EX 10.2
CONTRACTOR SERVICES AGREEMENT
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THIS AGREEMENT (the "Agreement") is effective as of the 15th day of
May, 2001 (the "Effective Date"), by and between UNITED SHIPPING & TECHNOLOGY,
INC., a Utah corporation ("Company") and MCG GLOBAL, LLC ("Contractor").
W I T N E S S E T H:
WHEREAS, Company is engaged in the logistics and same-day delivery
business (collectively, the "Business");
WHEREAS, Contractor is experienced in the business of consulting with
corporate management regarding operational, strategic and financial guidance and
has the expertise necessary to advise Company regarding these and similar
matters;
WHEREAS, Company desires to contract for the services of Contractor in
connection with Company's Business, operations, debt structure, vendors and
contractual obligations and, in particular with its rights and obligations under
that certain Merger Agreement, dated September 24, 1999 between CEX Holdings,
Inc., a Colorado corporation ("CEX"), Corporate Express Delivery Systems, Inc.,
a Delaware corporation, United Shipping & Technology, Inc., a Utah corporation
and United Shipping & Technology Acquisition Corp., a Delaware corporation (the
"Merger Agreement");
WHEREAS, the parties wish to enter into this Agreement to reflect their
mutual understandings and agreements;
NOW, THEREFORE, in consideration of the foregoing recitals, which are
hereby made an integral part hereof and of the mutual covenants hereinafter set
forth, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. Confidential Information. Company and Contractor previously
entered into a Non-Disclosure and Non-Circumvention Agreement on April
18, 2001 (the "Non-Disclosure Agreement"), which Non-Disclosure
Agreement, as well as its duties, obligations and definitions are
incorporated herein by reference. As used in this Agreement, the term
"Confidential Information" shall mean, in addition to the definitions
contained in the Non-Disclosure Agreement, any and all information
regarding Company, the Business or the Services disclosed, transferred,
or made known to Contractor, including without limitation information
concerning Company's past and present litigation, and Company's
finances, technology, customers, sales representatives suppliers.
2. Services. Contractor shall deliver to Company the items,
and shall perform the services, at the times and meeting the
requirements, specifications and other conditions described and set
forth in Exhibit A attached hereto and by this reference incorporated
herein (collectively, the "Services"). All Services called for by this
Agreement shall be performed in conjunction with and in accordance with
the directions, specifications, conditions
and requirements, as the same may be modified from time to time, of
Company and its representatives.
3. Compensation. In consideration for the Services, Company
shall pay Contractor such compensation in such amount and at such times
as is specified in Exhibit A attached hereto and by this reference
incorporated herein.
4. Expense. Company shall reimburse Contractor for all
reasonable travel expenses, consistent with the Company's existing
travel policies. With the exception of expenses incurred under
paragraph 6 hereof, Contractor shall be liable for all other expenses
or costs incurred by it with respect to providing the Services.
5. Term. The term of this Agreement (the "Term") shall be for
a period of two (2) months, commencing on the Effective Date, unless
earlier terminated by the parties as set forth herein. Either party may
terminate this Agreement at any time, for any reason, upon written
notice to the other. Upon termination, Contractor will be entitled to
receive reimbursement for any outstanding fees and expenses owed by
Company to Contractor under the Agreement.
6. Right to Contract With Others; Own Work Schedule.
Contractor's obligation hereunder is to provide the Services according
to the requirements, specifications and conditions, and no later than
the times, specified herein and in Exhibit A hereto. Contractor has no
obligation to work any particular hours or days or any particular
number of hours or days. Contractor retains the right to contract for
similar services with other businesses or individuals, subject to
Contractor's obligations under the Non-Disclosure Agreement and
hereunder.
7. Right to Control. The Company shall have no right to
control or direct the details, manner or means by which Contractor or
its affiliates provide the Services, except as otherwise set forth in
this Agreement. Contractor agrees to not take any action that is
detrimental to, or not in the best interest of, the Company.
8. Independent Contractor - Not Employee. Contractor is an
independent contractor and shall not be considered an employee,
partner, joint venturer or agent of the Company for any purpose
whatsoever. Contractor acknowledges and agrees that the Company has no
responsibility whatsoever for the payment of any taxes or other
obligations that arise from Contractor providing the Services.
9. Board Approval. The compensation payable to Contractor
pursuant to Section 2 of Exhibit A annexed hereto is subject to
approval by the Board of Directors of Company.
10. Not Assignable. Neither this Agreement nor any of
Contractor's rights or obligations hereunder, may be assigned or
transferred by Contractor to any party or parties or to any entity or
entities; provided, however, that Contractor may assign its right to
receive some or all of the compensation payable to Contractor pursuant
to Section 2 of Exhibit A annexed hereto provided that written notice
of such assignment shall be provided to Company.
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11. Indemnification. In connection with any Services provided
hereunder, or any report or recommendation that Contractor provides to
Company, Company will indemnify and hold Contractor and its officers,
directors, agents, servants and employees harmless from and against all
suits, claims (including claims brought by Company, other than for
breach of this Agreement by Contractor), costs, liabilities, fees and
expenses (including reasonable attorney's fees) resulting from or
arising out of any services rendered by Contractor to Company, other
than for Contractor's gross negligence or willful misconduct.
12. Insurance. Company represents and warrants that it
currently maintains Directors and Officers Liability insurance with
policy limits of $25,000,000, and covenants that it will not reduce or
eliminate such coverage during the Term. Company shall cause Contractor
and Xxxxx Xxxxx to be named as additional insured's under its Directors
and Officers Liability insurance policies. Company shall deliver to
Contractor a Certificate of Insurance evidencing that Contractor and
Xxxxx Xxxxx have been named as additional insureds under Company's
Directors and Officers Liability insurance policies.
13. General Provisions.
(a) This Agreement encompasses the entire agreement
of the parties with respect to the subject matter hereof and
there are no other agreements or understandings unless
expressed in writing and attached to this Agreement. This
Agreement may not be modified or amended except by a written
agreement signed by the parties hereto.
(b) If one or more of the paragraphs or parts hereof
are found to be unenforceable, illegal, contrary to public
policy or are in some other manner declared to be
unenforceable by a court of competent jurisdiction, this
Agreement shall remain in full force and effect except for
that paragraph or portion thereof determined to be
unenforceable, illegal or contrary to public policy.
(c) The construction, interpretation and performance
of this Agreement, and all transactions under or related to
it, shall be governed by the laws of the State of Minnesota.
(d) The terms and provisions of this Agreement
relating to Confidential Information and non-competition shall
remain in full force and effect notwithstanding the
termination or completion of this Agreement or the completion
of the provision of the Services.
(e) This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their
respective heirs, successors, representatives and assigns;
provided, however, that Contractor shall not, without the
express written consent of Company, assign or transfer any
Confidential Information to others.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
UNITED SHIPPING & TECHNOLOGY, INC.
Dated: June __, 2001 By:
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Name:
Title:
MCG Global, LLC
Dated: June __, 2001 By:
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Name:
Title:
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EXHIBIT A
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SERVICES AND COMPENSATION
The parties recognize and agree that in connection with the Merger
Agreement Company is engaged in on-going discussions and negotiations with CEX
regarding the purchase price calculation, insurance payment obligations, debt
obligations and various other matters related to the Merger. Additionally,
Company is engaged in discussions with General Electric Capital Corporation
regarding Company's revolving credit facility. Contractor shall provide services
in connection with these discussions, including negotiations with CEX and
General Electric Capital Corporation in an effort to benefit Company's cash,
balance sheet and equity position and working with management on operational
improvements.
1. Retainer Fee. Company will pay a retainer of one hundred fifty
thousand dollars ($150,000) for two months fees to Contractor, at a monthly
charge of seventy-five thousand dollars ($75,000) a month.
2. Success Fees. Company will pay Contractor success fees as follows:
(a) In the event Contractor is successful in achieving a
reduction of $10.0 Million or more (on a cumulative basis and other
than by way of the Company filing for bankruptcy protection or engaging
in a complete liquidation) in the (x) liabilities of Company to CEX,
(y) obligation of Company to pay or assume liabilities pursuant to the
Merger Agreement, or (z) positive adjustment to the purchase price (as
set forth in subparagraph (i) below) in any one or more of the
following four matters, and under terms and conditions acceptable to
Company, Company will pay Contractor, as a success fee, a five (5) year
warrant to purchase two million (2,000,000) shares of Company's Common
Stock at a strike price equal to the closing price of the Common Stock
on the date of this Agreement. The designated amounts of each of the
four matters listed below are stated in their approximate amounts and
are to be used only for establishing Contractor's fees and do not
constitute an admission by Company of the ultimate accuracy of the
amounts owed to or by CEX or Company. Contractor shall be entitled to
such success fee if such reduction is achieved during the Term or
within six (6) months of the expiration of the Term or other
Termination of this Agreement.
(i) Company and CEX are negotiating the purchase
price under the Merger Agreement. For the purposes of
Contractor's success fee under this Agreement, the amount of
the purchase price adjustment asserted by CEX is positive
$12.0 Million, as set forth on Attachment 1 annexed hereto.
Contractor's Services will include efforts to reduce the $12.0
Million positive adjustment to the purchase price asserted by
CEX.
(ii) As part of the Merger Agreement, Company entered
into three (3) promissory notes, the Short-Term Note, the
Long-Term Note and the Convertible Note (each as defined in
the Merger Agreement) (together, the "Seller Notes"). The
Seller Notes currently have an outstanding principal balance
of $14.5 Million. Contractor's Services will include efforts
to permanently reduce the principal balance of the Seller
Notes, which may include conversion of some or all of the
principal balance of such Seller Notes to equity.
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(iii) Currently, the Seller Notes carry outstanding
and future interest obligations of $3.0 Million. Contractor's
Services will include efforts to permanently reduce the
interest balance and obligations of the Seller Notes, which
may include conversion of some or all of the interest balance
and obligations of such Seller Notes to equity.
(iv) As part of the Merger Agreement, Company
retained certain insurance liabilities of CEX and/or its
subsidiaries and assumed certain liabilities of CEX and/or its
subsidiaries. For the purposes of Contractor's success fee
under this Agreement, the designated amount for the insurance
liabilities is $18 Million. Contractor's Services will include
efforts to reduce the Company's obligations pursuant to such
insurance liabilities below $18 Million.
(b) In the event Company reports monthly net income before
extraordinary items restructuring charges, minority interests and
income taxes of 2% for any three consecutive month period between the
execution of this agreement and the first anniversary of the expiration
of this Agreement, Company will pay to Contractor, as a success fee, a
five (5) year warrant to purchase two million (2,000,000) shares of
Company's Common Stock at a strike price equal to the closing price of
the Common Stock on the date of this Agreement.
For purposes of this Section 2, any Common Stock issuable pursuant to either of
the Warrants to be issued hereunder shall, upon issuance, have registration
rights at least equal to those registration rights granted pursuant to that
certain Second Amended and Restated Registration Rights Agreement dated as of
March 1, 2001 by and among the Company and TH Xxx.Xxxxxx Internet Partners, L.P.
et al.
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