Exhibit 2.59
AGREEMENT
This Agreement (the "Agreement") is entered into as of the 2nd day of
December, 1997, by and among Dispatch Management Services Corp., a Delaware
corporation and successor in interest to Dispatch Management Services LLC by
merger (the "Company"), Xxxxxxx Xxxxxxx, an individual, (the "Business
Contribution Member"), and DMS Subsidiary Number ___, a Delaware corporation
(the "Specific Company Subsidiary"). Unless defined herein, all capitalized
terms used in this Agreement shall have the meaning given them in the Operating
Agreement of Dispatch Management Services LLC dated December 1, 1996 by and
between the Members of Dispatch Management Services LLC, as amended (the
"Operating Agreement").
W I T N E S S E T H
WHEREAS, the Business Contribution Member owns the business trading as "1
000 Xxx Xxxxx," which is in the business of providing time-critical, on demand,
point-to-point delivery services (such business, and any other lines of business
related thereto, the "Business");
WHEREAS, subject to the terms and conditions set forth herein, the Business
Contribution Member desires to sell to the Company all the Business Contribution
Member's right, title and interest in and to the Assets (as defined in Section
1.2(a) below) for the Purchase Price (as defined in Section 1.4 below);
WHEREAS, upon the delivery of the financial statements, schedules,
disclosure documents, and other information required by this Agreement, and
approval of the same by the Company, the parties hereto will close pursuant to
the terms and conditions set forth herein;
WHEREAS, upon satisfaction of the conditions set forth herein, the sale of
the Assets will be consummated;
WHEREAS, at Closing (as hereinafter defined) under this Agreement, the
Company will contribute to the Specific Company Subsidiary all of the Company's
right, title and interest in and to the Assets, in exchange for 100% of the
equity ownership in the Specific Company Subsidiary;
WHEREAS, the Specific Company Subsidiary intends to enter into an
employment agreement with Xxxxx Xxxxx in the form attached hereto as Exhibit A,
as well as a non-competition agreement
in the form attached hereto as Exhibit B (such employment agreement and
non-competition agreement, together with all other agreements which are entered
into by the parties hereto pursuant to this Agreement or in connection with any
of the transactions contemplated hereby, the "Related Agreements");
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the representations,
warranties, covenants and agreements herein contained, and for the sum of $10.00
paid by the Company to the Business Contribution Member, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Overview
Upon execution of this Agreement, the Business Contribution Member
shall be obliged to deliver to the Company: (i) the unaudited financial
statements required pursuant to Section 1.4 below and (ii) the agreements
required pursuant to Section 3.1 below.
1.2 Definitions.
(a) Definition of Assets. For purposes of this Agreement, the
term "Assets" shall mean and include the following assets of the Business
Contribution Member:
(i) Those agreed upon assets (including radio channels) set
forth on Exhibit C attached hereto;
(ii) All rights to the trade name "1 800 San Diego", the
brand name, logos, and other Intellectual Property as defined in Section
2.11.(d) hereinbelow, customer lists, goodwill and other intangible assets; and
(iii) All rights, claims, and interests of the Business
Contribution Member, as of the Closing Date, under and with respect to agreed
upon contracts (the "Contracts"), as set forth on Exhibit D attached hereto.
To the extent that the assignment of the rights, claims and interests of
the Business Contribution Member under any of the Contracts requires the consent
of a third party (as set forth in Exhibit E hereto), and such third party's
consent to assignment is not secured prior to Closing hereunder, the parties
hereto shall use their best efforts to place the Specific Company Subsidiary in
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a position to receive the benefits of the Business Contribution Member's rights,
claims and interest in such Contracts during the term of such Contracts. The
parties' efforts to this end shall be made in a lawful and commercially
reasonable manner.
1.3. Closing Deliveries and Other Actions.
(a) Deliveries at Closing. In addition to the execution and
delivery of documents as and when otherwise required by the terms of this
Agreement, at the Closing the Business Contribution Member shall deliver (i) a
xxxx of sale, (ii) an instrument of assignment and assumption (the form and
substance of which shall be reasonably acceptable to the Company), (iii) any
other instruments of conveyance or transfer which may be necessary in the sole
discretion of the Company, including, without limitation, any instruments of
assignment in connection with the Intellectual Property and the Contracts, each
in form and substance reasonably acceptable to the Company, pursuant to which
the Business Contribution Member shall convey, assign, transfer and deliver to
the Company all right, title and interest in, to and under the Assets, free and
clear of any and all Encumbrances (as defined in Section 2.3(a) below), and (iv)
the opinion of his counsel as to such matters as counsel to the Company may
reasonably require, including but not limited to such counsel's opinion that:
the Business Contribution Member is authorized to conduct his business in each
jurisdiction in which he is doing business; the Business Contribution Member has
full power to enter into and perform his obligations under this Agreement, as
well the Related Agreements to which he is a party; this Agreement, and the
Related Agreements to which the Business Contribution Member is a party,
constitute legal, valid and binding obligations of the Business Contribution
Member, enforceable in accordance with their respective terms (except as
enforcement may be limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditor's rights, and principles of equity); and
the Business Contribution Member is not threatened with or affected by any
actions, proceedings or investigations wherein an unfavorable decision, ruling
or finding could have a materially adverse effect on the financial condition or
operation of the Business and/or the Assets, or could prevent, enjoin or
otherwise affect the transactions contemplated by this Agreement. At the
Closing, the Company shall deliver the Purchase Price to the Business
Contribution Member (less the Maximum Earn-Out, which shall be payable to the
Business Contribution Member pursuant to the terms of Section 1.4 above).
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(b) Further Actions. The parties hereto shall enter into,
execute and deliver such other and further agreements, documents and
instruments, as any of them may reasonably request, for the purpose of
effectuating the transactions contemplated by this Agreement. Without limiting
the foregoing, the Business Contribution Member shall take whatever steps are
necessary (such as filings with the United States Patent and Trademark Office)
to transfer the Intellectual Property to the Specific Company Subsidiary.
(c) Time and Place of Closing. Unless this Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 8.1., and subject to the satisfaction or waiver of
the conditions set forth in Section 7, the purchase and sale of the Assets,
pursuant to this Agreement (the "Closing") shall take place at the offices of
Silver, Xxxxxxxx & Taff, L.L.P., 0000 Xxx Xxxx Xxxxxx, X.X., Xxxxx 000X,
Xxxxxxxxxx, X.X. 00000, contemporaneously with the closing of the Initial
Public Offering unless the Initial Public Offering does not occur by March 31,
1998, in which case this Agreement shall be rendered null and void, or unless
another date, time or place is agreed to in writing by the parties hereto (the
day on which the Closing takes place being the "Closing Date").
1.4. Purchase Price. The purchase price for the Assets (the
"Purchase Price"), shall be $45,000.00 subject to adjustment (if any) as a
result of a reduction in the Maximum Earn-Out (as defined in this Section 1.4
below).
The parties hereto agree to allocate the Purchase Price to the Assets
in accordance with the manner set forth on Schedule 1.4 attached hereto and in
accordance with the applicable provisions of Section 1060 of the Code (the
"Price Allocation"). Accordingly, each party to this Agreement shall adopt and
utilize such Price Allocation for purposes of all tax returns filed by them and
shall not voluntarily take any position inconsistent therewith in connection
with any examination of any tax return, any refund claim, any litigation
proceeding or otherwise. Each of the Company and the Business Contribution
Member shall file on a timely basis a Form 8594 in accordance with the
requirements of Section 1060 of the Code and the provisions of this Section 1.4.
In the event that the Price Allocation is disputed by an taxing authority, the
party receiving notice of the dispute shall promptly notify the other parties
hereto of such dispute and the parties hereto shall consult with each other
concerning resolution of the dispute.
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The Company shall pay $25,000.00 of the Purchase Price in cash at the
Closing and the remaining $20,000.00 (the "Maximum Earn-Out"), which is subject
to the terms of the next paragraph.
The Maximum Earn-Out shall be earned by the Business Contribution
Member if the two following items are satisfied: (i) the three drivers that are
currently employed by the Business are still employed by the Specific Company
Subsidiary on the date six months after the Closing, and (ii) the Specific
Company Subsidiary achieves revenue in the sixth full calendar month following
the Closing of at least $7,500.00. The Company shall pay the Business
Contribution Member $20,000 promptly following verification that both of the
foregoing items have been satisfied.
2. Representations, Warranties and Covenants of the Business Contribution
Member.
The Business Contribution Member hereby represents, warrants and
covenants to the Company as follows:
2.1. Power. The Business Contribution Member has all requisite power
and authority to own, lease and operate his properties (including, without
limitation, the Assets) and to carry on his business as now being conducted
(including, without limitation, the Business). The Business Contribution Member
is duly qualified to conduct business in each jurisdiction in which the business
he is conducting (including, without limitation, the Business), or the
operation, ownership or leasing of his properties (including, without
limitation, the Assets), makes such qualification necessary.
2.2. Authority and Enforceability.
(a) Matters Relating to the Business Contribution Member. The
Business Contribution Member has all requisite power and authority to execute
and deliver this Agreement and each of the Related Agreements to which he is a
party and to perform fully his obligations hereunder and thereunder. The
execution and delivery of this Agreement, the Related Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Business Contribution
Member. This Agreement and each of the Related Agreements to which the Business
Contribution Member is a party has been duly executed and delivered by the
Business Contribution Member, and this Agreement and each of the Related
Agreements to which the Business Contribution Member is a party constitute the
legal, valid and
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binding obligations of the Business Contribution Member, enforceable against the
Business Contribution Member in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
2.3. Title to Assets; Condition.
(a) The Business Contribution Member owns beneficially and of
record, and has good and marketable title to, the Assets, free and clear of any
Encumbrances. For purposes of this Agreement, the term "Encumbrances" shall
mean restrictions, conditions, covenants, liens, easements, charges,
encroachments or any other matter affecting fee simple title.
(b) Upon consummation of the transactions contemplated at the
Closing, the Company will acquire good and marketable title to the Assets, free
and clear of any Encumbrances. All tangible assets conveyed hereunder are in
good working condition and repair, except for reasonable wear and tear.
2.4. Sufficiency of Assets. The Assets include substantially all the
assets and properties used or employed by the Business Contribution Member in
the Business as presently conducted. Immediately after giving effect to the
transfer of the Assets at Closing by the Business Contribution Member, and the
consummation of the other transactions contemplated pursuant to this Agreement
to be effected at the Closing, the Company will (i) have all right, title, and
interest in and to, or will have a valid right to use, without liability to
third party(ies), the Assets; and (ii) have all assets, rights, employees,
subcontractors and other persons and items which are reasonably necessary to
carry on the business and operations of the Business after the Closing Date in
substantially the same manner as presently conducted by the Business
Contribution Member.
2.5. No Violations Resulting From Transactions. The execution and
delivery by the Business Contribution Member of this Agreement and each of the
Related Agreements to which they are, respectively, a party, and the
consummation of the transactions contemplated hereby and thereby by each of the
Business Contribution Member will not (a) except as set forth in Exhibit E,
require any consent, waiver, approval, authorization or permit of, or filing
with or notification to, any third party, (b) result in or constitute a default,
or require any consent or approval of or notice to any
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person or entity, or result in the creation of an Encumbrance, under or pursuant
to (i) any of the Contracts, or (ii) any other material agreements to which the
Business Contribution Member is a party, or (c) violate any law applicable to
the Business Contribution Member or by which any of the Assets is bound.
2.6. Compliance with Laws.
(a) The Business Contribution Member is, and at all times during
the past three years has been, in material compliance with all laws applicable
to the Business Contribution Member or to the conduct of the business or
operations of the Business Contribution Member or the Business or the use of his
properties (including any leased properties) and assets (including, without
limitation, the Assets); and
(b) The Business Contribution Member has not received, and does
not know of the issuance or threatened issuance by any governmental entity, of
any notices of violation or alleged violation of any law applicable to the
Business Contribution Member or the Business. The Business Contribution Member
has provided the Company with true and complete copies of (i) all injunctions,
judgments, orders or consent or similar decrees or agreements of any
governmental entity to which the Business Contribution Member or the Business is
currently subject (or which the Business Contribution Member or the Business was
subject to during the previous three years) or which are otherwise applicable to
the Business Contribution Member or the Assets or to the conduct of the
Business, and (ii) all correspondence from the date hereof with respect to any
of the matters referred to in clause (b) or clause (i) of this Section 2.6. The
Business Contribution Member is not aware of any proposed legislation or law
which is reasonably expected to be enacted and which, if so enacted, could
reasonably be expected to have a material adverse effect on either the Business
or the Business Contribution Member.
2.7. Litigation. There is no action, suit, claim, investigation or
proceeding, whether at law or in equity (each, a "Legal Proceeding"), pending
or, to the knowledge of the Business Contribution Member, threatened that
questions the validity of this Agreement or the Related Agreements or any action
taken or to be taken by the Business Contribution Member in connection with the
consummation of the transactions contemplated hereby or thereby or which seeks
to prohibit, enjoin or otherwise challenge any of the transactions contemplated
hereby or thereby. Exhibit H sets
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forth an accurate and complete list, and a brief description (setting forth the
names of the parties involved, the court or other governmental or mediating
entity involved, the relief sought and the substantive allegations and the
status thereof), of each Legal Proceeding pending or, to the knowledge of the
Business Contribution Member, threatened against or affecting the Business
Contribution Member, the Business or any of the Assets. To the knowledge of the
Business Contribution Member, no event has occurred and no circumstance, matter
or set of facts exist which would constitute a valid basis for the assertion by
any third party of any claim or Legal Proceeding, other than those listed on
Exhibit H. Except as set forth in Exhibit H, there is no outstanding or, to the
knowledge of the Business Contribution Member, threatened judgment, injunction,
order or consent or similar decree or agreement (including, without limitation,
any consent or similar decree or agreement with any governmental entity)
against, affecting or naming the Business Contribution Member, the Business or
any of the Assets.
2.8. Financial Advisors.
(a) Except as set forth on Exhibit I attached hereto, no person
or entity has acted directly or indirectly as a broker, finder or financial
advisor for or to the Business Contribution Member in connection with the
negotiations relating to or the transactions contemplated by this Agreement or
the Related Agreements; and
(b) Except as set forth on Exhibit I attached hereto, no person
or entity is entitled to any fee or commission or like payment, or expense
reimbursement, in respect thereof based in any way on agreements, arrangements
or understandings made by or on behalf of the Business Contribution Member.
Such fees, commissions, like payments or expense reimbursements as are described
on Exhibit I attached hereto shall remain liabilities and expenses of the
Business Contribution Member exclusively.
2.9. Financial Statements; Receivables. Attached hereto as Exhibit J
are true, correct and complete copies of the most recent unaudited financial
statements for the Business have been prepared in accordance with U.S. generally
accepted accounting principles ("GAAP"), applied consistently with the past
practices of the Business, except where otherwise specifically noted therein,
and present and will present fairly in all material respects the financial
position, results of operations and changes in financial position or cash flows,
whichever is applicable, of the Business as at the dates
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and for the periods indicated (subject, in the case of the unaudited financial
statements, to normal year-end audit adjustments). Without limiting the
foregoing, no undisclosed liabilities or obligations of any nature (whether
known or unknown, or absolute, accrued, contingent or otherwise) shall exist as
at the Closing not reflected in the Business's most recently dated balance sheet
supplied to the Company. The Business Contribution Member has paid all federal,
state and local income, profits, franchises, sales, use, occupation, property,
excise and payroll taxes, and all license fees and other charges imposed upon
him, and has timely filed all tax returns and related documents required to be
filed with any governmental authority. There are no outstanding or proposed
statements of deficiency in tax payments to any federal, state, local or foreign
government with respect to the Business Contribution Member for any tax period.
As of the dates such Financial Statements were and will be prepared, all
accounts receivable reflected on the Financial Statements (i) have and will have
arisen from bona fide transactions in the ordinary course of the Business
Contribution Member's business, consistent with his past practices, and (ii) are
good and collectible at the aggregate recorded amounts thereof, net of any
applicable reserves for returns or doubtful accounts which are reflected in such
Financial Statements (such reserves, the "Reserves"); such Reserves are adequate
and reasonable and were established in accordance with GAAP.
2.10. Absence of Certain Developments.
(a) There has been no event, condition or state of facts of any
character that has had or is reasonably likely to have a material adverse effect
on the Assets or the Business.
(b) The Business Contribution Member has not entered into any
transaction or contract, or conducted his business, other than in the ordinary
course consistent with past practice.
2.11. Intellectual Property.
(a) List of Intellectual Property; Sufficiency. Exhibit K sets
forth a list of all Intellectual Property (as defined in Section 2.11.(d)
hereinbelow) which is owned by the Business Contribution Member, licensed by the
Business Contribution Member, licensed to the Business Contribution Member, or
otherwise used or able to be used in the Business (other than commonly-used
computer software which is generally available to the public and the use rights
to which were legally acquired by the Business Contribution Member either for
free or through established retail
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facilities) and indicates, with respect to each item of Intellectual Property
listed thereon, the owner thereof and, if applicable, the name of the licensor
and licensee thereof and the terms of such license or other contract relating
thereto. The Business Contribution Member owns or has the lawful right to use
all Intellectual Property as currently used or as necessary for the conduct of
the Business as now conducted. After Closing, the Specific Company Subsidiary
will have the right to use all of the Intellectual Property as currently used or
as necessary for the conduct of the Business as now conducted.
(b) Title; Validity; Pending Applications; Infringements, Etc.
(i) Except for Intellectual Property licensed to the
Business Contribution Member, the Business Contribution Member has full legal
and beneficial ownership (free and clear of any and all Encumbrances) of all of
the Intellectual Property , and the Business Contribution Member has not
received any notice or claim (whether written, oral or otherwise) challenging
the Business Contribution Member's ownership or rights in such Intellectual
Property or suggesting that any other entity has any claim of legal or
beneficial ownership with respect thereto; the Business Contribution Member has
all legal and other rights required to transfer the ownership of the
Intellectual Property to the Company at the Closing as contemplated hereby;
(ii) All of the Intellectual Property is legally valid and
enforceable without any qualification, limitation or restriction on his use, and
the Business Contribution Member has not received any notice or claim (whether
written oral or otherwise) challenging the validity or enforceability of any
such Intellectual Property;
(iii) Neither the use of any of the Intellectual
Property nor any other Intellectual Property used by the Business Contribution
Member will conflict with, infringe upon, violate or interfere with or
constitute an appropriation of any right, title or interest held by any other
person or entity, and there have been no claims made with respect thereto;
(iv) No other person or entity is infringing in any respect
on any part of the Intellectual Property. The Business Contribution Member has
not conducted his business (including, without limitation, the Business), and
has not used or enforced (or failed to use or enforce) any Intellectual
Property, in a manner that would result in the abandonment, cancellation or
unenforceability of any item of Intellectual Property, and the Business
Contribution Member has not
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taken or failed to take any action that would result in the forfeiture or
relinquishment of any Intellectual Property used in the conduct of his business
as now conducted (including, without limitation, the Business);
(v) Except as set forth in Exhibit K, the Business
Contribution Member has no liability or obligations to any third parties
incident to the Intellectual Property used or able to be used by the Business
Contribution Member in the conduct of his business (including, without
limitation, the Business) as heretofore conducted; and
(vi) The Business Contribution Member has timely met all of
his obligations to any third parties incident to the Intellectual Property used
or able to be used by the Business Contribution Member in the conduct of his
business (including, without limitation, the Business) as heretofore conducted,
and such obligations have been and will be correctly and adequately disclosed in
the Financial Statements.
(c) Protection and Maintenance of Intellectual Property.
(i) The Business Contribution Member has taken all
reasonable steps to (x) protect the Business Contribution Member's rights to the
Intellectual Property, and (y) to prevent the unauthorized use by any other
person or entity; and
(ii) The Business Contribution Member shall use all
reasonable efforts to maintain, or cause to be maintained, the Intellectual
Property in full force and effect through the Closing and, without limitation,
has renewed or has made, and will make within any applicable renewal period
ending on or prior to the Closing Date, application to renew all of the
Intellectual Property subject to expiration on or prior to the Closing Date.
The Business Contribution Member has not granted to any other Person or entity
any rights or permissions to use any of the Intellectual Property.
(d) Definition of Intellectual Property. For purposes of this
Agreement, the term "Intellectual Property" means any patent, copyright,
trademark, trade name, service xxxx, service name, brand xxxx, brand name, logo,
corporate name, Internet domain name or industrial design, any registrations
thereof and pending applications therefor (to the extent applicable), any other
intellectual property right (including, without limitation, any know-how, trade
secret, trade right, formula, conditional or proprietary report or information,
customer or membership list, any
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marketing data, and any computer program, software, database or data right), and
license or other contract (including without limitation license(s) to use
specific telephone numbers and/or radio channels/frequencies) relating to any of
the foregoing, and any goodwill associated with any business owning, holding or
using any of the foregoing.
2.12. Insurance. The Business Contribution Member currently
maintains, and as of the Closing Date will maintain, valid insurance policies,
which polices provide adequate coverage, within terms of scope and amount of
coverage, for the Assets and the operations conducted by the Business. From and
after Closing, the Specific Company Subsidiary will be solely responsible for
the insurance set forth in Exhibit L. In the event that such insurance policies
are unable to be assumed by the Specific Company Subsidiary directly from and
after Closing, the Business Contribution Member hereby agrees to keep such
insurance policy(ies) in full force and effect for 60 days after Closing, at the
Specific Company Subsidiary's expense, to allow the Specific Company Subsidiary
to arrange his own such insurance policy(ies). There are no pending material
claims against such insurance by the Business Contribution Member as to which
the applicable insurers have denied coverage. In addition, there exist no
material claims under such insurance that have not been properly filed by the
Business Contribution Member. During the past two years, the Business
Contribution Member has not been refused any insurance coverage by any insurer
from which the Business Contribution Member has sought coverage.
2.13. Contracts. Each of the Contracts (i) is valid and
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity); (ii) no Default (as defined below) exists under
any Contract either by the Business Contribution Member or by any other party
thereto; (iii) the Business Contribution Member is not aware of the assertion by
any third party of any claim of Default or breach under any of the Contracts;
and (iv) the Business Contribution Member is not aware of any present intention
on the part of any significant customer or supplier or other business partner of
the Business Contribution Member to either (x) terminate or significantly change
its existing business
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relationship with the Business Contribution Member either now or in the
foreseeable future, or (y) fail to renew or extend its existing business
relationship with the Business Contribution Member at the end of the term of any
existing contractual arrangement such entity may have with the Business
Contribution Member. For purposes of this Agreement, the term "Default" means,
with respect to any Contract, (x) any breach of or default under such Contract,
(y) any event, other than the normal passage of time, which would (either with
or without notice or lapse of time or both) give rise to any right of
termination, cancellation or acceleration or any obligation to repay with
respect to such Contract, or (z) any event, other than the normal passage of
time, which would result in either a significant increase in the obligations or
liabilities of, or a loss of any significant benefit of, the party in question
under such Contract.
2.14. Misrepresentation. Neither this Agreement (including the
Exhibits hereto) or any Related Agreement or any information supplied to the
Company by or on behalf of the Business Contribution Member in connection with
this Agreement, the Related Agreements or the transactions contemplated hereby
or thereby contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statement
contained herein or therein, in light of the circumstances under which they were
made, not misleading. The Business Contribution Member knows of no facts which
are reasonably likely to cause a material adverse effect on the Assets or the
Business.
3. Additional Representations, Warranties and Covenants of the Business
Contribution Member.
3.1. Non-Competition and Other Covenants of the Business Contribution
Member, and Certain Employees of the Business Contribution
Member.
The Business Contribution Member, and certain employees of the
Business Contribution Member noted on Exhibit B attached hereto, shall have, at
the Closing entered into agreements, the form of which is attached to this
Agreement as Exhibit B.
3.2. Confidentiality. The Business Contribution Member shall abide by
the terms of the Confidentiality Agreement between the Business Contribution
Member and the Company (or the Company's predecessor, Dispatch Management
Services LLC) executed on ____________. The Business Contribution Member and
the Specific Company Subsidiary each acknowledge and agree that the Company
shall have the right to disclose certain information concerning the Specific
Company Subsidiary, the Assets and/or the Business to third parties (which third
parties will in turn
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be bound by an agreement similar to the Confidentiality Agreement), for such
general corporate purposes as includes but is not limited to obtaining financing
and/or underwriting, and for general marketing purposes.
4. Representations and Warranties of the Company
The Company represents and warrants to the Business Contribution
Member as follows:
4.1. Organization, Standing and Power. The Company is duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company is
duly qualified and in good standing to conduct business in each jurisdiction in
which the business it is conducting, or the operation, ownership or leasing of
its properties, makes such qualification necessary.
4.2. Authority and Enforceability. The Company has all requisite
power and authority to execute and deliver this Agreement and each of the
Related Agreements to which it is a party and to perform fully its obligations
hereunder and thereunder. The execution and delivery of this Agreement and each
of the Related Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company. This Agreement and each of the
Related Agreements to which it is a party have been duly executed and delivered
by the Company, and constitute the legal, valid and binding obligations of the
Company enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and remedies
generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
4.3. No Violations Resulting From Transactions. The execution and
delivery by the Company of this Agreement and each of the Related Agreements to
which it is a party and the consummation of the transactions contemplated hereby
and thereby by the Company, will not (a) conflict with or violate any provision
of the Certificate of Incorporation or By-laws of the Company, or (b) except as
set forth on Exhibit E, require any consent, waiver, approval, authorization or
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permission of, or filing with or notification to, any third party; (c) result
in or constitute a default, or require any consent or approval of or notice to
any person or entity under or pursuant to any of the contracts to which the
Company is a party; or (d) violate any applicable laws.
4.4. Compliance with Laws.
(a) The Company is, and at all times since its inception has
been, in material compliance with all applicable laws; and
(b) The Company has not received, and does not know of the
issuance or threatened issuance by any governmental entity of, any notices of
violation or alleged violation of any applicable law. The Business Contribution
Member has been provided with true and complete copies of (i) all injunctions,
judgments, orders or consent or similar decrees or agreements of any
governmental entity to which the Company is currently subject (or to which the
Company was subject since its inception), and (ii) all correspondence through
the date hereof with respect to any of the matters referred to in clause (b) or
clause (i) of this Section 4.4.
4.5. Litigation. There is no Legal Proceeding pending or, to the
knowledge of the Company, threatened that questions the validity of this
Agreement or the Related Agreements or any action taken or to be taken by the
Company in connection with the consummation of the transactions contemplated
hereby or thereby or which seeks to prohibit, enjoin or otherwise challenge any
of the transactions contemplated hereby or thereby. Exhibit H sets forth an
accurate and complete list, and a brief description (setting forth the names of
the parties involved, the court or other governmental or mediating entity
involved, the relief sought and the substantive allegations and the status
thereof), of each Legal Proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company. To the knowledge of the Company, no
event has occurred and no circumstance, matter or set of facts exist which would
constitute a valid basis for the assertion by any third party of any claim or
Legal Proceeding, other than those listed on Exhibit H. Except as set forth in
Exhibit H, there is no outstanding or, to the knowledge of the Company,
threatened, judgment, injunction, order or consent or similar decree or
agreement (including, without limitation, any consent or similar decree or
agreement with any governmental entity) against, affecting or naming the
Company.
15
4.6. Default. The Company is not in material default of any of its
obligations, contracts, or commitments in any respect, or in breach of any
negative or affirmative covenants placed on it by its creditors, and the Company
has not been notified of any such defaults or breaches.
4.7. Misrepresentation. Neither this Agreement (including the
Exhibits hereto) or any Related Agreement or any information supplied to the
Business Contribution Member by or on behalf of the Company in connection with
this Agreement, the Related Agreements or the transactions contemplated hereby
or thereby contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statement
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
5. Covenants Relating to Conduct of Business
During the period from the date of this Agreement and continuing until
the Closing Date, the Business Contribution Member covenants and agrees that
(except as expressly contemplated or permitted by this Agreement, or to the
extent that the Company shall otherwise consent in writing):
5.1. Conduct of the Business Until the Closing Date. The Business
Contribution Member shall be obligated to:
(a) conduct the Business only in the ordinary course, consistent
with past practice;
(b) use his best efforts to (i) preserve the present business
operations, organization (including, without limitation, management and the
sales force) and goodwill of the Business and (ii) preserve the present
relationship of the Business Contribution Member with Persons having business
dealings with the Business Contribution Member;
(c) comply with all laws and with all contractual and other
obligations applicable to the Business Contribution Member;
(d) not subject any of the Assets to any Encumbrance;
(e) not acquire any material properties or assets and not sell,
assign, transfer, convey, lease or otherwise dispose of any of the material
properties of the Business (including but not limited to the Assets);
16
(f) promptly notify the Company of (i) the occurrence of any
matter which may have a material adverse effect on the Business or the Assets,
and (ii) any Legal Proceeding commenced by or against the Business Contribution
Member or any Legal Proceeding commenced or threatened relating to the
transactions contemplated by this Agreement.
(g) not agree to do anything prohibited by this Agreement or
anything which would make any of the representations and warranties of the
Business Contribution Member in this Agreement or the Related Agreements untrue
or incorrect in any material respect.
6. Additional Agreements and Representations.
6.1. Access to Information. The Business Contribution Member agrees
that, prior to the Closing Date, the Company shall be entitled (at its sole
expense), through its officers, employees and representatives (including,
without limitation, its legal advisors and accountants), to make such
investigation of the properties, businesses and operations and financial
condition of the Business and the Business Contribution Member and examination
of his books and records as the Company may reasonably request, and to make
extracts and copies of such books and records. Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances, and the Business Contribution Member shall cooperate
fully therein. In order that the Company may have full opportunity to make such
physical, business, accounting and legal review, examination or investigation as
it may reasonably request of the affairs of the Business and the Business
Contribution Member, the Business Contribution Member shall use his best efforts
to cause the Business Contribution Member's officers, employees, consultants,
agents, accountants, attorneys and other representatives to cooperate fully with
such Company representatives in connection with such review and examination.
6.2. Non-solicitation Pending Closing. After execution of this
Agreement, and through the Closing Date, the Business Contribution Member shall
not pursue, initiate, encourage or engage in any negotiations or discussions
with any third parties concerning the sale of the Business, the Assets, or any
part thereof or concerning the terms and conditions of this Agreement.
6.3. Additional Agreements. Each of the parties hereto agrees to use
their respective best efforts to (i) take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to
17
consummate and make effective the transactions contemplated by this Agreement
and the Related Agreements, (ii) obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental entities,
third parties and parties to Contracts with the Business Contribution Member as
are necessary for consummation of the transactions contemplated by this
Agreement and the Related Agreements, and (iii) fulfill all conditions precedent
applicable to such party pursuant to this Agreement and the Related Agreements.
In case at any time after the Closing Date any further action is necessary or
desirable to carry out the purposes of this Agreement or the Related Agreements,
each party hereto shall use their respective best efforts to take or cause to be
taken all such necessary action.
6.4. Notification of Certain Matters. The Business Contribution
Member shall give prompt notice to the Company of (a) any notice of, or other
communication relating to, a default under any contract material to the
financial condition, properties, business operations, or results of operations
of the Business and/or the Business Contribution Member to which he is a party
or is subject, (b) any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement or any of the
Related Agreements, or (c) any material adverse change in the properties
(including but not limited to the Assets), business operations, results of
operations, financial condition or prospects of the Business, other than changes
resulting from general economic conditions. In addition, the Business
Contribution Member shall be required to update the schedules and other
information supplied pursuant to this Agreement at such time as the information
contained therein changes in any material respect.
7. Conditions Precedent.
7.1. Conditions to Obligations of All Parties. The respective
obligations of each party under this Agreement shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Governmental Approvals. All authorizations, consents,
orders or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any governmental entity, requisite to the
transactions contemplated hereby, shall have been filed, occurred or have been
obtained, as the case may be.
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(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect; provided that prior to invoking this condition, each party shall use
their best efforts to have any such order, injunction, legal restraint or
prohibition vacated.
7.2. Conditions to Obligations of the Company. The obligations of the
Company to effect the transactions contemplated by this Agreement are subject to
the satisfaction of the following conditions (which are for the exclusive
benefit of the Company, any or all of which may be waived in whole or in part by
the Company):
(a) Representations and Warranties. The representations and
warranties of the Business Contribution Member set forth in this Agreement (with
regard to any supplements or updates thereto) shall be true and correct in all
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of a specified, earlier date) as of the
Closing Date as though made on and as of the Closing Date, respectively, except
as otherwise contemplated by this Agreement, and the Company shall have received
a certificate from the Business Contribution Member certifying to such effect.
(b) Performance of Obligations. The Business Contribution
Member shall each have performed all obligations required to be performed by
each such party under this Agreement at or prior to the Closing Date and the
Company shall have received a certificate from the Business Contribution Member
certifying to such effect.
(c) No Material Adverse Change. Since the date of this
Agreement, there shall have been no change, occurrence or circumstance resulting
in, or which could reasonably likely result in, individually or in the
aggregate, a material adverse effect on the Assets or the Business.
(d) Contractual Consents. The Business Contribution Member
shall have given all notices to, and obtained all consents, approvals or
authorizations of or from, any individual, corporation or other party which may
be necessary to permit the consummation of the transactions contemplated hereby
(including, without limitation, any consents required under the Contracts, or
which may be required to permit the change of ownership of any of the Assets).
19
(e) Related Agreements. Each of the Related Agreements to which
the Business Contribution Member is a party shall have been duly executed and
delivered by such party. In addition, the Related Agreements shall have been
entered into by the respective parties thereto.
(f) Termination of Franchise Agreement. The Business
Contribution Member must terminate his Franchise Agreement with 800 Couriers,
Inc.
7.3. Conditions to Obligations of the Business Contribution Member.
The obligation of the Business Contribution Member to effect the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions (which are for the exclusive benefit of the Business Contribution
Member), any or all of which may be waived in whole or in part by the Business
Contribution Member.
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of a specified, earlier date) as of the
Closing Date as though made on and as of the Closing Date except as otherwise
contemplated by this Agreement.
(b) Performance of Obligations. The Company shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the Closing Date.
(c) Related Agreements. Each of the Related Agreements shall
have been duly executed and delivered by the parties thereto.
8. Termination.
8.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual written consent of the Company and the Business
Contribution Member;
(b) by either the Company or the Business Contribution Member,
if the closing of the Initial Public Offering does not occur by March 31, 1998;
(c) by the Company in the event that the Anti-Dilution Rights
(as defined in the Operating Agreement) are not preserved; or
20
(d) by the Company in the event that the Business Contribution
Member does not timely deliver representation letters satisfactory to the
Company.
8.2. Effect of Termination Under Section 8.1. In the event of
termination of this Agreement by either the Company or the Business Contribution
Member as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of any party hereto or
any of its respective Affiliates, officers, directors or shareholders except (i)
for any and all obligations under the confidentiality provisions contained in
Section 3.2 of this Agreement; and (ii) to the extent that such termination
results from the willful breach by a party hereto of any of its representations
or warranties, or of any of its covenants or agreements, as set forth in this
Agreement. In the event that termination results from the willful breach by a
party hereto of any of its representations or warranties, or of any of its
covenants or agreements, as set forth in this Agreement, the breaching party
shall be liable to the non-breaching party for all direct damages (but not
indirect or consequential damages) incurred as a result of such willful breach.
9. Indemnification.
9.1. Indemnification.
(a) Indemnification by the Business Contribution Member. The
Business Contribution Member hereby agrees to indemnify, defend and hold
harmless the Company, the Specific Company Subsidiary, and their respective
officers, directors, employees and agents (collectively, the "Indemnitee") from
and against and in respect of any and all Losses (as defined below) to the
extent resulting from, arising out of, relating to, imposed upon or incurred by
the Indemnitee by reason of: (i) the conduct of the Business prior to the
Closing Date, (ii) any inaccuracy in or breach of any of the Business
Contribution Member's representations, warranties, covenants or agreements
contained in this Agreement, the Related Agreements or in any other agreement
or document entered into or delivered on or after the date hereof in connection
with this Agreement or any of the transactions contemplated hereby and thereby,
(ii) any liability or obligation of the Business Contribution Member, and (iii)
any non-compliance with any notice requirement, if any, which may be contained
in the Uniform Commercial Code as adopted by the State of New York relating to
bulk sales. Provided, however, the indemnification by the Business Contribution
Member under this Section 9.1.(a) shall include direct damages only (and not
indirect or consequential damages). For
21
purposes of this Agreement, the term "Losses" means any and all deficiencies,
judgments, settlements, demands, claims, actions or causes of action,
assessments, liabilities, losses, damages (whether direct, indirect or
consequential), interest, fines, penalties, costs and expenses (including,
without limitation, reasonable legal, accounting and other costs and expenses
incurred in connection with investigating, defending, settling or satisfying any
and all demands, claims actions, causes of action, suits, proceedings,
assessments, judgments or appeals, and in seeking indemnification therefor).
(b) Indemnification by the Company. The Company hereby agrees
to indemnify, defend and hold harmless the Business Contribution Member from and
against and in respect of any and all Losses resulting from, arising out of,
relating to, imposed upon or incurred by the Business Contribution Member by
reason of any inaccuracy in or breach of any of the Company's representations,
warranties, covenants or agreements contained in this Agreement or in any other
agreement or document entered into or delivered by the Company on or after the
date hereof in connection with this Agreement or any of the transactions
contemplated hereby and/or thereby. Provided, however, the indemnification by
the Company under this Section 9.1.(b) shall include direct damages only (and
not indirect or consequential damages) and shall be limited in the aggregate to
the Purchase Price.
9.2. Notice. If any claims in respect of Losses shall be asserted
against any party hereto or any of their respective successors in respect of
which such entity proposes to demand indemnification from any of the other
parties hereto under Section 9.1 hereof, the party seeking such indemnification
shall notify the other such parties in a reasonably prompt manner; provided that
failure to give such reasonably prompt notice shall not release, waive or
otherwise affect any party's obligations with respect thereto except to the
extent such party can demonstrate it was actually and materially prejudiced as a
result thereof.
10. General Provisions.
10.1. Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement shall survive the
Closing.
10.2. Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally or telecopied or
sent by overnight courier, or by certified or registered mail, postage prepaid,
and shall be deemed to be given, dated and received when so
22
delivered personally or by courier or telecopied, or, if mailed, five business
days after the date of mailing to the following address or telecopy number, or
to such other address or addresses as such Person may subsequently designate by
written notice given hereunder:
(a) if to Company, to:
Dispatch Management Services Corp.
00000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx, Chief Executive Officer
(b) if to the Business Contribution Member, to:
Xxxxxxx Xxxxxxx
0000 Xxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
10.3. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original and all of which
shall be considered one and the same agreement and shall become effective when
two or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
10.4. Entire Agreement; No Third Party Beneficiaries. This
Agreement (together with the Related Agreements and any other documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereto and is not intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
Subject to applicable law, this Agreement may be amended, modified or
supplemented only by written agreement of all parties hereto with respect to any
of the terms contained herein, and each party hereto agrees to be bound by any
such amendment, modification or supplement.
23
10.5. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Maryland, without giving
effect to the principles of conflicts of law thereof.
10.6. Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially averse to any party. In the event that the enforceability of any
non-competition or similar covenants contained herein or in any Related
Agreement is called into question as the result of time, geographical or other
applicable limitations specified in such covenants, such time, geographical or
other applicable limitations shall be deemed modified to the minimum extent
necessary to render the applicable provisions of such covenants enforceable.
10.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties.
10.8. Specific Performance. The parties hereto acknowledge that
irreparable damage would result if any of the covenants of this Agreement were
not specifically enforced, and they therefore consent that the rights and
obligations of the parties under this Agreement may be enforced by a decree of
specific performance issued by a court of competent jurisdiction. Such remedy
shall, however, not be exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise. Without limiting
the foregoing, the Business Contribution Member acknowledge that the failure to
comply with any of the provisions of Sections 3.1, 3.2. and 6.3 hereof will
result in irreparable harm for which there is no adequate remedy at law and that
the Company and/or the Specific Company Subsidiary shall be entitled, without
the necessity of proving actual damages, to injunctive relief in addition to
damages and all other remedies which may otherwise be available to the Company
and/or the Specific Company Subsidiary.
10.9. Fees and Expenses. All costs and expenses, including but
not limited to all fees and expenses of attorneys, lenders, financial advisers
and accountants, in connection with the negotiation, execution and delivery of
this Agreement, the Related Agreements and the consummation
24
of the transactions contemplated hereby and thereby, shall be paid by the party
incurring such costs and expenses.
10.10. Arbitration. Other than the Company's right to institute
legal action for a breach of the confidentiality, non-competition and
non-solicitation covenants set forth in Sections 3.1, 3.2 and 6.3 hereinabove,
any issue, controversy, dispute or claim arising out of or relating to this
Agreement or its alleged breach that cannot be resolved by mutual agreement
shall be resolved exclusively by arbitration by a single arbitrator in either
the District of Columbia or New York City, at the option of the Company, in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA") and judgment on the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. It is acknowledged by the
Business Contribution Member that money damages are inadequate to compensate the
Company and/or the Specific Company Subsidiary for a breach of the terms of this
Agreement, and that the Company and/or the Specific Company Subsidiary shall be
entitled to specific performance of the terms of this Agreement. The arbitrator
may enter a default decision against any party who fails to participate in the
proceeding. The decision of the arbitrator shall be final, conclusive, binding
and non-appealable. The losing party shall pay all costs and expenses of
arbitration.
The arbitrator shall be selected by consent of the parties, if possible.
If the parties fail to reach agreement upon appointment of the arbitrator within
ten days after a demand for arbitration is made, the arbitrator shall be
selected from a list of proposed arbitrators submitted by AAA. The selection
process shall be that which is set forth in the AAA commercial arbitration rules
then prevailing, except that (1) the number of preemptory strikes shall not be
limited, and (2) if the parties fail to select the arbitrator from three lists,
AAA shall have the power to make an appointment. If an arbitrator should die,
withdraw, or otherwise become incapable of serving, a replacement shall be
selected and appointed in a like manner.
10.11 Disclosure to Third Parties. The Company shall have the
right to disclose to third parties, in whatever manner the Company may
determine, the fact that this Agreement has been executed, the names of the
parties to this Agreement and the terms hereof.
25
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
or on behalf of each of the parties hereto as of the date first above written.
"COMPANY"
Attest: DISPATCH MANAGEMENT SERVICES CORP.
By: /s/ Xxxxx Xxxxxxxxx
_________________________ ________________________________________
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
"BUSINESS CONTRIBUTION MEMBER"
Attest: XXXXXXX XXXXXXX
By:/s/ Xxxxxxx Xxxxxxx
_________________________ ________________________________________
"SPECIFIC COMPANY SUBSIDIARY"
Attest:
________________________________________
By: /s/ Xxxxx Xxxxxxxxx
_________________________ ________________________________________
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
