BRAND MANAGER AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into this 14 day of September,
1997, by and between DISPATCH MANAGEMENT SERVICES CORP., a Delaware corporation
("DMS Corp."), and Xxxxx Xxxxxxxx, an individual residing at 0000 Xxxx 0xx
Xxxxxx, Xxxxx, Xxxxxxx, 00000 (the "Brand Manager").
WITNESSETH:
WHEREAS, DMS Corp. owns companies providing time-critical and related
services;
WHEREAS, DMS Corp. wishes to retain the services of the Brand Manager to
manage the business owned by DMS Corp. known as American Eagle Express -
Minneapolis (the "Brand") as an independent entity;
WHEREAS, the Brand Manager wishes to be retained by DMS Corp. to manage
the Brand as an independent entity; and
WHEREAS, the parties hereto wish to set forth the terms and conditions
pursuant to which the Brand Manager will manage the Brand.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed as follows:
1. Services. DMS Corp. hereby retains the Brand Manager, as an independent
entity, to manage the Brand, and the Brand Manager hereby accepts such
engagement, all upon the terms and conditions herein provided. During the term
of this Agreement, the Brand Manager covenants to manage the Brand in a
reasonable and judicious manner, using his best efforts to maximize Brand
Contribution (defined as total revenue less total expenses, before taxes, in
accordance with U.S. GAAP except as otherwise set forth in Exhibit 1 attached
hereto) and revenue of the Brand. For purposes of clarification, except where
otherwise provided in this Agreement, DMS Corp. will not have the right to
direct or control the Brand Manager as to the details of when, where and how his
responsibilities under this Agreement are to be performed.
2. Conduct of Business Through DMS Corp.
Notwithstanding anything in this Agreement to the contrary, the
Brand Manager covenants and agrees that all of the Brand's business (including
but not limited to dispatching services, other back-office functions, and road
management services) shall be conducted, processed and serviced through DMS
Corp., its affiliates, or an entity designated by DMS Corp., and the failure to
do so shall be grounds for DMS Corp. to terminate this Agreement immediately.
The Brand Manager also covenants and agrees that the Brand will be managed
pursuant to the "DMS Model" (as defined below), subject to a transition period
as mutually determined by the Brand Manager and DMS Corp. For purposes of this
Agreement, the "DMS Model" shall mean the use of DMS Corp.'s licensed software;
consolidation of back-office operations through a DMS Center; standardized
delivery zones, costing, services and data entry; profit-incentivized workers;
and other methods of doing business in effect from time to time which are
intended to be consistent with the industry's then-current best practices as
determined by DMS Corp.
3. Revenue Maintenance; Brand Contribution Percentage Maintenance.
(a) Revenue Maintenance. The Brand Manager shall be responsible for
maintaining and growing the revenue base of the Brand. The Brand Manager must
maintain a revenue base of at least $6,000,000 for the Brand during any twelve
month calendar period (January 1-December 31). For purposes of this paragraph
3(a), the revenue base of the Brand from the date of execution of this Agreement
through December 31, 1997 shall be annualized.
As set forth in paragraph 6 hereinbelow, the Brand Manager's failure to
maintain a minimum revenue base of $6,000,000 during any twelve month calendar
period shall be grounds for termination of this Agreement by DMS Corp.
(b) Brand Contribution Percentage Maintenance. The Brand Manager
shall be responsible for maintaining and growing the "Brand Contribution
Percentage" (defined as Brand Contribution as a percentage of the Brand's total
revenue). The relative performance of the Brand's Brand Contribution Percentage,
compared to the Brand Contribution Percentage of all other DMS Corp. brands,
will be evaluated on a regular (quarterly) basis by DMS Corp. and provided to
the DMS Corp. Business Steering Committee for review. If, for three consecutive
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review periods, the Brand's Brand Contribution Percentage falls in the bottom
10% of the Brand Contribution Percentage achieved by all DMS Corp. brands, DMS
Corp. will have the right, upon approval by the Business Steering Committee, to
terminate this Agreement in accordance with the provisions of paragraph 6
hereinbelow.
The Brand Manager, on at least 60 days' advance notice from DMS Corp.,
will be responsible for preparing a budget, forecasting expense items under his
control for each fiscal quarter in the upcoming fiscal year. Such budget will be
submitted to the DMS Corp. Business Steering Committee for approval, and such
approval shall not be unreasonably withheld unless the submitted budget targets
a Brand Contribution Percentage in the bottom 10% of the Brand Contribution
Percentages targeted by all DMS Corp. brands.
4. Brand Manager Compensation.
(a) Contribution-Based Compensation Structure. During the term of
this Agreement, the Brand Manager shall be compensated by DMS Corp. based on the
revenue/Brand Contribution formula set forth in Exhibit 1, which exhibit is
attached hereto and incorporated herein by reference.
(b) Treatment of Uncollectible Accounts Receivable. DMS Corp. and/or
its agents agree to make a good faith effort to collect all receivables of the
Brand for a period of ninety days after billing and posting of revenues. Any
receivables not collected within such ninety day period shall be written off by
DMS Corp. and assigned back to the Brand Manager for further collection action.
The Brand Contribution shall be calculated by increasing the expenses for the
calendar month immediately following such ninety day period by 100% of the
amount of receivables written off by DMS Corp. so as to compensate DMS Corp. for
the uncollected amount. If any portion of such uncollected amount is collected
in the future, such portion shall be included as revenue for the month in which
it is received.
(c) Cash/Equity Mix of Compensation. The Brand Manager's
compensation, as determined in accordance with Exhibit 1 attached hereto, shall
be paid partly in cash, and partly by the issuance to the Brand Manager of
registered, unrestricted common stock of DMS Corp. The cash/equity compensation
to be paid by DMS Corp. to the Brand Manager is set forth in Exhibit 2, which
exhibit is attached hereto and incorporated herein by reference.
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(d) Minimum Retainer; Deferred Compensation. For the services
rendered by the Brand Manager pursuant to this Agreement, DMS Corp. shall pay
the Brand Manager a minimum retainer in the amount of $9,000 per month, in
arrears, payable on the 25th day of the calendar month immediately following the
month for which the retainer is being paid. DMS Corp. will provide the Brand
Manager with a monthly statement of the Brand Manager's total earned margin for
the Brand. Any additional cash compensation, and all compensation payable in
common stock of DMS Corp. to which the Brand Manager is entitled pursuant to
this Agreement will be paid on a deferred basis on or about the January 15th
following the year in which such compensation is earned.
(e) Expense Reimbursement and Benefits. Expense reimbursement and
benefits policies of the Brand will be determined by the Brand Manager, subject
to generally accepted accounting principles and applicable tax laws and
regulations. The Business Steering Committee of DMS Corp. will provide the Brand
Manager with a list of guidelines as to appropriate reimbursement and benefits
policies for use by the Brand Manager. In the event that a particular expense
reimbursement or benefit is not clearly within the guidelines supplied by the
Business Steering Committee, then the Brand Manager shall submit the issue to
the Business Steering Committee for approval prior to claiming the reimbursement
or benefit as a deduction by the Brand.
Notwithstanding the foregoing, to the extent an expense is reported for
the Brand which expense is determined to be (either wholly or partly)
non-deductible for tax purposes, the Brand Contribution shall be reduced by
adding (as an additional expense for purposes of calculating Brand Contribution)
that amount of additional taxes incurred by DMS Corp. as a result of such
non-deductibility.
5. Term. The term of this Agreement shall begin as of the date of the
Initial Public Offering of DMS Corp.'s common stock, and unless terminated in
accordance with the provisions of paragraph 6 hereinbelow, shall terminate two
(2) years thereafter. Thereafter, this Agreement shall be automatically renewed
for successive one year periods, unless the Brand Manager shall give written
notice to the contrary at least 90 days prior to the termination of the initial
one year
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period or any succeeding one year period thereafter, or unless this Agreement is
terminated in accordance with the provisions of paragraph 6 hereinbelow.
6. Termination.
(a) Termination Rights. In addition to the provisions for
termination provided elsewhere in this Agreement, this Agreement may be
terminated at any time upon the mutual consent, given in writing effective upon
delivery, of DMS Corp. and the Brand Manager. The Brand Manager shall have the
unilateral right to give DMS Corp. notice of an intention to voluntarily
withdraw from this Agreement on six months written notice. In the event of such
voluntary withdrawal, or in the event of termination of this Agreement by DMS
Corp. or the DMS Corp. Business Steering Committee pursuant to this paragraph 6,
the right to re-issue a Brand Manager Agreement for the Brand rests solely with
DMS Corp. This Agreement may also be terminated by DMS Corp. upon the happening
of any of the following circumstances: (i) Brand Manager's failure to conduct
all of the Brand's business through DMS Corp., its affiliates or designee as
required pursuant to paragraph 2 above; (ii) failure to maintain the minimum
revenue base set forth in paragraph 3(a) above; (iii) the Brand's Brand
Contribution Percentage falling, for three (3) consecutive review periods, in
the bottom 10% of the Brand Contribution Percentage achieved by all other DMS
Corp. brands; (iv) the Brand Manager's violation of the Non-Competition
Agreement dated the ____ day of _________________, 1997 between the parties
hereto; or (v) conduct constituting "termination for just cause" at any time
during the term of the Agreement. For purposes of this Agreement, "termination
for just cause" shall mean termination for: (a) proven dishonesty in the course
of managing the Brand; (b) conviction of the Brand Manager for violation of any
criminal law classified as a felony or a crime of moral turpitude; or (c)
declaration of bankruptcy, composition of creditors, attachment of the Brand
Manger's interest or rights under this Agreement and similar occurrences.
(b) Cure Period. Compliance with the terms of this Brand Manager
Agreement shall be determined by the judgment of the Business Steering Committee
of DMS Corp., except that DMS Corp. shall be solely responsible for determining
whether the Agreement may be terminated pursuant to the provisions of Sections
6(a)(i), 6(a)(iv) or 6(a)(v) above. Members of the Business Steering Committee
will include other active brand managers engaged
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by DMS Corp., and the head of the Business Steering Committee will be the
President of DMS Corp. In the event that the Business Steering Committee
determines that the Brand Manager has defaulted in his obligations under this
Agreement, the Brand Manager shall receive written notice thereof, and (except
for termination by DMS Corp. under Sections 6(a)(i), 6(a)(iv) or 6(a)(v), any of
which shall be grounds for immediate termination without opportunity for cure)
shall be given a cure period during which the Brand Manager shall be permitted
to address and rectify the default. In the case of a failure to achieve the
minimum revenue base required under Paragraph 3(a) above, the Brand Manager
shall be deemed to have addressed and rectified the default if, during the
calendar quarter immediately following the date on which the Brand Manager
receives notice of such default, the annualized revenue for the Brand equals or
exceeds the minimum revenue base set forth in Paragraph 3(a). In the case of the
Brand's Brand Contribution Percentage falling, for three (3) consecutive review
periods, in the bottom 10% of the Brand Contribution Percentage achieved by all
other DMS Corp. brands, the Brand Manager shall be deemed to have addressed and
rectified the default if, during the calendar quarter immediately following the
date on which the Brand Manager receives notice of such default, the Brand's
Brand Contribution Percentage falls in the top 90% of the Brand Contribution
Percentage achieved by all other DMS Corp. brands. In the event that the default
has not been addressed and rectified within the specified cure period, as
determined in the sole discretion of the Business Steering Committee, the
Business Steering Committee will submit a recommendation to all brand managers
that this Agreement be terminated (the "Recommendation of Termination"). Unless
greater than one third of all DMS Corp. brand managers send the Business
Steering Committee written objection to such termination within fourteen (14)
days after the date of the Recommendation of Termination, this Agreement will be
terminated immediately thereafter and the Brand Manager will be so notified in
writing. Upon termination, all keys, identification materials, and proprietary
information and the like will be returned to DMS Corp.
7. Miscellaneous.
(a) Payment in local currency. All references to the measurement,
determination or payment of money under this Agreement, are to be in the
currency of the area in which the Brand Manager will perform his services. The
equity portion of the Brand Manager's
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compensation payable under this Agreement need not be listed on a stock
exchange, but in the event such equities are listed, they shall be listed on
such exchange as DMS Corp. shall determine in its sole discretion.
(b) No Employment Agreement. This Agreement does not create an
employer/employee relationship between the parties hereto. Except where
otherwise provided in this Agreement, DMS Corp. has no right to control and
direct the Brand Manager in the performance of his obligations under this
Agreement. Rather, the Brand Manager is recognized as an independent entity.
(c) Binding Effect; Assignability. This Agreement shall be binding
upon and shall inure to the benefit of DMS Corp. and the Brand Manager, and
their respective successors and/or permitted assigns. The Brand Manager shall
have the right to assign his rights and obligations under this Agreement to
another individual or entity with prior written approval of DMS Corp. only,
which approval shall not be unreasonably withheld or delayed, except the Brand
Manager shall have the right to assign his rights and obligations under this
Agreement to an entity controlled by the Brand Manager without prior written
approval of DMS Corp., provided that the Brand Manager gives reasonable advance
notice to DMS Corp. of such assignment. The Brand Manager's request for approval
of such an assignment shall include the name of the assignee; DMS Corp. shall
approve such assignment unless the assignee or an affiliate of the assignee is,
in the reasonable judgment of DMS Corp., a competitor of DMS Corp.
(d) Governing Law; Severability. This Agreement shall be governed by
the laws of the State of Delaware, without regard to such state's conflicts of
law principles. The Brand Manager hereby agrees to the personal jurisdiction of
the state and federal courts in Delaware. The provisions of this Agreement shall
be deemed severable, and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
(e) Entire Agreement. This Agreement constitutes the entire
Agreement between the parties as to the subject matter hereof, and will not be
superseded by any prior Agreement, covenant, or law other than that imposed by
the State of Delaware.
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(f) No Waiver. No waiver by DMS Corp. shall constitute a waiver as
to any subsequent act and this agreement may not be amended or modified except
in writing signed by the parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
"DMS CORP."
DISPATCH MANAGEMENT SERVICES CORP.
/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
Chief Executive Officer
WITNESS: "BRAND MANAGER"
__________________________ /s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
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