Exhibit 2.65
BRAND MANAGER AGREEMENT
THIS AGREEMENT is entered into this 12th day of November, 1997, by and
between DISPATCH MANAGEMENT SERVICES CORP., a Delaware corporation ("DMS Corp.")
and Detroit Dispatch Management Services, Inc., a Michigan coporation (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 Express Messenger (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 $2,100,000 for the Brand during
calendar year 1998 and $2,500,000 for any twelve month calendar period (January
1-December 31) thereafter.
As set forth in paragraph 6 hereinbelow, the Brand Manager's failure
to maintain the minimum revenue base set forth in the immediately preceding
paragraph 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 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
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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 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 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.
(d) Minimum Retainer; Deferred Compensation. For the services
rendered by the Brand Manager pursuant to this Agreement, DMS Corp. shall
initially pay the Brand Manager a
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minimum retainer in the amount of $9,200 per month, in arrears, payable on the
25th day of the calendar month immediately following the month for which the
retainer is being paid. If, during the sixth complete calendar month following
the date of the Initial Public Offering of DMS Corp.'s common stock, the Brand
Contribution Percentage for the Brand is 7.5% or higher, the minimum retainer
shall remain at $9,200 per month for the succeeding six calendar months. If
such Brand Contribution Percentage is less than 7.5%, the minimum monthly
retainer for the succeeding six calendar months shall be equal to $9,200
multiplied by a fraction, the numerator of which is the actual Brand
Contribution Percentage during such month, and the denominator of which is 7.5%.
If, during the twelfth complete calendar month following the date of the
Initial Public Offering of DMS Corp.'s common stock, the Brand Contribution
Percentage for the Brand is 12.00% or higher, the minimum retainer payable for
the succeeding twelve calendar months shall be the same or higher as the
retainer paid during such twelfth calendar month (and if such Brand Contribution
Percentage is 15.00% or higher, the minimum retainer for the succeeding 12
calendar months shall be increased as mutually agreed by the parties). If such
Brand Contribution Percentage is less than 12.00%, the minimum monthly retainer
for the succeeding twelve calendar months shall be equal to the retainer paid
during such twelfth calendar month multiplied by a fraction, the numerator of
which is the actual Brand Contribution Percentage during such twelfth calendar
month, and the denominator of which is 12.00%.
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
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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
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) violation of either of the Non-Competition Agreements between
DMS Corp. and Xxxx X. Xxxxxxx and
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Xxxxxx X. Xxxxxx, respectively, dated September 11, 1997 and November 12, 1997,
respectively; 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 either Xxxx X. Xxxxxxx
or Xxxxxx X. Xxxxxx 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 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
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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 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
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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"
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Chairman
Detroit Dispatch Services, Inc.
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