10-0105_AMERICAN TRAFFIC SOULUTIONS, INC_D17_Agenda Report1/5/2010
AGENDA REPORT D17
TO: Joe Tait, City Manager
FROM: Michael Cantor, Senior Management Analyst
SUBJECT: Consideration of an Assumption Agreement Relating to Traffic Signal
Violation Video -Enforcement System Lease and Services Agreement
(American Traffic Solutions, Inc.)
RECOMMENDATION:
By motion, approve the Assumption Agreement relating to Traffic Signal Violation
Video -Enforcement System Lease and Services Agreement with American Traffic
Solutions, Inc., and direct the City Manager to execute the Assumption Agreement.
SITUATION:
On June 29, 2007, the City Council approved an agreement with Nestor Traffic
Systems, Inc. entitled Traffic Signal Violation Video -Enforcement System Lease and
Services Agreement for the installation, and assistance in administration and operation
of a traffic signal violation detection system.
On June 4, 2009, Nestor Traffic Systems, Inc. entered into receivership proceedings.
On September 10, 2009, American Traffic Solutions, Inc. (ATS) acquired all of Nestor's
business relating to the Agreement.
ATS serves more than 200 communities throughout the United States and Canada with
more than 2,000 intersection safety and speed cameras under contract. Their clients
are in 17 states, which include the following large cities: New York, Philadelphia,
Washington D.C., St, Louis, Houston, Seattle, Los Angeles and San Diego.
Headquartered in Scottsdale, Arizona, ATS is an American owned, privately -held
corporation. ATS has been expanding its business and physical offices to support the
needs of its client partners. ATS has a multi-year, multi-million dollar line of credit from
Harris Bank as well as alternative equipment financing facilities with Bank of America.
In the third quarter of 2008, ATS completed a private equity financing with the $74
billion company Goldman Sachs, making them a minority investor in the company. The
purpose of this transaction was to provide additional growth capital for ATS' rapidly
expanding business, as well as to gain a value-added financial partner. Their financial
experience includes a consistent trend of increasing revenue and profitability.
Agenda Report
Page 2
January 05, 2010
The Assumption Agreement (Attachment 1) has been prepared by the City Attorney,
and signed by representatives of ATS.
Staff requests that the City Council formally consider the approval of the Assumption
Agreement.
COMMISSION/BOARD REVIEW AND RECOMMENDATIONS:
Not applicable.
FINANCIAL CONSIDERATIONS:
The Assumption Agreement does not result in any change from costs already budgeted
for services to be performed under the original agreement.
NOTIFICATION:
American Traffic Solutions, Inc.
RECOMMENDATION:
By motion, approve the Assumption Agreement relating to Traffic Signal Violation
Video -Enforcement System Lease and Services Agreement with American Traffic
Solutions, Inc., and direct the City Manager to execute the Assumption Agreement.
Respectfully submitted,
--
Michael Cantor
Senior Management Analyst
Attachment:
1. Assumption Agreement
ASSUMPTION AGREEMENT
RELATING TO
TRAFFIC SIGNAL VIOLATION VIDEO -ENFORCEMENT SYSTEM LEASE
SERVICES AGREEMENT
This Assumption Agreement is entered into effective the 71h day of October, 2009,
by and among the CITY OF SAN JUAN CAPISTRANO, a California municipal
corporation ("City"), and AMERICAN TRAFFIC SOLUTIONS, INC., a Kansas
Corporation ("ATS").
RECITALS
A. City entered into an agreement dated June 29, 2007 with Nestor Traffic
Systems, Inc., a Delaware Corporation ("Nestor"), entitled Traffic Signal Violation Video -
Enforcement System tease & Services Agreement (the "Agreement"), for the installation,
and assistance in administration and operation of a traffic signal violation detection
system ("System") .
B. On February 2, 2009, City and Nestor entered into an agreement
amendment, which suspended Section 4.6 of the Agreement pertaining to cost neutrality
consistent with the Judgment on Appeal from the Superior Court, County of Orange,
issued November 21, 2008 in Case No. 30-2008-93057 involving the City of Fullerton's
automated enforcement system (the "Amendment")
C. On June 4, 2009, Nestor entered into receivership proceedings in the State
of Rhode Island.
D. On September 10, 2009, ATS acquired all of Nestor's business relating to
the Agreement and System.
.......................
E. Section 9.1 of the Agreement authorizes Nestor to assign, and a third party
to acquire, all or substantially all of Nestor's business relating to the System.
F. Pursuant to the Agreement, ATS wishes to assume all rights,
responsibilities and liabilities in the Agreement as amended pursuant to the Amendment.
G. Accordingly, City and ATS desire to clarify, affirm, and acknowledge their
respective rights and obligations under the terms of the Agreement as amended.
ATTACHMENT
AGREEMENT
1. ATS hereby assumes, and City hereby acknowledges ATS' assumption of,
all of the rights and obligations of Nestor which ATS specifically accepted/acquired in
ATS' acquisition of Nestor (but excluding those which ATS did not accept) pursuant to the
terms of the Agreement as amended by the Amendment. ATS hereby expressly and
unconditionally agrees to perform and fulfill, from and after the effective date, all the
duties, terms, covenants, conditions and obligations required to be fulfilled and performed
by Nestor under the Agreement as amended by the Amendment.
2. City hereby consents to ATS' assumption of the Agreement, provided that
said consent shall not be construed to release, waive, or otherwise compromise
obligations under the Agreement and applicable law which ATS specifically
accepted/acquired in ATS' acquisition of Nestor (but excluding those which ATS did not
accept), or any violations thereof, whether known or unknown by City, or for any
subsequent performance of the Agreement by ATS.
3. Except as modified in this Assumption Agreement, the terms and conditions of
the Agreement shall remain in full force and effect.
4. This Assumption Agreement may be executed in multiple counterparts (each of
which is to be deemed an original for all purposes).
IN WITNESS WHEREOF, the parties have executed and delivered this
Assumption Agreement as of the day and year first above written.
CITY OF SAN JUAN CAPISTRANO AMERICAN TRAFFIC SOLUTIONS, INC.
Joe Tait, City Manager
Attest:
Maria Morris, City Clerk
Approved as to form:
2
Adam Tuton, Exec. VP and COO
Attest:
Secretary