AGREEMENT
This Agreement (the "Agreement") is entered into as of the 6th day of
October, 1997, by and among Dispatch Management Services Corp., a Delaware
corporation and successor in interest to Dispatch Management Services LLC by
merger (the "Company"), Bridge Wharf Investments Limited, a limited liability
company incorporated under the laws of England (the"Corporation"), and Riverbank
Limited (acting in its capacity as the sole trustee of the Xxx. X. Xxxxx
Settlement), a trust corporation incorporated under the laws of the British
Virgin Islands (the "Shareholder").
W I T N E S S E T H
WHEREAS, the Shareholder wishes to sell to the Company the entire issued
share capital of the Corporation;
WHEREAS, prior to the Closing in Escrow Date, the Shareholder will own or
have options over all of the issued and outstanding shares of capital stock of
the Corporation, (collectively, the "Stock");
WHEREAS, subject to the conduct of the due diligence examination to begin
following the execution of this Agreement, and further subject to the terms and
conditions set forth herein, the Shareholder desires to sell all of its right,
title and interest in the Stock to the Company, and the Company desires to
purchase the Stock;
WHEREAS, upon the satisfactory completion of the due diligence
examination, the delivery of the financial statements, schedules, disclosure
documents, questionnaires and other information required by this Agreement, and
approval of the same by the Company, the parties hereto will close in escrow
pursuant to the terms and conditions set forth herein;
WHEREAS, upon satisfaction of the conditions set forth herein, the escrow
will be terminated, and the sale of the Stock will be consummated;
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
Shareholder, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Closing in Escrow
1.1. Overview. Upon execution of this Agreement, the Shareholder
shall be obliged to deliver to the Company: (i) Disclosure Files (as defined in
Section 9.1 below); and (ii) within thirty (30) days after execution of this
Agreement, the audited and unaudited financial statements required pursuant to
Section 1.3 below.
After approval of the same by the Company, and prior to filing the
registration statement with the Securities and Exchange Commission relating to
the initial public offering of the common stock, par value $.01 per share, of
the Company (the "Initial Public Offering"), the Company will deliver to the
Shareholder a disclosure document, together with a notice (the "Notice")
specifying the date (being no later than March 31, 1998) by which the
Shareholder must execute and deliver a satisfactory shareholder representation
letter in the form attached to this Agreement for identification as Exhibit B
(or in such other form as the parties may agree) in order to consummate the sale
of the Stock pursuant to the terms of this Agreement.
The parties acknowledge that the Corporation currently owns the
premises from which it conducts its business operations, to wit: 00/00 Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxx XX0 (the "Operating Site"). The Company shall have the
option, exercisable by written notice to the Shareholder given at least 30 days
prior to Closing, to: (i) purchase the Operating Site (by increasing the
Purchase Price by a figure equal to (pounds)600,000 plus the balance due under
the West Brom Loan as of Closing, which increase in the Purchase Price is
hereinafter referred tot as the "Property Price"); or (ii) leasing the Operating
Site pursuant to the provisions of that certain lease attached hereto as
Schedule 1.1. In the event that the Company fails to give the Shareholder timely
written notice of its election to purchase the Operating Site, then, prior to or
simultaneously with the Closing (as defined below), the Corporation will: (i)
declare a dividend in specie of the freehold of the Operating Site subject to
the related loan to the West Bromwich Building Society of approximately
(pounds)470,633 (the "West Brom Loan"); and (ii) enter into a lease for the
Operating Site (the "Lease") in the form set forth in Schedule 1.1.
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In the event that the Company fails to give the Shareholder timely
written notice of its election to purchase the Operating Site, and, prior to
Closing, the Shareholder does not assume the West Brom Loan, then the Company
will reduce the cash portion of the Purchase Price by the dollar amount of such
liability as of the Closing Date.
Upon timely delivery from the Shareholder of a shareholder
representation letter in the form set out in Exhibit B, the parties will close
in escrow (the "Closing in Escrow") pursuant to the terms and conditions of this
Agreement. Such Closing in Escrow shall take place within thirty (30) days (or
such shorter period as is specified in the Notice) after timely delivery of a
shareholder representation letter from the Shareholder in the form set forth in
Exhibit B.
In the event that the Shareholder does not deliver a shareholder
representation letter in the form set forth in Exhibit B within thirty (30) days
of receipt of the Notice, this Agreement will be of no further force or effect,
except for any and all obligations under Sections 3.2 (confidentiality) and 8.2
(effect of termination under Section 8.1), which obligations will survive
termination of this Agreement.
1.2 Closing in Escrow Deliveries and Other Actions.
(a) Shareholder's Deliveries at Closing in Escrow. At the
Closing in Escrow, the Shareholder shall deliver the following to the law firm
of Paisner & Co, as escrow agent: (i) certificates (or other appropriate
documentation) representing all of the Stock with duly executed stock transfer
forms conveying the Stock represented thereby to the Company, free and clear of
all liens, security interests and claims, encumbrances or other rights of third
parties of any nature whatsoever, and granting unrestricted title to and
possession of the Stock to the Company, provided that in respect of Stock over
which the Shareholder has options which have not prior to the Closing been
completed this obligation shall be satisfied by the delivery of an agreement
duly executed by the Shareholder and the party holding shares in the Corporation
agreeing to the exercise of such option conditional only on Closing taking
place; (ii) the Corporation's corporate minute book, including the Stock
Certificate Book and all of the original share certificates (or other
appropriate documentation) representing the Corporation's capital stock, or
options to purchase such capital stock, at one time issued (but no longer issued
and outstanding); and (iii) all consents, waivers, and authorizations
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reasonably necessary or appropriate for the consummation of the transactions
contemplated by this Agreement.
Photocopies of all documents delivered in escrow to Paisner & Co
shall be delivered to the law firm of Silver, Xxxxxxxx & Xxxx, L.L.P., promptly
after receipt thereof by Paisner & Co.
(b) Consummation of Sale. Upon Closing in Escrow, subject to
the terms and conditions of this Agreement, the Company will be obligated to
purchase the Stock, and the Shareholder will be obliged to sell the Stock, at
the Purchase Price specified in Section 1.3 below, on the Closing Date specified
in Section 1.4 below.
1.3. Purchase Price. The purchase price for the Stock (the "Purchase
Price") shall be equal to Ten Million Eight Hundred Fifty Thousand Pounds
(U.K.)((pounds)10,850,000), subject to adjustment (if any) as provided in
Section 1.1 above.
Unless the Company gives the Shareholder written notice to the
contrary, the Shareholder shall deliver to the Company, within thirty (30) days
after execution of this Agreement: (i) audited financial statements of the
Corporation, including balance sheets dated as of September 30, 1994, 1995 and
1996, and income statements and cash flow statements for each of the three
twelve month periods ended on such dates; and (ii) unaudited financial
statements of the Corporation (the "June Figures", attached hereto as Exhibit
A), including a balance sheet dated as of June 30, 1997 and an income statement
and a cash flow statement for the nine month period ended June 30, 1997. In the
event that the closing of the Initial Public Offering has not occurred on or
before November 12, 1997, then upon written request from the Company given on or
before March 1, 1998, the Shareholder shall permit representatives of the
Company to prepare such additional financial statements of the Corporation as
the Company may desire (at the sole expense of the Company).
The Company shall pay Seven Million, Three Hundred Fifty Thousand
Pounds (U.K.)((pounds)7,350,000) of the Purchase Price (plus the Property Price,
if applicable) in cash and Three Million, Five Hundred Thousand Pounds
(U.K.)((pounds)3,500,000) of the Purchase Price in (restricted) stock of the
Company (the "Company Stock"). The number of shares of Company Stock to be
issued as partial payment of the Purchase Price shall be equal to the aggregate
dollar value of the stock component of the Purchase Price divided by the Initial
Public Offering price per share as set forth on the cover page of the prospectus
relating to the Initial Public Offering. (Pounds) 750,000 of Company Stock
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(the "Escrowed Stock"), and appropriately executed stock powers relating
thereto, shall be held in escrow (by a representative of the Company, and a
representative of the Shareholder, as joint escrow agents, pursuant to a
mutually agreeable escrow agreement) to secure the obligations of the
Shareholder pursuant to Section 9 below.
The Shareholder acknowledges that the sale of the Company Stock will
be restricted for a period of time by virtue of a "lock-up" agreement, as may be
required by the Company, by which the sale of the Company Stock is restricted
(perhaps prohibited) for a period of two (2) years from the date of the closing
of the Initial Public Offering, provided that: (i) the sale of such stock will
not restricted in the event that a third party makes an offer for the entire
issued capital stock of the Company, and the majority of the shareholders of the
Company accepts such offer; (ii) such shares of stock may be transferred to
members of the families of the Shareholder, or associated trusts, for fiscal
reasons, subject to the consent of the Company (not to be unreasonably withheld
or delayed), and subject in all cases to compliance with applicable U.S. federal
and state securities laws, rules and regulations; and (iii) (notwithstanding the
foregoing) such shares of stock may be transferred at such earlier time as the
original Class a members of Dispatch Management Services LLC transfer their
stock in the Company or any part thereof (excluding the Escrowed Stock, and
excepting from the effect of this clause iii transfers by operation of law, such
as by reason of death, bankruptcy, mental or physical incapacity, or divorce).
1.4. 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 Stock
pursuant to this Agreement (the "Closing") shall take place 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").
At the Closing: (i) Paisner & Co. shall deliver to the Company the
certificates, minute book, documents, and other materials theretofore held in
escrow from the Closing in Escrow; (ii) the Shareholder shall deliver to the
Company any updated consents, waivers and authorizations as
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referred to in Section 1.2(a)(iii) above which may reasonably be required;
(iii) the Shareholder shall deliver to the Escrow Agents appropriately executed
stock powers relating to the (pounds)750,000 of Company Stock to be placed in
escrow as specified above; (iv) the Company shall deliver the Purchase Price to
the Shareholder by way of: (a) payment in cleared funds in pounds sterling of
(pounds)7,350,000 (plus the Purchase Price, if applicable) to the Client Account
of Paisner & Co (whose receipt will be good discharge) as follows:
Bank: Barclays Bank Plc
Branch: Fleet Street Goslings Business Centre
00 Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Sort Code: 20-32-29
Account No. 600 65013;
(b) delivery of (pounds)2,750,000 in Company Stock to the Shareholder; and (c)
delivery of (pounds)750,000 in Company Stock to the joint escrow agents as
specified above; and (v) the Company shall pay the shareholder loan of
(pounds)212,500 and the directors' loan of (pounds)212,500 each as specified in
the audited accounts of the Corporation for the period ended September 30, 1997.
2. Representations, Warranties and Covenants of the Shareholder.
Subject to the limitations set forth in Section 9 below, and except
as set forth in the Disclosure Files (as defined in Section 9.1 below), the
Shareholder hereby represents, warrants and covenants to the Company as follows
(the "Warranties"):
2.1. Organization, Standing and Power. The Corporation is a limited
liability company duly organized, and validly existing under the laws of
England, and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted. The
Corporation is duly qualified 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.
2.2. Authority and Enforceability. The Shareholder and the
Corporation have all requisite legal right, power and authority to enter into
this Agreement and to agree to the transactions contemplated hereby and thereby
and to perform all of their respective obligations hereunder and thereunder.
This Agreement constitutes the legal, valid and binding obligations of the
Shareholder and the Corporation, enforceable in accordance with its terms,
subject to applicable bankruptcy,
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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.
2.3. Capital Structure, Due Authorization and Issuance. The capital
structure of the Corporation consists solely of an authorized share capital of
one million shares of (pounds)1 par value Ordinary Shares, of which 75,000 are
issued and outstanding, and will consist solely of the foregoing as of the
Closing in Escrow Date and the Closing Date. All issued and outstanding Stock
has been duly authorized and validly issued, are fully paid and non-assessable,
and were issued in compliance with all applicable securities laws.
2.4 Title to Stock. The Shareholder owns all of the Stock, free and
clear of any and all claims, liens, restrictions, pledges, charges, options,
security interests, encumbrances or other rights of third parties, including any
imposed by law. There are no other shares of capital stock, Loan Stock, options
or other equity or debt securities of the Corporation, of any kind or class
whatsoever, authorized, issued or outstanding, or any warrants, subscription
rights, or any other rights, agreements, or commitments of any nature relating
to the issuance of, or granting of, rights to acquire any shares of capital
stock or such securities of the Corporation.
2.5 Title to and Condition of the Corporation's Assets. The
Corporation has title to all of the assets set forth in the Financial Statements
(as defined in Section 2.11 hereinbelow). None of the Corporation's assets is
subject to any restriction, mortgage, pledge, lien, security interest, lease,
charge, encumbrance, objection or joint ownership, other than liens arising in
the ordinary and proper course of business. The Corporation's material assets
are in an adequate condition for their current purpose.
2.6. Sufficiency of Assets. The material assets used by the
Corporation are either owned by it (and reflected in the Closing Balance Sheet,
as defined in Section 9 below) or subject to the leasing and hire purchase
agreements described in the Disclosure Files which are agreements on arms length
terms.
2.7. No Violations Resulting From Transactions. The execution and
delivery of this Agreement by the Shareholder and the Corporation, and the
consummation of the transactions contemplated hereby by the Shareholder and the
Corporation will not (a) conflict with or violate any
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provision of the organizational documents of the Corporation, (b) require any
consent, waiver, approval, authorization, permission, or filing with or
notification to, any third party which would be material to the operations of
the Corporation, (c) result in or constitute a default, or require any consent
or approval of or notice to any person or entity, or result in the creation of
an encumbrance, under or pursuant to (i) any of the material contracts to which
the Corporation is a party (including but not limited to contracts of insurance
and leases as applicable), or (ii) any other material agreements to which the
Shareholder is a party, or (d) violate any law applicable to the Shareholder or
the Corporation.
2.8. Compliance with Laws.
(a) The Corporation is, and at all times during the past three
years has been, in material compliance with all applicable laws; and
(b) The Corporation 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 Company 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 Corporation is currently subject (or which the Corporation was subject to
during the previous three years), and (ii) all correspondence through the date
hereof with respect to any of the matters referred to in clause (b) of this
Section 2.8. Neither the Shareholder nor the Corporation is 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 the Corporation (i.e., a ten percent or greater decrease in overall
value of the Corporation).
2.9. 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 Shareholder and/or the Corporation, threatened, that
questions the validity of this Agreement or any action taken or to be taken by
the Shareholder or the Corporation in connection with the consummation of the
transactions contemplated hereby or which seeks to prohibit, enjoin or otherwise
challenge any of the transactions contemplated hereby. The Disclosure Files (as
defined below) set 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
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the status thereof), of each material Legal Proceeding pending or, to the
knowledge of the Corporation and/or the Shareholder, threatened against or
affecting the Corporation. There is no outstanding or, to the knowledge of the
Corporation and/or the Shareholder, 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 Corporation.
2.10. Financial Advisors.
(a) No person or entity has acted directly or indirectly as a
broker, finder or financial advisor for or to the Shareholder and/or the
Corporation in connection with the negotiations relating to or the transactions
contemplated by this Agreement; and
(b) No person or entity is entitled to any fee or commission
or like payment, or expense reimbursement, from the Corporation in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of the Corporation and/or the Shareholder hereunder or thereunder.
The Shareholder hereby agrees that all such fees, commissions or like payments,
or expense reimbursement shall be for the sole account of the Shareholder.
2.11. Financial Statements; Receivables. Attached hereto as Exhibit
C are true, correct and complete copies of the Corporation's most recent
unaudited financial statements which have been prepared in good faith and on a
basis consistent with previous management accounts for the Corporation. The
financial statements (including the notes and exhibits thereto) for the periods
ended September 30, 1994, 1995 and 1996 to be delivered pursuant to Section 1.3
herein (the "Financial Statements") were prepared in accordance with the books
and records of the Corporation, have and will have been prepared in accordance
with U.K. generally accepted accounting principles ("GAAP"), applied
consistently with the past practices of the Corporation, except where otherwise
specifically noted therein, and show in all material respects a true and fair
view of the financial position, results of operations and changes in financial
position or cash flows, whichever is applicable, of the Corporation as at the
dates and for the periods indicated. Without limiting the foregoing, the Closing
Balance Sheet shall show a true and fair view of the position of the Corporation
as at the date to which it was prepared (including liabilities or obligations of
any nature, whether known or unknown). The Corporation has paid (to the extent
due) all federal and local income, profits,
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franchises, sales, use, occupation, property, excise and payroll taxes, and all
license fees and other charges imposed upon it, and has timely filed all tax
returns and related documents required to be filed with any governmental
authority (the warranty set forth in this sentence being referred to in Section
9 below as the "Tax Warranty"). There are no outstanding or proposed statements
of deficiency in tax payments to any federal, local or foreign government with
respect to the Corporation for any tax period (the warranty set forth in this
sentence and the immediately preceding sentence being referred to in Section 9
below as the "Tax Warranty"). As of the dates such Financial Statements were and
will be prepared, all accounts receivable reflected on the Financial Statements
have and will have arisen from bona fide transactions in the ordinary course of
the Corporation's business, consistent with its past practices. The Shareholder
has no reason to believe that such accounts receivable will not be good and
collectible at the aggregate recorded amounts thereof, net of any applicable
reserves for returns, credit notes, settlement discounts or doubtful accounts
which are reflected in such Financial Statements (such reserves, the
"Reserves"); such Reserves are believed to be adequate and reasonable and were
established in accordance with GAAP.
2.12. Default. The Corporation 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
Shareholder have not been notified of any such defaults or breaches.
2.13. Absence of Certain Developments.
The Shareholder is not aware of: (i) any proposed legislation
directly affecting the Corporation's business; (ii) any change in the accounting
policies or practices of the Corporation or in generally accepted accounting
principles or in the tax reporting policies of the Corporation; or (iii) any
proposed increase in the rates of taxation applicable to the services of the
Corporation, which (in each case) could have a material adverse effect on the
Corporation (i.e., a ten percent or greater decrease in overall value of the
Corporation).
The Corporation has not entered into any transaction or contract, or
conducted its business, other than in the ordinary course consistent with past
practice.
2.14. Intellectual Property. The Corporation does not own any
registered Intellectual Property and to the extent that it owns any property
which is unregistered Intellectual
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Property it has not licensed this, it is not valued in the Closing Balance Sheet
and it has not received any notice from any other party claiming to be entitled
to it. Other than routine computer software which is properly licensed to the
Corporation it does not use any Intellectual Property belonging to any other
person. The Corporation has not licensed or sold to any other person its
customer list.
2.15. Insurance. The Corporation currently maintains, and as of the
Closing in Escrow and the Closing Date will maintain, valid insurance policies,
with limits of insurance at a level consistent with the level historically
maintained by the Corporation. There are no outstanding material insurance
claims by the Corporation 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 Corporation. During the past two years, the
Corporation has not been refused any insurance coverage by any insurer from
which the Corporation has sought coverage.
2.16. Leases. The Corporation is not a lessee or tenant of any real
or personal property.
2.17. Labor Agreements. The Corporation is not a party to any
collective bargaining agreement. Except as required by law, the Corporation is
not bound by any severance pay requirements which would require payment of more
than 3 months' pay.
2.18. Employee Benefit Plans. The Corporation does not maintain or
contribute to, and it has no liability or obligation with respect to any formal
or informal stock option, profit sharing, pension, retirement, bonus, stock
bonus, thrift-savings, incentive, benefit, welfare, cafeteria, medical
insurance, dental insurance, life insurance, accidental death and dismemberment
insurance, disability insurance or other similar plan, policy or arrangement
(collectively referred to herein as the "Plans"). The Corporation is not in
default under the terms of any of the Plans. The Corporation has made all
contributions to each of the Plans required by the terms of the respective
Plans, as well as all contributions required to be made in order to satisfy all
requirements of law. Each of the Plans has sufficient assets to satisfy (under
reasonable and permitted actuarial assumptions) its obligations on a termination
basis, and the level of contributions required pursuant to the terms of each
Plan is sufficient to satisfy (under reasonable and permitted actuarial
assumptions) the obligations of such Plan on a continuing basis for benefits
accrued to date.
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2.19. Compliance With Applicable Law. The Corporation's Plans are
currently in compliance in all respects with applicable law.
2.20. Employee Relations. The Corporation is in substantial
compliance with all applicable federal and local laws, statutes, regulations,
orders, codes, ordinances, guidelines, executive orders, contractor
requirements, judicial and administrative judgments and determinations to which
the Corporation is or was a party, and any other authority governing the
Corporation, with respect to its employees (hereinafter collectively referred to
as the "Applicable Employment Standards"), including, but not limited to,
employment, employment practices, fringe benefits, terms and conditions of
employment, termination of employment, severance or separation pay, workers'
compensation, disability, entitlements, unemployment insurance, employment
screening, wage-hour, employment discrimination on any basis, equal employment
opportunity, individual employee rights, affirmative action, occupational health
and safety, and immigration and right to work requirements. The Corporation
further represents that it is not in arrears in the payment of wages to any
employee (except to the extent of its normal payroll practices), and there are
no claims, liabilities, demands or causes of action, realized or unrealized,
actual, potential or contingent, pursuant to statutory rights or in tort,
contract or otherwise, against the Corporation arising out of or in connection
with any event, fact, circumstance or occasion relating to any applicant for
employment, the employment of any employee or the separation from employment of
any employee.
2.21. Licenses. The Corporation has the radio licenses, and the
appropriate license for the "ROCS" software, necessary for the conduct of its
business as presently conducted. Neither the radio licenses nor the license for
the ROCS software will be adversely affected by the consummation of the
transactions contemplated by this agreement. The Corporation does not possess
any licenses issued by public authorities, and the Corporation knows of no
licenses issued by public authorities which are necessary for the conduct of its
business as presently conducted.
2.22. Criminal Practices. The Corporation is not engaged and has not
been engaged in any criminal practices, including, but not limited to, payoffs,
kickbacks or illegal gifts.
2.23. Contracts. Neither the Corporation nor the Shareholder has
received notice of is aware of any present intention on the part of any
significant customer, supplier or other vendor with which the Corporation does
business to the effect that such customer either (x) will terminate
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or significantly change its existing business relationship with the Corporation
either now or in the foreseeable future, or (y) will fail to renew or extend its
existing business relationship with the Corporation at the end of the term of
any existing contractual arrangement such entity may have with the Corporation.
3. Additional Representations, Warranties and Covenants of the
Shareholder.
3.1. Non-Competition and Other Covenants of the Shareholder. The
Shareholder undertakes that it will not itself directly compete with the
Corporation and it will not itself knowingly solicit or entice away any of the
employees of the Corporation; provided that nothing in this section shall
prevent the Shareholder from continuing to have or acquiring investments in any
company or business which may do any of such things.
3.2. Confidentiality. The Shareholder shall abide by the terms of
the Confidentiality Agreement between the Corporation and the Company (or the
Company's predecessor, Dispatch Management Services LLC) executed on or about
September 3, 1997. The Shareholder and the Corporation both acknowledge and
agree that the Company shall have the right to disclose certain information
concerning the Corporation to third parties other than competitors of the
Corporation (which third parties will in turn 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 Shareholder 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 to perform fully
its obligations hereunder. The
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execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Company. This Agreement has been duly executed and
delivered by the Company, and constitutes 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 the consummation of the
transactions contemplated hereby by the Company, will not (a) conflict with or
violate any provision of the Certificate of Incorporation or By-laws of the
Company, (b) except as set forth on Exhibit D, require any consent, waiver,
approval, authorization or 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 Shareholder 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 any action taken or to be taken by the Company in connection with
the consummation of the transactions contemplated hereby or
14
which seeks to prohibit, enjoin or otherwise challenge any of the transactions
contemplated hereby or thereby. Exhibit E 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 E. Except as set forth in Exhibit E, 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.
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 information supplied to the Shareholder by or on behalf
of the Company in connection with this Agreement, or the transactions
contemplated hereby 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 Shareholder and the Corporation each 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) it shall use
such rights and powers as are reasonably available to it to procure that the
Corporation shall in all material respects:
(a) conduct its business only in the ordinary course,
consistent with past practice;
15
(b) use its best efforts to (i) preserve the present business
operations, organization (including, without limitation, management and the
sales force) and goodwill of its business and (ii) preserve the present
relationship of the Corporation with Persons having business dealings with the
Corporation;
(c) comply with all laws and with all contractual and other
obligations applicable to it;
(d) not change its organizational documents;
(e) not issue or contract to issue any stock, securities,
options, or debt which is convertible to stock or securities;
(f) not declare or agree to declare or otherwise make any
dividend or other distribution or payment in respect of the Stock (other than
the Operating Site);
(g) not sell, transfer, assign, pledge, encumber or otherwise
dispose of any of its assets, except in the ordinary course of business
consistent with past practice;
(h) not acquire any material properties or assets and not
sell, assign, transfer, convey, lease or otherwise dispose of any of its
material properties (other than the Operating Site);
(i) maintain its present insurance or equivalent coverage on
all of its assets and on all real and personal property leased to it;
(j) promptly notify the Company of (i) the occurrence of any
matter which may have a material adverse effect on its business or its assets
(i.e., a ten percent or greater decrease in overall value of the Corporation),
and (ii) any Legal Proceeding commenced by or against it or any Legal Proceeding
commenced or threatened relating to the transactions contemplated by this
Agreement, which in either case is material to the business;
(k) not agree to anything prohibited by this Agreement or
anything which would make any of the representations and warranties of the
Shareholder or the Corporation in this Agreement untrue or incorrect in any
material respect.
Provided that:
(i) the Corporation will be entitled to pay monthly dividends of up to an
aggregate amount of (pounds)20,000 per month to the shareholders of the
Corporation; and
16
(ii) the Corporation may incur capital expenditures as long as the Company
shall have been given prior notice, and the opportunity to consult with
the Corporation's management, once such capital expenditures exceeds
(pounds)100,000 in the aggregate (with additional prior notice and
opportunity to consult once such capital expenditures exceed
(pounds)200,000, and (pounds)300,000); and the Corporation shall not make
capital expenditures in excess of (pounds)350,000 without the Company's
prior written approval, which approval shall not be unreasonably withheld
or delayed;
notwithstanding the provisions of this Section 5.
6. Additional Agreements and Representations.
6.1. Access to Information. The Shareholder agrees to procure that,
prior to the Closing Date, the Company shall be entitled (at its sole expense
and subject to suitable undertakings as to confidentiality), 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 Corporation and
examination of its 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 shall not involve any outside advisers of the
Corporation unless the costs of such outside advisers shall be paid in advance
by the Company, and the Shareholder will procure that the Corporation shall
cooperate to permit such investigation and examination on such basis.
6.2. Non-solicitation Pending Closing. After execution of this
Agreement, and through the Closing Date, neither the Corporation nor the
Shareholder shall pursue, initiate, encourage or engage in any negotiations or
discussions with any third parties concerning the sale of the Corporation, its
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 reasonable 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 consummate and make
effective the transactions contemplated by this Agreement, (ii) obtain all
17
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental entities, third parties and parties to contracts with the
Corporation as are necessary for consummation of the transactions contemplated
by this Agreement, and (iii) fulfill all conditions precedent applicable to such
party pursuant to this Agreement. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, each party hereto shall use their respective reasonable efforts to
take or cause to be taken all such necessary action.
6.4. Notification of Certain Matters. The Corporation and the
Shareholder shall, as soon as practicable, give 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 Corporation to which it 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 (c) any material adverse change (i.e., a ten
percent or greater decrease in overall value of the Corporation) in the
properties, business operations, results of operations, or financial condition
of the Corporation, other than changes resulting from general economic
conditions. In addition, the Corporation and the Shareholder shall be required
to update the Disclosure Documents and other information supplied pursuant to
this Agreement at such time as the information contained therein changes in any
material respect.
6.5 Working Capital as of the Closing Date. The Shareholder shall
ensure that the Corporation's working capital (defined as the excess of current
(liquid) assets over current liabilities in each case as defined in the June
Figures) as of the Closing Date is no less than the Corporation's working
capital as of June 30, 1997, and that the Corporation's net asset value as of
the Closing Date is no less than the Corporation's net asset value as of June
30, 1997. For purposes of determining whether the Corporation had the required
working capital and net asset value as of the Closing Date, the Company will
cause to be prepared, promptly following the Closing, a balance sheet (the
"Closing Balance Sheet") of the Corporation as of the Closing Date. The Closing
Balance Sheet shall be prepared in accordance with the English Companies Acts
and GAAP, and shall be prepared on the
18
same basis as the June Figures and with the same accounting policies provided
always that accrued tax liabilities will be provided for as if the tax year
ended on the Closing Date).
In the event that the Company shall notify the Shareholder in writing
within five days after preparation of the Closing Balance Sheet that there is a
Shortfall (i.e., the amount necessary to bring the Corporation's working capital
and net asset value up to their respective levels as of June 30, 1997), then the
Company shall forthwith instruct Price Waterhouse to audit the Closing Balance
Sheet, and to calculate the working capital therein in accordance with the
English Companies Acts and GAAP. Price Waterhouse shall then determine the
amount of the Shortfall as set out in this paragraph 6.5 and set out their
determination in a certificate (the "PW Certificate") which they will deliver to
the Shareholder together with a copy of the Closing Balance Sheet. If the
Shareholder disputes the contents of the PW Certificate and/or the Closing
Balance Sheet, they shall notify the Company within 10 working days of their
receipt of the Certificate (the "Notification Period"). If the Shareholder does
not serve written notice within the Notification Period that they dispute the PW
Certificate and/or the Closing Balance Sheet (the" Dispute Notice") specifying
in reasonable detail the subject matter of the dispute then they will on the day
next following the end of the Notification Period forthwith pay the Company an
amount sufficient to bring the working capital and/or the net asset value, as
the case may be, up to the required amounts in order to pay the Shortfall.
If the Shareholder serves a Dispute Notice within the Notification Period,
the Company and the Shareholder will negotiate in good faith during the period
of 7 days to resolve the issue in dispute. If the dispute is not resolved within
the said period of 7 days the subject matter of the dispute shall be referred to
the President for the time being of the Institute of Chartered Accounts in
England and Wales who shall nominate an appropriate accountant (the "Referee")
to adjudicate on the dispute in question.
The Referee shall act as an expert and not as an arbitrator and the costs
and expenses of the Referee shall be borne as he shall direct. All issues as to
whether the Closing Balance Sheet has been prepared in accordance with the
English Companies Acts and GAAP and determination of assets and liabilities on
the Closing Balance Sheet shall be determined by the Referee whose decision
shall be final and binding upon the Company and the Shareholder in the absence
of manifest error.
19
The Referee shall serve notice of his decision and the amount of the
Shortfall (if any) on the Company and the Shareholder. If and to the extent that
there is a Shortfall following such determination, the Shareholder shall pay
such amount to the Corporation within 5 working days of service on the
Shareholder of the determination of the Referee.
The Company will procure that the Corporation will promptly provide the
Shareholder and its advisers and the Referee all working papers and documents
reasonably necessary for them to decide upon the issues relevant to the PW
Certificate and the Closing Balance Sheet and will afford them facilities to
inspect the same or copies if requested.
7. Conditions Precedent.
7.1. Conditions to Obligations of All Parties. The respective
obligations of each party under this Agreement in respect of the matters to be
performed at the Closing in Escrow Date and the Closing Date shall be subject to
the satisfaction prior to the Closing in Escrow Date and the Closing Date (as
appropriate) 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.
(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 reasonable 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 to be performed at the Closing in Escrow
and the Closing 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 set forth in this Agreement (without 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
20
and warranties speak as of a specified, earlier date) would be true if they had
been repeated as of the Closing in Escrow Date and the Closing Date as though
made on and as of the Closing in Escrow Date and the Closing Date, respectively,
except as otherwise contemplated by this Agreement.
(b) Performance of Obligations. The Corporation and the
Shareholder shall each have performed all obligations required to be performed
by each such party under this Agreement at or prior to the Closing in Escrow
Date and the Closing Date, respectively.
(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 Corporation, its assets or its
business (i.e., a ten percent or greater decrease in overall value of the
Corporation).
(d) Contractual Consents. The Corporation and/or the
Shareholder 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).
7.3. Conditions to Obligations of the Corporation and the
Shareholder. The obligations of the Corporation and the Shareholder 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
Corporation and the Shareholder, any or all of which may be waived in whole or
in part by the Corporation or the Shareholder).
(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 in Escrow Date and the Closing Date as though made on and as of the
Closing in Escrow Date and the Closing Date, respectively, 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 in Escrow Date and the Closing Date, respectively.
21
7.4 Costs of Satisfying Conditions. To the extent that any costs are
incurred in satisfying any of the conditions contemplated by this Agreement
these shall be borne by the Company, which will reimburse any other party which
has suffered any of such costs promptly upon demand, provided however that those
costs incident to the Corporation's or the Shareholder's compliance with the
requirements of English law, as necessary to fulfill their respective
obligations under this Agreement, shall be borne by the Corporation or the
Shareholder, as appropriate.
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
Shareholder;
(b) by either the Company or the Shareholder, if the June
Figures, as finally prepared by Price Waterhouse, are materially different than
the June Figures, as set forth in the draft unaudited financial statements as
prepared by Price Waterhouse and delivered to the Company and the Shareholder
prior to execution of this Agreement;
(c) by either the Company or the Shareholder, if the Initial
Public Offering does not close by March 31, 1998; or
(d) by the Company in the event that the Shareholder does not
timely deliver a shareholder representation letter in the form of Exhibit B.
8.2. Effect of Termination Under Section 8.1. In the event of
termination of this Agreement by either the Company or the Shareholder 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
up to a maximum of (pounds)10,000.
22
9. Limitations.
9.1. Limitation on Shareholder's Liability. The Shareholder shall
have no liability under this Agreement or in connection with this Agreement,
howsoever arising, whether in contract, tort or otherwise, unless and until the
aggregate amount of all proper claims under this Agreement shall exceed
(pounds)20,000 and further provided that the liability of the Shareholder under
this Agreement or in connection with this Agreement, howsoever arising, whether
in contract, tort or otherwise, shall be limited to the Company Stock placed in
escrow pursuant to the provisions of Section 1.3 above (the "Escrowed Stock"),
and further provided that the liability of the Shareholder under this Agreement
shall be limited to an aggregate of (pounds)150,000 in value of Escrowed Stock
as to the Tax Warranty (as defined in Section 2.11 above). As set forth in the
escrow agreement governing the disbursement of the Escrowed Stock (the "Escrow
Agreement"), the number of shares of Company Stock to be released from escrow
shall be equal to the dollar amount of the Warranty Claim (as defined below)
divided by the latest publicly quoted closing price for the Company Stock as
appears in the most recent copy of the Wall Street Journal on the date that
disbursement is made. Notwithstanding anything in this Agreement to the
contrary, the Company shall have no rights or remedies whatsoever against the
Shareholder in respect of the Purchase Price paid over to the Shareholder other
than the Escrowed Stock and the Company's sole remedies and rights pursuant to
this Agreement or in connection with this Agreement, howsoever arising, whether
in contract, tort or otherwise, shall be by way of disbursement of the Escrowed
Stock in accordance with the Escrow Agreement. Provided always that none of the
foregoing limitations will apply in the case of fraud or fraudulent
misrepresentation.
It is recorded that the Shareholder is entering into this Agreement in its
capacity as the trustee of a trust, and has no personal interest in the subject
matter hereof. Notwithstanding any of the other provisions of this Agreement,
the liabilities of the Shareholder in terms of this Agreement shall be limited
to the assets from time to time held by it as the trustee of such trust ("Trust
Assets"). Provided always that the Shareholder undertakes unconditionally that
the Escrowed Stock will at all times remain part of the Trust Assets whilst
there are obligations outstanding under this Agreement.
Except in the case of fraud or fraudulent misrepresentation, no claims
shall be capable of being made against the Shareholder under or in connection
with this Agreement unless written notice
23
thereof (specifying all material details of the breach or other event to which
such a claim shall relate and the Company's bona fide estimate of the amount
thereof) shall have been given to the Shareholder not later than 24 months from
the date of this Agreement. Any such claim which may be made shall (if it has
not been previously satisfied, settled or withdrawn) be deemed to be withdrawn
at the expiration of 6 months from the date of giving notice of such claim
unless legal proceedings in respect thereof have been commenced by the issuing
and service of such proceedings against the Shareholder and the subject matter
of any such claim which shall be deemed withdrawn shall not be capable of being
the subject of a further claim.
The Company acknowledges that it has not relied on any
representation, warranty, covenant or undertaking of the Shareholder or any
other persons save for any representation, warranty, covenant or undertaking
expressly set out in this Agreement or the Disclosure Files; and that without
limiting the foregoing it has no rights pursuant to any of the information
provided to it prior to the date of this Agreement; and that the Company is not
aware of any matter or thing which in its reasonable opinion may be inconsistent
with any of the Warranties or which would or may give rise to any liability on
the part of the Warrantors pursuant to the Warranties. The Company acknowledges
that no representation, warranty, covenant or undertaking (whether express or
implied, statutory or otherwise) made or alleged to have been made by or on
behalf of the Shareholder in connection with or arising out of the sale of the
Stock (whether by the provision of information or otherwise howsoever) and which
is not expressly set out in this Agreement shall give rise to any liability on
the part of the makers thereof or any other person or persons who might
otherwise be liable in respect of the making thereof.
The Warranties are given subject to all matters disclosed by the
minute books of the Corporation and to all other matters disclosed by any
written information made available to the Company or its advisers prior to the
execution of this Agreement (the "Disclosure Files"), all of which matters shall
be treated as disclosed against each and all of the Warranties.
9.2. Specific Limitations. The Shareholder shall have no liability
to the Company and the Company shall not have any claim whatsoever against the
Shareholder in respect of any claim under the provisions of Section 2 above (a
"Warranty Claim") or any matter giving rise thereto the extent that:
24
(i) provision or allowance or reserve in respect thereof has been
made in the Closing Balance Sheet or payment or discharge
thereof has been taken into account in preparing such balance
sheet or the matter to which the claim relates was
specifically referred to in the note to such balance sheet;
(ii) it would not have arisen but for any change after Closing in
the accounting policies or practices of the Corporation or in
generally accepted accounting principles or in the tax
reporting policies of the Corporation;
(iii) it occurs as a result of any legislation not in force at the
date of Closing which takes effect retrospectively or occurs
as a consequence of a change in the interpretation of the law
or the practice or any taxation authority after the date
hereof in the United Kingdom;
(iv) it would not have arisen but for any voluntary act, omission,
transaction or arrangement after Closing otherwise than in the
ordinary course of business of the Corporation as at present
carried on;
(v) it would not have arisen but for any change in the nature or
conduct or any winding up or cessation after Closing of any
trade or business carried on by the Corporation; and
(vi) the Corporation recovers under a policy of insurance in
respect of the loss or damage which gives rise to the Warranty
Claim.
If any liability of the Shareholder is in respect of a liability of the
Corporation which is contingent when the Warranty Claim is notified to the
Shareholder, then the Shareholder shall not be obliged to make any payment in
respect of the liability until such time as the contingent liability becomes an
actual liability.
If after Closing there comes to the notice of the Company any matter or
claim or event or thing which may constitute or give rise to a Warranty Claim,
it shall be a condition of liability in respect of such Warranty Claim that the
Company shall:
(i) forthwith give written notice thereof to the Shareholder
giving full details of the Warranty Claim so far as then known
to the Company together with the Company's assessment of the
amount that and the date on which the Company
25
anticipates that the Shareholder will be required to make a
payment in respect of the Warranty Claim;
(ii) not make any admission of liability, agreement or compromise
with any person, body or authority in relation thereto without
the prior agreement of the Shareholder (which shall not be
unreasonably withheld or delayed); and
(iii) give the Shareholder and its professional advisers access to
the premises, personnel and advisers of the Company and the
Shareholder as may be relevant upon reasonable notice and
during normal business hours and access to any relevant
chattels, documents and records owned by or within the power
or control of the Company and/or the Corporation or to which
the Company or the Corporation has or can procure access so as
to enable the Shareholder and its professional advisers to
examine such chattels, accounts, documents and records and
take extracts or photocopies thereof for the purpose of
determining the nature and extent of the Warranty Claim and
the steps that may be appropriate to remedy or avert it.
Following the Company giving notice to the Shareholder of a Warranty
Claim, the Company shall afford the opportunity to take such steps as the
Shareholder considers reasonable to remedy or avert the Warranty Claim.
The Shareholder may require the Company to give such information and
assistance in connection with the affairs of the Corporation as the Shareholder
may reasonably request to avoid, resist, appeal or compromise the Warranty Claim
subject to the Shareholder's indemnifying the Company for itself and as trustee
for the Corporation against all costs and expenses which it or they may properly
incur in connection with such assistance.
The Shareholder may request the Company or the Corporation to allow the
Shareholder to take on or take over at its own expense the conduct of all
proceedings of whatsoever nature arising in connection with the Warranty Claim
subject to the Company's approval of the Shareholder's professional advisers,
which approval shall not be unreasonably withheld or delayed. If the Shareholder
takes on or takes over the conduct of proceedings, the Company shall, or shall
procure that the Corporation shall, provide such information as the Shareholder
may reasonably require in
26
connection with the preparation for and conduct of such proceedings. Any
settlement of a Warranty Claim the proceedings of which has been taken over by
the Shareholder shall be subject to the prior written approval of the Company,
which approval shall not be unreasonably withheld or delayed.
Where the Company or Corporation is entitled to recover from some other
person any sums in respect of a Warranty Claim the Company shall or shall
procure that the Corporation shall take such action as the Shareholder may
reasonably request to enforce such recovery and any amount so recovered shall be
taken into account in determining the liability of the Shareholder in respect of
any related Warranty Claim subject to the Shareholder's advancing to the Company
all costs and expenses which the Company may incur in connection with such
action.
For the avoidance of doubt, nothing in this Agreement shall in any way
restrict or limit the general obligation at law of the Company to take
reasonable steps to mitigate any loss or damage which it may suffer in
consequence of any breach by the Shareholder of the terms of this Agreement.
If, before the Shareholder has made a payment in respect of a Warranty
Claim, the Corporation or the Company shall recover (whether by payment,
discount, credit or otherwise including from insurers or any taxation authority)
any sum by reason of or in respect of the matter giving rise to the Warranty
Claim they shall take such recovery (less any reasonable costs and expenses
properly incurred in relation to such recovery) into account in determining the
amount of the Warranty Claim.
If the Shareholder shall have made any payment in respect of a Warranty
Claim and the Corporation or the Company shall subsequently receive a benefit
which was not taken into account in determining any liability of the Shareholder
in respect of the Warranty Claim and which would have reduced such liability had
the benefit been taken into account (including under any insurance) the Company
(for itself or on behalf of the relevant company as the case may be) shall
forthwith repay the Shareholder an amount equal to the lesser of:
(i) an amount corresponding to the benefit (including the amount of any
such refund but, in all cases, after deduction of any reasonable
costs or expenses properly incurred in such recovery as well as all
taxation thereon); and
(ii) the payment by the Shareholder to the Company in respect of the
Warranty Claim.
27
9.3 Guarantees
The following provisions of this Section 9.3 shall apply to any
guarantees, indemnities, undertakings, agreements or other contingent
liabilities given or entered into at any time by any of Xxxxxx Xxxxx and Xxxxxx
Xxxxx in relation to Corporation or its acts, omissions, obligations or
liabilities ("Guarantees"). The Company shall attempt to procure the release of
Xxxxxx Xxxxx and Xxxxxx Xxxxx from those Guarantees listed in the Disclosure
File for the purposes of this Section 9.3 as soon as practicable and in respect
of any other Guarantees of which Xxxxxx Xxxxx and Xxxxxx Xxxxx shall at any time
hereafter become aware as soon as practicable after notice thereof has been
given by Xxxxxx Xxxxx and Xxxxxx Xxxxx to the Company. Notwithstanding the
foregoing, unless the Company secures the release of the April 25, 1997
indemnity and all other guarantees and indemnities given by Xxxxxx Xxxxx and
Xxxxxx Xxxxx to Trade Indemnity - Xxxxxx Commercial Finance Ltd ("Xxxxxx"), the
Company shall pay at Closing the liability of the Corporation to Xxxxxx under
the factoring agreement between the Corporation and Xxxxxx dated November 2,
1992 and procure that the factoring agreement is discharged. The Company
undertakes to Xxxxxx Xxxxx and Xxxxxx Xxxxx that it will indemnify Xxxxxx Xxxxx
and Xxxxxx Xxxxx and keep Xxxxxx Xxxxx and Xxxxxx Xxxxx indemnified from and
against any and all liability (including in respect of claims, proceedings,
costs and interest) in relation to any claims made, or obligations arising on or
after Closing (as well as before Closing to the extent such claims or
obligations are set forth in the Disclosure Files) under or pursuant to any of
the Guarantees.
10. General Provisions.
10.1. Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement shall survive the
Closing for the period of two (2) years referred to in Section 9.2 above.
10.2. Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally 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 delivered personally or
by courier, or, if mailed, five business days after the date of mailing to the
following address, or to such other address or addresses as such Person may
subsequently designate by written notice given hereunder:
28
(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 Corporation or the Shareholder, to:
Pailex Corporate Services Limited
c/o Paisner & Co.
Xxxxxxxx Xxxxx
000 Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attention: X. X. Xxxxxx
with a copy to: Riverbank Limited
X.X. Xxx 000 Mignot Plateau
Xxxxxx Xxxxxx
Xx. Xxxxx Xxxx
Xxxxxxxx
Xxxxxxx Xxxxxxx XX0 0XX
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
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
29
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.
10.5. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of England. The parties irrevocably submit to the
sole jurisdiction of the courts of England and Wales in respect of any claim,
dispute or difference arising out of or in connection with this Agreement. The
Company hereby irrevocably appoints any partner of Akin Gump (London), located
at Xxx Xxxxx Xxxxx, Xxxxxx, Xxxxxxx XX0X 0XX, to be its agent for service of
proceedings within England and Wales.
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
adverse to any party. In the event that the enforceability of any
non-competition or similar covenants contained herein 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. 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, and the consummation of the transactions contemplated hereby, shall
be paid by the party incurring such costs and expenses.
10.9. Disclosure to Third Parties. The Company shall have the right
to disclose to third parties (except for competitors of the Corporation), 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.
10.10. Stamp Duty. The Company and the Shareholder shall share
equally the obligation to pay Stamp Duty as necessary for the Company's name to
be registered in the Register of Members of the Corporation.
30
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"
DISPATCH MANAGEMENT SERVICES CORP.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
Attest: "CORPORATION"
Bridge Wharf Investments Limited
_________________________ By: /s/ Xxxxxx Xxxxx
------------------------------------------
Name: Xxxxxx Xxxxx
Title: Managing Director
Witness: "SHAREHOLDER"
Riverbank Limited
__________________________ By: /s/ Riverbank
------------------------------------------
Duly authorized for Trustee, Xxx. X. Xxxxx
Settlement
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