U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File No. 0-25319
TRANSPORTATION LOGISTICS INT'L, INC.
(Name of Small Business Issuer in its Charter)
COLORADO 84-1191355
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
136 Freeway Drive, East Orange, NJ 07018
(Address of Principal Executive Offices)
Issuer's Telephone Number: (973) 266-7020
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the Registrant's classes of common stock, as of the
latest practicable date:
May 21, 2001
Common Voting Stock: 22,399,348
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Condensed Interim Balance Sheet
March 31,2001
Assets
Current Assets
Cash and equivalents $ 439,924
Accounts receivable, net of allowance
for doubtful accounts of $37,497 1,670,472
Prepaid expenses 133,028
Notes receivable - current portion 368,791
Net assets of discontinued operations 186,291
Deferred income taxes 11,270
---------
Total Current Assets 2,809,776
---------
Property and equipment, at cost, less
accumulated depreciation 503,349
---------
Goodwill and customer lists, net of
accumulated amortization 118,787
---------
Other Assets
Security deposits 78,085
Other assets 95,976
Loan receivable affiliates 365,131
---------
Total Other Assets 539,192
---------
Total Assets 3,971,104
=========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable 1,747,132
Accrued expenses 152,537
Notes payable to bank 567,876
Income taxes payable 22,728
Loan payable 428,697
---------
Total Current Liabilities 2,918,970
---------
Stockholders' Equity
Common stock, no par value; 50,000,000
shares authorized, 20,865,000 shares
issued and outstanding 1,647,392
Additional paid-in capital -
stock options 29,300
Retained earnings (137,463)
Accumulated other comprehensive income 8,642
Less: treasury stock, 235,652 shares
at cost (456,675)
Consulting services to be provided (39,062)
---------
Total Stockholders' Equity 1,052,134
---------
Total Liabilities and Stockholders'
Equity $3,971,104
=========
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Condensed Interim Statements of Operations
Three Months Ended
March 31,
2001 2000
-----------------------
Operating Revenues $ 1,600,120 $ 1,817,079
Direct Operating Expenses 1,190,257 1,290,910
--------- ---------
Gross Profit 409,863 526,169
--------- ---------
Operating Expenses
Selling, general and administrative 634,562 410,029
Depreciation and amortization 59,427 60,000
--------- ---------
Total Operating Expenses 693,989 470,029
--------- ---------
Operating Income (Loss) (284,126) 56,140
--------- ---------
Other Income (Expense)
Interest expense (16,628) (4,341)
--------- ---------
Total Other Income (Expense) (16,628) (4,341)
--------- ---------
Income (Loss) Before Income Taxes (300,754) 51,799
(Provision) Benefit for Income Taxes - 20,000
--------- ---------
Income (Loss) Before Discontinued Operations (300,754) 31,799
Income (Loss) From Discontinued Operations of
Subsidiary (net of tax effect of $20,000) - (37,994)
--------- ---------
Net Income (Loss) $ (300,754) $ (6,195)
========= =========
Earnings Per Share
Income from continuing operations $ (0.01) $ 0.03
Discontinued operations - (0.04)
--------- ---------
Basic and diluted earnings per share $ (0.01) $ (0.01)
========= =========
Weighted Average Number of Common Shares
Outstanding
Basic 20,902,500 932,200
Diluted 20,902,500 932,200
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Condensed Interim Statements of Cash Flows
Three Months Ended
March 31,
2001 2000
------------------
Cash Used in Operating Activities $ (233,497) $ (150,876)
Cash Flows From Investing Activities
Purchase of property and equipment (51,408) (54,000)
Collection of notes receivable 408,383 -
------- -------
Net Cash Provided by Investing Activities 356,975 (54,000)
------- -------
Cash Flows From Financing Activities
Loan payable, net 127,834 -
Proceeds from bank loans 110,626 35,818
Loans to affiliates (117,630) -
------- -------
Net Cash Provided by Financing Activities 120,830 35,818
------- -------
Net Increase (Decrease) in Cash and Equivalents 244,308 (169,058)
Cash and Equivalents at Beginning of Period 195,616 224,540
------- -------
Cash and Equivalents at End of Period $ 439,924 $ 55,482
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 16,628 $ 4,341
Income taxes $ - $ -
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Condensed Interim Financial Statements
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Item 310 of Regulation
S-B. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 2001
and 2000 are not necessarily indicative of the results that may be expected
for the years ended December 31, 2001 and 2000. The unaudited condensed
financial statements should be read in conjunction with the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 2000.
OPERATING SEGMENTS
The Company's operations are classified into four principal reportable
segments that provide different products or services. Logistics Services
U.S., Logistics Services UK, Student transportation, commercial driver
leasing. Separate management of each segment is required because each
business unit is subject to different marketing, and operating strategies
and different geographic locations.
Segmental Data
Reportable Segments Three Months Ended March 31, 2001
TLI US TLI UK Pupil Bangladesh Total
==============================================================================
External Revenue $ 355,162 $ 453,962 $ 750,107 $ 40,889 $1,600,120
Depreciation and
Amortization $ 22,684 $ - $ 36,764 $ - $ 59,448
Operating Income
(Loss) $ (303,585) $ (158,714) $ 193,897 $(15,723) $ (284,125)
Assets $2,513,017 $ 755,285 $ 608,539 $ 94,263 $3,971,104
Capital
Expenditures $ 51,408 $ - $ - $ - $ 51,408
Reportable Segments Year Ended March 31, 2000
TLI US TLI UK Pupil Bangladesh Total
==============================================================================
External Revenue $ 243,382 $ 864,821 $ 708,876 $ - $1,817,079
Depreciation and
Amortization $ - $ - $ 60,000 $ - $ 60,000
Operating Income
(Loss) $ (37,497) $ (10,989) $ 104,626 $ - $ 56,140
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
Forward-looking Statements: No Assurances Intended
This Report contains certain forward-looking statements regarding
Transportation Logistics, its business and financial prospects. These
statements represent Management's present intentions and its present belief
regarding the company's future. Nevertheless, there are numerous risks and
uncertainties that could cause our actual results to differ from the results
suggested in this Report. Among the more significant risks are:
1. the fact that Transportation Logistics' growth will be limited by its
ability to obtain additional capital;
2. the fact that the industry in which Transportation Logistics operates
is dominated by large logistics companies, against whom
Transportation Logistics must compete;
3. the fact that the Translogistics Network is untested and may not
perform as expected; and
4. the fact that Transportation Logistics may not be able to attract the
skilled managers it will need in order to expand its operations
efficiently.
Because these and other risks may cause the Company's actual results to
differ from those anticipated by Management, the reader should not place
undue reliance on any forward-looking statements that appear in this Report.
Readers should also take note that Transportation Logistics will not
necessarily make any public announcement of changes affecting these forward-
looking statements, which should be considered accurate on this date only.
Results of Operations
In its first 21 months of operations, through December 31, 2000,
Transportation Logistics experienced steady growth and profitable operations,
despite the fact that the core of our business plan, the Translogistics
Network, was in the development stage throughout this period and consumed
$1.5 million of our resources. Our revenue grew consistently from one quarter
to the next, as we expanded our logistics operations.
Our revenue through December 31, 2000 did not, however, include any
significant revenue attributable to the Translogistics Network. Although
intra-network operations commenced in 2000, there has been no significant
revenue from Network operations in 2000, primarily because we were still
engaged in developing a domestic U.S. presence sufficient to meet the needs
of Network members. In January, 2001 we announced the formation of our joint
venture with Cargo, Inc., Cargo/TLI, LLC, which gives us established
facilities in 27 cities throughout the United States, enabling us to service
almost all of the U.S. requirements of the members of the Translogistics
Network. We expect, therefore, that our revenue for the second half of 2001
will include a substantial component of business generated by the
Translogistics Network, which should propel our revenue growth.
The first quarter of 2001 was a transition period. As a result, the
financial results for the quarter did not reflect the growth pattern that our
Company has established. The reported operating revenues for the first
quarter fell by 12% from the first quarter of 2000, primarily because of a
48% reduction in the business of TLI (U.K.), as the efforts of that office
were directed toward initiating the full world-wide operations of the
Translogistics Network.
It is also noteworthy that Cargo/TLI, LLC generated approximately $2.7
million in revenue during the quarter ended March 31, 2001, but none of that
revenue is included in the Transportation Logistics' results for the quarter.
Had the formal contracts between Transportation Logistics and Cargo, Inc.
that govern the joint venture been completed and executed during the quarter,
our financial results for the quarter would have reflected our majority
interest in that joint venture.
Similarly, the reported quarter-to-quarter 48% increase in operating
expenses reflects our development of the infrastructure we will need to
function within the Translogistics Network, even though we are not yet
realizing revenue from our participation in the Network. In addition,
expenses for the recent quarter must also be understood as including over
$170,000 in costs attributable to two acquisitions that are in final
negotiations. We expensed those costs in the first quarter of 2001, although
the acquisitions are not yet complete.
The overall result of these situations was a reported loss from operations
in the quarter of $284,126, which would appear to indicate a decline when
compared to operating income of $56,140 in the quarter ended March 31, 2000.
Our actual business, however, is growing quite satisfactorily, and according
to our plan. In sum, the first quarter was a transition period, and we do
not expect the reported results to be characteristic of the future operations
of Transportation Logistics Int'l.
Liquidity and Capital Resources
The primary potential roadblock facing our plans for growth is our need
for capital. We are actively seeking additional capital resources, through
sale of equity or debt, and hope to increase our available resources in the
near future. With additional capital resources, we expect to be able to expand
our international presence, and accelerate domestic transactions through our
Translogistics Network. That development would have a significant positive
effect on our revenue and profits.
At March 31, 2001 we had a working capital deficit of $109,194, which
represented a reduction of $291,196 from our working capital balance of
$182,002 at December 31, 2000. The primary reason for the reduction in our
working capital was that we were required to utilize our working capital and
credit resources to offset the loss from operations during the quarter,
including the acquisition costs that were expensed during the quarter.
Specifically, we added $238,460 to our short-term debts and utilized $294,492
that was collected pursuant to the note we received on our sale of CDA North
America. Overall, our operations consumed $233,497 in cash.
Again, we view the utilization of cash that resulted from first quarter
operations as an aberration caused by the transition of our operations to a
Network-focused environment. In general, our operations consume little cash,
having used only $20,963 in cash during 2000, and only $17,427 in cash during
1999. We expect, therefore, to be able to sustain operations for the
indefinite future, despite our current working capital deficit. Expansion,
however, will require additional resources, since, as a new entrant into the
logistics industry, much of the business we obtain requires us to finance
orders from our own resources.
At March 31, 2001 the only significant credit available to us was a
$500,000 bank line of credit, which we had fully utilized. That loan is due
on June 1, 2001, and is presently being repaid on a weekly basis. It was
replaced in April, 2001 by a facility of up to $2,000,000, based on eligible
receivables, which was issued by another lending institution.
PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K.
Reports on Form 8-K:
March 28, 2001. Change in Registrant's Certifying Accountant
Exhibits
10 - Form of Agents Agreement for the Translogistics Network
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANSPORTATION LOGISTICS INT'L, INC.
Date: May 21, 2001 By: /s/ Ronald P. Sorci
----------------------------------------
Ronald P. Sorci, Chief Executive Officer
By: /s/ Steven Frazier
----------------------------------------
Steven Frazier, Chief Financial Officer,
Chief Accounting Officer
* * * * * * * * * * * *
EXH. 10
AGENTS AGREEMENT
THIS AGREEMENT is made on the ........ day of ............... 2001
BETWEEN
TRANSLOGISTICS NETWORK (PRINCIPAL) which is a limited company registered in
the United Kingdom who's registered address is Suite 9, Keynes House,
Alfreton Road, Derby. DE21 4AS and who's company registration number is
4127642. Hereafter known as TRANSLOG.
AND
(AGENTS) a company registered in the country of ...................
at ............................. and who's registration number
is.............................Hereafter known as THE AGENT.
Recitals
a) TRANSLOG is jointly owned by numerous international logistics providers
located in and representing different geographical areas of the world.
The aim of the company is to promote a global network of logistics
providers who will co-operate exclusively with each other to provide a
modern, efficient and profitable total logistics service.
b) THE AGENT is appointed to serve as the Translog representative for the
territory of .................. and has agreed to abide by all of the
rules contained herein.
c) THE AGENT shall endeavour to provide the highest standard of quality
service and to represent and promote the services of the other TRANSLOG
agents wherever possible.
d) TRANSLOG owns the copyright on all marks of the intellectual property
described herein in clause 1 h) and which may be provided to THE AGENT
from time to time.
1. Definitions
a) Client is a customer of THE AGENT
b) Confidential information shall mean all communication and other
information whether written, visual or oral and other material
supplied to or obtained by one party from the other party during the
continuance of this agreement and all information, recommendations or
advice given to one party by the other party in pursuance of it's
duties under this agreement and shall without limitation include any
information from whatever source supplied to or obtained by one party
concerning the trade secrets, carriers, agents, business associations
and transactions, financial arrangements, and technical or commercial
affairs of the other party provided that information does not include
information which;
(i) is in or comes into the public domain
(ii) is known to the disclosing party prior to this date
(iii) is made known to the disclosing party by a third party, other than
by breach of this agreement
(iv) is required to be disclosed by law or by the listing rule of a
stock exchange on which the disclosing party is listed
(v) is reasonably required to be disclosed in order to perform the
disclosing party's obligations in this agreement
(vi) is disclosed to the disclosing party's professional advisors.
c) Consignor agent shall mean a member agent who gains export business from
his client
d) Customers shall mean any client who contracts with any member of the
Translog network.
e) Export Gateway shall mean the last port of departure where a consignment
is loaded onto a vessel or aeroplane for departure from that country.
f) Freight profit share shall mean that element of freight profit which is
the difference between the cost paid to a carrier(s) from FOB export
gateway to landed import gateway and the charge levied on the client(s)
for the same service or where a specific agreement has been made between
the exporting agent and the importing agent.
g) Import gateway shall mean the first port of discharge from a vessel or
an Aeroplane in a destination country.
h) Intellectual property means;
(i) copyright trade and business names, know-how and rights in designs
in respect of the TRANSLOG systems
(ii) rights under licences, consents, orders, statutes or likewise.
i) International Freight shall mean the movement of goods of any
description from one country to another by air, ocean or overland.
j) Member agent is an agent who is party to this agreement.
k) Port shall mean sea port, airport or inland container terminal.
l) Programs shall mean any software programs where the licence is owned
by Translog or any software programs purchased by TRANSLOG for use by
THE AGENTS.
m) Receiving agent shall mean an agent who attends to the import duties
for a shipment where international freight is involved.
n) Regional Control Representative shall mean a shareholder of TRANSLOG
elected to sit on the board of TRANSLOG to represent the specific
region in which the agent is located.
o) Routing of Freight shall mean where a member agent has sold the
international freight movement of an export consignment to a client.
This is regardless of the client being the buyer or the seller in the
transaction.
p) Shipping agent shall mean an agent who attends to an international
export shipment.
q) Third party business shall mean international transactions moved between
two countries and paid for in one of those countries but routed by a
member agent in a third country.
r) Translog network shall mean the association created by the Translogistics
Network shareholders agreement, which links all of THE AGENTS to a common
working practice.
s) Triangulation Business shall mean international shipments gained and
paid for in one country and shipped between two other countries.
2. Operational duties of THE AGENT
a) Communication
The agent agrees (wherever possible) to reply to all communications from
another member agent within the following time frames-
(i) Rate requests. 24 hours from receipt.
(ii) Operational queries. The same working day as received.
(iii) Sales Requests. To acknowledge within 24 hours and to action
within 7 working days from receipt.
b) Export freight handling
Freight routed from another member agent shall be handled by the shipping
agent in accordance with the instructions and rates as provided by the
routing agent. In the event that the rates are not deemed to be profitable
or that the instructions are not deemed to be practical, the shipping agent
should in the first instance communicate with the routing agent. If the
problem cannot be resolved it should be passed to the TRANSLOG office for
clarification. If a compromise still cannot be found, the shipping agent
reserves the right to refuse to handle the shipment.
c) Import freight handling
Freight consigned to a member agent from another member agent shall be
handled in accordance with the instructions as provided by the consignor
agent. If the instructions provided are not accepted as practical by the
receiving agent, they should contact the shipping agent for clarification.
If the problem cannot be resolved, it should be passed to the TRANSLOG
office for clarification. If a compromise cannot be found, the receiving
agent retains the right to refuse to handle the shipment.
d) Free domicile documentation
Wherever free domicile shipments are involved, the receiving agent agrees
to send full entry details (copies of the customs entry) as back-up
documentation to support the duty invoice.
e) Free Domicile Duty Payments
Credit will not be issued by the import agent for free domicile shipments
unless agreed in advance with the exporting agent.
f) Other operational duties
From time to time, TRANSLOG may agree to implement a specific handling or
operational function to enhance the service levels of the network. THE
AGENT will be expected to comply with these rules.
g) Quality Control
From time to time, Translog will introduce agreed quality control
procedures. THE AGENT will be expected to comply with these procedures.
Many of THE AGENTS already have their own quality control procedures that
have been formulated to be conducive to their local environment. Any
procedures that TRANSLOG introduce will not conflict with such policies.
h) Type of business conducted
Unless agreed in the attached Schedule 1, THE AGENT agrees that it will
answer rate requests for the following kinds of business. If necessary,
THE AGENT will use the services of a sub-contractor in order to obtain the
necessary information.
(i) Air freight and associate costs
(ii) Ocean freight and associate costs including break bulk cargo.
(iii) Inland haulage costs.
(iv) Warehouse costs (bonded and none bonded).
Packing.
(vi) Pick and Pack logistics.
3. Exclusivity
a) THE AGENT agrees that with the exception of those agreed exemptions,
which are listed in the attached Schedule 1, all international
transactions will be consigned to or routed from the relevant TRANSLOG
agent. Triangulation and third party business shall be shipped between
the incumbent TRANSLOG agents in the countries involved.
b) THE AGENT agrees that within twelve months of the date of this agreement,
THE AGENT shall make every effort to work towards an exclusive agreement
with the TRANSLOG agent in the territories listed in Schedule 1. If this
cannot be achieved in the time scale nominated THE AGENT must receive
written permission from TRANSLOG to continue with their existing
agreement.
4. Profit Share
a) General profit share
Unless specially agreed in advance between all agents involved in a
transaction, the profit derived from the freight element of a shipment
is equally shared between the shipping agent and the receiving agent.
b) Triangulation and third party shipments
Unless specifically agreed in advance between all agents involved in a
transaction, the freight element of a shipment is shared in the
following ratios;
(i) The agent routing the freight - 50% of the freight profit.
(ii) The shipping agent - 25% of the freight profit.
(iii) The receiving agent - 25% of the freight profit.
c) Commissions payments and consultancy fees
Any commission payments or special consultancy fees should be agreed in
advance of the associated transactions. In order to comply with local
regulation it may be necessary not to advise in writing of such
agreements, in which case, the agent has the option of telephoning the
Translogistics office to advise of a verbal agreement.
5. Inter-agent invoicing
The export agent shall always invoice in the currency of his choice and
the receiving agent shall always pay in that currency or in US$ unless an
agreement is made in advance. The rate of exchange for payment in US$ will
be based on the IATA rate as published on the date of arrival for air-
freight and the line rate for ocean freight.
6. Claims
a) Agents agree that any claims for loss or damage shall be notified to
the responsible agent immediately they are notified of the problem. Any
such claims should be acknowledged.
b) For airfreight, any claim lodged within a period of 21 days from the
receipt of cargo at destination must be actioned. After 21 days, the
claim is deemed to be time-barred.
c) For ocean freight, any claim lodged within a period of 30 days from
receipt of the cargo at destination must be actioned. After 30 days,
the claim is deemed to be time barred.
d) From time to time, TRANSLOG may introduce a global insurance policy
covering specific eventualities. THE AGENT has the right to purchase
cover under such a policy but may elect not to do so as long as he can
produce evidence that his own cover is adequate.
7. Franco Domicile Shipments
The receiving agent must agree in advance in writing that it will accept
Franco Domicile shipments. Every separate client should be verified prior
to any such shipments being dispatched.
8. Inter-group accounting
a) Export invoicing
All inter-network export invoices where freight is collect, must be issued
in the first instance by fax or E-mail at the same time as the shipment
documentation is transmitted. If for any reason, this cannot be done, a
statement of charges should accompany the documentation and the relevant
invoice should follow within 48 hours. Hard copies of the invoice should
be sent so that they can be received within 14 days of the shipment being
received.
b) Import invoicing
All inter-network inbound invoices (landed costs) where prior agreement has
been reached, should be sent by fax or e-mail within 12 hours of a shipment
being delivered. If this cannot be done, then a statement of charges should
be issued within the same period. The hard copy invoice should be sent so
that it can be received within 14 days of the shipment being delivered.
c) Free Domicile Payments
Duty and tax invoices or a statement of charges should be sent by fax or
e-mail prior to the shipment being delivered. The shipping agent must
confirm in writing, prior to delivery, that these charges are acceptable
and that they will be paid. The receiving agent retains the right to
determine if credit on duty and taxes will be extended to the shipping
agent.
d) Queried invoices
In the event that any invoice is queried, the dispute must be made known
within the following time criteria;-
(i) For general invoices, within seven days of receipt.
(ii) For free domicile invoices, the same day as received.
e) Invoice method
Every export shipment must be invoiced net of profit share or if invoiced
gross, a profit share credit note should be included.
f) Statements
The agent agrees to issue a monthly statement of invoices to all other
member agents. This statement to be issued by the seventh working day of
the following month. Disputed invoices should not appear on the statement.
g) Payment
The agent agrees that any statements received by him are passed within a
further seven days and payment is made on the 15th of the month by wire
transfer subject to the proviso that the shipments were officially landed
and made available to the receiving agent in the previous month.
h) Part payment
If a statement is received with disputed invoices, the balance of the
statement should be paid as per 8 (g) above and the dispute should be
actioned as per clause 9.
9. Disputed Invoices
In the event that an invoice is disputed, the agents agree to try and
resolve the query with the disputed party as soon as possible. In the
event that a dispute cannot be resolved locally then the aggrieved party
has the right to use the TRANSLOG office as a mediator. In this event the
following action should be taken.
a) The invoice number is lodged in the TRANSLOG office and the two parties
are given a further 14 days to resolve the problem.
b) If after this time an agreement cannot be reached, The TRANSLOG office
will offer to act as an arbitration unit and if so, both parties will
have to sign a document confirming their agreement to abide by the
TRANSLOG decision.
c) If this option is rejected, both agents must submit to the corporate
arbitration unit employed for such events and the cost of the hearing
will be borne by the losing party. If a clear cut decision is not made
then the costs will be allocated inversely proportional to the
allocation of the award.
d) In the event that an arbitration unit or the TRANSLOG office determines
that a "dispute" was deliberately engineered to delay payment, interest
at the rate of 2% per month or part thereof will be paid to the
aggrieved party.
10.Contra-accounting
The rules of this agreement are that every member agent pays other member
agents in the currency of the invoice of the issuing party or in US$.
However, if any two parties wish to contra their accounts, they can come
to a local agreement and do so. If, in order to do this, they want to use
the TRANSLOG office as a mediator for exchange rates, they will be welcome
to do so.
11.Payment guarantee
All member agents must agree to abide by and take part in the guarantee
payment plan as described in the shareholders agreement.
12.Bank Charges
Any bank charges applied as remittance charges are accounted for by the
payer and any bank charges applied for receipt are accounted for by the
Payee.
13.Group Audit
a) As part of this agreement, the agent must consent to receive an official
network auditor and give access to his freight accounts if asked to do
so. This request will be made 3 days in advance and is intended to
ensure that correct profit shares are allocated.
b) As part of this agreement, the agent must consent to accept random audit
checks which will be carried out by a representative of Translogistics.
In the event that the representative believes there is a problem, a
third party accountant will be employed to undertake a more thorough
audit.
c) If discrepancies are found and the audit party determines that an agent
has deliberately miss-declared a profit share, then the full total of
profit on the transactions involved can be awarded to the other
agent(s). The auditor's decision on this matter is final.
14.Sales
a) The agent is expected to deploy enough resources to generate sales
between his country and other agent countries. These resources will
result in gained business and general sales leads. This flow of business
will be monitored from the TRANSLOG office and any agent that does not
appear to be directly involved in adequate sales activity will be advised
accordingly. Failure to respond to these advises may result in action
being taken by the board of TRANSLOG.
b) If an agent believes that his sales activity with another agent is not
being adequately responded to, he may request help from the TRANSLOG
office where an analysis will be made followed by mediation if it is
deemed to be required.
c) The margin of profit expected from a new customer will vary from agent
to agent. In all cases both the receiving agent and the sending agent
must agree guide lines on profitability prior to offers being jointly
made.
d) If an agent sells some business which results in a loss, that agent is
responsible for accepting that loss unless a Bi-lateral agreement
between the two agents involved is in place.
15.Rates
All AGENTS will be expected to complete the universal rates program
currently being built with the following information;
a) Net airfreight rates.
b) Net ocean freight rates.
c) Pre-shipment handling charges at net plus an agreed profit. These
profit margins should be less than the general average in their country.
d) Landed charges for import shipments should be at net plus an agreed
profit. These profit margins should be less than the average in their
country.
16.Systems
a) Supply chain management systems
From time to time, TRANSLOG will make available specific Supply Chain
Management Systems. THE AGENT agrees to use these systems as directed
in each case.
b) Sales system
TRANSLOG will make available a global sales system. THE AGENT agrees to
use these systems as directed in each case.
c) Operations system
TRANSLOG will make available an operating system which THE AGENT may
chose to use.
d) Communication systems
TRANSLOG will make available computer systems which will enable the
agents to communicate more efficiently amongst themselves. THE AGENT
must agree to use this system.
e) Customised systems
THE AGENT may request specific customised systems from TRANSLOG to enable
them to gain major clients. In every case, TRANSLOG will confirm an
availability date as to when this system will be made available. In
certain circumstances where considerable work is involved, the agent will
be asked to meet the cost of the system. In this case, the cost will not
include any profits.
f) Rates system
TRANSLOG will make available a rates system. THE AGENT will be expected to
feed this system with their rates as directed in each case.
g) Cost of implementation
All systems are built to be down loaded via the web. If THE AGENT wants
the systems to be physically installed and in-house training given, they
must accept the cost of the staff visiting.
17.Group Negotiations
a) Statistics
TRANSLOG will be negotiating global agreements with major carriers. The
agent is expected to supply statistics and to confirm his willingness to
include any of his existing international freight in any such agreement-
provided that it results in a cost saving to him and the service offered
by the carrier complies to the service criteria expected by THE AGENT.
b) Exemptions
Any exemptions to 17 a) above, should be agreed between the agent and
TRANSLOG in advance of any group negotiations taking place.
18.Abandoned Cargo
The selling agent is solely responsible for abandoned cargo.
19.Uncleared shipments
If as a result of poor or delayed service, a consignee refuses to pay the
freight charges for his cargo, the import agent must act on behalf of the
export agent and collect the outstanding charges or alternatively declare
the cargo abandoned. This does not prohibit the two agents from making a
joint agreement to accept part of the liability.
20.Use of Corporate Logo
a) The agent is entitled to use the corporate TRANSLOGISTICS logo after
receiving written consent from TRANSLOG.
b) In the event that an agent looses it's right to be a member of
TRANSLOG, the agent must agree to cease using the logo immediately.
21.Insurance
The agent agrees to maintain insurance policies which are deemed to be
reasonable and adequate within the industry. Adequate insurance cover will
vary from country to country and is included in Schedule 2.
22.Confidentiality
a) The agent agrees that any information pertaining to another agent which
may be classed as confidential is not disclosed to any other party
without written consent from the other agent.
b) The agent agrees that any information supplied by TRANSLOG will remain
confidential to them during the terms of this agreement and after this
agreement ceases.
c) The provisions of this clause shall survive the termination of this
agreement.
23.Termination
a) This agreement comes into force from the agreement date and will
continue indefinitely unless termination notice is given in writing
three months before the end of each year from the commencement date.
Or,
b) If the agent commits any breach of the law. Or
c) If the agent becomes insolvent. Or
d) If the TRANSLOG board of Directors agree by a majority vote to buy-back
the stock held by THE AGENT in TRANSLOG as per the TRANSLOG shareholders
agreement.
24.Termination Procedure
Upon termination for any of the above reasons, the agent must cease using
the logos, systems, agents or any other intellectual property which are
owned by or contracted to TRANSLOG.
25.Agent Disputes
If any two agents have a dispute which is not covered already in this
document, TRANSLOG will offer to act as a mediator. In such cases, both
parties must agree to sign declarations confirming that they will abide by
any decision made by TRANSLOG.
26.Legalities
THE AGENT hereby agrees that any transaction he carries out with any other
member of the TRANSLOG network will be conducted in full compliance with
the laws of the countries involved at that time.
27.Records
THE AGENT hereby agrees to keep accounts together with supporting vouchers
(including without limitation, copies of suppliers invoices) and shall
allow the duly elected network internal auditor to check audit and copy
the same for the purpose of checking any information given.
28.No joint venture or partnership
Nothing in this agreement shall create a partnership or joint venture
between the parties hereto and save as expressly provided in this agreement
neither party shall enter into or have authority to enter into any
engagement or make any representation or warranty on behalf of, or pledge
the credit of or otherwise bind or oblige the other party hereto.
29.Force Majeure
Neither party shall be liable to the other for any failings to perform or
delay in performance of its obligations hereunder (other than an obligation
to pay monies) caused by
a) An act of god.
b) Outbreak of hostilities, riot, civil disturbances or act of terrorism.
c) The act of any government or authority, including revocation of any
licences or consent.
d) Fire, explosions, floods, fog or bad weather.
e) Default of carriers or sub-contractors.
f) Theft, malicious damage, strike, lock-out or industrial action of any
kind.
g) Any cause or circumstances whatever beyond it's reasonable control.
30.Indemnity
THE AGENT agrees to indemnify and defend the Directors and employees of
TRANSLOG and other TRANSLOG agents against all claims, liabilities, costs,
fees, fines and judgements resulting from any action taken by the agent
pursuant to this agreement.
31.Representations and Warranties
a) Authority
The signatory of this document warrants that it has the power and authority
to execute and sign this agreement and that all requisite company
authorization action has been taken.
b) Other agreements
Each party represents and warrants to the other that its execution and
performance of this agreement will not constitute a breach of violation of
any other agreement, contract or covenant by which it is legally bound.
c) Licences and permits
The agent warrants that at all times during the course of this agreement,
it will hold and maintain any valid licences or permits required in order
to fulfil it's commitments.
32.Whole agreement
This agreement supersedes any partial or interim agreements between
TRANSLOG (or TLI) and THE AGENT and represents the entire agreement
between the parties in relation to the matter dealt with herein. No
variation of this agreement shall be valid unless it is in writing and
signed by or on behalf of each of the parties.
33.Notices
a) Any notice or other communication under or in connection with this
agreement shall be in writing and shall be delivered personally or sent
by courier, telex or telefax to the party due to receive the notice or
communication at it's address set out in this agreement or any other
address as such party may specify by notice in writing to the other
party.
b) In the absence of evidence of earlier receipt, any notice or other
communication shall be deemed to have been duly given
(i) if delivered personally when left at the address referred to
in clause 33 a)
(ii) if sent by courier and a receipt is obtained.
(iii) if sent by telex when the correct answer-back is received.
(iv) if sent by telefax on completion of it's transmission.
34.Governing law and jurisdiction
a) This agreement is governed by, and shall be construed in accordance
with English law.
b) Each party irrevocably agrees that the courts of England shall have
exclusive jurisdiction to hear and determine the suit, action or
proceedings and to settle any duties which may arise out of or in
connection with this agreement.
c) Each party irrevocably waives any objections which it might at any time
have to the courts of England being nominated as the forum to hear and
determine any Proceedings and to settle any disputes and agrees not to
claim that the courts of England are not a convenient or appropriate
forum.
d) Each party agrees that the process by which any proceedings are begun
in England may be served by being delivered in accordance with clause
33. Nothing contained in this clause shall affect the right to serve
process in any other manner permitted by law.
35.Counterparts
This agreement may be executed in any number of counterparts, each of which
when executed and delivered shall be an original, but all the counterparts
together shall constitute one and the same instrument.
Schedule 1. List of exemptions as per clause 3.
Schedule 2. List of insurance requirements as per clause 21.
SCHEDULE 1
We hereby declare our intention to continue working with the partner
nominated below in the territory described.
Name of Partner Territory details
SCHEDULE 2
List of all insurance cover that is required to protect a partner's interest.