
(c) Compliance Certificate of Borrower. Within thirty (30)
days after the end of each fiscal quarter of Borrower hereafter and
ninety (90) days after the year of each fiscal year of Borrower, a
certificate signed by the chief financial officer of the Company,
substantially in the form of Exhibit "B" attached hereto certifying
that after a review of the activities of Borrower during such quarter,
Borrower has observed, performed and fulfilled each and every
obligation and covenant contained herein and no Event of Default exists
under any of the same or, if any Event of Default shall have occurred,
specifying the nature and status thereof, and stating that all
financial statements of Borrower delivered to Lender during the
respective period pursuant to Sections 6.1(a) and 6.1(b) hereof, to
his/her knowledge, fairly present in all material respect the financial
position of the Borrower and the results of its operations at the dates
and for the periods indicated, and have been prepared in accordance
with GAAP, together with a calculation of the Financial Covenants.
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<PAGE> 24
(d) Borrowing Base Certificate. Within thirty (30) days after
the end of each month, a Borrowing Base Certificate together with an
aging and listing of all accounts receivable of Borrower prepared in
accordance with GAAP which itemizes each account debtor by name and
which states the total amount payable to Borrower and contains a
breakdown indicating current amounts due, amounts thirty (30) days past
due, sixty (60) days past due, and ninety (90) or more days past due,
and reflecting any credit adjustments, returns, and allowances.
(e) Other Information. Such other information concerning the
business, properties or financial condition of Borrower as Lender shall
reasonably request.
6.2 Maintenance of Existence and Rights; Conduct of Business;
Management. It will preserve and maintain its corporate existence and all of its
rights, privileges, licenses, permits, franchises and other rights necessary or
desirable in the normal conduct of its business, conduct its business in an
orderly and efficient manner consistent with good business practices and
maintain professional management of its business.
6.3 Operations and Properties. It will keep in good working order and
condition, ordinary wear and tear excepted, all of its assets and properties
which are necessary to the conduct of its business.
6.4 Authorizations and Approvals. It will promptly obtain, from time to
time at its own expense, all such governmental licenses, authorizations,
consents, permits and approvals as may be required to enable it to comply with
its obligations hereunder and under the other Credit Documents and to operate
its businesses as presently or hereafter duly conducted.
6.5 Compliance with Law. It will comply with all applicable laws,
rules, regulations, and all final, nonappealable orders of any Governmental
Authority applicable to it or any of its property, business operations or
transactions, including without limitation, any environmental laws applicable to
it, a breach of which could result in a Material Adverse Effect.
6.6 Payment of Taxes and Other Indebtedness. It will pay and discharge
(i) all income taxes and payroll taxes, (ii) all taxes, assessments, fees and
other governmental charges imposed upon it or upon its income or profits, or
upon any property belonging to it, before delinquent, which become due and
payable, (iii) all lawful claims (including claims for labor, materials and
supplies), which, if unpaid, might become a Lien upon any of its property and
(iv) all of its Indebtedness as it becomes due and payable, except as prohibited
hereunder; provided, however, that it shall not be required to pay any such tax,
assessment, charge, levy, claims or Indebtedness if and so long as the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate actions and appropriate accruals and reserves therefor have been
established in accordance with GAAP.
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<PAGE> 25
6.7 Compliance with Significant Debt Agreements and Other Agreements.
It will comply in all material respects with (i) all Significant Debt
Agreements, and (ii) all agreements and contracts to which it is a party, a
breach of which could result in a Material Adverse Effect.
6.8 Compliance with Credit Documents. It will comply with any and all
covenants and provisions of this Credit Agreement, the Notes and all other
Credit Documents.
6.9 Notice of Default. It will furnish to Lender immediately upon
becoming actually aware of the existence of any event or condition that
constitutes an Event of Default, a written notice specifying the nature and
period of existence thereof and the action which it is taking or proposes to
take with respect thereto.
6.10 Other Notices. It will promptly notify Lender of (a) any Material
Adverse Effect, (b) any waiver, release or default under any Significant Debt
Agreement, (c) any claim not covered by insurance against Borrower or any of
Borrower's properties, and (d) the commencement of, and any material
determination in, any litigation with any third party or any proceeding before
any Governmental Authority affecting it, except litigation or proceedings which,
if adversely determined, would not have a Material Adverse Effect.
6.11 Books and Records; Access. Upon three (3) Banking Days notice from
Lender, it will give any authorized representative of Lender access during
normal business hours to, and permit such representative to examine, copy or
make excerpts from, any and all books, records and documents in its possession
of and relating to the Loans, and to inspect any of its properties. It will
maintain complete and accurate books and records of its transactions in
accordance with good accounting practices.
6.12 ERISA Compliance. With respect to its Plans, it shall (a) at all
times comply with the minimum funding standards set forth in Section 302 of
ERISA and Section 412 of the Code or shall have duly obtained a formal waiver of
such compliance from the proper authority; (b) at Lender's request, within
thirty (30) days after the filing thereof, furnish to Lender copies of each
annual report/return (Form 5500 Series), as well as all schedules and
attachments required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA, in connection with each of its Plans
for each year of the plan; (c) notify Lender within a reasonable time of any
fact, including, but not limited to, any Reportable Event arising in connection
with any of its Plans, which constitutes grounds for termination thereof by the
PBGC or for the appointment by the appropriate United States District Court of a
trustee to administer such Plan, together with a statement, if requested by
Lender, as to the reason therefor and the action, if any, proposed to be taken
with respect thereto; and (d) furnish to Lender within a reasonable time, upon
Lender's request, such additional information concerning any of its Plans as may
be reasonably requested.
6.13 Further Assurances. It will make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all such notices,
certifications and additional agreements, undertakings or other assurances, and
take any and all such other action, as Lender may, from time to time, deem
reasonably necessary or proper to fully evidence the Loan.
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<PAGE> 26
6.14 Insurance. It shall maintain in full force and effect at all times
all insurance coverages required under the terms of this Credit Agreement and/or
the Security Documents to which it is a party. In addition, it shall maintain in
full force and effect at all times:
(a) Policies of all risk coverage insurance covering all
tangible personalty in which Lender has been granted or obtained a
security interest to secure the Obligation, in coverage amounts not
less than, from time to time, the fair market value thereof.
(b) Policies of insurance evidencing personal liability and
property damage liability coverages in amounts not less than
$1,000,000.00 (combined single limit for bodily injury and property
damage), and an umbrella excess liability coverage in an amount not
less than $2,000,000.00 shall be in effect with respect to Borrower.
(c) Policies of workers' compensation insurance in amounts and
with coverages as legally required.
Without limitation of the foregoing, it shall at all times maintain insurance
coverages in scope and amount not less than, and not less extensive than, the
scope and amount of insurance coverages customary in the trades or businesses in
which it is from time to time engaged. All of the aforesaid insurance coverages
shall be issued by insurers reasonably acceptable to Lender.
Copies of all policies of insurance evidencing such coverages in effect
from time to time and showing Lender as an additional insured and loss payee
shall be delivered to Lender within fifteen (15) days of the Closing Date and
upon reasonable notice upon issuance of new policies thereafter. From time to
time, promptly upon Lender's request, it shall provide evidence satisfactory to
Lender (i) that required coverage in required amounts is in effect, and (ii)
that Lender is shown as an additional insured and loss payee with respect to all
such coverages, as Lender's interest may appear, by standard (non-attribution)
loss payable endorsement, additional insured endorsement, insurer's certificate
or other means acceptable to Lender in its reasonable discretion. At Lender's
option, it shall deliver to Lender certified copies of all such policies of
insurance in effect from time to time, to be retained by Lender so long as
Lender shall have any commitment to lend hereunder and/or any portion of the
Obligation shall be outstanding or unsatisfied. All such insurance policies
shall provide for at least thirty (30) days prior written notice of the
cancellation or modification thereof to Lender.
6.15 New Subsidiaries. The Company shall promptly and diligently take
all actions necessary to cause any new Subsidiary (each a "New Subsidiary") to
become a "Co-Borrower" for all purposes of this Credit Agreement and a "Debtor"
under the Security Documents and any other security documents reasonably
required by Lender; provided, however, that, in the event that Super Shuttle
franchisees operating in Los Angeles, California, Orange County, California
and/or Miami, Florida become a Subsidiary (each an "Excepted Subsidiary"), an
Excepted Subsidiary need not become a "Co-Borrower" hereunder unless proceeds
from a Loan hereunder are used for the benefit
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of such Excepted Subsidiary. Within thirty (30) days of being acquired or
created, such New Subsidiary shall deliver to Lender an executed Assumption
Agreement in the form attached hereto as Exhibit "E" together with executed
Security Documents and such other documents as Lender may reasonably request.
The term "Co-Borrower" shall mean that such New Subsidiary shall be jointly
liable, and each severally and unconditionally liable, for the full payment and
satisfaction of the Loans and all other obligations of Borrower under this
Credit Agreement. The term "Debtor" shall have the meaning set forth in the
Security Documents.
6.16 Other Bank Services. It shall maintain its deposit accounting
accounts and merchant card business with the Lender and/or an Affiliate thereof.
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ARTICLE 7
NEGATIVE COVENANTS
Until payment in full of the Loans and the performance of the
Obligation, Borrower shall not, without receiving the prior express written
consent of Lender:
7.1 Existence. Dissolve or liquidate, or merge or consolidate with or
into any other entity, or turn over the management or operation of its property,
assets or business to any other Person or make any substantial change in the
character of its business.
7.2 Amendments to Organizational Documents. Amend its organizational
documents if the result thereof could result in the occurrence directly or
indirectly of a Material Adverse Effect.
7.3 Margin Stock. Use any proceeds of the Loans, or any proceeds of any
other or future financial accommodation from Lender for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any "margin stock"
as that term is defined in Regulation U or to reduce or retire any indebtedness
undertaken for such purposes within the meaning of said Regulation U, and will
not use such proceeds in a manner that would involve Borrower in a violation of
Regulation U or of any other Regulation of the Board of Governors of the Federal
Reserve System, nor use such proceeds for any purpose not permitted by Section 7
of the Exchange Act, or any of the rules or regulations respecting the
extensions of credit promulgated thereunder.
7.4 Fiscal Year. Change the times of commencement or termination of its
fiscal year or other accounting periods; or change its methods of accounting
other than to conform to GAAP applied on a consistent basis. After any such
changes, its method of accounting shall conform to GAAP.
7.5 Liens. On and after the date hereof, create, issue, assume or
suffer to exist Liens upon the Collateral or any stock of a Borrower, except
Permitted Liens.
7.6 Transfer Collateral. Assign, transfer or convey any of its right,
title and interest in the Collateral.
7.7 Merger; Sale of Assets. (i) Sell, lease, transfer or dispose of
substantially all of the Collateral to another entity; or (ii) consolidate with
or merge the Collateral into another entity, or permit any transfer of the
ownership of the Collateral, permit any other entity to merge into it or
consolidate with it, or permit any transfer of the ownership or power to
control, Borrower, other than in any case to another Borrower.
7.8 Dividends; Loan; Affiliate Payments. Borrower shall not (i) declare
or pay cash dividends, or (ii) make loans to other Persons except to another
Borrower in the ordinary course of business, or (iii) makes payments to its
Affiliates (except to another Borrower).
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7.9 Financial Covenants. Permit:
(a) The ratio of its Net Indebtedness to its Tangible Net
Worth to be more than 3.75 to 1.0 at the end of any fiscal quarter;
(b) Its Tangible Net Worth to be less than $1,900,000.00 plus
seventy-five percent (75.0%) of Borrower's positive net income of each
quarterly period, beginning March 31, 1998 (with no deduction for any
quarterly period net loss) plus seventy-five percent (75.0%) of any
additional paid-in equity capital at the end of any fiscal quarter; and
(c) Its Debt Coverage Ratio to be less than 1.25 to 1.0 at the
end of any Relevant Period;
where:
A. "Net Indebtedness" means the Indebtedness of Borrower as
shown on its most recent balance sheet less any amounts included
therein with respect to the Mesa Note.
B. "Tangible Net Worth" means, at any given date, the total
shareholder's equity (including capital stock, additional paid in
capital and retained earnings after deducting treasury stock) which
would appear on a balance sheet of Borrower prepared as of such date in
accordance with GAAP, less the aggregate book value of "Intangible
Assets" (as defined below) shown on such balance sheet. "Intangible
Assets" means those assets that are (i) deferred assets, other than
prepaid taxes; (ii) assets which would be classified as intangible
assets on a balance sheet prepared in accordance with GAAP; and (iii)
unamortized debt discount and expense.
C. Debt Coverage Ratio is defined as the ratio of "EBITDA" to
"debt service requirement" for the "Relevant Period." In the ratio, the
numerator "EBITDA" is defined as the sum for the Relevant Period of
Borrower's net income, amounts received with respect to the Sale Notes
and the Vehicle Notes, tax expense, depreciation expense, amortization
of intangibles expense and interest expense, all to the extent deducted
in the calculation of net income; the denominator "debt service
requirement" is defined as the sum of the actual payments made within
the Relevant Period with respect to all current maturities of long-term
debt (excluding the RLC) and the Mesa Note, capital lease obligations,
and interest expense; and "Relevant Period" means (i) as of December
31, 1997, the prior three month period ending such date, (ii) as of
March 31, 1998, the prior six month period ending such date, (iii) as
of June 30, 1998, the prior nine month period ending such date, and
(iv) as of September 30, 1998 and as of the end of each fiscal quarter
thereafter, the prior twelve-month period.
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ARTICLE 8
EVENTS OF DEFAULT
8.1 Events of Default. An "Event of Default" shall exist if any one or
more of the following events (herein collectively called "Events of Default")
shall occur and be continuing:
(a) Borrower shall fail to pay any principal of, or interest
on, any Note when the same shall become due or payable and such failure
continues for five (5) Banking Days after notice thereof to Borrower.
(b) Any failure or neglect to perform or observe any of the
covenants, conditions, provisions or agreements of Borrower contained
herein, or in any of the other Credit Documents (other than a failure
or neglect described in one or more of the other provisions of this
Section 8.1) and such failure or neglect either cannot be remedied or,
if it can be remedied, it continues unremedied for a period of fifteen
(15) days after written notice thereof to Borrower.
(c) Any warranty, representation or statement contained in
this Credit Agreement or any of the other Credit Documents, or which is
contained in any certificate or statement furnished or made to Lender
pursuant hereto or in connection herewith or with the Loans, shall be
or shall prove to have been false when made or furnished.
(d) The occurrence of any material "event of default" or
"default" by Borrower under any Credit Document, or any agreement, now
or hereafter existing, to which Lender or an Affiliate of Lender, and
Borrower are a party.
(e) Borrower shall (i) fail to pay any Indebtedness of
Borrower (other than the Notes) due under any Significant Debt
Agreement, or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or
otherwise) or within any applicable grace period, (ii) fail to perform
or observe any term, covenant, or condition on its part to be performed
or observed under any agreement or instrument relating to such
Indebtedness, within any applicable grace period when required to be
performed or observed, if the effect of such failure to perform or
observe is to accelerate the maturity of such Indebtedness, or any such
Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled prepayment), prior to the
stated maturity thereof, or (iii) allow the occurrence of any material
event of default with respect to such Indebtedness.
(f) Any one or more of the Credit Documents shall have been
determined to be invalid or unenforceable against Borrower executing
the same in accordance with the respective terms thereof, or shall in
any way be terminated or become or be
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declared ineffective or inoperative, so as to deny Lender the
substantial benefits contemplated by such Credit Document or Credit
Documents.
(g) Borrower shall (i) apply for or consent to the appointment
of a receiver, trustee, custodian, intervenor or liquidator of itself
or of all or a substantial part of its assets, (ii) file a voluntary
petition in bankruptcy or admit in writing that it is unable to pay its
debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or answer seeking
reorganization of an arrangement with creditors or to take advantage of
any bankruptcy or insolvency laws, (v) file an answer admitting the
material allegations of, or consent to, or default in answering, a
petition filed against it in any bankruptcy, reorganization or
insolvency proceeding, or (vi) take corporate action for the purpose of
effecting any of the foregoing
(h) An involuntary petition or complaint shall be filed
against Borrower, seeking bankruptcy or reorganization of Borrower, or
the appointment of a receiver, custodian, trustee, intervenor or
liquidator of Borrower, or all or substantially all of its assets, and
such petition or complaint shall not have been dismissed within sixty
(60) days of the filing thereof; or an order, order for relief,
judgment or decree shall be entered by any court of competent
jurisdiction or other competent authority approving a petition or
complaint seeking reorganization of Borrower, appointing a receiver,
custodian, trustee, intervenor or liquidator of Borrower, or all or
substantially all of its assets, and such order, judgment or decree
shall continue unstayed and in effect for a period of sixty (60) days.
(i) Any final judgment(s) (excluding those the enforcement of
which is suspended pending appeal) for the payment of money in excess
of the sum of $100,000 in the aggregate (other than any judgment
covered by insurance where coverage has been acknowledged by the
insurer) shall be rendered against Borrower, and such judgment or
judgments shall not be satisfied, settled, bonded or discharged at
least ten (10) days prior to the date on which any of its assets could
be lawfully sold to satisfy such judgment.
(j) Either (i) proceedings shall have been instituted to
terminate, or a notice of termination shall have been filed with
respect to, any Plans (other than a Multi-Employer Pension Plan as that
term is defined in Section 4001(a)(3) of ERISA) by Borrower, any member
of the Controlled Group, PBGC or any representative of any thereof, or
any such Plan shall be terminated, in each case under Section 4041 or
4042 of ERISA, and such termination shall give rise to a liability of
the Borrower or the Controlled Group to the PBGC or the Plan under
ERISA having an effect in excess of $100,000 or (ii) a Reportable
Event, the occurrence of which would cause the imposition of a lien in
excess of $100,000 under Section 4062 of ERISA, shall have occurred
with respect to any Plan (other than a Multi-Employer
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Pension Plan as that term is defined in Section 4001(a)(3) of ERISA)
and be continuing for a period of sixty (60) days.
(k) Any of the following events shall occur with respect to
any Multi-Employer Pension Plan (as that term is defined in Section
4001(a)(3) of ERISA) to which Borrower contributes or contributed on
behalf of its employees and Lender determines in good faith that the
aggregate liability likely to be incurred by Borrower, as a result of
any of the events specified in Subsections (i), (ii) and (iii) below,
will have an effect in excess of $100,000; (i) Borrower incurs a
withdrawal liability under Section 4201 of ERISA; (ii) any such plan is
"in reorganization" as that term is defined in Section 4241 of ERISA;
or (iii) any such Plan is terminated under Section 4041A of ERISA.
(l) The occurrence of a Change in Control without the written
consent of Lender, except that an IPO shall not be deemed to be a
Change in Control.
(m) The dissolution, liquidation, sale, transfer, lease or
other disposal of all or substantially all of the assets or business of
Borrower.
(n) Any failure to observe any of the Financial Covenants.
(o) A substantial change of the Company's executive management
group.
(p) The occurrence of any adverse change in the financial
condition of Borrower that Lender in its reasonable discretion deems
material, or if Lender in good faith shall believe that the prospect of
payment or performance of the Loans is impaired.
8.2 Remedies Upon Event of Default. If an Event of Default shall have
occurred and be continuing, then Lender may, at its sole option, exercise any
one or more of the following rights and remedies, and any other remedies
provided in any of the Credit Documents, as Lender in its sole discretion may
deem necessary or appropriate, all of which remedies shall be deemed cumulative,
and not alternative:
(i) Cease making Advances or extensions of financial
accommodations in any form to or for the benefit of Borrower,
(ii) Declare the principal of, and all interest then
accrued on, the Notes and any other liabilities hereunder to
be forthwith due and payable, whereupon the same shall become
immediately due and payable without presentment, demand,
protest, notice of default, notice of acceleration or of
intention to accelerate or other notice of any kind all of
which Borrower hereby expressly waives, anything contained
herein or in the Notes to the contrary notwithstanding,
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(iii) Reduce any claim to judgment, and/or
(iv) Without notice of default or demand, pursue and
enforce any of Lender' rights and remedies under the Credit
Documents, or otherwise provided under or pursuant to any
applicable law or agreement; provided, however, that if any
Event of Default specified in Sections 8.1(g) and 8.1(h) shall
occur, the principal of, and all interest on, the Notes and
other liabilities hereunder shall thereupon become due and
payable concurrently therewith, without any further action by
Lender and without presentment, demand, protest, notice of
default, notice of acceleration or of intention to accelerate
or other notice of any kind, all of which Borrower hereby
expressly waives.
Upon the occurrence and during the continuance of any Event of Default,
Lender is hereby authorized at any time and from time to time, without notice to
Borrower (any such notice being expressly waived by Borrower), to set off and
apply any and all moneys, securities or other property of Borrower and the
proceeds therefrom, now or hereafter held or received by or in transit to Lender
or its agents, from or for the account of Borrower, whether for safe keeping,
custody, pledge, transmission, collection or otherwise, and also upon any and
all deposits (general or special) and credits of Borrower, and any and all
claims of Borrower against Lender at any time existing. Lender agrees promptly
to notify Borrower after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of Lender under this Section 8.2 are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) which Lender may have.
8.3 Performance by Lender. Should Borrower fail to perform any
covenant, duty or agreement with respect to the payment of taxes, obtaining
licenses or permits, or any other requirement contained herein or in any of the
Credit Documents within the period provided herein, if any, for correction of
such failure, Lender may, at its option, perform or attempt to perform such
covenant, duty or agreement on behalf of Borrower. In such event, Borrower
shall, at the request of Lender, promptly pay any amount expended by Lender in
such performance or attempted performance to Lender at its office in Inglewood,
California, together with interest thereon at the Default Rate, from the date of
such expenditure until paid. Notwithstanding the foregoing, it is expressly
understood that Lender does not assume any liability or responsibility for the
performance of any duties of Borrower hereunder or under any of the Credit
Documents or other control over the management and affairs of Borrower.
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ARTICLE 9
MISCELLANEOUS
9.1 Modification. All modifications, consents, amendments or waivers of
any provision of any Credit Document, or consent to any departure by Borrower
therefrom, shall be effective only if the same shall be in writing and accepted
by Lender.
9.2 Waiver. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other further exercise
thereof or the exercise of any other right. The rights of Lender hereunder and
under the Credit Documents shall be in addition to all other rights provided by
law. No modification or waiver of any provision of this Credit Agreement, the
Notes or any Credit Documents, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall extend beyond
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.
9.3 Payment of Expenses. Borrower shall pay all costs and expenses of
Lender (including, without limitation, the attorneys' fees of Lender's legal
counsel) incurred by Lender in connection with the documentation of the Loans,
and the preservation and enforcement of Lender's rights under this Credit
Agreement, the Notes, and/or the other Credit Documents; provided, however, that
notwithstanding the aforesaid, with respect to any legal action between the
parties hereto that is pursued to judgment the prevailing party only shall be
reimbursed by the other party for all costs and expenses (including, without
limitation, reasonable attorneys' fees and costs) incurred in connection with
the preservation and enforcement of its rights under this Credit Agreement, the
Notes and/or other Credit Documents. In addition, Borrower shall pay all costs
and expenses of Lender in connection with the negotiation, preparation,
execution and delivery of any and all amendments, modifications and supplements
of or to this Credit Agreement, the Notes or any other Credit Document.
9.4 Notices. Except for telephonic notices permitted herein, any
notices or other communications required or permitted to be given by this Credit
Agreement or any other documents and instruments referred to herein must be (i)
given in writing and personally delivered or mailed by prepaid certified or
registered mail or sent by overnight delivery service, or (ii) made by
telefacsimile delivered or transmitted, to the party to whom such notice or
communication is directed, to the address of such party as follows:
Borrower: SuperShuttle International, Inc.
4610 South 35th Street
Phoenix, Arizona 85040
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<PAGE> 35
Lender: Imperial Bank
9920 South La Cienega Boulevard
Suite 636
Inglewood, California 90301
Attention: General Counsel
Telecopier: (310) 417-5695
With a copy to: Imperial Bank Arizona
400 East Van Buren
Suite 900
Phoenix, Arizona 85004
Attention: Kevin Halloran
Telecopier: (602) 261-7881
Any notice to be personally delivered may be delivered to the principal offices
(determined as of the date of such delivery) of the party to whom such notice is
directed. Any such notice or other communication shall be deemed to have been
given (whether actually received or not) on the day it is personally delivered
as aforesaid; or, if mailed, on the third day after it is mailed as aforesaid;
or, if transmitted by telefacsimile, on the day that such notice is transmitted
as aforesaid. Any party may change its address for purposes of this Credit
Agreement by giving notice of such change to the other parties pursuant to this
Section 9.4.
9.5 Governing Law; Jurisdiction, Venue. The Credit Documents shall be
governed by and construed in accordance with the substantive laws (other than
conflict laws) of the State of Arizona, except to the extent Lender has greater
rights or remedies under Federal law, whether as a national bank or otherwise,
in which case such choice of Arizona law shall not be deemed to deprive Lender
of any such rights and remedies as may be available under Federal law. Each
party consents to the personal jurisdiction and venue of the state courts
located in Maricopa County, State of Arizona in connection with any controversy
related to this Credit Agreement, waives any argument that venue in any such
forum is not convenient and agrees that any litigation initiated by any of them
in connection with this Credit Agreement shall be venued in the Superior Court
of Maricopa County, Arizona.
9.6 Waiver of Jury Trial. EACH PARTY HERETO HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO REQUIRE A TRIAL
BY JURY IN ANY COURT ACTION PERTAINING TO OBLIGATIONS SECURED OR THE CREDIT
DOCUMENTS OR THE COLLATERAL, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
9.7 Invalid Provisions. If any provision of any Credit Document is held
to be illegal, invalid or unenforceable under present or future laws during the
term of this Credit Agreement, such provision shall be fully severable; such
Credit Document shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of such Credit Document; and
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the remaining provisions of such Credit Document shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from such Credit Document. Furthermore, in lieu of
each such illegal, invalid or unenforceable provision there shall be added as
part of such Credit Document a provision mutually agreeable to Borrower and
Lender as similar in terms to such illegal, invalid or unenforceable provision
as may be possible and be legal, valid and enforceable.
9.8 Binding Effect. The Credit Documents shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors,
assigns and legal representatives; provided, however, that Borrower may not,
without the prior written consent of Lender, assign any rights, powers, duties
or obligations thereunder.
9.9 Entirety. The Credit Documents embody the entire agreement between
the parties and supersede all prior agreements and understandings, if any,
relating to the subject matter hereof and thereof.
9.10 Headings. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Credit Agreement.
9.11 Survival. All representations and warranties made by Borrower
herein shall survive delivery of the Notes and the making of the Loans.
9.12 No Third Party Beneficiary. The parties do not intend the benefits
of this Credit Agreement to inure to any third party, nor shall this Credit
Agreement be construed to make or render Lender liable to any materialman,
supplier, contractor, subcontractor, purchaser or lessee of any property owned
by Borrower, or for debts or claims accruing to any such persons against
Borrower. Notwithstanding anything contained herein or in the Notes, or in any
other Credit Document, or any conduct or course of conduct by any or all of the
parties hereto, before or after signing this Credit Agreement or any of the
other Credit Documents, neither this Credit Agreement nor any other Credit
Document shall be construed as creating any right, claim or cause of action
against Lender, or any of its officers, directors, agents or employees, in favor
of any materialman, supplier, contractor, subcontractor, purchaser or lessee of
any property owned by Borrower, nor to any other person or entity other than
Borrower.
9.13 Time. Time is of the essence hereof.
9.14 Indemnity. Borrower agrees to and shall indemnify, hold harmless
and defend Lender from any liability, claims or losses resulting from the
disbursement of the proceeds of the Loans. This provision shall survive
repayment of the Loans and shall continue in full force and effect so long as
the possibility of such liability, claims or losses exists.
9.15 Schedules and Exhibits Incorporated. All schedules and exhibits
attached hereto, if any, are hereby incorporated into this Credit Agreement by
each reference thereto as if fully set forth at each such reference.
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<PAGE> 37
9.16 Counterparts. This Credit Agreement may be executed in multiple
counterparts, each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed this Credit Agreement
as of the day and year first above written.
SUPERSHUTTLE INTERNATIONAL, INC., a
Delaware corporation
By: ___________________________________
Name:__________________________________
Title:_________________________________
SUPERSHUTTLE OF SAN FRANCISCO, INC., a
California corporation
By: ___________________________________
Name:__________________________________
Title:_________________________________
SUPERSHUTTLE ARIZONA, INC., an
Arizona corporation
By: ___________________________________
Name:__________________________________
Title:_________________________________
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SUPERSHUTTLE DFW, INC., a Texas corporation
By: ________________________________________
Name:_______________________________________
Title:______________________________________
SUPERSHUTTLE FRANCHISE CORPORATION,
a Delaware corporation
By: ________________________________________
Name:_______________________________________
Title:______________________________________
SHUTTLE EXPRESS, INC., a Maryland
corporation
By: ________________________________________
Name:_______________________________________
Title:______________________________________
IMPERIAL BANK ARIZONA, an Arizona banking
corporation
By: ________________________________________
Name:_______________________________________
Title:______________________________________
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Exhibit 10.35
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT ("Agreement") is entered into effective as of
the 1st day of September, 1997, by and among SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation (hereinafter referred to as "SSI"), SHUTTLE EXPRESS,
INC., a Maryland corporation (hereinafter referred to as the "Company"), and
YELLOW HOLDING, INC., a Maryland corporation (hereinafter referred to as
"Yellow"). SSI and Yellow are herein sometimes referred to collectively as the
"Shareholders", and each singly as "Shareholder".
WHEREAS, the Shareholders aggregately own all of the capital stock of the
Company (hereinafter referred to as "Shares"), and they and the Company wish to
restrict stock ownership of the Company to parties with whom they mutually
choose to deal to assure the continued ease of administration of the Company's
business.
WHEREAS, the parties desire to promote their individual interests and the
interests of the Company by imposing certain restrictions and obligations on
the Shareholders, the Company, and the Shares.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants hereinafter contained, and for other good and lawful consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
agree as follows:
ARTICLE 1
RESTRICTION ON SALE OF SHARES
1.1 Endorsement of Stock. Upon the execution of this Agreement, the
certificates representing the Shares shall be surrendered to the Secretary of
the Company and endorsed as follows:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SHAREHOLDERS AGREEMENT TO WHICH THE COMPANY IS A PARTY, AND NONE OF SUCH
SHARES, OR ANY INTEREST THEREIN, SHALL BE TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF EXCEPT AS PROVIDED IN SUCH AGREEMENT. A COPY OF
THE AGREEMENT IS ON FILE IN THE OFFICE OF THE COMPANY AND WILL BE MADE
AVAILABLE FOR INSPECTION TO ANY PROPERLY INTERESTED PERSON WITHOUT CHARGE
WITHIN FIVE (5) WORKING DAYS AFTER THE COMPANY'S RECEIPT OF A WRITTEN
REQUEST.
1
<PAGE> 2
A copy of this Agreement, together with any amendments thereto shall remain
on file with the Secretary of the Company and shall be available for inspection
to any properly interested person without charge within five (5) working days
after the Company's receipt of a written request therefor.
Subject to the terms of this Agreement, the Shareholders shall be entitled
to exercise all rights of ownership in the Shares.
No shares of any class of stock of the Company, other than the Shares, are
presently issued and outstanding. If the Company issues additional shares, the
Company shall cause all shares so issued to bear the above endorsement, and to
be subject to all the terms and conditions of this Agreement, and such shares
shall for all purposes be deemed "Shares" hereunder. Each person receiving such
issued shares shall automatically be deemed a "Shareholder" hereunder, and in
furtherance thereof, each such person shall execute and deliver to the parties
hereto an agreement in writing to be bound by this Agreement.
1.2 Restrictions on Transfer or Encumbrance. Except as otherwise set
forth in this Agreement, no Shareholder shall, without the prior written consent
of all other Shareholders, transfer, or permit the transfer of, all or any part
of the Shares, or any interest therein, whether legal or beneficial, now owned
or hereafter acquired by such Shareholder. Any attempted transaction not in
compliance with this Section 1.2 shall be void. As used in this Agreement, the
verb "transfer," in whatever form, number or tense, shall mean, as the case may
be, encumber or in any manner use as collateral, to transfer, or to sell or
otherwise to dispose of, or suffer disposition or encumbrance, voluntarily or
involuntarily.
ARTICLE II
SPECIFIC OPTIONS BETWEEN SSI AND YELLOW
2.1 Call and Put Options. SSI shall have a call option and Yellow shall
have a put option on the shares of stock of the Company owned by Yellow as
follows. SSI may exercise its call option at any time after the date thereof
through 5:00 p.m., Baltimore Time, June 1, 1999. Yellow may exercise its put
option only for the period between January 1, 1999 through 5:00 p.m., Baltimore
Time, June 1, 1999. The purchase price for either SSI's call option or Yellow's
put option shall be equal to 4.5 times the product of one-half (1/2) of the
Earnings Before Income Taxes ("EBIT") of the Company for the 12-month period
ending the calendar month immediately preceding the exercise of the put or call
option, but in no event for a price of less than One Million Dollars
($1,000,000.00) The EBIT of the Company for the relevant period shall be
determined by the accountant regularly employed by the Company at the time of
the triggering event, or if for any reason that accountant is then unable or
unwilling to act, or if there be no such accountant, then any certified public
accountant acceptable to the parties may be retained by for this purpose.
The payment of the purchase price in the event of the exercise of a put or
call option shall be paid, at the option of SSI, as follows:
2
<PAGE> 3
An initial payment in cash at the closing of such sale of twenty-five
percent (25%) of said price, with the balance payable in equal monthly
installments over a period of thirty-six (36) months. The balance shall be
evidenced by a promissory note bearing interest at the prime rate of
interest charged by the primary bank of the Company in effect at the time
of the closing. Yellow shall retain a security interest in the shares
transferred as security for performance of SSI's obligations under the
promissory note, and SSI agrees to execute and deliver such instruments
(including share certificates) and documents as shall be necessary to
create and perfect such security interest.
2.2 Rejection of Yellow's Put Option By SSI. The foregoing notwithstanding,
SSI may reject Yellow's exercise of its put option, in which event either party
may immediately market all but not less than all of the authorized, issued and
outstanding stock or assets of the Company, for a period of 12 months, to any
bona fide third party purchaser. Upon receipt of a bona fide offer from a third
party purchaser acceptable to the party obtaining the offer, the other party
shall not unreasonably withhold its consent to the sale of its stock (or
substantially all of the assets) of or in the Company to said third party
purchaser. The total consideration to be received for the sale of all of the
Company's outstanding stock or all of its assets shall be shared equally by SSI
and Yellow.
In addition, if SSI rejects the put option of Yellow then SSI shall cause
one of the directors of the Company who had been appointed by SSI to resign and
such director shall be replaced by the President of Yellow. SSI agrees to vote
its shares in such manner as to elect the President of Yellow as the fifth
director of the Company.
ARTICLE III
TRANSFERS TO THIRD PARTIES
3.1 Offering Notice; Non-Cash Consideration, Involuntary Transfers. Each
Shareholder hereby covenants, during the term of this Agreement, not to
transfer, or permit the transfer of, any Shares, or any interest therein,
whether legal or beneficial, to any third party until June 2, 1999, and then
only after first offering to transfer the same to or for the benefit of the
Company or the Shareholders as provided in this Article.
(a) The Offering Notice. Any Shareholder (the "Selling Shareholder") having
received a bona fide offer from a third party and desiring to accept the offer,
or desiring to transfer any Shares to a third party, shall before accepting the
offer or proposing the transfer submit the offer or proposal in writing to each
of the other Shareholders (individually called "Optionee" and collectively
called "Optionees") and to the Company. The offer or proposal (the "Offering
Notice") shall identify the number of Shares and the interest therein that the
Selling Shareholder proposes to transfer (the "Offered Shares"), and shall set
forth the consideration for which the Offered Shares are proposed to be
transferred, the identity and the address of the third party (the "Proposed
Purchaser"), and all other terms and conditions of the proposed transaction.
3
<PAGE> 4
(b) Non-Cash Consideration. In the event the Offering Notice sets forth a
cash value for non-cash consideration, the Company and each Optionee shall have
ten (10) days, beginning with the day following receipt of the Offering Notice
by the Company and all Optionees, to make written, good faith objections to the
cash value specified for all or any part of the non-cash consideration. If the
Company or any Optionee objects to the cash value specified in the Offering
Notice for all or any part of the non-cash consideration, each objecting party
shall notify the Selling Shareholder, the Secretary of the Company, and the
other Optionees, as the case may be, in writing setting forth the cash value he
or it would assign to the disputed non-cash consideration and the reason(s)
therefor. If after ten (10) days, beginning with the day following receipt of
each such notice of objection by the Selling Shareholder, the Company and all
Optionees, there remains any objection to the cash value of any item of non-cash
consideration, the dispute over the cash value of such items shall be submitted
for arbitration pursuant to Section 4.4(o) hereof.
(c) Involuntary Transfer. Any Shareholder who becomes aware that there is a
reasonable possibility Shares held by such Shareholder or any other Shareholder
may be transferred involuntarily in the reasonably foreseeable future shall
provide written notice to the Company and all other Shareholders describing in
reasonable detail the known circumstances concerning the possible transfer and
thereafter keep the Company and other Shareholders reasonably informed with
respect to the potential transfer. The date upon which an involuntary transfer
becomes effective shall be an "Involuntary Transfer Date" for purposes of this
Agreement. In the event of the occurrence of an Involuntary Transfer Date, any
person or entity who receives Shares as a result of the transfer that occurred
on the Involuntary Transfer Date shall be deemed to be a "Selling Shareholder"
for purposes of this Agreement, such Shares shall be deemed to be "Offered
Shares", and upon receipt of notice of such event, the Company shall send
written notice of such event identifying the number of Shares and the interest
therein held by the Selling Shareholder to all "Optionees," who shall consist
for this purpose of all Shareholders other than the Selling Shareholder and the
Shareholder, if any, from whom the Selling Shareholder acquired the Shares, and
such notice shall be deemed to be an "Offering Notice." Such Optionees and the
Company shall have the right to purchase such Shares pursuant to Section 3.2.
3.2 Options to Purchase.
(a) First Option. The Company shall have an option, continuing for thirty
(30) days, beginning with the day following receipt of the Offering Notice, to
elect to acquire all or any part of the Offered Shares on the terms set forth in
Section 3.4 hereof. If the Company elects to acquire all of the Offered Shares,
the Secretary of the Company shall, no later than the last day of the Company's
thirty (30) day option period, notify the Selling Shareholder and Optionees of
its decision in writing. (As used in this section and hereinafter in this
Agreement, the verb "acquire," in whatever form, number or tense, shall mean, as
the case may be, to take as security or as collateral, to accept a transfer, to
purchase, or otherwise to acquire.)
(b) Second Option. If the Company elects not to exercise its option under
the preceding subsection or elects to acquire less than all the Offered Shares,
the Secretary of the Company shall,
4
<PAGE> 5
no later than the last day of the Company's thirty (30) day option period,
notify the Selling Shareholder and Optionees of its decision in writing. Each
Optionee then shall have an option, continuing for a period of thirty (30)
days, beginning with the day following receipt of such notice by all Optionees,
to acquire, on the terms set forth in Section 3.4 hereof, all or any part of
the Offered Shares not acquired by the Company in the same ratio as the total
number of shares of the Company's capital stock owned by such Optionee bears to
the total number of shares of the capital stock of the Company then outstanding
and owned by all Optionees. Any Optionee desiring to acquire all or any part of
the Offered Shares not acquired by the Company shall deliver to the Secretary
of the Company within said thirty (30) day period a written election so to
acquire the Offered Shares or a specified portion thereof up to his
proportionate share.
(c) Subsequent Options. If any Optionee does not elect to acquire his or
its proportionate share, the Secretary of the Company shall give written notice
thereof to all Optionees who elected to exercise their options (the "Exercising
Optionees"), no later than five (5) days following the last day of the option
period of the last Optionee to receive notice. Each Exercising Optionee shall
then have a further option, continuing for five (5) days, beginning with the
day following receipt of such notice by all Exercising Optionees, to elect to
acquire the still unsold Offered Shares in the same ratio that the total number
of shares of the Company's capital stock owned by him or it bears to the total
number of shares of the capital stock of the Company then outstanding and owned
by all Exercising Optionees. Any Exercising Optionee desiring to acquire all or
any part of the Offered Shares not acquired by the Company or by any Optionee
shall deliver a written election during said five (5) days period. Such notices
and options shall continue to be given in the same manner and for the same
periods until election(s) to acquire all of the Offered Shares are made, or
until no Exercising Optionee is willing to exercise his or its option to
acquire the remaining Offered Shares. Only an Exercising Optionee who shall
have fully exercised his or its last option under this Section 3.2(c) shall be
deemed to be an Exercising Optionee for purposes of notice and exercise of the
next subsequent option, if any, under this Section 3.2(c).
3.3 Failure to Acquire All Offered Shares. To the extent the Company and
Optionees collectively do not elect pursuant to Section 3.2 to acquire all the
Offered Shares, then, if applicable, (i) the options granted hereunder to the
Company and Optionees shall, for purposes of the Offering Notice only, be
forfeited and the Selling Shareholder may complete the transaction with the
Proposed Purchaser, no later than the thirtieth (30th) day following the last
day of the last option period provided for herein, for the consideration per
Offered Share, for all, but not less than all the Offered Shares and upon all
the terms and conditions set forth in the Offering Notice, or (ii) with
respect to Offered Shares acquired upon an Involuntary Transfer Date, the
Company shall record the Selling Shareholder as the owner of record of such
Shares. The Offered Shares shall for all purposes remain subject to this
Agreement and the Proposed Purchaser, any person taking the Shares as
collateral pursuant to a pledge or other encumbrance, or any person holding
such Shares on account of the occurrence of an Involuntary Transfer Date
shall, upon completion of the transaction, immediately and automatically be
deemed a Shareholder hereunder and shall be bound by this Agreement. If
requested by the Company or any Shareholder, any such transferee shall, as a
condition to transfer, agree in writing to be bound by the terms of this
Agreement, including, in the case of a person taking
5
<PAGE> 6
Shares as collateral, the requirement that he or it provide notice of default
and/or foreclosure to the Shareholders and the Company pursuant to Section 3.1.
A person taking the Shares as collateral pursuant to a pledge or other
encumbrance shall not have the right to exercise any option under Section 3.2 by
virtue of his so holding such shares as collateral or following foreclosure. If
the transaction with the Proposed Purchaser is not consummated by such
thirtieth (30th) day pursuant to the exact terms and conditions set forth in
the Offering Notice, then all the provisions of this Agreement shall be deemed
to apply again to all the Offered Shares.
3.4 Election to Acquire Offered Shares. If the Company and/or the
Optionees elect to acquire Offered Shares pursuant to Section 3.2 hereof, the
Company and each Exercising Optionee shall be obligated to consummate his or
its election to acquire the Offered Shares pursuant to such election(s) no later
than the sixtieth (60th) day following the last exercise of an option, or the
sixtieth (60th) day following the determination of the Fair Market Value
pursuant to Section 3.5, if applicable (the "Closing").
The price to acquire each Offered Share shall be the price, if any, set
forth in the Offering Notice (computed on the basis of the cash value of all
consideration as determined under Section 3.1(b)), or otherwise the Fair Market
Value as defined in Section 3.5 hereof or. With respect to a transfer that is
not an involuntary transfer, the price shall be paid upon the terms set forth in
the Offering Notice. With respect to involuntary transfers, the price may be
paid by the Company and/or each Exercising Optionee, as they, in their sole
discretion elect, as follows:
(a) cash in full, payable at the time of the Closing; or
(b) (except in the event the Selling Shareholder proposes only pledge,
encumber or otherwise use the Offered Shares as collateral) an initial
payment in cash at the closing of twenty-five percent (25%) of said
price, with the balance payable in equal monthly installments over a
period of thirty-six (36) months. The balance shall be evidenced by a
promissory note bearing interest at the prime rate of interest charged
by the primary bank of the Company in effect at the time of the
closing. The Selling Shareholder shall retain a security interest in
the Offered Shares subject to the exercised option as security for
performance of the Company's and/or the Exercising Optionees
obligations under the promissory note, and the Exercising Optionee
and/or Company agree to execute and deliver such instruments
(including share certificates) and documents as shall be necessary to
create and perfect such security interest.
When the Offering Notice pertains to an offer to lend funds to the Selling
Shareholder, secured by Shares of the Company, the Exercising Optionees sole
option shall be to elect to lend the funds on the terms set forth in the
Offering Notice.
3.5 Fair Market Value.
<PAGE> 7
(a) The Fair Market Value of a Share of the capital stock of the Company
shall mean that value which is determined pursuant to this Section 3.5. The
Fair Market Value may be mutually agreed upon by the selling and acquiring
parties of the shares of Stock. If the parties do not mutually agree upon the
Fair Market Value of a share of Stock within ten (10) days after delivery of a
written notice of exercise of a purchase right or obligation under this
Agreement, then the Fair Market Value of a share of Stock shall be equal to the
fair market value of such share as determined as of the date of such notice
pursuant to Section 3.5(b) below.
(b) The net worth of the Company for purposes of this Agreements shall be
computed and determined as follows:
(1) The net worth of the Company shall be equal to 4.5 times the Earnings
Before Income Taxes ("EBIT") of the Company for the 12-month period ending the
calendar month immediately preceding the date of the notice of exercise. The
EBIT of the Company for the relevant period shall be determined by the
accountant regularly employed by the Company at the time of the notice of
exercise, or if for any reason that accountant is then unable or unwilling to
act, or if there be no such accountant, then any certified public accountant
acceptable to the parties may be retained by for this purpose. Any dispute in
the selection of an accountant which continues for more than thirty (30) days
shall be resolved by arbitration pursuant to Section 4.4(o) of this Agreement.
(3) The Fair Market Value of a share of stock of the Company shall be its
allocate portion of the Company's net worth so determined.
ARTICLE IV
GENERAL PROVISIONS
4.1 Termination. This Agreement shall terminate upon the occurrence of
either of the following events:
(a) Bankruptcy of the Company; or
(b) Voluntary agreement of the Company and all Shareholders.
(c) Upon ownership of all of the Company's outstanding capital stock being
vested in one person.
"Bankruptcy" shall mean the occurrence of any of the following events with
respect to the Company: if (1) it is dissolved; (2) it becomes insolvent or
fails or is unable or admits in writing its inability generally to pay its
debts as they become due; (3) it makes a general assignment, arrangement or
composition with or for the benefit of its creditors; (4) it institutes or has
instituted against it a proceeding seeking relief under any bankruptcy or
insolvency law or other similar law affecting creditors' rights, or a petition
is presented for the winding-up or liquidation of the Company and, in
7
<PAGE> 8
the case of any such proceeding or petition instituted or presented against
it, such proceeding or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making of an order for
the winding-up or liquidation of the Company or (B) is not dismissed,
discharged, stayed or restrained in each case within 90 days of the institution
or presentation thereof, (5) it has a resolution passed for its winding-up or
liquidation; (6) it weeks or becomes subject to the appointment of an
administrator, receiver, trustee, custodian or other similar official for it
or for all or substantially all its assets; (7) any event occurs with respect
to the Company which, under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses (1) to (6)
inclusive; or (8) the Company takes any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the foregoing acts.
4.2 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their heirs, legal representatives, successors
and assigns; provided, however, that except as otherwise expressly provided in
this Agreement, no Shareholder shall assign any rights, obligations or interest
hereunder without the prior written consent of all other Shareholders.
4.3. Amendment. This Agreement may only be amended by a written agreement
approved by the Board of Directors of the Company and all the Shareholders. Any
agreement so approved shall be executed by the Company and the Shareholders and
filed with the corporate records.
4.4. General. Except to the extent inconsistent with the express language
of the foregoing provisions of this Agreement, the following provisions shall
govern the interpretation, application, construction and enforcement of this
Agreement.
(a) Notice. Any notice from one party to the other shall be deemed given
when delivered to, or on the day after being sent by a nationally recognized
overnight courier service addressed to, the person at the address listed below
or to such other person and/or address as may be designated from time to time
in writing:
To SSI: SuperShuttle International, Inc.
4610 S. 35th Street
Phoenix, Arizona 85040
Attn: Brian Wier, President
With a copy to: Oman, Schulenburg & Politan, P.L.C.
4801 E Greenway Road
Scottsdale, AZ 85254
Attn: Steven P. Oman, Esq.
To Company: Shuttle Express, Inc.
508 DiGuilian Blvd.
Glen Burnie, Maryland 21061
Attn: Marty Haynes
8
<PAGE> 9
With a copy to: Moldawer & Marshall, P.C.
30 Courthouse Square, Suite 300
Rockville, Maryland 20850
Attn: Alan B. Moldawer, Esq.
To Yellow: Yellow Holding, Inc.
2100 Huntingdon Avenue
Baltimore, Maryland 21211
Attn: Terry Oates
With a copy to: Moldawer & Marshall, P.C.
30 Courthouse Square, Suite 300
Rockville, Maryland 20850
Attn: Alan B. Moldawer, Esq.
(b) Additional Acts and Documents. Each party hereto agrees to do all such
things and take all such actions, and to make, execute and deliver such other
documents and instruments, as shall be reasonably requested to carry out the
provisions, intent and purpose of this Agreement.
(c) Authority. Each of the parties hereto represents and warrants to each
other party hereto that this Agreement has been duly authorized by all
necessary action and that this Agreement constitutes and will constitute a
binding obligation of each such party.
(d) Attorney Fees. If suit is brought or an attorney is retained by any
party to this Agreement to enforce the terms of this Agreement or to collect
any moneys due hereunder, or to collect money damages for breach hereof, or in
connection with any arbitration or action arising out of this Agreement, the
prevailing party shall be entitled to recover, in addition to any other remedy,
reimbursement for reasonable attorney fees, court costs, arbitration costs,
costs of investigation and other related expenses incurred in connection
therewith.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, all such counterparts shall be deemed to constitute one and the
same instrument, and each of said counterparts shall be deemed an original
hereof.
(f) Time. Time is of the essence of this Agreement and each and every
provision hereof. Any extension of time granted for the performance of any duty
under this Agreement shall not be considered an extension of time for the
performance of any other duty under this Agreement.
(g) Waiver. Failure of any party to exercise any right or option arising
out of a breach of this Agreement shall not be deemed a waiver of any right or
option with respect to any subsequent or different breach, or the continuance
of any existing breach.
9
<PAGE> 10
(h) Integration Clause, Oral Modification. This Agreement represents the
entire agreement of the parties with respect to the subject matter hereof, and
all agreements entered into prior hereto are revoked and superseded by this
Agreement, and no representations, warranties, inducements or oral agreements
have been made by any of the parties except as expressly set forth herein, or
in other contemporaneous written agreements.
(i) Captions. Captions and sections headings used herein are for
convenience only, are not a part of this Agreement, shall not be deemed to
limit or alter any provisions hereof, and shall not be deemed relevant in
construing this Agreement.
(j) Governing Law. This Agreement shall be deemed to be made under, and
shall be construed in accordance with and shall be governed by , the laws of
the State of Maryland.
(k) Indemnity. Each party to this Agreement agrees to indemnity each other
party, and hold it harmless, for, from and against all claims, damages, costs
and expenses (including reasonable attorney fees) attributable, directly or
indirectly, to the breach by such indemnifying party of any obligation
hereunder.
(l) Interpretations. To the extent permitted by the context in which used,
(i) words in the singular number shall include the plural, (ii) words in the
masculine gender shall include the feminine and neuter, and vice versa, and
(iii) references to "persons" or "parties" in this Agreement shall be deemed to
refer to natural persons, corporations, general partnerships, limited
partnerships, trusts and all other entities.
(m) Interest on Overdue Amounts. To the extent any amount becomes due and
owing hereunder, the party to whom such amount is payable shall be entitled to
receive, in addition to such amount, interest thereon at the higher of 12% per
annum or the rate specified in Section 2.4 hereof, from and after the date on
which notice of delinquency is given to the party or parties owing the amount
so due.
(n) Specific Performance. In addition to such other remedies as may be
available under applicable law, the parties acknowledge that the remedies of
specific performance and/or injunctive relief shall be available and proper in
the event any party fails or refuses to perform its duties hereunder.
(o) Arbitration. In the event any dispute or controversy arising out of
this Agreement cannot be settled by the parties, such controversy or dispute
shall be submitted to arbitration in Baltimore, Maryland, and for this purpose
each party hereby expressly consents to arbitration in such place. In the event
the parties cannot mutually agree upon an arbitrator and procedure to settle
their dispute or controversy within fifteen (15) days after written demand by
one of the parties for arbitration, then the dispute or controversy shall be
arbitrated by a single arbitrator pursuant to the then-existing rules and
regulations of the American Arbitration Association governing commercial
transactions. The decision of the arbitrator shall be binding upon the parties
hereto for all purposes, and judgment to
<PAGE> 11
enforce any such binding decision may be entered in any court having
jurisdiction thereof. At the request of either party, arbitration proceedings
shall be conducted in the utmost secrecy. In such case, all documents,
testimony and records shall be received, heard and maintained by the arbitrator
in secrecy, available for inspection only by either party and by their
attorneys and experts who shall agree, in advance and in writing, to receive
all such information in secrecy. In all other respects, the arbitration shall
be conducted pursuant to the Uniform Arbitration Act as adopted and regulations
of the American Arbitration Association governing commercial transactions to
the extent such rules and regulations are not inconsistent with such Act or
this Agreement.
(p) Exhibits. Any Exhibit attached hereto shall be deemed to have been
incorporated herein by this reference, with the same force and effect as if
fully set forth in the body hereof.
(q) Invalidity. Notwithstanding any other term or provision of this
Agreement, if any right or interest created by or in connection with this
Agreement would be invalid or unenforceable if not subject to the terms
contained in this sentence, such interest or right shall terminate twenty (20)
years after the date of death of the last to die of the parties and the
children of the parties living at the time of creation of such right or
interest.
(r) Severability. If any provision of this Agreement is declared void or
unenforceable, such provision shall be deemed severed from this Agreement,
which shall otherwise remain in full force and effect.
(s) Business Day; Time for Performance. Any reference in this Agreement to
"business day" shall refer to a Monday, Tuesday, Wednesday, Thursday or Friday
on which a majority of the banks (by number) having their principal executive
offices in Baltimore, Maryland are generally open for business in that City. If
the date on which an act specified to occur or be performed under this
Agreement shall not be a business day, or if the last day on which an election,
notice or other act can be made or accomplished under this Agreement shall not
be a business day, then the same shall be timely if it occurs or is performed,
made or accomplished on the next following business day.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day, month and year first written above.
SHUTTLE EXPRESS, INC.
a Maryland corporation
By: [Signature Not Legible]
----------------------------------
Its: President
-----------------------------------
<PAGE> 12
YELLOW HOLDING, INC.
a Maryland corporation
By: /s/ Mark Joseph
------------------------------
Its: President
-----------------------------
SUPERSHUTTLE INTERNATIONAL, INC.
a Delaware corporation
By: /s/ Tom LaVoy
------------------------------
Its: CFO/Treasurer
-----------------------------
12
<PAGE> 13
ATTACHMENT "E"
CONSOLIDATED FINANCIAL STATEMENTS
for the years ended September 30, 1995, 1996 and 1997
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME STATE OF INCORPORATION
- ---- ----------------------
<S> <C>
SuperShuttle Arizona, Inc. ................................. Arizona
SuperShuttle DFW, Inc. ..................................... Texas
SuperShuttle of San Francisco, Inc. ........................ California
SuperShuttle Franchise Corporation.......................... Delaware
Tamarack Transportation, Inc. dba SuperShuttle Los
Angeles................................................... California
Preferred Transportation, Inc. dba SuperShuttle Orange
County.................................................... California
Southern Shuttle Services, Inc. dba SuperShuttle Miami...... Florida
AAA Wheelchair Wagon Services, Inc. ........................ Florida
Limousines of South Florida, Inc.(1)........................ Florida
Wheelchair Ambulance of Hollywood, Inc. .................... Florida
A1A Snowbird Leasing, Inc. ................................. Florida
Shuttle Express, Inc.(1) dba SuperShuttle Baltimore......... Maryland
Shuttle Associates, LLC dba SuperShuttle New York........... New York
</TABLE>
- ------------------------------
(1) The Company owns a fifty percent (50%) equity interest in its Baltimore
operation, which is also subject to a franchise agreement with the Company.
The Company also has a right of first refusal with respect to the sale
thereof.
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of SuperShuttle
International, Inc. on Form S-1 of our report on the financial statements of
SuperShuttle International, Inc. dated December 2, 1997 (March 31, 1998 with
respect to certain information in Note 1), our report on the financial
statements of Preferred Transportation, Inc. dba SuperShuttle Orange County
dated March 20, 1998, our report on the financial statements of Tamarack
Transportation, Inc. dba SuperShuttle Los Angeles dated March 23, 1998, our
report on the financial statements of Southern Shuttle Services, Inc. dated
March 17, 1998, and our report on the combined financial statements of AAA
Wheelchair Wagon Services, Inc. and Limousines of South Florida, Inc., dated
March 17, 1998, all appearing in the Prospectus, which is part of this
Registration Statement. The Financial Statements of SuperShuttle International,
Inc. for the year ended September 30, 1995 were audited by other auditors.
We also consent to the reference to us under the headings "Selected
Consolidated Financial Data" and "Experts" in such Prospectus.
Phoenix, Arizona
June 1, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants as of February 2, 1996, and during the
period covered by the financial statements on which we reported, we hereby
consent to the use of our report dated February 2, 1996, on the financial
statements as of September 30, 1995, and for the year then ended of SuperShuttle
International, Inc. appearing in the Prospectus, which is part of the attached
Registration Statement of SuperShuttle International, Inc. on Form S-1.
We also consent to the reference to our Firm under the headings "Selected
Consolidated Financial Data" and "Experts" in such Prospectus.
/s/ ARTHUR ANDERSEN LLP
Phoenix, Arizona
June 3, 1998.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,858,000
<SECURITIES> 0
<RECEIVABLES> 1,555,000
<ALLOWANCES> 110,000
<INVENTORY> 0
<CURRENT-ASSETS> 5,230,000
<PP&E> 12,015,000
<DEPRECIATION> 8,069,000
<TOTAL-ASSETS> 12,456,000
<CURRENT-LIABILITIES> 5,896,000
<BONDS> 1,259,000
0
4,105,000
<COMMON> 28,000
<OTHER-SE> 1,065,000
<TOTAL-LIABILITY-AND-EQUITY> 12,456,000
<SALES> 18,225,000
<TOTAL-REVENUES> 18,225,000
<CGS> 0
<TOTAL-COSTS> 11,014,000
<OTHER-EXPENSES> 6,331,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 185,000
<INCOME-PRETAX> 695,000
<INCOME-TAX> (2,087,000)
<INCOME-CONTINUING> 2,880,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,880,000
<EPS-PRIMARY> 1.03
<EPS-DILUTED> .81
</TABLE>
