BRAND MANAGER AGREEMENT
THIS AGREEMENT is entered into this 14th day of September, 1997, by and
between DISPATCH MANAGEMENT SERVICES CORP., a Delaware corporation ("DMS Corp.")
and Xxxxx Xxxxx, an individual residing at 0000 Xxxxxx Xxxx, Xxxxxxxx Xxxxxxx,
Xxxxxxxx, 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 Kangaroo Express (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 $2,698,069 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 $2,698,069 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 $0 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
consummation 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
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prior to the termination of the initial one year 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 between the parties hereto entered into in connection with the
Agreement, dated as of September ____, 1997, between Kangaroo Express of
Colorado Springs, Inc. and DMS Corp.; 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 that is 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
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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 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.
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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 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. 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.
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 Xxxxx
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Xxxxx Xxxxx
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