Transport Labor Contract/Leasing, Inc. & Subsidiaries - Page 4

                                        - 4 -                                         
          company clients were paying substantial amounts to obtain such              
          insurance.  Generally, the premium rates for workers’ compensa-             
          tion insurance on truck drivers were significantly higher than              
          premium rates for most other occupations.  As a result, workers’            
          compensation insurance was a major expense for trucking compa-              
          nies.  In soliciting a trucking company’s business, TLC’s sales             
          representatives explained that TLC was able to obtain workers’              
          compensation insurance in the private market at comparatively low           
          premium rates because of the large number of driver-employees on            
          whom it obtained such insurance.                                            
               When TLC was successful in attracting a trucking company as            
          a client, TLC and that trucking company entered into a contract             
          entitled “TLC Exclusive Lease Agreement” (exclusive lease agree-            
          ment), which set forth the agreement between them with respect to           
          the leasing by such trucking company of driver-employees from               
          TLC.6  When each trucking company entered into an exclusive lease           
          agreement with TLC, such trucking company terminated the employ-            
          ment arrangement that it previously had with all of its truck               

               6Each exclusive lease agreement was a standard TLC form                
          contract.  There were no agreements between TLC and any trucking            
          company client regarding TLC’s leasing driver-employees to such             
          trucking company client other than the agreement set forth in the           
          exclusive lease agreement.  The material provisions of each                 
          exclusive lease agreement remained unchanged throughout the                 
          taxable years at issue except for the factor (discussed below)              
          used to compute the lease fee that each trucking company client             
          owed TLC.                                                                   

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011