Exhibit 2.70
BRAND MANAGER AGREEMENT
THIS AGREEMENT is entered into this 26th day of November, 1997, by and
between DISPATCH MANAGEMENT SERVICES CORP., a Delaware corporation ("DMS
Corp.") and Columbine Management Services, LLC, a North Carolina Limited
Liability Company (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 A Courier (Charlotte) (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 its 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 its 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 $1,320,000 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
commencement of the term of this Agreement through December 31, 1998 shall be
annualized.
As set forth in paragraph 6 hereinbelow, the Brand Manager's
failure to maintain a minimum revenue base of $1,320,000 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 review periods, the Brand's Brand Contribution
Percentage falls below 7.5% (after payment of the minimum monthly retainer),
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.
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The Brand Manager, on at least 60 days' advance notice from DMS
Corp., will be responsible for preparing a budget, forecasting expense items
under its 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 of less than 7.5%
(after payment of the minimum monthly retainer).
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.
(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 $_____ 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.
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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 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
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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, below 7.5% (after payment of the minimum monthly
retainer); (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; 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
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 its 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
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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,
below 7.5% (after payment of the minimum monthly retainer), 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 is
7.5% or more (after payment of the minimum monthly retainer). 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 its 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 its 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
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and/or permitted assigns. The Brand Manager shall have the right to assign
its 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.
(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.
DISPATCH MANAGEMENT SERVICES CORP.
"DMS CORP."
/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
Chief Executive Officer
WITNESS: "BRAND MANAGER"
COLUMBINE MANAGEMENT SERVICES, LLC
/s/ Xxxxxx Xxxxx Points
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Xxxxxx Xxxxx Points
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President
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