No preview available
HomeMy WebLinkAboutECAT C02-042 Air Terminal Agreement with Colorado Mountain Express� Cow. -q-x-`70 C, AGREEMENT FOR OPERATION OF GROUND TRANSPORTATION SERVICES EAGLE COUNTY AIR TERMINAL CORPORATION THIS AGREEMENT, made and entered into this day of FC b, 2002, by and between Eagle County Air Terminal Corporation, a not for profit 63 -20 Corporation of the State of Colorado "Corporation ", and Colorado Mountain Express LLC (Concessionaire "). WITNESSETH: WHEREAS, Corporation is owner, constructor and operator of the Commercial Passenger Terminal Building and associated support facilities (TERMINAL BUILDING) located on Eagle County Regional Airport in Eagle County, Colorado, and has the right to lease portions of the TERMINAL BUILDING and to grant operating privileges thereon subject to the terms and conditions hereinafter set forth; and WHEREAS, CONCESSIONAIRE desires to lease certain premises within the TERMINAL BUILDING, and use certain facilities at the TERMINAL BUILDING, and acquire certain rights and privileges from Corporation in connection with its use of the TERMINAL BUILDING and CORPORATION is willing to lease and grant same to CONCESSIONAIRE under terms and conditions hereinafter stated; and WHEREAS, CORPORATION has the power and authority to enter into this agreement; NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and considerations herein contained, CORPORATION and CONCESSIONAIRE agree as follows: Article 1 Definitions Section 1.1 Definitions The terms and phases defined in this Article 1 for all purposes of this AGREEMENT shall have the following meanings: A. "Airport" shall mean Eagle County Regional Airport. B. "Auditor" shall mean the Corporation's Auditor and his authorized representative. C. "Concession Space" shall mean the concession counter with associated office space and ready/ return spaces as generally depicted on the Terminal Space Plan attached hereto as Exhibit A, located within the TERMINAL BUILDING and adjacent parking area. The CORPORATION and CONCESSIONAIRE acknowledge and agree that the dimensions of the Concession Space as set forth in Exhibit A are approximate Ci and that, following the completion of construction, the precise dimensions and square footage shall be determined by the Manager and a revision to Exhibit A will be made, if necessary, depicting the dimensions and square footage of the Concession Space as actually constructed, this action to be taken without the requirements of a formal amendment to this Agreement. D. "Concessionaire's Proposal" shall mean the Proposal as submitted by CONCESSIONAIRE and accepted by the CORPORATION and consisting of CONCESSIONAIRE's proposed minimums and its plan of operation. E. "Date of Beneficial Occupancy" or "DBO" shall mean the day ten business days following the day on which the premises for CONCESSIONAIRE are deemed substantially complete. Substantial completion shall occur when the CORPORATION's architects certify that CONCESSIONAIRE premises have been substantially completed in accordance with the construction documents and are available to CONCESSIONAIRE to finish out its leased space. F. "Manager" shall mean the Terminal Manager, designated as such by the Eagle County Air Terminal Corporation. The word also means the chief assistant of that official or acting Terminal Manager, if any, of CORPORATION whenever the Terminal Manager is unable to act in such capacity, or the successor of the Terminal Manager in functions, if any. G. "Past Due Interest Rate" shall mean interest accruing at 18% per annum commencing on the fifth calendar date after the date such amount is due and owing until paid to CORPORATION. ARTICLE 2 Grant of Concession Rights Section 2.1 Concession Rights Granted. CORPORATION grants to CONCESSIONAIRE the right to occupy, improve and use the Concession Space consistent with and subject to all the terms and provisions of this Agreement. Section 2.2 Uses and Privileges of CONCESSION SPACE. CONCESSIONAIRE shall enjoy the following privileges in connection with its use of the CONCESSION SPACE: (A) The nonexclusive right, privilege and obligation to conduct and operate a ground transportation (common carrier services by bus, limousine, taxicab or van) concession at the TERMINAL BUILDING solely for providing ground transportation from or to the TERMINAL BUILDING. CONCESSIONAIRE understands and agrees that it shall not engage in any other business on the AIRPORT under this agreement. (B) The right, privilege, and obligation to service and maintain in good and safe operating order, free from known mechanical defects, van /bus and passenger -type vehicles used in the ground transportation business of the CONCESSIONAIRE; provide transportation to commercial airline passengers' final destination via vans, people movers and buses from the AIRPORT to destinations throughout the Eagle and Vail Valleys and throughout Colorado and return to the AIRPORT; and occupy operations office, storage, turnaround, and pickupCdrop off parking spaces. CONCESSIONAIRE shall not engage in rental car operations of any kind to or from the TERMINAL BUILDING. (C) No signs shall be installed by CORPORATION on or about the TERMINAL BUILDING without the prior written approval of the Manager, said approval should not be unreasonably withheld. The CORPORATION intends to implement and enforce signage standards in the TERMINAL BUILDING, including ground transportation counter backwall standards and pickupfdrop off space signage. No temporary signs or displays shall be permitted on the backwall or the counter surfaces without the prior written approval of the Manager, which approval shall not be unreasonably withheld. Section 2.3 Rights Not Exclusive. CORPORATION reserves the right to grant other concessionaires the right to offer ground transportation in other locations in the TERMINAL BUILDING; and CONCESSIONAIRE understands and agrees that its right to offer ground transportation services is not exclusive. Section 2.4 Means of Access. CONCESSIONAIRE, its agents, invitees, guests, employees and suppliers have a non - exclusive right of ingress to and egress from the CONCESSION SPACE by a means of access located outside the boundaries of such space as specified by CORPORATION. Such access shall, without exception, be in common with such other persons (including, at the option of the CORPORATION, the general public) as the CORPORATION may authorize or permit, and the CORPORATION may at any time close, relocate, reconstruct or modify such means of access, provided that a reasonable convenient and adequate means of ingress and egress is available for the same purposes. This right of access is subject to the security requirements of the section herein entitled "Security ". Section 2.5 Right of Inspection. CORPORATION retains the full right of entry in and to the CONCESSION SPACE for any purpose necessary, incidental to or in connection with its obligations hereunder, or in the exercise of its functions, or for the purpose of making any inspection it deems necessary. Section 2.6 Employee Parking. CONCESSIONAIRE'S employees at the CONCESSION SPACE and, during periods of construction in the TERMINAL BUILDING, its construction contractors, shall be entitled to the use of parking areas designated for TERMINAL BUILDING employees. CONCESSIONAIRE'S employees and construction contractors shall not park elsewhere on the Airport, and any such parking will be treated as a civil and/or criminal trespass. CORPORATION reserves the right to limit the number of spaces to be made available to CONCESSIONAIRE, to designate specific parking spaces for some or all TERMINAL BUILDING tenants, to move, contract, and expand the parking area(s) designated for employee parking, and to make such rules and regulations for the use of the parking area(s) designated for employee parking, in its sole discretion. 1 C, i ARTICLE 3 Term Section 3.1 Term. This Agreement shall become effective on 12:01 a.m. to _ "' #irne on the Date of Beneficial Occupancy of the TERMINAL BUILDING hereinafter 04W the "Effective Date" and continue for three years, expiring at 12:01 a.m. on the third anniversary of the Date of Beneficial Occupancy subject to prior termination as provided in Article 8 hereof. Notwithstanding the foregoing, upon the defeasance of the bonds issued pu M-Vant to the Corporation's Trust Indenture dated as of June 1, 1996, following maturity or earlier as provided in the Trust Indenture this Agreement shall terminate, as of the date of defeasance, and CONCESSIONAIRE shall vacate the premises leased hereunder within not more than ninety (90) days. CORPORATION will give not less than thirty (30) and not more than sixty (60) days notice of an intent to defease the bonds in accordance with the Trust Indenture. CORPORATION also will give CONCESSIONAIRE notice of the date of defeasance within two (2) business days following the actual defeasance.. Section 3.2 Surrender of Concession Space. Upon the expiration orearl "ier termination of this Agreement or on the date specified in any demand for possession by CORPORATION after any Default by CONCESSIONAIRE, CONCESSIONAIRE covenants and agrees to surrender possession of the Concession Space td CORPORATION in the same condition as when first occupied, ordinary wear and tear expected. Section 3.3 Holding Over. If CONCESSIONAIRE remains in possession of the leased premises after the expiration of this Agreement without any written renewal thereof, such holding over shall not be deemed as a renewal or extension of this Agreement, but shall create only a tenancy from month to month that may beterminated at any time by CONCESSIONAIRE or CORPORATION upon thirty (30) days written notice to the other party. Such holding over shall otherwise be upon the same; terms and conditions as set forth in this agreement. in ARTICLE 4 Compensation Charges, Fees, and Accounting Records Section 4.1 Space and Facilities Charges: During the term hereof, CONCESSIONAIRE shall pay the following space and facilities charges: (a) For the use of the counter and associated space in the TERMINAL BUILDING, the sum of four ($4.00) per square foot per month, or a total of $ * * *00 per month, all payments to be made in advance and without demand, on the first day of each calendar month of this Agreement. (b) Waiver of Space and Facilities Charges. In the event that there is no commercial air service operating from the new TERMINAL BUILDING during an entire calendar month, the charges for use of the counter and associated space shall be waived. (c) Company shall supply its own janitorial service and maintenance services (including landscaping maintenance). Should CONCESSIONAIRE fail to clean and maintain the premises, CORPORATION shall enter the premises and perform such janitorial service and maintenance and CONCESSIONAIRE shall reimburse CORPORATION for actual charges incurred plus a reasonable administrative charge. Said payment shall be made at the office of the CORPORATION, or such other place as the CORPORATION may designate in writing, within fifteen (15) days of receipt of CORPORATION's invoice therefor. Section 4.2 Privilege Fee: For the concession privileges granted hereunder, and in addition to the charges paid for the premises described in Subsection 4.1 hereof, CONCESSIONAIRE shall pay to CORPORATION: the Per Trip Fee in Subsection 4.2(b); and, beginning on Commencement of the Term and for each month designated thereafter, the Minimum Monthly Privilege Fee in Subsection 4.2(a) or the Per Trip Fee in Subsection 4.2(b), whichever sum is greater, as follows: (a) Minimum Privilege Fees. A minimum monthly privilege fee, as follows: December, 2001) (amount in words) Sixteen Thousand Dollars (amount in numbers) $16,000 January 2002 (amount in words) Thirty Thousand Dollars (amount in numbers) $30,000 February 2002 (amount in words) Thirty Thousand Dollars (amount in numbers) $30,000 5 C'2 March 2002 (amount in words) Thirty Thousand Dollars (amount in numbers) $30,000 April 2002 (amount in words) Sixteen Thousand Dollars (amount in numbers) $16,000 December, 2002 (amount in words) Sixteen Thousand Dollars (amount in numbers) $16,000 January 2003 (amount in words) Thirty Thousand Dollars (amount in numbers) $30,000 February 2003 (amount in words) Thirty Thousand Dollars (amount in numbers) $30,000 March 2003 (amount in words) Thirty Thousand Dollars (amount in numbers) $30,000 April 2003 (amount in words) Sixteen Thousand Dollars (amount in numbers) $16,000 December, 2003 (amount in words) Sixteen Thousand Dollars (amount in numbers) $16,000 January 2004 (amount in words) Thirty Thousand Dollars (amount in numbers) $30,000 February 2004 (amount in words) Thirty Thousand Dollars (amount in numbers) $30,000 March 2004 (amount in words) Thirty Thousand Dollars (amount in numbers) $30,000 April 2004 (amount in words) Sixteen Thousand Dollars (amount in numbers) $16,000 n CIII (b) Per Trip Fee. Ten (10) days after the beginning of each calendar month during the term hereof, CONCESSIONAIRE shall pay to CORPORATION a sum of money which represents the amount by which the Per Trip Fee exceeds the Minimum Privilege Fee for the previous month. In the event the Per Trip Fee shall not exceed the Minimum Privilege Fee during any month in the term hereof, then no Per Trip Fee shall be due and payable for such month. (c) During the months of May, June, July„ August, Septernber, and October (to the extent applicable to the Term hereof) there shall be no Minimum Privilege Fee. During said period of time, CONCESSIONAIRE shall continue to pay to CORPORATION the Per Trip Fee as hereinbefore defined. (d) CONCESSIONAIRE understands that Eagle County charges ground transportation companies on a permit fee basis to operate at the AIRPORT, and those permit fees are separate and in addition to any fees payable under this Agreement. Section 4.3 Per Trip Fees. As used herein, the term "Per Trip Fee" shall mean the total amount actually charged by Eagle County for use of the airport on a per trip basis in connection with the providing of ground transportation services at the TERMINAL BUILDING, regardless of where the passenger is picked up or dropped off. The Per Trip Fee level will be determined annually by Eagle County and will be charged to all Ground Transportation operators regardless of whether or not they have a lease with Eagle County Air Terminal Corporation. Section 4.4 Interest on Past Due Amounts. Any payments not made to CORPORATION when due shall accrue interest at the Past Due Interest Rate, as herein defined. Section 4.5 Place and Manner of Payments. All sums payable to CORPORATION hereunder shall be made without notice at the following: Eagle County Air Terminal Corporation C/O Eagle County Regional Airport Manager P.O. Box 850 Eagle, Colorado 81631 or at such other place as the Manager or his authorized representative may hereafter designate by notice in writing to CONCES-SIONAIRE. All sums shall be made in legal tender of the United States. Any check given to the CORPORATION shall be received by it subject to collection, and CONCESSIONAIRE agrees to pay any charges, fees or costs incurred by the CORPORATION for such collection, including reasonable attorney's fees. 7 G C ARTICLE 5 OPERATION AND USE OF CONCESSION SPACE Section 5.1 Operations. CONCESSIONAIRE agrees to conduct its business to accommodate the public using the TERMINAL BUILDING and to operate the concession in the following manner: A. CONCESSIONAIRE shall operate the concession in a first- classs manner satisfactory to the CORPORATION. Service shall be prompt, clean, courteous and efficient. B. CONCESSIONAIRE shall be open for business at least one and one half hour before and one hour after the first and last daily flight each day. The CORPORATION will consult with CONCESSIONAIRE concerning hours of operation and changes to the hours of operation. C. CONCESSIONAIRE shall acquire all operating permits and licences and comply with all applicable rules and regulations. D. CONCESSIONAIRE shall maintain all vehicles in good and safe operating order, free from known mechanical defects, and in a clean, neat, and attractive condition inside and out. E. CONCESSIONAIRE shall offer reasonable rates and provide to CORPORATION, upon request, a written listing of said rates charged to customers. F. CONCESSIONAIRE shall pay all traffic violation notices issued to its vehicles under the control or operation of its employees at the AIRPORT. G. CONCESSIONAIRE shall provide dependable ground transportation service to meet the needs of the traveling public (set hours of operation during ski season). H. CONCESSIONAIRE shall provide the following services for its customers at the TERMINAL BUILDING: 1) accept major credit cards; 2) provide reservation system for services; 3) provide prompt service. I. CONCESSIONAIRE shall maintain proper County permits for authority to use the AIRPORT and advise the CORPORATION of any change, in said authority. J CONCESSIONAIRE and its agents and employees shall not engage in open, notorious, and public disputes, disagreements, or conflicts with visitors, customers or other concessionaires. K. The management, maintenance and operation of privileges under this Agreement shall at all times during the term hereof be under the supervision and c direction of an active, qualified, competent, and experienced manager representing CONCESSIONAIRE, who shall be subject at all times to the direction and control of CONCESSIONAIRE. CONCESSIONAIRE will cause such manager to be assigned a duty station or office on the premises at which he or she shall be available during normal business hours; and CONCESSIONAIRE will, at all times during the absence of such manager, assign or cause to be assigned a qualified subordinate to be in charge of the premises, services, and facilities and to be available on the premises and to act for the Manager in his or her absence. L. CONCESSIONAIRE shall, in the operation of the services under this Agreement, employ or permit the employment of only such personnel as will assure a high standard of service to the public. All such personnel, while on duty, shall be clean, neat in appearance, and courteous at all times and shall be appropriately attired, with uniforms in such instances as are appropriate. No personnel employed by CONCESSIONAIRE while on or about the premises shall use improper language, act in a loud, boisterous or otherwise improper manner, or be permitted to solicit business in an inappropriate manner. There shall be no solicitation or greeting of customers, prospective customers or airport visitors by employees (or others associated with CONCESSIONAIRE as employee, contract driver, agent, principal, director, officer, manager, or otherwise) located outside the CONCESSION SPACE. M. CONCESSIONAIRE shall maintain a close check over attendants and employees to ensure the maintenance of a high standard of service to the public, the performance of such obligation to be determined at the sole discretion of CORPORATION. CONCESSIONAIRE shall take all proper steps to discipline employees who participate in acts of misconduct while on duty. N. CONCESSIONAIRE shall drop off passengers, park vehicles, and load its passengers only in those places designated for such purposes, respectively, by CORPORATION. Section 5.2 Vending Machines. No amusement or vending machines or other machines operated by coins, tokens or credit cards shall be installed or maintained in or upon the Concession Space except with the written permission of the Manager or his authorized representative. This prohibition includes, but not by way of limitation, sales from vending machines of such items as cigarettes, candy, maps, coffee, soft drinks, newspapers, stamps and insurance policies; telephones; dispensation of cash, money orders and checks; and operation of mechanical or electronic game devices, electronic video games, and entertainment devices. Section 5.3 Compliance with all laws and Regulations. CONCESSIONAIRE agrees not to use or permit the Concession Space to be used for any purpose prohibited by the laws of the United States or the State of Colorado or the resolutions or ordinances of Eagle County or Airport rules and regulations, all as amended from time to time, and not otherwise authorized hereunder, and it further agrees that it will use the Concession Space in accordance with all applicable federal, state and local laws, ordinances, resolutions and all rules and regulations adopted by the County or the CORPORATION for the management, operation and control of the Airport, either 9 C11, C11 promulgated by the CORPORATION or Eagle County on its own initiative or in compliance with regulations or actions of the Federal Aviation Administration or other authorized federal agency. CONCESSIONAIRE further agrees to submit any report or reports or information which the CORPORATION is required by law or regulation to obtain from CONCESSIONAIRE or which Manager may request relating to CONCESSIONAIRE's operations. Section 5.4 Compliance with Environmental Requirements. CONCESSIONAIRE, in conducting any activity on the Concession Space, shall comply with all applicable local, state or federal environmental rules, regulations, statutes, laws or orders (collectively "Environmental Regulations "), including but not limited to Environmental Requirements regarding the storage, use and disposal of Hazardous Materials or Special Wastes to the Environment. CONCESSIONAIRE shall acquire all necessary federal, state, and local environmental permits and comply with all applicable federal and state environmental permit requirements. Section 5.5 Hazardous Use. CONCESSIONAIRE agrees that nothing shall be done or kept in the Concession Space and no improvements, changes, alterations, additions, maintenance or repairs shall be made to the Concession Space which might be unsafe or hazardous to any person or property. Further, CONCESSIONAIRE shall not do or permit to be done any act or thing upon the Concession Space which will invalidate, suspend or increase the rate of any fire insurance policy required under this Agreement, or carried by CORPORATION, covering the Concession Space or the buildings in which the Concession Space is located or which, in the opinion of the Manager or his authorized representative, may constitute a hazardous condition that will increase the risks normally attendant upon the operations contemplated under this Agreement. If, by reason of any failure by CONCESSIONAIRE to comply with the provisions of this section, after receipt of notice in writing from CORPORATION, any fire insurance rate on the Concession Space or on the buildings in which the same is located, shall at any time be higher than it normally would be, then CONCESSIONAIRE shall pay the CORPORATION, on demand, that part of all fire insurance premiums paid by the CORPORATION which have been charged because of such violation or failure of CONCESSIONAIRE; provided, that nothing herein shall preclude CONCESSIONAIRE from bringing, keeping or using on or about the Concession Space such materials, supplies, equipment and machinery as are appropriate or customary in carrying on its business, or from carrying on the normal operations contemplated herein. Section 5.6 Structural, Electrical or System Overloading. CONCESSIONAIRE agrees that nothing shall be done or kept on the Concession Space and no improvements, changes, alterations, additions, maintenance or repairs shall be made to the Concession Space which might impair the structural soundness of the building, result in an overload of utility, plumbing, or HVAC systems serving the TERMINAL BUILDING or interfere with electric, electronic or other equipment at the Airport. In the event of violations hereof, CONCESSIONAIRE agrees to immediately remedy the violation at CONCESSIONAIRE's expense. Section 5.7 Noise, Odors, Vibrations and Annoyances. CONCESSIONAIRE shall 10 el r conduct its operations in an orderly and proper manner so as not to commit any nuisance in the Concession Space or annoy, disturb or be offensive to others in the TERMINAL BUILDING and shall take alt reasonable measures, using the latest known and practicable devices and means, to eliminate any unusual, nauseous or objectionable noise, gases, vapors, odors and vibrations and to maintain the lowest possible sound level in its operations. Section 5.8 Accessibility CONCESSIONAIRE shall not do or permit to be done anything which might interfere with the effectiveness or accessibility of utility, heating, ventilating or air conditioning systems or portions thereof on the Concession Space or elsewhere on the Airport, nor do or permit to be done anything which may interfere with free access and passage in the Concession Space or the public areas adjacent thereto, or hinder police, firefighting or other emergency personnel in the discharge of their duties. CONCESSIONAIRE shall not place any additional lock of any kind upon any window or interior or exterior door in the Concession Space, or make any change in any existing door or window lock or the mechanism thereof, unless a key therefor is maintained on the Concession Space, nor refuse, upon the expiration or sooner termination of this Agreement, to surrender to CORPORATION any and all keys to the interior or exterior doors on the Concession Space, whether said keys were furnished to or otherwise procured by CONCESSIONAIRE. If any keys furnished to CONCESSIONAIRE by CORPORATION are lost, Concessionaire shall pay CORPORATION, on demand, the cost for replacement thereof. Section 5.9 No Action. CONCESSIONAIRE agrees not to allow or permit any sale by auction or hawking on the Concession Space. Section 5.10 Restrictions on Changes and Alterations. Subject to the requirements of the section herein entitled "Renovation of Concession Space ", CONCESSIONAIRE agrees not to improve, change, alter, add to, remove or demolish the Concession Improvements, as defined herein, or any improvements, on the Concession Space without the prior written consent of the Manager or his authorized representative. CONCESSIONAIRE must comply with all conditions which may be imposed by the Manager, in his sole discretion. Full and complete specifications for all work and improvements, along with a statement of the time required to complete such work shall be submitted to and approved in writing by the Manager or his authorized representative before construction work commences. Copies of plans for all changes or alterations shall be given to the Manager for review and written approval prior to commencement of construction. First -class standards of design and construction will be required in connection with all such work, facilities and improvements, and all improvements shall conform with applicable statutes, ordinances, building codes, regulations and other general requirements of CORPORATION, procurement of general liability and builder's risk insurance and performance and payment bonds, and compliance with worker's compensation, prevailing wage, MBE/WBE participation requirements, and compliance with the Americans with Disabilities Act, 42 U.S.C. 12,000 et sea., and its regulations. The approval given by CORPORATION shall not constitute a representation or warranty as to such conformity; responsibility therefor shall at all times remain with 11 CONCESSIONAIRE. Approval by CORPORATION shall ex-tend ex-tend to and include consideration of architectural and aesthetic matters, and CORPOR TtON expressly reserves the right to reject any designs submitted and to require CONCESSIONAIRE to resubmit designs and layout proposals until they meet with CORPORATION's approval. CORPORATION agrees to act promptly upon a request roval of such plans and /or revisions thereto. Section 5.11 Title to Improvenamnits. CONCESSIONAIRE agrees that all improvements to the Concession Space, including approved changes and retiovok which are affixed to the realty, shall become the property of the COR - ORATION Upon their completion and acceptance by CORPORATION. SECTION 5.12 Removatof CONCESSIONAIRE`S Equipment., CONCESSIONAIRE shall retain title to and shall remove, at its- "sole cost, prior to the expiration or termipation of this Agreement, all of CONCESSIONAIRE's Equipment, as hereinafter definFrd. "Concessionaire's Equipment " shall mean all equipment, apparatus, machinery, signs, furnishings, trade fixtures and personal property installed by CONCESSIONAIRE and used in the operation of the b ess of Concessionaire (as distinguished from the use and operation of the Concessi Space) which is listed on an annual inventory list submitted by CONCESSIONAIRE and approved by the CORPORATION. If such removal shall injure or damage the Concession Space, CONCESSIONAIRE agrees, at its sole cost, at or prior to the expiration or termination of this Agreement, to repair such injury or damage in good and workmanlike fashion and to place the Concession Space in the same condition as the Concession Space would have been if such Concessionaire's Equipment had not been installed. If CONCESSIONAIRE fails to remove any of Concessionaire's Equipment by the expiration or termination of this Agreement, CORPORATION may, at its option, keep and retain any such Concessionaire's Equipment or dispose of the same and retain any proceeds therefrom, and CORPORATION shall be entitled to recover from CONCESSIONAIRE any costs of CORPORATION in removing the same and in restoring the Concession Space in excess of the actual proceeds, if any, received by CORPORATION from disposition thereof. ARTICLE 6 UTILITIES AND SERVICES Section 6.1 Corporation Improvements and Services. CORPORATION shall provide and maintain, water, sewer, general lighting, electrical power, and heating and air - conditioning for the TERMINAL BUILDING and make them available to the Concession Space. If CONCESSIONAIRE requires additional water, lighting, electrical power, telephone outlets, or adjustments to the air conditioning system, such additional improvements or services shall be subject to the prior written approval of 12 CORPORATION, and:any such improvements shall be made at GONCESSIONAIRE's expense. Section 6.2 Corritsobn Use Services. The Manager may establish common use services at the Airport, including but not limited to trash and refuse removal, deliveries, industrial waste handling, recycling, and'. security guards. The Manager reserves the right to establish charges for common use services based upon documented actual costs. Trash. sewer, and deliveries will be common use services which CONCESSIONAIRE may be required to use and pay its prorata actual share; however, t,6i-i-i un use s: vices r.= oa utilized at CONCESSiONAIRE's option. CONCESSIONAIRE agrees to pay the charges for those common use services which .,are utilized by CQN0SIONAIRE.. Section 6.3 Inte "on of Services. CONCESSIONAIRE agrees that CORPORATION sh be liable for failure to supply any utility services. CORPORATION reserves, the right to temporarily discontinue utility services at such time as may be necessary by reason of accident, unavailability of employees, repairs, alterations or improvements or whenever by reason of strikes, lockouts, riots, acts of God or any other happenings beyond the control of the CORPORATION, CORPORATION is unable to furnish such utility services. CORPORATION shall not be liable for damages to persons or property for any such discontinuance, nor shall such discontinuance in any way be construed as cause for abatement of compensation or operate to release the CONCESSIONAIRE from any of its obligations hereunder, except as otherwise provided in the section entitled "Damage, Destruction or Loss." ARTICLE 7 Indemnity, Insurance and Bonds Section 7.1 Indemnity. CONCESSIONAIRE hereby agrees to release and indemnify and save harmless County and CORPORATION, its officers, agents and employees from and against any and all loss of or damage to property, or injuries to or death of any person or persons, including property and employees or agents of the CORPORATION, and shall defend, indemnify and save harmless County and CORPORATION, its officers, agents and employees from any and all claims, damages, suits, costs, expense, liability, actions, penalties or proceedings of any kind or nature whatsoever, including worker's compensation claims, of or by anyone whomsoever, in any way resulting from, or arising out of, directly or indirectly, its operations in connection herewith, its construction of the Concession Improvements, or its use or occupancy of any portion of the Airport and including acts and omissions of officers, employees, representatives, suppliers, invitees, contractors, subcontractors, and agents of the CONCESSIONAIRE; provided, that the CONCESSIONAIRE need not release, indemnify or save harmless the County and CORPORATION, its officers, agents and employees from damages resulting from the sole negligence of the County's and CORPORATION's officers, agents and employees. The minimum insurance requirements prescribed herein shall not be deemed to limit or define the obligations of CONCESSIONAIRE hereunder. 13 Section 7.2 Insurance. CONCESSIONAIRE further agrees to secure at its own expense, and to keep in force at all times during the Term hereof, Comprehensive General Public Liability Insurance in the minimum amount of One Million Dollars ($1,000,000.00) bodily injury and property damage combined single limit each occurrence. The required insurance coverage also shall include Personal Injury, Blanket Contractual Coverage for this Agreement, and Independent Contractors Coverage. CONCESSIONAIRE shall also maintain in force, during the term of this Agreement, Automobile Liability Insurance, Comprehensive Form, which shall insure all CONCESSIONAIRE's owned or hired limousines and /or other vehicles used by CONCESSIONAIRE at AIRPORT pursuant to this Agreement, in the minimum amount of One and One Half Million Dollars ($1,500,000.00) Bodily Injury and Property Damage Combined Single Limit per occurrence. CONCESSIONAIRE shall also maintain in force during the term of this Agreement Workers Compensation and Employers Liability Insurance in accordance with the provisions of Colorado law. The limit of such insurance coverage shall be for statutory Worker's Compensation benefits, and shall not be less than One Hundred Thousand Dollars ($100,000.00) for employers liability insurance. CONCESSIONAIRE agrees that CORPORATION shall be named as an additional insured under such policy or policies of insurance and said policy or policies shall include the severability of interest "cross over" provision. A certificate or certificates evidencing such insurance coverage shall be filed with CORPORATION within ten (10) days after execution of this Agreement, and said certificate(s) shall provide that such insurance coverage will not be canceled or reduced without at least thirty (30) days prior written notice to CORPORATION. At least ten (10) days prior to the expiration of said insurance policy or policies, a certificate showing that such insurance coverage has been renewed or extended shall be filed with CORPORATION. If such coverage is canceled or reduced; CONCES ,qIONAIRE shall within seven (7) days of notice of cancellation or reduction, but in any evert more than fifteen (15) days before the effective date of said cancellation or reduction, file with CORPORATION a certificate showing that the required insurance has been reinstated in full, or provided through another insurance company or companies. In the event that CONCESSIONAIRE shall at any time fail to provide CORPORATION with the insurance required under this section, CORPORATION may immediately terminate this Agreement. The insurance carried by the CONCESSIONAIRE, as required by this Agreement, shall be primary over any insurance carried by the CORPORATION or County for their own protection. A copy of the insurance representative's license, or other legal proof of his /her authorization to sign the Certificate of Insurance for and on behalf of the insurance company /companies shown thereon, must be attached to the Certificate of Insurance. Facsimile stamped signature on the Certificate will not be accepted. The Certificate must be signed by the insurance company's authorized representative. The CORPORATION will conditionally accept self - insurance under this section, subject to review and approval of appropriate County and State requirements. All preceding coverages and limits will apply. 14 l Section 7.3 Performance Bond. Upon execution of this Agreement, CONCESSIONAIRE shall deliver to the Manager, and maintain in effect at all times throughout the Term, a valid corporate performance bond, or such other acceptable surety as first approved in writing by CORPORATION, in an amount equal to the sum of five months Monthly Guarantees, which amount is subject to increase by the Manager. Such bond shall be payable without condition to the CORPORATION and guarantee to the CORPORATION full and faithful performance of all of the terms and provisions of this Agreement by CONCESSIONAIRE, as said Agreement may be amended, supplemented or extended. All bonds shall be in forms satisfactory to CORPORATION, and be executed by such sureties as are satisfactory to CORPORATION and (a) are licensed to conduct business in the State of Colorado, and (b) are named in the current list of "Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies" as published in Circular 570 (amended) by the Audit Staff Bureau of Accounts, U.S. Treasury Department. All bonds signed by an agent must be accompanied by a certified copy of the authority to act. If the surety on any bond furnished by CONCESSIONAIRE is declared bankrupt, or becomes insolvent, or its right to do business in Colorado is terminated, or it ceases to meet the requirements of clauses (a) and (b) of the preceding paragraph, CONCESSIONAIRE shall within five days thereafter substitute another bond and surety, both of which shall be acceptable to CORPORATION. Section 7.4 No Personal Liability. No director, officer or employee of either party hereto shall be held personally liable under this Agreement or because of its execution or attempted execution. Section 7.5 Taxes, Licenses, Liens and Fees. CONCESSIONAIRE agrees to promptly pay all taxes, excises, license fees and permit fees of whatever Mature applicable to its operations hereunder and to take out and keep current alt t`nunicipal, state or federal licenses required for the conduct of its business at and upon the Concession Space and further agrees not to permit any of said taxes, excises, es, license fees or permit fees to become delinquent. CONCESSIONAIRE also agrees not to permit any mechanic's or materialman's or any other lien to become attached or be foreclosed upon the Concession Space or improvements thereto, or any pad or parcel thereof, by reason of any work or labor performed or materials furnished by Ashy mechanic or materialman. CONCESSIONAIRE agrees to furnish to the Manager, upon request, duplicate receipts or other satisfactory evidence showing the prompt-payment by it of Social Security, unemployment insurance and worker's compensation ►surance, and all required licenses and all taxes. CONCESSIONAIRE further agrees to promptly pay when due all bills, debts and obligations incurred by it in connection with its operations hereunder and not to permit the same to become delinquent and to suffer no lien, mortgage, judgment or execution to be filed against the Concession Spate or improvements thereon which will in any way impair the rights of the CORPORATION under this Agreement. 15 ARTICLE 8 DEFAULT AND REMEDIES C - 11 Section 8.1 Default. CONCESSIONAIRE shall be in default under this Agreement if CONCESSIONAIRE: A. Fails to timely pay when due to CORPORATION the compensation or any other payment required hereunder; or B. Is in default under any other Agreement with CORPORATION or Eagle County; or C. Becomes insolvent, or takes the benefit of any present or future insolvency or bankruptcy statute, or make4 a general assignment for the benefit of creditors, or consents to the appointment of a receiver, trustee or liquidator of any or substantially all of its property; or D. Transfers its interest under ff-yis Agreement, without the prior written approval of CORPORATION, by reason of death, operation of law, assignment, sublease or otherwise, to any other person, entity or corporation; or E. Fails to timely submit plans and cifications, bonds and other preconstruction submittals, fails to promptly begin and complete construction of concession improvements, or fails to occupy and use the Concession Space after construction is completed; or F. Abandons, deserts or vacates the cession Space; or G. Suffers any lien or attachment to beMW against the Concession Space, the Airport or CORPORATION's prop because of any act or omission of CONCESSIONAIRE, and such lien attachment is not discharged or contested by CONCESSIONAIRE in goad faftvby proper legal proceedings within 20 days after receipt of notice thereof by O ' ESSIONAIRE; or H. Fails to keep, perform and observe any other promise, covenant or agreement set forth in this Agreement and suchWure continues for a period of more than 30 days after delivery by Manager of a Written notice of such breach or default, except where a shorter period is spea&d hereirt, or where fulfillment of its obligation requires activity over a period of time and CONCESSIONAIRE within 10 days of notice commences in good faith to perform whatever may be required to correct its failure to perform and continues such performance without interruption except for causes beyond its control; or Gives its permission to any person to use for any illegal purpose any portion of the TERMINAL BUILDING made available to CONCESSIONAIRE for its use under this Agreement. 16 CJ , Section 8.2 Remedies. If CONCESSIONAIRE defaults in any of the covenants, terms and conditions herein, the CORPORATION may exercise any one or more of the following remedies: A. CORPORATION may elect to allow this Agreement to continue in full force and effect and to enforce all of CORPORATION's rights and remedies hereunder, including without limitation the right to collect compensation as it becomes due together with Past Due Interest; or B. CORPORATION may cancel and terminate this Agreement and repossess the Concession Space, with or without process of law, and without liability for so doing, upon giving 30 days written notice to CONCESSIONAIRE of its intention to terminate, at the end of which time all the rights hereunder of the CONCESSIONAIRE shall terminate, unless the default, which shall have been stated in such notice, shall have been cured within such 30 days. Notwithstanding the foregoing, during the Term herein, CONCESSIONAIRE shall be allowed only two notices of default hereunder which it may cure within the time specified in this section. The third notice shall be final and without opportunity for cure and CORPORATION, in its sole discretion, may elect therein (1) to cancel and terminate -all of the rights hereunder of the CONCESSIONAIRE, and CORPORATION may, upon the date specified in such third notice, reenter the Concession Space and remove therefrom all property of the CONCESSIONAIRE and store the same at the expense of the CONCESSIONAIRE, or (2) to proceed under subparagraph C. below. If CORPORATION elects to terminate, CONCESSIONAIRE shall be liable to CORPORATION for all amounts owing at the time of termination, including but not limited to compensation due plus interest thereon at the Past Due - Interest Rate together with any other amount to fully compensate CORPORATION for all loss of compensation, damages, and costs, including attorney's fees, caused by CONCESSIONAIRE's failure to perform its obligations hereunder, or which in the ordinary course would likely result therefrom. C. CORPORATION may elect to reenter and take possession of the Concession Space and expel CONCESSIONAIRE or any person claiming under CONCESSIONAIRE, and remove all effects as may be necessary, without prejudice to any remedies for damages or breach. Such reentry shall not be construed as termination of this Agreement unless a written notice specifically so states; however, CORPORATION reserves the right to terminate the Agreement at any time after reentry. Following reentry, the CORPORATION may relet the Concession Space, or any portion thereof, for the account of Concessionaire, on such terms and conditions as CORPORATION may choose, and may make such repairs or improvements as it deems appropriate to accomplish the reletting. CORPORATION shall not be responsible for any failure to relet or any failure to collect compensation due for such reletting. CONCESSIONAIRE shall be liable to CORPORATION for all costs of reletting, including attorney's fees and repairs or improvements. Notwithstanding re -entry by CORPORATION, CONCESSIONAIRE shall continue to be liable for all amounts due as compensation under this Agreement, on the dates specified and in such amounts as 17 C l would be payable if default had not occurred. Upon expiration of the Term, or any earlier termination of the Agreement by CORPORATION, CORPORATION, having credited to the account of CONCESSIONAIRE any amounts recovered through reletting, shall refund, without interest, any amount which exceeds the compensation, damages, and costs payable by CONCESSIONAIRE under this Agreement. Section 8.3 Remedies Cumulative. The remedies provided in this Agreement shall be cumulative and shall in no way affect any other remedy available to CORPORATION under law or equity. Section 8.4 Waivers. No failure of CORPORATION to insist upon the strict performance of a term, covenant or agreement contained in this Agreement, no failure by CORPORATION to exercise any right or remedy under this Agreement, and no acceptance of full or partial payment during the continuance of any default by CONCESSIONAIRE shall constitute a waiver of any such term, covenant or agreement or a waiver of any such right or remedy or a waiver of any default by CONCESSIONAIRE. Article 9 DAMAGE, DESTRUCTION OR LOSS Section 9.1 Damage to or Destruction of Concession Space. If the Concession Space, or any portion thereof, is destroyed or damaged by fire or otherwise to an extent which renders it unusable, CORPORATION may rebuild or repair any portions of the building structure destroyed or damaged, and, if the cause was beyond the control of CONCESSIONAIRE, the obligation of CONCESSIONAIRE to pay the compensation hereunder shall abate as to such damaged or destroyed portions during the time they are unusable. If CORPORATION elects not to proceed with the rebuilding or repair of the building structure, it shall give notice of its intent within 90 days after the destruction or damage. CONCESSIONAIRE may then, at its option, cancel and terminate this Agreement. Section 9.2 Cooperation in Event of Loss. If CORPORATION elects to rebuild, CONCESSIONAIRE must replace all Concession Improvements at its sole cost. CORPORATION and CONCESSIONAIRE shall cooperate with each other in the collection of any insurance proceeds which may be payable in the event of any loss or damage. Section 9.3 Loss or Damage to Property. CORPORATION shall not be liable for any loss of property by theft or burglary from the Airport or for any damage to person or property on the Airport resulting from lightning, or water, rain or snow, which may come into or issue or flow from any part of the Airport, or from the pipes, plumbing, wiring, gas or sprinklers thereof or that may be caused by the CORPORATION's employees or any other cause, and CONCESSIONAIRE agrees to make no claim for any such loss or damage at any time, except for any abatement of compensation or right to insurance proceeds provided for in this Section. U-1 C; Section 9.4 Mutual Waiver/insurance Coverage. CORPORATION and CONCESSIONAIRE each waive any and every claim for recovery from the other for any and all loss of or damage to the Concession Space or to the contents thereof, which loss or damage is covered by valid and collectible fire and extended insurance policies, to the extent that such loss or damage is recoverable under such insurance policies. Since this mutual waiver will preclude the assignment of any such claim by subrogation or otherwise to an insurance company or any other person, CONCESSIONAIRE agrees to give to each insurance company which has issued, or may issue, to the Concessionaire policies of fire and extended coverage insurance, written notice of the terms of this mutual waiver, and to have such insurance policies properly endorsed, if necessary, to prevent the invalidation of the insurance coverage by reason of this waiver. Article 10 MISCELLANEOUS PROVISIONS Section 10.1 Agreement Binding upon Successors. This Agreement, subject to the provisions of the section entitled "Assignment ", shall be binding upon and extend to the heirs, personal representatives, successors and assigns of the respective parties hereto. Section 10.2 Agreement Made in Colorado. This Agreement shall be timed to have been made in and shall be construed in accordance with- the laws of the State of Colorado. Section 10.3 Agreement Subordinate to Agreements with "United States". This Agreement is subject and subordinate to the terms, reservations, restrictions and conditions of any existing or future agreements between CORPORNTION or Eagle County and the United States, the execution of which has been or may be required as a condition precedent to the transfer of`federal rights or property to Eagle County for Airport purposes and the expenditure: of federal funds for the development of the Airport or airport system. The provisions of the attached Appendices 1, 2 and 3 are incorporated herein by reference. Section 10.4 Agreement Subordinate to Ground Lease with Eagle County. This agreement is subject to the written approval of Eagle County and is subject and subordinate to the terms, reservation, restrictions and conditions of the Ground Lease and any existing or future agreements between CORPORATION and Eagle County. Section 10.5 Assignment. CONCESSIONAIRE shall not assign this Agreement or in any way transfer or hypothecate any of its interest in this Agreement without first obtaining the written consent of the CORPORATION, which consent will not be unreasonably withheld, provided that CONCESSIONAIRE acknowledges that CORPORATION need not consent to any such assignment or subletting at any time, and to the extent, that CORPORATION has space available to lease to rental car companies. As used herein, "assignment" means and includes, but is not limited to, (i) 19 the grant or transfer of any right, title, possession, lien, encumbrance, security interest or other interest in, on or to five percent (5 %) or more of the stock or other ownership interest of CONCESSIONAIRE, (ii) grants or transfers to, a single person or entity, including to any other person(s) and entity(ies) directly or indirectly controlled by it or which directly or indirectly control it, of any right, title, possession, lien, encumbrance security interest or other interest in, on or to the stock or other ownership interest which aggregate five percent (5 %) or more of the stock or other ownership interest of CONCESSIONAI °E, ;iii) if CONCESSIONAIRE is a limited liability company, a change in the chief operating officer, manager or other person responsible for the day -to -day performance by CONCESSIONAIRE of the Agreement, (iv) the grant or transfer of any right, title, lien, encumbrance, security interest or other interest in, on or to some or all of the income or profits (however they may be measured or defined, e.g., gross income, gross profit, operating profit, net profit) of CONCESSIONAIRE, and (v) the grant or transfer of any right, title, lien, encumbrance, security interest or other interest in, on or to some or all of the cash flow (however it may be measured or defined) of CONCESSIONAIRE. If CONCESSIONAIRE shall assign or attempt to assign its interest in the whole or any part of this Agreement in violation of this section, such assignment shall be void and this Agreement shall thereupon automatically terminate. CORPORATION's consent to one assignment shall not be deemed to be a consent to any subsequent assignment. Section 10.6 Bond Indentures. This Agreement is in all respects subject and subordinate to any and all CORPORATION bond indentures applicable to the TERMINAL BUILDING and Airport and to any other bond indentures which should amend, supplement or replace such bond indentures. The parties to this Agreement acknowledge and agree that all property subject to this Agreement which was financed by the net proceeds of tax- exempt bonds is owned by CORPORATION or Eagle County, and CONCESSIONAIRE agrees not to take any action that would impair, or omit to take any action required to confirm, the treatment of such property as owned by CORPORATION or Eagle County for purposes of Section 142(b) of the Internal Revenue Code of 1986, as amended. In particular, the CONCESSIONAIRE agrees to make, and hereby makes, an irrevocable election (binding on itself and all successors in interest under this Agreement) not to claim depreciation- or an investment credit with respect to any property subject to this Agreement which was financed by the net proceeds of tax - exempt bonds and shall execute such forms and take such other action as CORPORATION or Eagle County may request in order to implement such election. Section 10.7 Force Majeure. Neither party hereto shall be liable to the other for any failure, delay or interruption in the performance of any of the terms, covenants or conditions of this Agreement due to causes beyond the control of that party, including without limitation strikes, boycotts, labor disputes, embargoes, shortages of materials, acts of God, acts of the public energy, acts of superior governmental authority, weather conditions, floods, riots, rebellion, sabotage or any other circumstance for which such party is not responsible or which is not in its power to control, but in no event shall this paragraph be construed so as to allow CONCESSIONAIRE to reduce or abate its obligation to pay the Monthly Guarantee or Percentage Fee herein. Section 10.8 Inconvenience During Construction. CONCESSIONAIRE recognizes 20 that from time to time during the Term of this Agreement, it mayabe necessary for CORPORATION to commence or complete programs of construction, expansion, relocation, maintenance and repair in order that the TERMINAL BUILDING and its facilities may be completed and operated as ECAT determines, and that such construction, expansion, relocation, maintenance and r_ 'r ry inconvenience the CONCESSIONAIRE in its operation at the Airport. Concessionaire agrees that no liability shall attach to CORPORATION or Eagle County, its officers, agents, employees, contractors, subcontractors and representatives by way of such inconveniences, and CONCESSIONAIRE waives any right to claim damages or other consideration therefrom. SECTION 10.9 Delay in Opening. CONCESSIONAIRE agrees that no liability shall attach to the CORPORATION or Eagle County, its officers, agents and employees by reason of any efforts or action toward implementation of any present or future plans for the TERMINAL BUILDING, or by reason of any delay in opening of the expansion to the TERMINAL BUILDING, and waives any right to claim damages or other consideration arising therefrom. Section 10.10 Nondiscrimination. In connection with the performance of its rights, privileges and obligations under this Agreement, CONCESSIONAIRE agrees not to refuse to hire, discharge, promote or demote, or to discriminate in matters of compensation against any person otherwise qualified, solely because of race, color, religion, national origin, gender, age, military status, sexual orientation, marital status, or physical or mental disability, and CONCESSIONAIRE further agrees to insert the foregoing provision in all subcontracts hereunder. CONCESSIONAIRE further agrees to the provisions set forth in Appendix 4, and to insert the provisions thereof into all subcontracts hereunder. CONCESSIONAIRE further agrees to the provisions regarding Disadvantaged Business Enterprises set forth in Appendices 5 and 6. Section 10.11 Not Partnership. Notwithstanding the provisions herein for payment by CONCESSIONAIRE to CORPORATION of sums based upon a percentage of Gross Revenues, it is expressly understood and agreed that the CORPORATION shall not be construed or held to be a partner, associate or joint venturer of CONCESSIONAIRE in the conduct of its business. CONCESSIONAIRE shall at all times have the status of an independent contractor without the right or authority to impose tort or contractual liability upon the CORPORATION. 21 C) C) Section 10. 12 Notices. All notices required to be given to CORPORATION or CONCESSIONAIRE hereunder shall be in writing and sent by first class mail, facsimile (with an original by first class mail), or personal delivery to: CORPORATION: President Eagle County Air Terminal Corporation P.O. Box 850 Eagle, Colorado 81631 Phone: (970) 524 -8246 Fax: (970) 524 -8247 CONCESSIONAIRE: Jay R. Ufer, Manager /President Colorado Mountain Express LLC P.O. Box 580 Vail, Colorado 81658 Phone: 970 - 926 -9800 Either party hereto may designate in writing from time to time the address of substitute or supplementary persons within the State of Colorado to receive such notices. The effective date of service of any such notice shall be three calendar days after the date such notice is mailed, the date it is personally delivered or the first business day after delivery by facsimile. Section 10.13 Paragraph Headings. The paragraph headings herein are for convenience in reference only and are not intended to define or limit the scope of any provision of this Agreement. Section 10.14 Patents and Trademarks. CONCESSIONAIRE represents that it is the owner of or fully authorized to use any and all services, processes, machines, articles, marks, names or slogans used by it in its operations under this Agreement. CONCESSIONAIRE agrees to save and hold harmless CORPORATION, its officers, employees, agents and representatives from any loss, liability, expense, suit or claim for damages in connection with any actual or alleged infringement of any patent, trademark or copyright arising from any alleged or actual unfair competition or other similar claim arising out of the operations of CONCESSIONAIRE under this Agreement. Section 10.15 Security. CONCESSIONAIRE shall cause its officers, contractors, agents and employees to comply with any and all existing and future security regulations or Security Plan adopted by CORPORATION or Eagle County pursuant to Part 107, Federal Air Regulations of the Federal Aviation Administration, as it may be amended from time to time. Section 10.16 Severability. If any provision in this Agreement is held by a court to be invalid, the validity of other provisions herein which are severable shall be unaffected. Section 10.17 Third Parties. This Agreement does not, and shall not be deemed or 22 construed to, confer upon or grant to any third party or parties (except parties to whom the CONCESSIONAIRE may assign this Agreement in accordance with the terms hereof, and except any successor to CORPORATION any right to claim damages or to bring any suit, action or other proceeding against either CORPORATION or the CONCESSIONAIRE because of any breach hereof or because of any of the terms, covenants, agreements and conditions herein. Section 10.18 Entire Agreement. The parties acknowledge and agree that the provisions herein constitute the entire agreement and that all representations made by any officer, agent or employee of the respective parties unless included herein are null and void and of no effect. No alterations, amendments, changes or modifications, unless expressly reserved to the Manager herein, shall be valid unless executed by an instrument in writing by all the parties with the same formality as this Agreement. Section 10.19 Concessionaire's Warranty of Its Ability To Enter Agreement. CONCESSIONAIRE represents and warrants, which representation and warranty form a material part of the consideration of this Agreement without which CORPORATION would not enter into this Agreement, that it is authorized to and lawfully able to enter into and perform, and is under no prohibition against entering into and performing, this Agreement and that entering into this Agreement and performing pursuant to the terms thereof shall not constitute or cause a default or breach of any other contract, covenant or duty. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written. CORPORATION Eagle County Air Terminal Corporation By: T C. Stone, Pre ident -eyle CONCESSIONAIRE By: Colo o Mountain ' press 23 APPENDIX NO. 1 STANDARD FEDERAL ASSURANCES NOTE: As used below the term "contractor" shi _ an and include the "CONCESSIONAIRE," and the term "sporrser " shall mean the "CORPORATION ". During the term of this contract, the contractor, for itself, its assignees and successors in interest (hereinafter referred to as the "contractor") gees as follows: 1. Compliant. with Regulations. The contractor shall comply with the Regulations relative to nondiscrimination in federally assisted programs of the Department of Transportation (hereinafter "DOT ") Title 49, Code of Federal Regulations, Part 21, as they may be amended from time to time (hereinafter referred to as the Regulations), which are herein incorporated by reference and made a part of this contract. 2. Nondiscrimination. The contractor, with regard to the work performed by it dut'ing the contract, shall not discriminate on the grWnds of race, color, sex, creed or national origin in the selection and retention of subcontractors, including poi- curement of materials and leases of equipment. The contractor ohall not participate t: +, ;er ° 4 ly or indirectly in the discrimination prohibited by section 2J.tJl of the Regulations, in,:� 4 + §q employment practices when the contract cover c a program set forth in Appendix B of the Regu! `' ... 3.Solicitations for SubcontractorssIncludinq Procurement of Materials and Eauipment. In all solicitations either by competitive bidding or negotiation made by the contractor for work to be performed under a subcontract, including procurement of materials or leases of equipment, each potential subcontractor or supplier shall be notified by the contractor of the contractor's obligations under this contract and the Regulations relative to nondiscrimination on the grounds of race, color, or national origin. 4.Information and Reports. The contractor shall provide all information and reports required by the Regulations or directives issued pursuant thereto and shall permit access to its books, records, accounts other sources of information, and its facilities as may be determined by the sponsor or then Feder2it Aviation Administration (FAA) to be pertinent to ascertain compliance with such Regulations, orders, and instructions. Where any information required of a contractor is in the exclusive possessiorof another who fails or refuses to furnish this information, the contractor shall so Certify i the sponsor of the FAA, as appropriate, and shall set forth what efforts it has made to obtain the information. 5. Sanctions for Noncompliance. In the event of the contractor's noncompliance with the nondiscrimination provisions of this contract, the sponsor shall impose such contract sanctions as it or the FAA may determine to be appropriate, including, but not limited to: 24 (71, C", a. Withholding of payments to the contractor under the contract until the contractor complies, and /or b. Cancellation, termination, or suspension of the contract, in whole or in part. 6. Incorporation of Provisions. The contractor shall include the provisions of paragraphs 1 through 5 in every subcontract, including procurement of materials and leases of equipment, unless exempt by the Regulations or directives issued pursuant thereto. The contractor shall take such action with respect to any subcontract or procurement as the sponsor or the FAA may direct as a means of enforcing such provisions including sanctions for noncompliance. Provided, however, that in the event a contractor becomes involved in, or is threatened with, litigation with a subcontractor or supplier as a result of such direction, the contractor may request the sponsor to enter into such litigation to protect the interests of the sponsor and, in addition, the contractor may request the United States to enter into such litigation to protect the interests of the United States. 25 f APPENDIX NO. 2 STANDARD FEDERAL ASSURANCES NOTE: As used below, the term "DOT' means the United States Department of Transportation. 1. CONCESSIONAIRE for itself, representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land -that in the event facilities are constructed, maintained, or otherwise operated on the said property described in this agreement for a purpose for which a DOT program or activity is extended or for another purpose involving the provision of similar services or benefits, the CONCESSIONAIRE shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to 49 CFR Part 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation, and as said Regulations may be amended. 2. The CONCESSIONAIRE for itself, representatives, successors in interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land: (1) that no person on the grounds of race, color, sex, creed or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities, (2) that in the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, color, sex, creed or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination, (3) that the CONCESSIONAIRE shall use the premises in compliance with all other requirements imposed by or pursuant to 49 CFR Part 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation, and as said Regulations may be amended. IM C, APPENDIX NO. 3 C NONDISCRIMINATION IN AIRPORT EMPLOYMENT OPPORTUNITIES CONCESSIONAIRE assures that it will comply with pertinent statutes, Executive Orders and such rules as are promulgated to assure that no person shall, on the grounds of race, creed, color, national origin, sex, age, or handicap be excluded from participating in any activity conducted with or benefiting from Federal assistance. This Provision obligates the CONCESSIONAIRE or its transferee for the period during which Federal assistance is extended to the airport program, except where Federal assistance is to provide or is in the form of personal property or real property or an interest therein or structures or improvements thereon. In these cases, this Provision obligates the CONCESSIONAIRE or any transferee for the longer of the following periods: (a) the period during which the property is used by the sponsor or any transferee for a purpose for which Federal assistance is extended, or for another purpose involving the provision of similar services or benefits; or (b) the period during which the airport sponsor or any transferee retains ownership or possession of the property. In the case of contractors, this Provision binds the contractors from the bid solicitation period through the completion of the contract. It is unlawful for airport operators and their lessees, tenants, concessionaires and contractors to discriminate against any person because of race, color, national origin, sex, creed, or handicap in public services and employment opportunities. 27 C APPENDIX NO. 4 LEASE PROVISIONS REQUIRED OR SUGGESTED BY THE FEDERAL AVIATION ADMINISTRATION A. Terminal Corporation agrees to operate the Leased Premises for the use and benefit of the public, more specifically as follows: 1. To furnish good, prompt, and efficient services adequate to meet all the demands for its services at the Airport, 2. To furnish said services on a fair, equal, and non - discriminatory basis to all users thereof, and 3. To charge fair, reasonable, and non - discriminatory prices for each unit of sale or service, provided that Terminal Corporation may be allowed to make reasonable and non - discriminatory discounts, rebates, or other similar types of price reductions to volume purchasers. B. Terminal Corporation, 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 running with the land that: 1. 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 in the use of said facilities. 2. In the construction of any improvements on, over or under such land and the furnishing of services thereon, 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. 3. Terminal Corporation shall use the premises 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, as said Regulations may be amended. In the event of breach of any of the above non - discriminatory covenants, the County shall have the right to terminate the Lease and to re -enter and repossess the Leased Premises and the facilities thereon, and hold the same as if said Lease had never been made or issued. This provision does not become effective until the procedures of 49 CPR Part 21 are followed and completed, including expiration of appeal rights. 28 � C C. Affirmative Action. 1. Terminal Corporation 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 ground of race, creed, color, national origin, or sex, be excluded from participating in any employment, contracting, or leasing activities covered in 14 CFR Part 152, Subpart E. Terminal Corporation 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 County assures that it will require that its covered organizations provide assurance to the grantee that they similarly will undertake affirmative action programs and that they will require assurances from their suborganization, as required by 14 CPR Part 152, Subpart E, to the same effect. 2. Terminal Corporation agrees to comply with any affirmative action plan or steps for equal employment opportunity required by 14 CFR, Part 152, Subpart E, as part of the affirmative action program or by any Federal, state or local agency or court, including those resulting from a conciliation Lease, a consent decree, court order, or similar mechanism. Terminal Corporation agrees that state or local affirmative action plan will be used in lieu of any affirmative action plan or steps required by 14 CFR Part 152, Subpart E only when they fully meet the standards set forth in 14 CFR 152.409. Terminal Corporation agrees to obtain a similar assurance from its sub - lessees' covered organizations, and to cause them to require a similar assurance of their covered suborganizations, as required by 14 CFR Part 152, Subpart E. 29 Y Y Y 0 Y Y Y ao �a c� 2p Wm Eg -i mo -4 crim 4r Z �x rn -a �Z Z E 1� g� 11- r� x H td H H im A. CHECKLIST OF ITEMS TO BE COMPLETED AND SUBMITTED WITH PROPOSAL. The following forms and questionnaires are to be completed, fully executed, signed, and returned with your pro osal L PROPOSAL FORM ( Proposal Form 2. PROPOSAL SURETY (�1 Cashier's Check, Certified Check or Bid Bond payable without condition to Ea County Air Terminal Corporation, in the amount of Five Thousand Dollars Eagle ($5,000.00). DUES TIONNAIRES/FORMS (V� Qualifications and Experience Questionnaire. Attach any other other relevant business or franchise experience, references, awrds and history. h as () If applicable, copy of DBE Certification, or photocopy of first page of pending certification application. 4. ADDENDA SHEET(S) (11)/ Acknowledgment of receipt of Addendum #1 pagella c B. PROPOSAL FORM NON - EXCLUSIVE GROUND TRANSPORTATION CONCESSION AGREEMENT Eagle County Air Terminal Corporation (To be Used by All Proposers) TO: Eddie F. Storer, A.A.E. Eagle County Air Terminal Corporation 219 Eldon Wilson Road P.O. Box 850 Eagle, Colorado 81631 Dear Sir: The undersigned, having examined the Instructions to Proposers, the Sample Agreement for Ground Transportation Concession Agreement, and any and all related documents for the proposed non - exclusive operation of ground transportation concessions in the commercial passenger terminal building at Eagle County Regional Airport, Eagle, Colorado, and having become familiar with the proposed sites therefor and operations thereof, hereby proposes to pay monthly to the Eagle County Air Terminal Corporation during the three year term of the Ground Transportation Concession Agreement, base rent of $4.00 per square foot per month and a privilege fee of the following minimum ski season monthly guarantee, (cannot be less than $7,500.00 for each 10 foot of counter per month for January, February and March of each year and cannot be less than $4,000.00 per 10 foot of counter per month for December and April of each year) for each of the ski season portions of the three year term as indicated, whichever is greater: 2001 -2002 Ski Season : December, 2001 C (amount in words) ; ti >A e. '7 4U -1 ,r POl140j_ (amount in numbers) #t,00 0 X y / /�} ' ��,Qt) 4t/L ppp January 2002 (amount in words)- Ji`'✓a..deI /c rc (amount in numbers) ht)5 Sza- )<'V v 4 February 2002 (amount in words) (amount in numbers) j X y7-E a4 r #3p 606 March 2002 (amount in words) (amount in numbers) a_x % 4W4n 3," -r,)dG V April 2002 (amount in words) (amount in numbers)i}{ �/ /i21� -7� z1T� Page 12a C", 2002 -2003 Ski Season : December, 2002 (amount in words) (amount in numbers) t�OLbx y 4p prC,pu„- January 2003 (amount in words) piyOG•, (amount in numbers) p� February 2003 (amount in words) 1da,41 / (amount in numbers) 5man X March 2003 (amount in words).�/e (amount in numbers),6t7, j2 o Y y� -rzy�� 3 QUO April 2003 �} (amount in words) </ /XJLJ Az. a'►� (amount in numbers) ` G�� t�1 , s j� pQp 2003 -2004 Ski Season : December, 2003 (amount in words) (amount in numbers) Do X y �a January 2004 (amount in words) crTG Ul11Jtw+� %�v lftr -1 (amount in numbers) February 2004 (amount in words)7,,,p_���/�!1 (amount in numbers) .A7 MO x y March 2004 (amount in words),.�* (amount in numbers) 7hgo X y 4c, j Tr April 2004 cc''� ""�� (amount in words) J(7�i�¢n (1Lc4 C� G�J (amount in numbers),t f i The undersigned agrees to execute the formal Ground Transportation Concession Agreement. Attached hereto is a (certified) (cashier's) check or (bid bond) in the amount of Five Thousand Dollars ($5,000.00) payable without condition to Eagle County Air Terminal Corporation, which may be retained by ECAT as liquidated damages, and not as a penalty, in the event of failure of the undersigned to execute the Page 13a Ground Transportation Concession Agreement and otherwise to comply with the Instructions to Proposers. The undersigned hereby acknowledges receipt of copies of Addendum #1, the Sample Ground Transportation Concession Agreement, and Instructions to Proposers for the rental car concession and that the same have been reviewed prior to the execution of this proposal; that the premises at the terminal building at Eagle County Regional Airport proposed to be devoted to this privilege, and plans showing the layout of such premises, have been inspected by the undersigned, who has become thoroughly familiar herewith and with the proposed method of operation. The undersigned further (a) acknowledges the right of the Eagle County Air Terminal Corporation to reject any or all proposals submitted, and that an award may be made to a proposer other than one of the four highest monetary proposers if all other conditions and requirements are not met; (b) acknowledges and agrees that the discretion of ECAT in selection of the successful proposers shall be final, not subject to review or attack, and (c) acknowledges that this proposal is made with full knowledge of the foregoing and in full agreement thereto. By submission of this proposal, the proposer acknowledges that ECAT has the right to make any inquiry or investigation he deems appropriate to substantiate or supplement information contained in the proposal and related documents, and authorizes release to ECAT of any and all information sought in such inquiry or investigation. Dated at r:— AI s this t C� day of c chi-. 2001. Signature of Prop er: ; I If an individual Doing business as If a partnership: Doing business as By: (General Partner) Page 14a If a corporation: By: _ Title: (Seal if proposal by corporation) corporation. If a limited liability company C �a,0a ;` ��� PC�SS `,UZ— By: Title: Address of Proposer: S-im Q ccA C7 !91 61ST Telephone: G', C� — 9949 — Page 15a i ADDENDUM ACKNOWLEDGMENT The undersigned hereby acknowledges receipt of Addendum #1 dated October 1, 2001. By: Title t� Qualifications and Experience Form Answers I. General Information I. A. Colorado Mountain Express LLC. By its Manager: BF Holding Corp by its VP of Transportation Jay R.Ufer P.O.Box 580 Vail, CO 81658 I. B. 970 - 926 -9800 Ext 6507 Jay, Ext 6403 Brian I. C. Limited Liability Corporation Limited Liability Corporation 1. When formed? 02/02/1998 2. Where formed? Delaware 3. Is LLC authorized to do business in Colorado? Yes As of what date? 02/02/1998. 4. Furnish the following information about the principal members with 5 % or more ownership of the company. The ownership of CME LLC is held by three other LLC's... CDMC@ 50% EWRMII @ 49% and HF Holding Corp @ 1 %. BF Holding Corp is the "Manager "of CME LLC under the operating agreement and Jay Ufer as VP of Transportation of BF Holding Corp and the President of CME LLC is authorized to encumber under the Consent in Writing in lieu of a Meeting document attached. 5. Name and Address of Agent for Process East West Partners Dianne Paradis 100 East Thomas Place Avon CO 81620 II. Statement of Qualifications and Experience Attachment II, A. Colorado Mountain Express LLC PO Box 580 Vail CO 81658 970 - 926 -9800 Attachment II, B. NO Attachment II, C. 17 Years Colorado Mountain Express Management has been providing ground transportation services in the Vail and Aspen markets since 1984 Attachment II, D. We have had a counter at ECAT since 1996. We have had counters at DIA Stapleton since the 1980's. We employ 12 —20 people at DIA and 2 -12 people at ECAT depending on the seasonality. CME RE employs about 400 people seasonally on a combined basis. c Attachment II, E. CME DIA 1997 - $6,899,000 1998 - $7,130,000 1999 - $6,766,500 2000 - $6,562,993 CME Vail Valley Jet Center 1997 - $1,326,800 1998 - $1,554,250 1999 - $1,487,900 2000 - $1,818,005 CME ECAT 1997 - $1,405,650 1998 - $1,881,800 1999 - $1,197,100 2000 - $1,969,505 Attachment II, F. Landlords City and County of Denver Manager of Aviation Denver International Airport 8500 Pena Blvd Room 9870 Denver, CO 80249 Phone 303 - 342 -2505 Eagle County Air Terminal PO Box 850 Eagle CO 81631 970 -524 -9490 Edwards Station LLC PO Box 350 Edwards, CO 81632 Phone 970 - 926 -3208 BHR LLC PO Box 185 Carbondale, CO 81623 Phone 970 - 945 -6500 Attachment II, G. None CII J f Attachment II, H. Jay Ufer --------- Start 1991 to current Tony Clement - -Start 1984 to current Tom Ball - - - - -- -Start 1995 to current Daryl Tims ----- Start 1991 to current Brian Seidel - -- -Start 1994 to current And many other managers have over 5 years of experience in the airport transit business. Attachment II, I. Yes Attachment II,1 Vans 115 Subs 12 Sedans 6 People Movers 2 Attachment II, K. Credit Cards Master Card, Visa, Discover Attachment II, L. Outlets ECAT counter Edwards Station Edwards office and shop Metcalf road parking lot Glenwood Springs office and parking and shop Attachment II, M. 83 currently this summer Attachment III, A. See audited financials enclosed for 1998 -2000 Jay R. Ufer 6469 East Ashburn Lane Highlands Ranch, CO 80130 303 - 470 -1237 Attachment III, B. NO Attachment III, C. NO Attachment III, D. Confidentiality of Information All information in the enclosed bid is proprietary except for the amount of the bid. All financial statements, statistics and officer information is confidential. The undersigned hereby attests to the truth and accuracy of all statements, answers, and representation made in this questionnaire including all supplementary statements attached hereto July -;8 -00 INS Frum -COLOR MOUNTAIN EXPRESS 8T084850 T -623 P.03 C014SENT IN WPXMG IN LIEU OF A hM • 'MG of T E BMA" OF DMCMRS of IW MOLDING COM - - The Colorado Corpoa^at = Cache provides that unless ft utr3 s of inragmeadon or bylaw of a ccupond= pmvide otherwise, any action required or permitted to ba Won ar a meeting of the Board of Dines tons of a ratpaaation may be ud = without a miming if -che action is evidenced by one or more written c*Am= descriM g *e action rakes, signed by each director, and delivered t4 the s=cwry of the ooxpocs;d= for iaeludon is the miantes or for filing with the carpao= records. , The sole director of BF Holding Cap., a Colorado co=pormiaa4 (the "Corporado 1l, by sipi ng this docuiae6 waives any and all notice dw may be required For at meeting of the Board of Directors of to Corpocadon in compiiante with the Wars& Cmpmdon Code and tbt Cargotasioa's articles of hwc%;pomttaa and bylaws, sud take for following a=os RESOLVED: Tlmt the Snllo'wing mdmduals are hereby elected to serve in the caPacirS' listed opposite their awes mail the am am vA meeting w MR duir successors shall have been duly rlected and gratified: Hairy I-L Fsc Mpg, III President James F. Adams Slice Ptesidear. Ross F. Snavlcer Vice Pnmid= Pawl Boyne Vice President of Teebuology ICEEMy. E. 8tr>ezetword, Vice President John V. Evans Vice Plesidctc Richard W. FLmk Jr. Vine Presiders Robert L. Knous k Vioe Pcesdezz Roger W. Lessmaa Vice Ptt siic t Charles E. Ma Vice President Dianne A. parmiis Vice Prcddeat & Secretary Roger L- Perry Vice President Blake L. Riva Vice President Dennis M Rocbelle Assimm S=c=y Dent Rose Vice PteddBm Mark L. Smith Vice President James A. TelliAg Vice Presid= Jay V&t Vim president of Tmuponation. Colleen )4 Weiss Vice President John 1, Wale Vice President Christina V_ Weight Nine Ptesiejem & T rcasu= WUH-t L WAgirC Vice Presidennt This Cole+ of the Board ofDitaetws, whm sigaa<i, shall evidence g7mval that sate foregoing rwaiutioas s;balt for an purposes be validly a4pprod- E.`c=acd this 10a day of January, 2000. F -053 C' C .io ARTH LEP ANDERSEN EAST WEST RESORT TRANSPORTATION, LLC AND SUBSIDIARY Consolidated Financial Statements As Of December 31, 1999 And 1998 Together With Report or IndependeM Public Accountants t } k. T H,►RTrLHRAN ERSElm REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Members of East West Resort Transportation, LLC: We have audited the accompanying consolidated balance sheets of EAST WEST RESORT TRANSPORTATION, LLC (a Delaware limited liability company) AND SUBSIDIARY as of December 31, 1999 and 1998, and the related consolidated statements of income, members' 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 auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether- the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of East West Resort Transportation, LLC and subsidiary as of December 31, 1999 and 1998, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. Denver; Colorado, February 11, 2000. L L CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31 1999 AND 1998 ASSETS CURRENT ASSETS: Cash and cash equivalents Accounts receivable - Trade, net of allowance for doubtful accounts of $12,000 and $5,000, respectively Other Prepaid expenses and other Total current assets PROPERTY AND EQUIPMENT, net RESTRICTED CERTIFICATE OF DEPOSIT INTANGIBLES, net Total assets LIABILITIES AND MEMBERS' EQUITY CURRENT LIABILITIES: Accounts payable Accrued liabilities Accrued interest - related parties Advance deposits Current portion of long -term debt Related party debt Current portion of capital lease obligations Total current liabilities LONG -TERM DEBT LONG -TERM PORTION OF CAPITAL LEASE OBLIGATIONS COMMITMENTS AND CONTINGENCIES (Note 6) MEMBERS' EQUITY: Capital contributions Accumulated deficit Total members' equity Total liabilities and members' equity affiRs 1999 1998 $ 602,950 $ 604,954 319,299 452,413 163,948 43,087 308,595 550,385 1,3 94,792 1,650,939 1,113,105 788,622 16,551 15,792 7,049,829 6,579,395 S2,574,277 $-2.034,648 $ 387,718 S 203,954 721,275 664,560 21,012 74,003 720,141 735,826 1,246,226 1,296,098 440,929 493,349 145,419 2581409 3,682,720 3,726,199 1,143,406 1,222,323 45,550 123,759 5,651,508 5,084,701 (948.907) (1,122,334) 4,702,601 3,962,367 $U74.27 034 648 The accompanying notes to consolidated Financial statements are an integral part of these consolidated balance sheets. r � EAST WEST RESORT TRANSPORTATION LLC AND SUBSIDIARY The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31 1999 AND 1998 1999 1998 TRANSPORTATION REVENUE $10,301,692 $10,922,320 OPERATING EXPENSES: Transportation operating costs 6,9I5,336 7,234,619 Selling and marketing expenses 210,710 179,238 General and administrative expenses 1,728,904 1,661,653 Depreciation and amortization 986,474 1,195,849 Total operating expenses 9,841,424 10,271,359 OPERATING INCOME 460,268 650,961 OTHER INCOME (EXPENSE): Interest income 29,201 18,424 Interest expense (221,056) (390,054) Interest expense — related parties (57,303) (74,003) Other income (expenses), net (37,683) 81,440 ' Total other income (expense) ---=- ---- -- (286,841) -------- ---- -- (364,193) NET INCOME g_173.427 $ 286,768 The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. I a CII t EAST WEST RESORT TRANSPORTATION LLC AND SUBSIDIARY CONSOLIDATED STATEMENTS OF MEMBERS' EOUTTY FOR THE YEARS ENDED DECEMBER 31 1999 AND 1998 BALANCES, January 1, 1998 Capital contributions Net income BALANCES, December 31, 1998 Capital contributions Distributions of preferred return Net income BALANCES, December 31, 1999 The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. Members' Equity CDMC EWRM II HF Holdings Total $2,089,900 S - $(9,312) $2,080,588 1,339,809 250,098 5,104 1,595,011 217,576 69,192 - 286,768 3,647,285 319,290 (4,208) 3,962,367 578,783 I08,039 2,205 689,027 (61,110) (59,888) (1,222) (122,220) 105,678 67,749 - 173,427 $4 Z 6 6 $435 _Q0 $a-225) $4 702,6Q The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. NEST CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 1999 AND 1998 N 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 173,427 $ 286,768 Adjustments to reconcile net income to net cash provided by operating activities- } Depreciation 434,558 654,553 Amortization 551,916 541,296 Noncash interest expense 21,012 74,003 (Gain) loss on sale of assets 3,458 (61,873) Change in operating assets and liabilities - Accounts receivable 12,253 29-268 > Prepaid expenses and other assets 241,031 205,887 Accounts payable and accrued liabilities 240,479 (73,934) Advanced deposits (15,685) (138,554) Net cash provided by operating activities 1,662,449 1,517,414 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment (393,229) (188,545 ) Proceeds from sale of property and equipment 114,265 645,620 ► Additional acquisition cost paid to CMEII (50,000) - Acquisition of Eagle Transportation Services, Inc., net of cash acquired (772,350) - Net cash (used in) provided by investing activities (1,101,314) 4572075 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes payable 718,256 - Payments on notes payable (1,573,468) (3,038,793 Payments on capital lease obligations (274,734) (218,310) Capital contributions 689,027 1,595,011. Distributions to members (122,220) - Net cash used in financing activities (563,139) . (1,662,092) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS v (2,004) 312,397 CASH AND CASH EQUIVALENTS, beginning of year 604,954 292,557 " CASH AND CASH EQUIVALENTS, end of year S 604.954 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 25 649 $ 33 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Capital lease obligations incurred _ upon the acquisition of equipment $ g 5 5 $---L7.57 2 Increase to related party debt resulting from addition of accrued interest into principal $ 74,003 $ 18.349 Issuance of note payable to CMEII $ I QO,000 $ - Issuance of note payable in connection with the acquisition of ETS The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. N ii EAST WEST RESORT TRANSPORTATION LLC AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31 1999 AND 1998 1. ORGANIZATION AND BUSINESS: East West Resort Transportation, LLC ( "EWRT "), a Delaware limited liability company, was formed on July 31, 1996 for the purpose of engaging in the business of performing ground transportation services directly or through investments in other entities. EWRT is the sole member of Colorado Mountain Express, LLC ( "CME "), a Delaware limited liability company, formerly known as Colorado Mountain Express (the "Partnership "), which provides ground transportation, primarily to skiers, between airports in Denver and Eagle, Colorado and the Vail, Beaver Creek and Aspen resorts_ EWRT and its subsidiary CME are collectively referred to as the "Company ". The majority of the Company's revenue is earned during the ski season of December through April. The Operating Agreement for the Company is dated April 8, 1997 and the Company will continue in perpetuity. Ownership of the Company At December 31, 1999, ownership of the Company was as follows: Crescent Development Management Corp. ( "CDMC ") (Investing Member) 500/ East West Resorts Management H, LLC ( "EWRM II") (Investing Member) -49% H.F. Holding Corp. ( "HF Holdings ") (Managing Member) l o/ Allocation of Net Income and Net Loss and Distribution of Cash Flows 100% The Operating Agreement generally provides, subject to certain provisions within the Operating J Agreement, for net income and loss to be allocated and distributed as follows: Net Income a. First, proportionately to each member to the extent of all excess net losses previously allocated to the respective member. } -2- b. Second, proportionately to each member to the extent net losses plus the member's preferred return, on a cumulative basis, have been previously allocated to the respective member_ Preferred return is calculated at 15% per annum, compounded annually, for all members based upon their adjusted capital account balances, as defined. As of December 31, 1999, the unpaid preferred return was as follows: CDMC $1,708,803 s EWRM II $ 277,119 HF Holdings $ 5,442 z fi 6 c } c. Third, proportionately to each member in accordance with the ownership interests of each member as presented above. Net Loss a. First, proportionately to each member to the extent net income (allocated in c. above) has been previously allocated to the member. b. Second, proportionately to each member to the extent of each member's aggregate adjusted net capital contributions. c. Third, proportionately to each member in accordance with the ownership interest of each member as presented above. However, a member cannot be allocated losses in excess of their net capital contributions. The excess losses shall be allocated to the other members in proportion to their combined aggregate adjusted net capital contributions. Distribution of Cash Flows Distributable cash is generally defined in the Operating Agreement as the amount by which cash receipts exceed operating expenses plus any reasonable reserves deemed necessary by the Managing Member for the payment of liabilities. Distributable cash is to be allocated as follows: a. First, proportionately to each member to the extent of each member's unpaid preferred return. b. Second, proportionately to each member to the extent of each member's aggregate adjusted net capital contributions. c. Third, to each member in accordance with the ownership interests of each member as presented above. Capital Contributions Capital contributions, if any are necessary as determined by the Managing Member, are to be contributed 84.0% by CDMC, 15.7% by EWRM II and 0.3% by HF Holdings. At December 31, 1999 and 1998, the net capital accounts of the members are as follows: = Capital Contributions as of December 31, > 1999 1998 CDMC $4,806,021 $4,288,348 EWRM II 848,712 800,561 HF Holdings (3,225) (4,208) $5 $5,QB4,701 ;t Liquidation The Company will continue in perpetuity unless HF Holdings and CDMC elect to dissolve. In liquidation, after payment of all obligations of the Company, distributions to all members will adhere to the guidelines described in Distribution of Cash Flows above. Management The right to manage, control and conduct the business of the Company is vested in HF Holdings. Significant decisions, as defined in the Operating Agreement, must have approval of the Investing Members. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation The accompanying consolidated financial statements include the accounts of EWRT and CME. All significant intercompany transactions and balances have been eliminated in consolidation. Revenue Recognition t: Transportation revenue is recognized when the service is provided. Payments received in advance of the service date are accounted for as advance deposits in the accompanying consolidated balance sheets. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentration of credit risk consist principally of cash and accounts receivable_ The Company's cash is deposited in federally insured bank accounts_ Concentration of credit risk with respect to accounts receivable is limited due to the Company's large number of customers from different geographical regions throughout the continental .t C11 - 3 - C11 Capital Contributions Capital contributions, if any are necessary as determined by the Managing Member, are to be contributed 84.0% by CDMC, 15.7% by EWRM U and 0.3% by HF Holdings. At December 31, 1999 and 1998, the net capital accounts of the members are as follows: r Capital Contributions as of December 31, 1999 1998 T CDMC EWRM H HF Holdings Liquidation $4,806,021 848,712 (3,225) $5 SI S 8 $4,288,348 800,561 (4,208) $5,984,701 The Company will continue in perpetuity unless HF Holdings and CDMC elect to dissolve. In liquidation, after payment of all obligations of the Company, distributions to all members will adhere to the guidelines described in Distribution of Cash Flows above. Management The right to manage, control and conduct the business of the Company is vested in HF Holdings. Significant decisions, as defined in the Operating Agreement, must have approval of the Investing Members. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation The accompanying consolidated financial statements include the accounts of EWRT and CME. All significant intercompany transactions and balances have been eliminated in consolidation. Revenue Recognition 4' Transportation revenue is recognized when the service is provided. Payments received in advance of the service date are accounted for as advance deposits in the accompanying consolidated balance sheets. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentration of credit risk consist principally of cash and accounts receivable_ The Company's cash is deposited in federally insured bank accounts. Concentration of credit risk with respect to accounts receivable is limited due to the Company's large number of customers from different geographical regions throughout the continental t -4- Cl United States. For larger accounts, the Company performs ongoing credit evaluations of these customers and requires a 50% deposit as collateral. Historically, credit losses have not been significant. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Property and Equipment x Property and equipment are stated at cost. Property and equipment and assets recorded under capital leases are depreciated using the straight -line method over a period of 2 -5 years or the lease term (if shorter). Certain assets are depreciated to estimated salvage values. Maintenance and repair costs are charged to operations as incurred. When property is sold or retired, the related costs and accumulated depreciation are removed from the accounts. STB and PUC Certificates of Authori ty The Surface Transportation Board ( "STB ") of the Department of Transportation and the Public Utilities Commission of Colorado ( "PUC ") require all entities who provide public transportation to have authority to operate under the respective jurisdictions of the STB and PUC. The costs to acquire these authorities were capitalized and amortized on a straight -line basis over the estimated useful lives of the authorities. Such costs are fully amortized. The certificates of authority are renewed annually for minimal cost, which is expensed as incurred. t Restricted Certificate of Deposit U The certificate of deposit secures a letter of credit which has been issued on behalf of the Company to secure a lease obligation of the Company. Income Taxes No provision for income taxes is included in the accompanying consolidated financial statements since the taxable income or loss of the Company is the responsibility of the members. Advertisinz r Advertising costs are expensed as incurred and are included in selling and marketing expenses in the accompanying consolidated statements of income. The Company does not incur any direct- response advertising costs. Advertising expense totaled $129,130 and $99,079 for the years ended December 31, 1999 and 1998; respectively. Management 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. a ii 7 3 z C -5- C, Long -Lived Assets The Company evaluates potential impairment of long -lived assets and intangibles whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable through future undiscounted cash flows. Management believes that there has not been any impairment of the Company's long -lived assets and intangibles. Intangibles Intangibles consist of the following as of December 31, 1999 and 1998: Intangibles are amortized over their estimated useful lives. The following is a summary of the estimated useful lives Goodwill 15 years Non- compete agreements 5 years Other intangibles 3 years New Accounting Pronouncements In March 1998, the American Institute of Certified Public Accountants ( "AICPA ") issued Statement of Position ( "SOP ") 98 -1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," which provides guidance on accounting for the cost of such software. SOP 98 -1 is effective for financial statements for fiscal years beginning after December 15, 1998. The adoption of SOP 98 -1 during the current year did not have a material impact on the Company's consolidated financial statements. In April 1998, the A.ICPA issued SOP 98 -5 "Reporting the Cost of Start -up Activities," which provides guidance on the accounting for start -up costs_ SOP 98 -5 requires that the Company expense these costs as incurred_ SOP 98 -5 is effective for fiscal years beginning after December 15, I998_ The adoption of SOP 98 -5 during the current year did not have a material impact on the Company's consolidated financial statements. 1999 1998 Goodwill, net of accumulated amortization of $1,325,908 and $821,655 $6,901,495 $6,433,398 Non - compete Agreements, net of accumulated amortization of $101,666 and $60,000 148,334 140,000 Other intangibles, net of accumulated amortization of $19,626 and $13,629 - 5,997 $?.049.822 $6,579,325 Intangibles are amortized over their estimated useful lives. The following is a summary of the estimated useful lives Goodwill 15 years Non- compete agreements 5 years Other intangibles 3 years New Accounting Pronouncements In March 1998, the American Institute of Certified Public Accountants ( "AICPA ") issued Statement of Position ( "SOP ") 98 -1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," which provides guidance on accounting for the cost of such software. SOP 98 -1 is effective for financial statements for fiscal years beginning after December 15, 1998. The adoption of SOP 98 -1 during the current year did not have a material impact on the Company's consolidated financial statements. In April 1998, the A.ICPA issued SOP 98 -5 "Reporting the Cost of Start -up Activities," which provides guidance on the accounting for start -up costs_ SOP 98 -5 requires that the Company expense these costs as incurred_ SOP 98 -5 is effective for fiscal years beginning after December 15, I998_ The adoption of SOP 98 -5 during the current year did not have a material impact on the Company's consolidated financial statements. -6- C', 3. BUSINESS COMBINATION: On November 5, 1999, the Company entered into an asset purchase agreement with Eagle Transportation Services, Inc., a Colorado corporation ( "ETS "). ETS provides ground transportation service from the airports in Denver and Eagle, Colorado to the ski resorts in the Vail Valley. The aggregate consideration paid by the Company was $1,272,350, paid as follows: cash of $772,350 and promissory notes of $500,000. The acquisition was accounted for under the purchase method of accounting, and accordingly, the assets have been included in the consolidated financial statements at fair value. The portion of the purchase price in excess of the fair values of the tangible assets of ETS was allocated to a non - compete agreement and goodwill with allocated values of $50,000 and $822,350, respectively, and are being amortized on a straight -line basis over 5 and 15 year periods, respectively. ETS's only tangible assets were vehicles which were valued at $400,000. No working capital was acquired in the purchase. Income generated from the vehicles purchased from ETS has been included in the accompanying financial statements since the date of the acquisition.` k 4. PROPERTY AND EOUIPMENT: Property and equipment consist of the following as of December 31, 1999 and 1998: 1999 1998 Transportation vehicles and equipment $ 1,197,739 $ 722,263 Transportation vehicles and equipment under r capital lease 98,097 351,629 Computer and office equipment 480,964 269,142 Computer and office equipment under capital lease 255,964 369,237 Furniture and fixtures 174,123 185,373 Furniture and fixtures under capital lease - 48,216 2,206,887 1,945,860 Less- Accumulated depreciation and amortization (1,093,782) (1,157,238) $ 1. OS $ 788,622 Accumulated amortization of equipment under capital Ieases was $209,538 and $461,794 as of December 31, 1999 and 1998, respectively. 1� r T 1 -7- 1 5. DEBT AND CAPITAL LEASE OBLIGATIONS: Debt Debt consists of the following as of December 31, 1999 and 1998: Notes payable to three financial institutions, interest rates ranging from 9.26% to 13.91 %, maturing from October 2000 to December 2004, secured by vehicles with a net book value of $73,961, and equipment with a net book value of $21,676 at December 31, 1999 Bankruptcy debt of Airport Shuttle Corporation assumed by the Company, payable to various creditors, interest from 60K to 8.25 %. principal and interest payments due monthly or quarterly through April 1999, unsecured Installment notes payable to two banks, interest rates ranging from 9.75% to 10% payable monthly, maturing on various dates from April 2000 to November 2002, secured by vehicles with a net book value of approximately $425,000 Notes payable to Colorado Mountain Express Investors, Inc., ( "CMET') interest rates ranging from 8% to 10 %, principal and interest payments due annually, maturing in January 2001 and April 2001, unsecured Note payable to Airport Shuttle Corporation, interest at 10 %, principal and interest payments due annually, maturing in January 2002, unsecured Notes payable to East West Resort Transportation H, LLC ( "EWRT II ") and EWRM II, interest at 15 %, principal due April 2000 and 1999, respectively, unsecured (related party) Notes payable to Eagle Transportation Services, Inc., interest at I0 %, maturing November 2000 and November 2002, principal and interest payments due annually, unsecured Other indebtedness, interest at 6 %, principal and interest payments monthly, maturing in July 1999, unsecured Less- Current maturities innn 1998 110,615 $ 202.665 140,577 509,257 430,750 759,760 1,044,686 5I0,000 680,000 440,929 493,349 500,000 _ 19,743 2,830,561 3,011,770 (1,687,155) (1,789,447) $_1.143.406 $ =L22 The future minimum debt principal payments of the Company are as follows: Year ending December 31- 2000 $1,687,155 2001 650,500 2002 461,105 2003 15,130 E 2004 16.671 The Company's bank debt is subject to non - financial covenants, the most restrictive of which is no merger or change of ownership is allowed without prior bank approval. Further, the banks generally have ;e= the ability to call the debt if in their opinion a material adverse change in the Company's financial position has occurred. Capital Lease Obligations The Company has entered into various capital lease obligations for vehicles, equipment and furniture. l The obligations bear interest at rates ranging from 4.5% to 15.7% per annum and mature at various dates from July 2000 to February 2004. The lease obligations are collateralized by the related vehicles, >It equipment and furniture which have a net book value of approximately $145,000 at December 31, 1999. At December 31, 1999, future minimum payments required under capital lease obligations are as follows_ Year ending December 31- 2000 $ 146,966 2001 21,735 2002 14,087 2003 11,644 2004 1,941 Less: Interest 196,373 Future minimum principal payments 190,969 = Less: Current portion (145,419) ` Long -term portion of capital lease obligations $—A5,55 t A number of capital leases have guaranteed residual provisions or balloon payments which the Company believes will be offset by the sale proceeds of the related equipment. The aggregate maturities of these residual provisions and balloon payments are $18,417, all of which mature in 2000. to 6. COMMITMENTS AND CONTINGENCIES: Operating Lease Commitments The Company leases various equipment, employee housing and office space under noncancelable operating leases. The future minimum rental payments required under these leases along with future sub- lease proceeds are as follows: Lease Sub -Lease Net Obligations Proceeds Obligation Year ending December 31- 2000 11,676,866 $141,048 $1,535,818 2001 I,000,264 - 1,000,264 2002 595,697 - 595,697 2003 555,545 - 555,545 2004 572,212 - 572,212 Thereafter 2,457,286 - 2,457,286 p S61V 87 $I4.04$ $6116,82 Total rent expense under these leases for the years ended December 31, 1999 and 1998 was approximately $2,208,305 and $1,900,000, respectively. Sub -lease proceeds for the years ended n December 31, 1999 and 1998 were approximately $520,999 and $162,000, respectively. A number of operating lease agreements have guaranteed residual provisions which the Company believes will be offset by the sale proceeds of the related equipment when sold by the lessor. The aggregate maturities of these residual provisions are: Year ending December 31- 2000 $108,872 2001 $ 1,975 2002 $161,101 401 (k) Savings Plan The Company has a 401(k) savings plan (the "Plan ") for eligible employees. To become eligible, employees must reach the age of 21 and have worked for the Company for a minimum of one calendar year (defined as 1,000 hours)_ Once becoming eligible, employees remain eligible as long as they continue to work for the Company, even if their annual hours later fall below 1,000. Eligible employees may contribute up to 20% of their wages to the Plan, subject to certain limitations described in the Plan. The Company will match 5% of the employee's contributions up to a total of 1.25% of the employee's salary. Employee contributions immediately vest to the employee and the Company's contributions to the Plan on behalf of the employees vest at 25% per year over a four year period beginning the second year after employment has begun" The Company's expense related to the Plan was 122.086 and $15,534 for the years ended December 31, 1999 and 1998, respectively. 10 - "°I Letter of Credit The Company has obtained a letter of credit ( "LOC ") totaling approximately $13,000 to secure a lease obligation. The LOC is secured by a certificate of deposit. Lertal Actions S The Company is party to various legal actions and claims related to its business and is vigorously defending itself. In management's opinion, the ultimate settlement of these actions will have no material ? effect on the Company's consolidated financial position or their consolidated results of operations. 7. RELATED PARTY TRANSACTIONS: On August 7, 1997, EWRT R loaned the Company $175,000. On October 20, 1997, an additional $100,000 was loaned to the Company. The loan bears interest at 15% per annum. Accrued interest through December 31, 1998 was added to the principal balance on January 1, 1999. As of December 31, 1999, the loan has a principal amount outstanding of $ 165,929. The Company accrued interest of $10,502 as of December 31, 1999. On April 1, 1999, the maturity of the loan was amended to extend the maturity date to April 1, 2000. On October 20, 1997, EWRM II loaned CME $25,000. Subsequent loans of $100,000 and $75,000 occurred on October 31, 1997 and November 14, 1997, respectively. The loans bear interest at 15% per It annum. Accrued interest through December 31, 1998 was added to the principal balance on January 1, 1999. The loan was repaid during 1999 per the terms of the loan agreement On September 30, 1999 EWRT II loaned the Company $275,000. The loan bears interest at 15% per ` annum. The Company has accrued interest of $10,510 as of December 31, 1999. The loan matures in L April 2000. The Company pays certain expenses on behalf of EWRT II which are subsequently reimbursed. As of December 31, 1999 and 1998, the Company has paid approximately $344,200 and $199,000 on behalf of EWRT II. As of December 31, 1999, the Company has accrued $53,600 for amounts due from EWRT II which are included in accounts receivable other in the accompanying consolidated balance sheets. During 1999 the Company entered into a lease agreement with Edwards Station, LLC for the Company's office and vehicle parking facilities. The terms of the lease agreement requires the Company to maintain a $50,000 security deposit and make monthly payments of $42,367. The lease term is 10 years through 2009 with an option for an additional 5 year term. Lease expense as of December 31, 1999 was $50,567 which is included in general and administrative expenses in the accompanying consolidated statements of income_ C <_ .a_1`11- 1F!ANDERSEN REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Members of East West Resort Transportation, LLC: We have audited the accompanying consolidated balance sheets of EAST WEST RESORT TRANSPORTATION, LLC (a Delaware limited liability company) AND SUBSIDIARY as of December 31, 2000 and 1999, and the related consolidated statements of income, members' 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 auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of East West Resort Transportation, LLC and subsidiary as of December 31, 2000 and 1999, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. e�2a4L, J:�W/e44js4t L L P Denver, Colorado, February 9, 2000. WIS CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31 2000 AND 1999 ASSETS CURRENT ASSETS: Cash and cash equivalents Accounts receivable - Trade, net of allowance for doubtful accounts of $12,000 and $12,000, respectively Other Prepaid expenses and other Total current assets PROPERTY AND EQUIPMENT, net RESTRICTED CERTIFICATE OF DEPOSIT INTANGIBLES, net Total assets LIABILITIES AND MEMBERS' EQUITY CURRENT LIABILITIES: Accounts payable Accrued liabilities Accrued interest - related parties Advance deposits Current portion of long -term debt Related party debt Current portion of capital lease obligations Total current liabilities LONG -TERM DEBT LONG -TERM PORTION OF CAPITAL LEASE OBLIGATIONS COMMITMENTS AND CONTINGENCIES (Note 6) MEMBERS' EQUITY: Capital contributions Accumulated deficit Total members' equity Total liabilities and members' equity S 2000 1999 $ 769,075 $ 602,950 517,093 319,299 148,131 163,948 386,636 308,595 1,820,935 1,394,792 1,017,524 1,113,105 - 16,551 6,449,889 7,049,829 $9,288,348 $9 574.277 $ 327,133 $ 387,718 770,962 721,275 69,725 21,012 844,996 720,141 776,703 1,246,226 464,314 440,929 24,253 145,419 3,278,086 3,682,720 696,596 1,143,406 24,835 45,550 5,648,945 5,651,508 (360,114) (948,907) 5,288,831 4,702,601 $9 288 348 $9 5 4 277 The accompanying notes to consolidated financial statements are an integral part of these consolidated balance sheets. C r EAST WEST RESORT TRANSPORTATION LLC AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31 2000 AND 1999 Total other income (expense) 23,113 (286,841) NET INCOME $ 588,793 $ 173,427 The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. 2000 1999 TRANSPORTATION REVENUE $11,524,846 $10,301,692 OPERATING EXPENSES: Transportation operating costs 7,525,773 6,915,336 Selling and marketing expenses 231,405 210,710 General and administrative expenses 2,024,628 1,728,904 Depreciation and amortization 1,177,360 986,474 Total operating expenses 10,959,166 9,841,424 OPERATING INCOME 565,680 _ 460,268 OTHER INCOME (EXPENSE): Gain (loss) on sale of assets 289,855 (3,458) Interest income 24,924 29,201 Interest expense (187,315) (221,056) Interest expense — related parties (72,108) (57,303) Other, net (32,243) (34,225) Total other income (expense) 23,113 (286,841) NET INCOME $ 588,793 $ 173,427 The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. EAST WEST RESORT TRANSPORTATION LLC AND SUBSIDIARY CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY FOR THE YEARS ENDED DECEMBER 31 2000 AND 1999 BALANCES, December 31, 1998 Capital contributions Distributions Net income BALANCES, December 31, 1999 Distributions Net income BALANCES, December 31, 2000 Members' Equity CDMC EWRM II HF Holdings Total $3,647,285 $319,290 $(4,208) $3,962,367 578,783 108,039 2,205 689,027 (61,110) (59,888) (1,222) (122,220) 105,678 67,749 - 173,427 4,270,636 435,190 (3,225) 4,702,601 (1,282) (1,255) (26) (2,563) 358,782 230,011 - 588,793 $4,628.136 $ $ (3 251) $5,288,831 The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 2000 AND 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities - Depreciation Amortization Noncash interest expense (Gain) loss on sale of assets Change in operating assets and liabilities - Accounts receivable Prepaid expenses and other assets Accounts payable and accrued liabilities Advanced deposits Net cash provided by operating activities 2000 1999 $ 588,793 $ 173,427 577,420 599,940 72,098 (289,855) (181,977) (61,490) (10,898) 124,855 1,418,886 CASH FLOWS FROM INVESTING ACTIVITIES: �~ Acquisition of property and equipment (674,184) Proceeds from sale of property and equipment 482,200 Additional acquisition cost paid to CMEII - Acquisition of Eagle Transportation Services, Inc., net of cash acquired- Net cash (used in) provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes payable Payments on notes payable Payments on capital lease obligations Capital contributions Distributions to members Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, beginning of year CASH AND CASH EQUIVALENTS, end of year SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Increase in related party debt resulting from addition of accrued interest into principal Capital lease obligations incurred upon the acquisition of equipment Issuance of note payable to CMEH Issuance of note payable in connection with the acquisition of ETS (191,984) 484,665 (1,400,998) (141,881) (2,563) (1,060,777) 166,125 602,950 434,558 551,916 21,012 3,458 12,253 241,031 240,479 (15,685) 1,662,449 (393,229) 114,265 (50,000) (772,350) (1,101,314) 718,256 (1,573,468) (274,734) 689,027 (122,220) (563,139) (2,004) 604,954 $--.769,075 $ 6 2 95 $ 214 53 $ 25 49 $ - $ 83.535 $ - $ 1_ 0_ The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. C %6j EAST WEST RESORT TRANSPORTATION LLC AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31 2000 AND 1999 1. ORGANIZATION AND BUSINESS: East West Resort Transportation, LLC ( "EWRT "), a Delaware limited liability company, was formed on July 31, 1996 for the purpose of engaging in the business of performing ground transportation services directly or through investments in other entities. EWRT is the sole member of Colorado Mountain Express, LLC ( "CME "), a Delaware limited liability company, formerly known as Colorado Mountain Express (the "Partnership "), which provides ground transportation, primarily to skiers, between airports in Denver and Eagle, Colorado and the Vail, Beaver Creek and Aspen resorts. EWRT and its subsidiary CME are collectively referred to as the "Company ". The majority of the Company's revenue is earned during the ski season of December through April. The Operating Agreement for the Company is dated April 8, 1997 and the Company will continue in perpetuity. Ownership of the Company At December 31, 2000, ownership of the Company was as follows: Crescent Development Management Corp. ( "CDMC ") (Investing Member) 50% East West Resorts Management II, LLC ( "EWRM II ") (Investing Member) 49% H.F. Holding Corp. ( "HF Holdings ") (Managing Member) 1% ion Allocation of Net Income and Net Loss and Distribution of Cash Flows The Operating Agreement generally provides, subject to certain provisions within the Operating Agreement, for net income and loss to be allocated and distributed as follows: Net Income a. First, proportionately to each member to the extent of all excess net losses previously allocated to the respective member. C CI b. Second, proportionately to each member to the extent net losses plus the member's preferred return, on a cumulative basis, have been previously allocated to the respective member. Preferred return is calculated at 15% per annum, compounded annually, for all members based upon their adjusted capital account balances, as defined. As of December 31, 2000, the unpaid preferred return was as follows: CDMC EWRM II HF Holdings $2,728,086 $ 458,300 $ 9,146 c. Third, proportionately to each member in accordance with the ownership interests of each member as presented above. Net Loss a. First, proportionately to each member to the extent net income allocated in c. above has been previously allocated to the member. b. Second, proportionately to each member to the extent net income allocated in b. above has been previously allocated to the member. c. Third, proportionately to each member in accordance with the ownership interest of each member as presented above. However, a member cannot be allocated losses in excess of their net capital contributions. The excess losses shall be allocated to the other members in proportion to their combined aggregate adjusted net capital contributions. Distribution of Cash Flows Distributable cash is generally defined in the Operating Agreement as the amount by which cash receipts exceed operating expenses plus any reasonable reserves deemed necessary by the Managing Member for the payment of liabilities. Distributable cash is to be allocated as follows: a. First, proportionately to each member to the extent of each member's unpaid preferred return. b. Second, proportionately to each member to the extent of each member's aggregate adjusted net capital contributions. Third, to each member in accordance with the ownership interests of each member as presented above. Additionally, the Operating Agreement allows for tax distributions to be made equal to each members presumed tax liability. Since EWRT's inception, all distributions have been tax distributions. Capital Contributions -3- ,`i Capital contributions, if any are necessary as determined by the Managing Member, are to be contributed 84.0% by CDMC, 15.7% by EWRM II and 0.3% by HF Holdings. At December 31, 2000 and 1999, the capital contributions of the members are as follows: CDMC EWRM II HF Holdings Liquidation Capital Contributions As of December 31, 2000 1999 $4,804,739 $4,806,021 847,457 848,712 (3,251) (3,225) $5-64&9-4-5 $5 651.508 The Company will continue in perpetuity unless HF Holdings and CDMC elect to dissolve. In liquidation, after payment of all obligations of the Company, distributions to all members will adhere to the guidelines described in Distribution of Cash Flows above. Management The right to manage, control and conduct the business of the Company is vested in HF Holdings. Significant decisions, as defined in the Operating Agreement, must have approval of the Investing Members. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the accounts of EWRT and CME. All significant intercompany transactions and balances have been eliminated in consolidation. Revenue Recognition Transportation revenue is recognized when the service is provided. Payments received in advance of the service date are accounted for as advance deposits in the accompanying consolidated balance sheets. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentration of credit risk consist principally of cash and accounts receivable. The Company's cash is deposited in federally insured bank accounts. Concentration of credit risk with respect to accounts receivable is limited due to the Company's large number of customers from different geographical regions throughout the continental -4- United States. For larger accounts, the Company performs ongoing credit evaluations of these customers and requires a 50% deposit as collateral. Historically, credit losses have not been significant. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Property and Equipment Property and equipment are stated at cost. Property and equipment and assets recorded under capital leases are depreciated using the straight -line method over a period of 2 -5 years or the lease term (if shorter). Certain assets are depreciated to estimated salvage values. Maintenance and repair costs are charged to operations as incurred. When property is sold or retired, the related costs and accumulated depreciation are removed from the accounts. STB and PUC Certificates of Authority The Surface Transportation Board ( "STB ") of the Department of Transportation and the Public Utilities Commission of Colorado ( "PUC ") require all entities who provide public transportation to have authority to operate under the respective jurisdictions of the STB and PUC. The costs to acquire these authorities were capitalized and amortized on a straight -line basis over the estimated useful lives of the authorities. Such costs are fully amortized. The certificates of authority are renewed annually for minimal cost, which is expensed as incurred. Income Taxes No provision for income taxes is included in the accompanying consolidated financial statements since the taxable income or loss of the Company is the responsibility of the members. Advertising Advertising costs are expensed as incurred and are included in selling and marketing expenses in the accompanying consolidated statements of income. The Company does not incur any direct - response advertising costs. Advertising expense totaled $124,118 and $129,130 for the years ended December 31, 2000 and 1999, respectively. Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. Long -Lived Assets The Company evaluates potential impairment of long -lived assets and intangibles whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable through future undiscounted cash flows. Management believes that there has not been any impairment of the Company's long -lived assets and intangibles. Intangibles Intangibles consist of the following as of December 31, 2000 and 1999: Goodwill, net of accumulated amortization of $1,875,848 and $1,325,908 Non - compete Agreements, net of accumulated amortization of $151,666 and $101,666 2000 1999 $6,351,555 $6,901,495 98,334 148,334 $ 44 9 $7 4 82 Intangibles are amortized over their estimated useful lives. The following is a summary of the estimated useful lives: Goodwill 15 years Non - compete agreements 5 years BUSINESS COMBINATION: On November 5, 1999, the Company entered into an asset purchase agreement with Eagle Transportation Services, Inc., a Colorado corporation ( "ETS "). ETS provides ground transportation service from the airports in Denver and Eagle, Colorado to the ski resorts in the Vail Valley. The aggregate consideration paid by the Company was $1,272,350, paid as follows: cash of $772,350 and promissory notes of $500,000. The acquisition was accounted for under the purchase method of accounting, and accordingly, the assets have been included in the consolidated financial statements at fair value. The portion of the purchase price in excess of the fair values of the tangible assets of ETS was allocated to a non - compete agreement and goodwill with allocated values of $50,000 and $822,350, respectively, and are being amortized on a straight -line basis over 5 and 15 year periods, respectively. ETS's only tangible assets were vehicles which were valued at $400,000. No working capital was acquired in the purchase. Income generated from the vehicles purchased from ETS has been included in the accompanying financial statements since the date of the acquisition. 4. PROPERTY AND EQUIPMENT: Property and equipment consist of the following as of December 31, 2000 and 1999: Transportation vehicles and equipment Transportation vehicles and equipment under capital lease Computer and office equipment Computer and office equipment under capital lease Furniture and fixtures Furniture and fixtures under capital lease Less- Accumulated depreciation and amortization 2000 1999 $ 1,487,259 $ 1,197,739 47,419 98,097 766,136 480,964 54,039 255,964 116,924 174,123 70,603 - 2,542,380 2,206,887 (1,524,856) (1,093,782) $ 1.017.524 $ 1.113.105 Accumulated amortization of equipment under capital leases was $68,807 and $209,538 as of December 31, 2000 and 1999, respectively. 5. DEBT AND CAPITAL LEASE OBLIGATIONS• Debt Debt consists of the following as of December 31, 2000 and 1999: Note payable to a financial institution, interest rate at 9.26 %, maturing on May 1, 2001, secured by vehicle with a net book value of $27,200 Installment notes payable to two banks, interest rates ranging from 9.75% to 10% payable monthly, maturing on various dates from December 2001 to December 2004, secured by vehicles and furniture with a net book value of approximately $128,782 and $55,306, respectively Notes payable to Colorado Mountain Express Investors, Inc., ( "CMEII") interest rates ranging from 8% to 10 %, principal and interest payments due annually, maturing in January 2001 and April 2001, unsecured Note payable to Airport Shuttle Corporation, interest at 10 %, principal and interest payments due annually, maturing in January 2002, unsecured 2000 1999 $ 43,821 $ 110,615 454,952 509,257 284,526 759,760 340,000 510,000 -7- Cj Related party notes payable to East West Resort Transportation 11, LLC ( "EWRT H "), interest at 15 %, principal due April 2001, unsecured Note payable to Eagle Transportation Services, Inc., interest at 10 %, maturing November 2002, principal and interest payments due annually, unsecured Less- Current maturities The future minimum debt principal payments of the Company are as follows: Year ending December 31- 2001 2002 2003 2004 2000 1999 $ 464,314 $ 440,929 350,000 500,000 1,937,613 2,830,561 (1,241,017) (1,687,155) $ 696.596 $=1.143,406 $1,241,017 591,715 83,194 21,687 $1 37 61 The Company's bank debt is subject to non - financial covenants, the most restrictive of which is no merger or change of ownership is allowed without prior bank approval. Further, the banks generally have the ability to call the debt if, in their opinion, a material adverse change in the Company's financial position has occurred. Capital Lease Obligations The Company has entered into various capital lease obligations for equipment and furniture. The obligations bear interest at rates ranging from 4.5% to 10.6% per annum and mature at various dates from February 2001 to February 2004. The lease obligations are collateralized by the related vehicles, equipment and furniture which have a net book value of approximately $47,948 at December 31, 2000. r -8- At December 31, 2000, future minimum payments required under capital lease obligations are as follows: Year ending December 31- Net 2001 $ 27,540 2002 13,598 2003 11,644 2004 1,941 54,723 Less: Interest (5,635) Future minimum principal payments 49,088 Less: Current portion (24,253) Long -term portion of capital lease obligations $ 24 6. COMMITMENTS AND CONTINGENCIES: Operating Lease Commitments The Company leases various equipment, employee housing and office space under noncancelable operating leases. The future minimum rental payments required under these leases along with future sub- lease proceeds are as follows: Year ending December 31- 2001 2002 2003 2004 2005 Thereafter Lease Sub -Lease Net Obligations Proceeds Obligation $1,750,250 $189,379 $1,560,871 760,066 - 760,066 656,010 - 656,010 627,525 - 627,525 646,350 - 646,350 2,649,218 - 2,649,218 $7,089,419 $1 9 379 $6 9 040 Total rent expense under these leases for the years ended December 31, 2000 and 1999 was approximately $2,480,231 and $2,208,305, respectively. Sub -lease proceeds for the years ended December 31, 2000 and 1999 were approximately $618,016 and $520,999, respectively. < 9 l A number of operating lease agreements have guaranteed residual provisions which the Company believes will be offset by the sale proceeds of the related equipment when sold by the lessor. The aggregate maturities of these residual provisions are: Year ending December 31- 2002 $161,101 2003 $ 40,742 401(k) Savings Plan The Company has a 401(k) savings plan (the "Plan ") for eligible employees. To become eligible, employees must reach the age of 21 and have worked for the Company for a minimum of one calendar year (defined as 1,000 hours). Once becoming eligible, employees remain eligible as long as they continue to work for the Company, even if their annual hours later fall below 1,000. Eligible employees may contribute up to 20% of their wages to the Plan, subject to certain limitations described in the Plan. The Company will match 5% of the employee's contributions up to a total of 1.25% of the employee's salary. The Company's contributions to the Plan on behalf of the employees vest at 25% per year over a four year period beginning the second year after employment has begun. The Company's expense related to the Plan was $23,422 and $22,086 for the years ended December 31, 2000 and 1999, respectively. RELATED PARTY TRANSACTIONS• EWRT II has loaned the Company an aggregate of $550,000. The loans bear interest at 15% per annum. As of December 31, 2000 and 1999, $464,314 and $440,929 are outstanding under these loans, respectively. The Company has accrued interest of approximately $70,000 as of December 31, 2000, related to notes payable to EWRT H. The Company pays certain expenses on behalf of EWRT H which are subsequently reimbursed. As of December 31, 2000 and 1999, the Company has paid approximately $438,000 and $344,200, respectively, on behalf of EWRT Il. As of December 31, 2000 and 1999, the Company has accrued approximately $51,000 and $53,600, respectively, for amounts due from EWRT H which are included in accounts receivable other in the accompanying consolidated balance sheets. During 1999, the Company entered into a lease agreement with Edwards Station, LLC ( "Edwards Station ") for the Company's office and vehicle parking facilities. The terms of the lease agreement requires the Company to maintain a $50,000 security deposit and make monthly payments of $42,367. The lease term is 10 years through 2009 with an option for an additional 5 year term. Lease expense as of December 31, 2000 was approximately $564,000 which is included in general and administrative expenses in the accompanying consolidated statements of income. Additionally, as of December 31, 2000, the Company has a receivable from Edwards Station for employee wages paid by the Company on behalf of Edwards Station for approximately $47,000, which is included in other accounts receivable in the accompanying consolidated balance sheets. The Company pays an annual management fee to East West Partners, an affiliate of the members. The Company paid management fees of approximately $108,000 and $104,000 during the years ended December 31, 2000 and 1999, respectively.