<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 13, 1996
REGISTRATION STATEMENT NO. 333-15639
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ARAMEX INTERNATIONAL LIMITED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
BERMUDA 4513 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
<TABLE>
<S> <C>
CT CORPORATION SYSTEM
2 BADR SHAKER ALSAYYAB STREET 1633 BROADWAY
UM UTHAYNA, AMMAN, JORDAN NEW YORK, NEW YORK 10019
(011) 962-6-603192 (212) 247-2882
(Address, including zip code, (Name, address and telephone number
and telephone number, including area of agent for service)
code,
of Registrant's principal executive
offices)
</TABLE>
------------------------
COPIES TO:
<TABLE>
<S> <C>
LAWRENCE B. FISHER, ESQ. SAMUEL B. FORTENBAUGH III, ESQ.
ORRICK, HERRINGTON & SUTCLIFFE LLP MORGAN, LEWIS & BOCKIUS LLP
666 Fifth Avenue 101 Park Avenue
New York, New York 10103 New York, NY 10178-0060
(212) 506-5000 (212) 309-6000
(212) 506-5151 (Fax) (212) 309-6273 (Fax)
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, U.S. $0.01 par value............. 1,150,000 shares(1) $8.00(2) $9,200,000.00 $2,787.88
</TABLE>
(1) Includes 150,000 shares of Common Stock which the Underwriters have the
option to purchase to cover over-allotments, if any.
(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(b) of the Securities Act of 1933, as amended (the
"Act").
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY
BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 13, 1996
PROSPECTUS
1,000,000 SHARES
[LOGO]
COMMON STOCK
------------------
Aramex International Limited (the "Company") is hereby offering (the
"Offering") 1,000,000 shares of common stock, par value $0.01 per share (the
"Common Stock"). Prior to this Offering, there has been no public market for the
Common Stock and there can be no assurance that such a market will develop after
consummation of this Offering or, if developed, that it will be sustained. It is
currently estimated that the initial public offering price per share of Common
Stock will be between $7.00 and $8.00. See "Risk Factors" and "Underwriting" for
a discussion of the factors considered in determining the initial public
offering price of the Common Stock. Application has been made for listing of the
Common Stock on the Nasdaq National Market under the symbol "ARMX."
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 12.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNT PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(3).................................. $ $ $
</TABLE>
(1) Does not include additional compensation payable to Commonwealth Associates,
the representative of the Underwriters (the "Representative") in the form of
a non-accountable expense allowance, a corporate advisory fee and certain
warrants. See "Underwriting" for information concerning such additional
compensation and certain indemnification and contribution arrangements with
the Underwriters.
(2) Before deducting expenses payable by the Company estimated at $450,000, not
including the non-accountable expense allowance.
(3) Certain shareholders (the "Selling Shareholders") have granted the
Underwriters an option (the "Over-Allotment Option"), exercisable for 45
days after the date of this Prospectus to purchase up to 150,000 additional
shares of Common Stock solely to cover over-allotments, if any. If the
Underwriters exercise this option in full, the Price to Public will total
$ ; the Underwriting Discount and Commissions will total $ ; and
the Proceeds to the Selling Shareholders will total $ . See
"Underwriting."
The shares of Common Stock are being offered by the Underwriters named
herein when, as and if delivered to and accepted by the Underwriters and subject
to their right to reject any order in whole or in part. It is expected that
delivery of the certificates representing such shares will be made against
payment therefor at the office of Commonwealth Associates, New York, New York,
on or about December , 1996.
------------------------
COMMONWEALTH ASSOCIATES
The date of this Prospectus is December , 1996
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES
THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED OR
THE CONTEXT OTHERWISE REQUIRES: (I) THE "COMPANY" OR "ARAMEX" REFERS TO ARAMEX
INTERNATIONAL, LIMITED, A HONG KONG COMPANY, AND ITS CONSOLIDATED SUBSIDIARIES
PRIOR TO THE REORGANIZATION (DESCRIBED UNDER "THE COMPANY'S ORGANIZATION") AND
ARAMEX INTERNATIONAL LIMITED AND ITS CONSOLIDATED SUBSIDIARIES FOLLOWING THE
REORGANIZATION, AND (II) ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE
OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION AND NO EXERCISE OF THE WARRANTS TO
PURCHASE 100,000 SHARES OF COMMON STOCK ISSUED TO THE REPRESENTATIVE IN
CONNECTION WITH THIS OFFERING (THE "REPRESENTATIVE'S WARRANTS"). ALL REFERENCES
IN THIS PROSPECTUS TO "$" SHALL MEAN UNITED STATES DOLLARS. FOR THE PURPOSES OF
THIS PROSPECTUS, THE "MIDDLE EAST" SHALL INCLUDE THE FOLLOWING COUNTRIES:
BAHRAIN, CYPRUS, EGYPT, IRAN, IRAQ, ISRAEL, JORDAN, KUWAIT, LEBANON, OMAN, THE
PALESTINIAN TERRITORIES, QATAR, SAUDI ARABIA, SUDAN, SYRIA, TURKEY, THE UNITED
ARAB EMIRATES, AND YEMEN.
THE COMPANY
Aramex provides express delivery and freight forwarding services from its
main hubs in Dubai, London, New York and Amman primarily to, from and within
destinations in the Middle East and the Indian Sub-Continent. Aramex has
approximately 800 full-time employees and operates through a network of 36
stations/offices and 11 service providers located in 29 countries, and holds a
majority interest in a direct marketing and mail order business, Middle East
Direct Marketing ("MED"), which operates five SHOP THE WORLD DIRECT catalog
centers. The Company's strategy is to focus on its core business and to expand
its services in certain areas of the Middle East to include (i) warehouse
management in designated free trade zone locations, (ii) inter-modal regional
transportation and distribution (offering the options of express air freight
forwarding and ground distribution); (iii) inventory management; and (iv) local
warehousing. From 1991 to 1995, the Company's revenues grew from $17.2 million
to $43.6 million. The Company generated revenues of $43.6 million and $35.9
million, with corresponding net income of $1.5 million and $1.4 million, for the
year ended December 31, 1995 ("1995") and the nine months ended September 30,
1996 (the "Nine Month Period"), respectively. Aramex uses commercial airline
service to carry its express parcels and freight, resulting in lower capital
costs and greater pricing flexibility. Aramex is a founding member of the
Overseas Express Carriers Network (the "OEC"), which is a global alliance among
certain leading independent express companies that functions as a worldwide
delivery network for its members. In October 1996, Airborne Freight Corporation
("Airborne"), the parent of Airborne Express, the third largest domestic air
express delivery carrier in the United States and a member of the OEC, invested
$2.0 million for 8.9% of the Company's Common Stock at $6.56 per share.
The Company has been operating in the Middle East since 1982. According to
Boeing Commercial Airplane Group ("Boeing") in its 1996/1997 WORLD AIR CARGO
FORECAST, it has been estimated that real gross domestic product ("GDP") for the
Middle East will grow at approximately 3.5% per year to $740 billion by 2015.
Because of its strategic location at the crossroads of Asia, Europe, and Africa,
the Middle East is becoming a major center for world air freight distribution.
It was reported by Boeing that, in early 1996, total air traffic through Dubai,
where the Company operates one of its major hubs, increased 23% and
transshipments increased 41% from 1995. The Company believes it is well
positioned to benefit from the economic growth forecasted for the Middle East
which should result in an increased demand for express, freight forwarding and
regional trucking services.
INTERNATIONAL SMALL PARCEL EXPRESS SERVICE
Express shipments consist of small packages, typically ranging in weight
between 0.5 and 50 kilograms, with time-sensitive delivery requirements. The
Company offers its express delivery services on an international basis to both
retail and wholesale express accounts and has its own computer tracking system,
which permits rapid tracking of a customer's express shipments. Customers may
also track their shipments
3
<PAGE>
directly on-line on the Company's web-site on the world wide web
(www.aramex.com). At September 30, 1996, the Company had approximately 20,000
retail express accounts and 640 wholesale express accounts.
Retail express customers include individual and commercial accounts such as
trading companies, pharmaceutical companies, banks, service and information
companies and manufacturing and regional distribution companies. Revenues from
retail accounts were $13.7 million (or 31% of total revenues) and $11.7 million
(or 32% of total revenues) for 1995 and the Nine Month Period, respectively.
None of the Company's retail customers accounted for more than 1.2% of the
Company's total revenues for 1995 or the Nine Month Period.
Wholesale customers consist primarily of express delivery companies (such as
Airborne Express, Emery, Purolator Canada, and United Parcel Service), which
originate express packages that have a Middle Eastern destination and require
Aramex's network in the region to deliver their customers' shipments. Unlike
certain of its competitors, Aramex does not repackage these shipments. This is
attractive to the Company's wholesale customer because it enables the customer
to preserve its corporate identity with the end user. Based upon its knowledge
of the Middle East market, management believes that Aramex is the leading
independent wholesaler to the Middle East. Revenues from wholesale accounts were
$11.6 million (or 27% of total revenues) and $9.5 million (or 26% of total
revenues) for 1995 and the Nine Month Period, respectively.
FREIGHT FORWARDING
The Company offers a wide range of freight forwarding services, including
air and ocean freight forwarding, consolidation, warehousing, customs clearance
and breakbulk services. Aramex provides "door to door" service from, to and
within the Middle East and the Indian Sub-Continent. A significant portion of
the Company's freight forwarding business involves consignee sales (imports)
and, to a lesser extent, exports. Freight forwarding shipments (or "cargo"
shipments) typically have gross weights in excess of 50 kilograms, require
customs clearance and are less time-sensitive than express shipments. Revenues
from the Company's freight forwarding operations were $14.3 million (or 33% of
total revenues) and $10.4 million (or 29% of total revenues) for 1995 and the
Nine Month Period, respectively. Of the Company's more than 500 freight
forwarding accounts, none exceeded 1% of the total 1995 or Nine Month Period
freight forwarding revenues, respectively.
SHOP THE WORLD DIRECT CATALOG CENTERS (MED)
In 1995, Aramex launched MED, a direct marketing and mail order catalog
service on a test basis in Amman, Jordan, with the objective of developing
distribution and sales of international mail order products throughout the
Middle East. The catalogs are featured in the Company's SHOP THE WORLD DIRECT
catalog centers where salespeople assist customers in selecting and ordering
merchandise. At September 30, 1996, MED had exclusive rights to sell and
distribute products from approximately 20 catalogs including Brooks Brothers,
The Chef's Catalog, Hammacher Schlemmer, J.C. Penney, and Littlewoods (UK) and
others in the Middle East (with the exception of Saudi Arabia, Kuwait and the
Gulf States in the case of J.C. Penney). The Company operates SHOP THE WORLD
DIRECT catalog centers in Jordan, Kuwait, Egypt, Lebanon and Qatar, where the
Company sells, processes and delivers mail order products to its customers.
Commission revenue generated from such sales by MED accounted for $0.6 million
(or 2% of total revenue) for the Nine Month Period. In addition to generating
commissions on each sale of a product, MED generates package delivery revenue
for the Aramex express delivery network.
DOMESTIC AND REGIONAL GROUND EXPRESS TRANSPORTATION SERVICES
The Company has developed an extensive regional network for the delivery of
small parcels for its customers which include local distributors, pharmaceutical
companies, banks and a TV home shopping service. Revenues from intracountry
operations were $2.0 million (or 5% of total revenues) and $2.1 (or
4
<PAGE>
6% of total revenues ) for 1995 and the Nine Month Period, respectively. Aramex
plans to expand its ground transportation network to offer cross-border trucking
and ground transportation for small parcels and fast-moving consumer goods in
the region, servicing what the Company perceives to be a highly underdeveloped
market. In developing a parcel shuttle service linking the main cities in the
Middle East, Aramex expects to lower the cost of linehauling by reducing air
freight movement and thereby offer its customers lower prices and the option of
deferred service. Management believes the addition of such complementary
businesses should help strengthen the core business of Aramex.
GROWTH STRATEGY
The Company's business strategy is to provide a full range of international
and domestic express, freight forwarding, logistics, ground transportation and
mail order services to its customers. The Company believes that it competes in
an industry and a region characterized by a growing need among customers for
more comprehensive services. By offering a wide range of distinct delivery and
transportation services at a reasonable price, the Company plans to position
itself as a leading provider of express, freight forwarding and logistics
services in its core markets.
The express, transportation and logistics services businesses require
extensive and ongoing investments in technological and systems infrastructure.
The Company historically has made significant investments in its technology
systems to provide a strong platform for enhanced service and future growth. In
connection with the introduction of logistics and other services, the Company
has commenced a reengineering of its station operations, which includes a number
of ongoing technological initiatives such as: (i) the installation of upgraded
information systems; (ii) the development of Aramex's own private communications
network; (iii) the replacement of manual processing with bar coding scanner
technology for all its offices around the world; and (iv) the development of a
customized software package to provide customers and suppliers with direct
electronic connections to the Aramex network.
The Aramex management team has been carefully building the Company's
infrastructure, creating the technology and management systems, employee base
and strategic alliances required both to support future growth in the Company's
current business lines and to serve as a platform for the expansion into the
following new businesses and emerging markets:
LOGISTICS MANAGEMENT. The increased use of intermodalism (two or
more means of transportation) in freight forwarding has been coupled with
a corresponding increased demand for outsourced logistics management
services. Based upon the results of a pilot program implemented at its
headquarters, Aramex plans to introduce, on a Company-wide basis, a new
service concept, the "One Stop Shop," as a total logistical solution to
its customers' transport needs. Aramex is currently undertaking a major
re-engineering effort designed to transform the structure of its stations
from a department setup (e.g., express, freight forwarding, etc.) into
cross-functional personalized customer teams offering multi-modal
regional transportation and distribution as well as inventory management
services. Additionally, with a portion of the proceeds of this Offering,
the Company plans to open warehousing and distribution centers in
designated regional free trade zones. The Company will target its
existing customers as well as potential customers requiring high value
and timely delivery, including aviation, automobile, computer and
electronics companies, light assembly factories and wholesale freight
forwarders.
GEOGRAPHIC EXPANSION. The Company is implementing a strategy focused
on expanding its geographic presence in the Middle East, the Indian
Sub-Continent, and other emerging markets such as North Africa and
certain former Soviet Central Asian Republics. Each of these emerging
markets is characterized by large populations and growing economies which
are liberalizing and opening their markets to the private sector and to
foreign investors. The Company plans to expand its distribution network
in these regions, Aramex management believes it can (i) enhance its
regional market share and presence; (ii) expand its customer base; and
(iii) further reduce its
5
<PAGE>
geographic revenue concentration. The Company has targeted a portion of
the proceeds from the Offering to acquire an equity interest in the
operations of its current service providers or joint ventures located in
India, Sri Lanka, Pakistan and Turkey. Recently, the Company entered into
an agreement with a service provider in Uzbekistan to commence operations
in early 1997 and plans to commence negotiations to establish joint
ventures in certain North African countries and other Central Asian
Republics such as Kazakhstan and Azerbaijan.
ADDITIONAL MED SHOP THE WORLD DIRECT CATALOG CENTERS. In an effort
to add additional sources of revenue and as a natural extension of the
basic express business, the Company plans to open additional catalog
centers with a portion of the proceeds from the Offering and to commence
local advertising of its mail order services. The Company's goal is to
open at least five additional catalog centers in the next twelve months
with a long-term view to including a catalog center in or near each of
its stations in the Middle East. The Company plans to continue to seek to
offer similar value-added customized special services to its growing
customer base.
The Company's principal executive office is located at 2 Badr Shaker
Alsayyab Street, Um Uthayna, Amman, Jordan and the Company's telephone number is
962-6-5522192.
------------------------
ARAMEX-Registered Trademark- is a registered service mark of the Company.
This Prospectus includes trademarks and service marks of companies
other than those of the Company.
6
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered Hereby.................. 1,000,000 shares
Common Stock to be Outstanding after the
Offering(1)................................ 4,429,688 shares
Use of Proceeds.............................. For expansion, working capital and other
general corporate purposes. See "Use of
Proceeds" and "Certain Transactions."
Proposed Nasdaq Symbol....................... "ARMX"
Risk Factors................................. The Common Stock offered hereby involves a
high degree of risk. Prospective investors
should carefully consider the factors
discussed under the heading "Risk Factors."
</TABLE>
- ------------------------
(1) Excludes 300,000 shares of Common Stock issuable upon exercise of
outstanding options having an exercise price at or above the initial public
offering price of the Common Stock and 100,000 shares of Common Stock
issuable upon the exercise of the Representative's Warrants at an exercise
price of 120% of the initial offering price. See "Management" and
"Underwriting."
THE COMPANY IS ORGANIZED UNDER THE LAWS OF THE ISLANDS OF BERMUDA AND IS
HEADQUARTERED IN JORDAN. CERTAIN OF THE COMPANY'S DIRECTORS, OFFICERS AND
CONTROLLING PERSONS, AND SELLING SHAREHOLDERS AS WELL AS CERTAIN OF THE EXPERTS
NAMED IN THIS PROSPECTUS RESIDE OUTSIDE THE UNITED STATES. ALL OR A SUBSTANTIAL
PORTION OF THEIR ASSETS AND THE ASSETS OF THE COMPANY ARE LOCATED OUTSIDE THE
UNITED STATES, INCLUDING BERMUDA AND JORDAN. AS A RESULT, IT MAY NOT BE POSSIBLE
FOR INVESTORS TO EFFECT SERVICE OF PROCESS WITHIN THE UNITED STATES UPON SUCH
PERSONS OR TO ENFORCE JUDGMENTS AGAINST THE COMPANY OR SUCH PERSONS OBTAINED IN
UNITED STATES COURTS PREDICATED UPON THE CIVIL LIABILITY PROVISIONS OF THE
FEDERAL OR STATE SECURITIES LAWS OF THE UNITED STATES. THE COMPANY HAS BEEN
ADVISED BY CONYERS, DILL & PEARMAN, BERMUDA COUNSEL TO THE COMPANY, THAT THE
ENFORCEMENT OF JUDGMENTS OF UNITED STATES COURTS OBTAINED IN ACTIONS AGAINST THE
COMPANY OR SUCH PERSONS PREDICATED UPON THE CIVIL LIABILITY PROVISIONS OF THE
FEDERAL OR STATE SECURITIES LAWS AND THE ENFORCEABILITY, IN ORIGINAL ACTIONS, OF
LIABILITIES AGAINST THE COMPANY OR SUCH PERSONS PREDICATED SOLELY UPON THE
FEDERAL OR STATE SECURITIES LAWS OF THE UNITED STATES WOULD REQUIRE THE
COMMENCEMENT OF A SEPARATE ACTION IN THE BERMUDA COURTS. THERE IS UNCERTAINTY AS
TO WHETHER THE COURTS OF BERMUDA OR JORDAN WOULD (i) ENFORCE JUDGMENTS OF UNITED
STATES COURTS OBTAINED AGAINST THE COMPANY OR SUCH PERSONS PREDICATED UPON THE
CIVIL LIABILITY PROVISIONS OF THE FEDERAL SECURITIES LAWS OF THE UNITED STATES
OR (ii) ENTERTAIN ORIGINAL ACTIONS BROUGHT IN BERMUDA COURTS AGAINST THE COMPANY
OR SUCH PERSONS PREDICATED UPON THE FEDERAL SECURITIES LAWS OF THE UNITED
STATES. THE COMPANY HAS IRREVOCABLY APPOINTED CT CORPORATION SYSTEM, 1633
BROADWAY, NEW YORK, NEW YORK 10019, AS ITS AUTHORIZED AGENT TO RECEIVE SERVICE
OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING AGAINST IT BASED UPON THE FEDERAL
SECURITIES LAWS OF THE UNITED STATES AND/OR ARISING
7
<PAGE>
OUT OF OR RELATING TO THIS OFFERING. THE COMPANY HAS BEEN ADVISED BY ALI SHARIF
ZU'BI & SHARIF ALI ZU'BI LAW FIRM THAT THE ENFORCEMENT OF FOREIGN JUDGEMENTS IN
JORDAN IS GOVERNED BY LAW NO. 8 OF 1952 WHICH PROVIDES THAT A FOREIGN JUDGEMENT
MAY BE ENFORCED IN JORDAN BY MEANS OF AN APPLICATION TO THE COMPETENT COURT
WITHOUT RETRIAL AND RE-EXAMINATION OF THE MERITS OR ISSUES OF THE CASE.
JORDANIAN COURTS MAY, HOWEVER, DECLINE TO ENFORCE A FOREIGN JUDGEMENT (I) IF THE
COURT WHICH PASSED THE JUDGEMENT WAS WITHOUT COMPETENT JURISDICTION, (II) IF THE
DEFENDANT HAS NOT CARRIED ON ANY BUSINESS WITHIN THE JURISDICTION OF THE COURT
WHICH PASSED THE JUDGEMENT OR WAS NOT RESIDENT WITHIN ITS JURISDICTION AND DID
NOT WILLFULLY APPEAR BEFORE THE COURT OR DID NOT RECOGNIZE ITS JURISDICTION,
(III) IF THE DEFENDANT WAS NOT NOTIFIED TO APPEAR BEFORE THE COURT WHICH ISSUED
THE JUDGEMENT OR WAS NOT DULY OR PROPERLY SERVED WITH NOTICE, (IV) IF THE
JUDGEMENT HAS BEEN PASSED IN A FRAUDULENT MANNER, (V) IF THE DEFENDANT IS ABLE
TO PERSUADE THE COURT THAT THE JUDGEMENT IS NOT FINAL, (VI) IF THE JUDGEMENT
CONTRAVENES JORDANIAN PUBLIC POLICY, AND (VII) IF THE LAWS OF THE COUNTRY OF THE
COURT WHICH PASSED THE JUDGEMENT DO NOT RECOGNIZE AND ENFORCE JUDGEMENTS OF
JORDANIAN COURTS.
8
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The summary consolidated financial information set forth below is derived
from and should be read in conjunction with the Consolidated Financial
Statements, including the Notes thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Express............................................... $ 19,802 $ 22,349 $ 25,491 $ 18,467 $ 21,394
Freight Forwarding.................................... 6,544 13,104 14,306 10,707 10,421
Domestic(1)........................................... 833 1,291 2,007 1,407 2,099
Other(2).............................................. 1,635 1,385 1,798 1,179 1,982
--------- --------- --------- --------- ---------
Total revenues...................................... 28,814 38,129 43,602 31,760 35,896
Shipping costs.......................................... 13,676 19,992 23,045 17,109 18,623
--------- --------- --------- --------- ---------
Gross profit........................................ 15,138 18,137 20,557 14,651 17,273
Operating expenses...................................... 6,099 6,877 7,986 5,803 6,456
Selling, general and administrative expenses............ 7,885 10,232 10,664 7,774 9,050
--------- --------- --------- --------- ---------
Operating income.................................... 1,154 1,028 1,907 1,074 1,767
Interest expense........................................ (4) (46) (61) (13) (10)
Gain (loss) on sale of fixed assets..................... 7 (4) (1) (39) --
Exchange gain (loss).................................... (182) (55) 31 84 (6)
Other income (loss)..................................... (200) (123) 69 (26) 1
--------- --------- --------- --------- ---------
Income before income taxes.......................... 775 800 1,945 1,080 1,752
Provision for income taxes.............................. 56 227 266 233 180
Minority interests...................................... 633 278 157 95 124
--------- --------- --------- --------- ---------
Net income.......................................... $ 86 $ 295 $ 1,522 $ 752 $ 1,448
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income per common share(3).......................... $ 0.03 $ 0.09 $ 0.49 $ 0.24 $ 0.46
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average number of common shares
outstanding(3)........................................ 3,125 3,125 3,125 3,125 3,125
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
DECEMBER 31, --------------------------
------------------------------- PRO FORMA, AS
1993 1994 1995 ACTUAL ADJUSTED(4)(5)
--------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................... $ 2,239 $ 1,915 $ 2,867 $ 3,800 $ 11,990
Total assets............................................. 10,297 13,178 14,344 17,513 25,703
Total liabilities........................................ 6,908 9,715 9,649 11,379 11,379
Shareholders' equity..................................... $ 2,612 $ 2,889 $ 4,404 $ 5,850 $ 14,040
</TABLE>
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(1) Domestic revenues are derived from the intracountry delivery of packages,
primarily by ground transportation.
(2) Other revenues include revenue derived from the Company's remail and special
services and, for the nine months ended September 30, 1996, include $0.6
million of revenues from the Company's Middle East Direct Marketing (MED)
business.
(3) Assumes consummation of the Reorganization and excludes 300,000 shares of
Common Stock issuable upon exercise of outstanding options and 100,000
shares of Common Stock issuable upon the exercise of the Representative's
Warrants. See "Management" and "Underwriting."
(4) Gives effect to the sale of 304,688 shares of Common Stock to Airborne in
October 1996 for an aggregate purchase price of $2.0 million (the "Airborne
Stock Purchase"). See "Certain Transactions."
(5) Adjusted to reflect the sale of the shares of Common Stock offered hereby at
an assumed initial public offering price of $7.50 per share (after deducting
estimated offering expenses and underwriting discount and commissions). See
"Capitalization" and "Use of Proceeds."
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THE COMPANY'S ORGANIZATION
Aramex International Limited (sometimes referred to in this section as
"Aramex Bermuda") was incorporated under the laws of Bermuda in October 1996 as
the successor to Aramex International, Limited, a Hong Kong company which was
incorporated in February 1986 ("Aramex Hong Kong"). On December 13, 1996, Aramex
Bermuda subscribed for 100 shares of Aramex Hong Kong (the "Ordinary Shares")
and each share of Aramex Hong Kong outstanding prior to such subscription was
converted by a special resolution of the shareholders of Aramex Hong Kong into
non-voting deferred shares (the "Deferred Shares") (collectively, the
"Reorganization"). The Deferred Shares do not carry voting rights (other than in
respect of resolutions affecting their class rights) and are effectively
subordinated to the Ordinary Shares (all of which are held by Aramex Bermuda) in
respect of all dividends, distributions and liquidation rights until such time
as the holders of Ordinary Shares have received $100 billion. Subsequent to the
Reorganization and prior to the Offering, the Company's shareholders will own
the same proportion of outstanding shares of Aramex Bermuda as they held in
Aramex Hong Kong prior to the Reorganization. Pursuant to the Reorganization,
Aramex Bermuda will become the parent holding company of Aramex Hong Kong. The
existing shareholders of Aramex Hong Kong will retain a nominal interest in
Aramex Hong Kong through their ownership of the Deferred Shares. Aramex Hong
Kong will act as an intermediate holding company of the Company's subsidiaries
until the Company completes its reorganization plan to transfer all of its
assets from Aramex Hong Kong to Aramex Bermuda or into other subsidiary
companies. See "Risk Factors--Risks Inherent in International Operations" and
Note 1 to Notes to Consolidated Financial Statements.
The corporate structure of the Company's operating subsidiaries is in part
influenced by the laws of the countries in which the Company operates. Various
Middle Eastern and other governments require governmental approval prior to
investments by foreign persons and limit the extent of any such investment. See
"Risk Factors--Restrictions and Controls on Foreign Investments and Acquisitions
of Majority Interests." As a result, the Company generally operates through
subsidiaries, sponsors, joint ventures, service providers and agents.
The Company operates through wholly-owned subsidiaries in France, Greece,
Jordan, New York, United Kingdom, Washington D.C. and the Palestinian
Territories.
The Company has entered into sponsorship agreements whereby a domestic
company sponsors Aramex to obtain a charter or license. The Company has entered
into such agreements in Abu Dhabi, Bahrain, Cyprus, Dubai, Kuwait and Qatar.
The Company has entered into joint venture agreements in Canada, Egypt,
Lebanon, Syria and Turkey. The Company has entered into a technical services and
exclusive agency agreement in Saudi Arabia.
The Company has also entered into agency relationships with local service
providers whereby it appoints an agent to conduct its courier services in a
designated territory in return for royalties. The Company has entered into such
agreements in Bulgaria, Ethiopia, India, Iran, Oman, Pakistan, Sri Lanka,
Switzerland, Uzbekistan, Sudan, Hong Kong, Bangladesh and Yemen.
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The following chart illustrates the Company's corporate structure.
[CHART]
Recently, the Company entered into an agreement with a service provider in
Uzbekistan to commence operations in early 1997. Following the Offering, the
Company may enter into discussions to increase its ownership or participation
interest in several joint ventures as well as convert its agency arrangements
with certain of its service providers into joint ventures. The Company is
negotiating to increase its interest in its Egyptian joint venture and in its
Lebanese joint venture.
The Company may enter into discussions to commence new joint ventures in
certain North African countries and other Central Asian Republics, such as
Kazakhstan and Azerbaijan.
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RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, THE
FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING THE COMPANY
AND ITS BUSINESS BEFORE PURCHASING THE SECURITIES OFFERED HEREBY. PROSPECTIVE
INVESTORS SHOULD BE IN A POSITION TO RISK THE LOSS OF THEIR ENTIRE INVESTMENT.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS
INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS
PROSPECTUS.
RISKS INHERENT IN INTERNATIONAL OPERATIONS
A majority of the Company's business is conducted outside of the United
States. As a result, the Company's operations are subject to various risks such
as the possibility of the loss of revenue, property or equipment due to
expropriation, nationalization, war, insurrection, terrorism or civil
disturbance, the instability of foreign economies, currency fluctuations and
devaluations, adverse tax policies and governmental activities that may limit or
disrupt markets, restrict payments or the movement of funds or result in the
deprivation of contract rights. Additionally, the ability of the Company to
compete may be adversely affected by foreign governmental regulations that
encourage or mandate the hiring of local contractors, or by regulations that
require foreign contractors to employ citizens of, or purchase supplies from
vendors in, a particular jurisdiction. The Company is subject to taxation in a
number of jurisdictions, and the final determination of its tax liabilities
involves the interpretation of the statutes and requirements of various domestic
and foreign taxing authorities. Foreign income tax returns of foreign
subsidiaries, unconsolidated affiliates and related entities are routinely
examined by foreign tax authorities. There can be no assurance that any of these
risks will not have an adverse effect on the Company.
RISKS ASSOCIATED WITH HONG KONG SUBSIDIARY
Following the Reorganization and until it completes the transfer of assets
from Aramex Hong Kong to Aramex Bermuda, the Company will continue to operate
through Aramex Hong Kong. As a result, the Company's business, results of
operations and financial condition may be influenced by the political situation
in Hong Kong. On July 1, 1997, sovereignty over Hong Kong will be transferred
from the United Kingdom to the People's Republic of China, and Hong Kong will
become a Special Administrative Region of China. There can be no assurance that
the transfer of sovereignty and any resulting changes in the political, legal or
other conditions in Hong Kong will not adversely impact the ability of Aramex
Hong Kong to conduct business.
RISKS RELATING TO OPERATIONS IN THE MIDDLE EAST
The Company operates in 17 countries located in the Middle East. The Company
derived 71% of 1995 revenue and 74% of the Nine Month Period revenue and
substantially all of its operating profit from operations in the Middle East,
and the risks of doing business in that region could adversely affect the
Company. Such risks include the following:
POLITICAL AND ECONOMIC FACTORS. The Middle East's economies have been
subject to many destabilizing factors, including military conflicts and
tensions, civil unrest, large government deficits, low foreign exchange reserves
and fluctuations in world commodity prices. In attempting to respond to these
problems, many Middle Eastern governments have intervened in their economies,
employing among other things, fiscal, monetary and trade policies, import
duties, foreign currency restrictions and controls of wages, prices and exchange
rates. Some Middle Eastern governments have frequently changed their policies in
all these areas. Certain Middle Eastern economies have received military and
economic aid from the United States and many Middle Eastern companies have been
financed by United States venture capital and
12
<PAGE>
investment concerns. There is no assurance that such aid and investments will
continue to be available in the future.
RISKS OF FOREIGN LEGAL SYSTEMS. Many of the countries where the Company
operates and plans to operate have legal systems that differ from the United
States legal system and may provide substantially less protection for foreign
investors.
EFFECT OF POSTAL TAXES AND OTHER PAYMENTS. In several Middle Eastern
countries where the Company operates, it is required to pay taxes and/or
royalties to the local postal authority. To the extent these taxes and/or
royalties are increased, the Company's results of operations may adversely be
affected.
RESTRICTIONS AND CONTROLS ON FOREIGN INVESTMENTS AND ACQUISITIONS OF MAJORITY
INTERESTS
Foreign investment by the Company in local joint ventures or business
acquisitions has been and will continue to be restricted or controlled to
varying degrees. These restrictions or controls have and may continue to limit
or preclude foreign investment in certain proposed joint ventures or business
acquisitions or increase the costs and expenses of the Company in seeking to
effectuate such a transaction. Various governments require governmental approval
prior to investments by foreign persons and limit the extent of any such
investment. In certain countries, the Company is required to conduct operations
pursuant to an agency or sponsorship agreement. The loss of an agent or sponsor
could result in the temporary or permanent cessation of operations in a
particular country. There can be no assurance that the Company will be able to
replace such agent or sponsor on favorable terms, if at all. Furthermore,
various governments restrict investment opportunities by foreign persons in
certain industries. Various governments may also require governmental approval
for the repatriation of capital and income by foreign investors. Various
governments have laws protecting local postal authorities. Although such
approvals are usually given, there can be no assurance that such approvals will
be forthcoming in the future. There can be no assurance that additional or
different restrictions or adverse policies applicable to the Company will not be
imposed in the future or, if imposed, as to the duration or impact of any such
restrictions or policies.
DEPENDENCE ON INTERNATIONAL TRADE
International trade is essential to the Company's results of operations and
has played an important role in the economic development of the Middle East and
other regions where the Company currently operates or plans to operate.
International trade is influenced by many factors, including economic and
political conditions, major work stoppages, currency fluctuations, and laws
relating to tariffs, trade restrictions, foreign investments, and taxation. A
reduction in the volume of international trade due to one or more of these
factors, any material restrictions on trade, or a downturn in the economies
where the Company currently operates or plans to operate could have a material
adverse effect on the Company. Political differences may lead to the imposition
of trade barriers and/or economic sanctions. The occurrence of such barriers or
sanctions could have a material adverse effect on the Company's operations.
GOVERNMENT REGULATION
The Company's operations require and will require various licenses, permits
and approvals in each jurisdiction where it operates. The loss or revocation of
any existing licenses, permits or approvals or the failure to obtain any
necessary licenses, permits or approvals in new jurisdictions where the Company
intends to do business would have an adverse effect on the ability of the
Company to conduct its business and/or on its ability to expand into such
jurisdictions. Authorization to commence operations will be required in each
country in which the Company intends to operate. No assurance can be given that
the Company will obtain such authorizations, licenses, permits or necessary
approvals. In addition, countries in which the Company wishes to operate may
have regulatory systems that impose other impediments on the Company's
operations. There can be no assurance that the Company will be able to
profitably operate in light of these restrictions.
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<PAGE>
RELIANCE ON COMMERCIAL CARRIERS
The Company relies on scheduled flights of commercial air carriers and
shipping companies in delivering its express mail and freight forwarding
services. Consequently, the ability of the Company to provide reliable, low-cost
express delivery would be adversely affected by changes in policies and
practices such as pricing, payment terms, scheduling, and frequency of service
or increases in the cost of fuel, taxes and labor, and other factors that are
not within the Company's control.
RISKS ASSOCIATED WITH GEOGRAPHIC EXPANSION AND NEW LINES OF BUSINESS
The Company intends to actively pursue a strategy of continued growth, and
will seek to expand the range of its services and penetrate new geographic
markets. The Company's ability to expand into new geographic markets will be
dependent upon its ability to secure the requisite local permits necessary to
conduct business, including those which may be required by the local postal
authority. Several countries targeted by the Company for expansion have
restricted express companies from operating in their jurisdiction. For example,
as of the date hereof, Algeria and Morocco each have permitted one of the
Company's competitors to operate therein and Tunisia has not permitted any
express company to operate therein. Failure to secure such local permits would
create a competitive disadvantage for the Company and hinder or delay its
expansion plans therein. The Company also plans to open additional catalog
centers and commence offering logistics management services along with regional
trucking and ground transportation. This will require additional capital
expenditures, including leasing additional facilities and purchasing and
operating a small trucking fleet. The Company has only limited experience in
operating a trucking operation and a logistics management service. The
availability of qualified and licensed drivers will become an important factor
in the Company's expansion of a regional trucking and ground transportation
business. In addition, the Company will be required to identify suitable new
geographic markets with sufficient demand for the Company's services, to hire
and retain skilled management, marketing, customer services and other personnel,
and to successfully manage growth, including monitoring operations, controlling
costs and maintaining effective quality and service controls. There can be no
assurance that the Company will be able to do so effectively or that allocation
of capital or human resources will not adversely impact the Company as a whole.
EFFECTS OF INFLATION; CURRENCY FLUCTUATIONS
Exchange rates for some local currencies in countries where Aramex operates
may fluctuate in relation to the U.S. dollar and such fluctuations may have an
adverse effect on the Company's earnings or assets when local currencies are
translated into U.S. dollars. Any weakening of the value of a local currency
against the U.S. dollar could result in lower revenues and earnings for the
Company when such local currencies are translated into U.S. dollars. Therefore,
there can be no assurance that currency exchange rates will not have a material
adverse effect on the Company.
COMPETITION
The Company faces strong competition in the Middle East and other regions in
which it operates. The Company's ability to compete effectively depends
principally upon price, frequency and capacity of scheduled service, extent of
geographic coverage and reliability. Some of the Company's competitors have well
established reputations and significantly greater financial and other resources
available for expansion than the Company. The Company's principal competitors
are DHL Worldwide Express, Federal Express, TNT Express Worldwide and UPS. There
can be no assurance that the Company will be able to expand as rapidly as, or
compete effectively against, its competitors.
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<PAGE>
HOLDING COMPANY STRUCTURE
The Company is a holding company and substantially all of its operations are
conducted through subsidiaries, joint ventures and contractual sponsorship
arrangements. Consequently, the Company will rely principally on dividends or
advances from its subsidiaries (including ones that are not wholly-owned), joint
ventures, contractual sponsorship arrangements and agency relationships with
service providers. The ability of such subsidiaries to pay dividends and the
ability of the Company to realize on its investment in other entities is subject
to applicable local law and certain other restrictions.
DEPENDENCE ON KEY EMPLOYEES
The Company's growth and profitability are dependent upon, among other
things, the abilities and experience of the Company's management team including
Mr. William Kingson and Mr. Fadi Ghandour, the Company's Chairman and the
Company's President, Deputy Chairman and Chief Executive Officer, respectively.
If the services of Messrs. Kingson and Ghandour or a number of the Company's
executive officers were no longer available to the Company, the Company's
business, financial condition and results of operations could be adversely
affected.
From time to time, Messrs. Fadi Ghandour and William Kingson have made
non-interest bearing loans to the Company. In addition, from time to time, Mr.
Ghandour has also personally guaranteed lines of credit and bank overdrafts on
behalf of the Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Certain Transactions" and Note 8 to Notes
to Consolidated Financial Statements. There can be no assurance that such loans
and guarantees will be available to the Company in the future.
SEASONALITY
The Company's business is seasonal in nature. Historically, the Company
experiences a decrease in demand for its services during the first and third
quarter, the post-winter holiday and summer vacation seasons. The Company
traditionally experiences its highest volume in the fourth quarter due to the
holiday season. The seasonality of the Company's sales may cause a variation in
its quarterly operating results and a significant decrease in second or fourth
quarter revenues may have an adverse effect on the Company's results of
operations for that fiscal year.
POTENTIAL LIABILITY REGARDING DELIVERY OF SHIPMENTS AND NO INSURANCE COVERAGE
In the Company's business, the Company assumes responsibility to its
customers for the safe delivery of shipments up to $100.00 in value. Upon the
customer's request, the Company insures amounts above $100.00 with local
insurance companies. The Company does not carry an umbrella insurance policy.
The Company has, from time to time, made payments to its customers for claims
related to its shipments which, to date, have not been material to the Company's
results of operations. Should the Company experience an increase in the number
of such claims, there can be no assurance that the Company's results of
operations will not be adversely affected.
ARBITRARY DETERMINATION OF OFFERING PRICE
The initial public offering price has been arbitrarily determined by
negotiation between the Company and the Underwriters. In determining the
offering price, the Underwriters and the Company have considered, among other
things, market prices of similar securities of comparable publicly traded
companies, the financial condition and operating information of companies
engaged in activities similar to those of the Company, the financial condition
and prospects of the Company and the general condition of the securities market.
Consequently, the initial public offering price of the Common Stock does not
necessarily bear any relationship to the Company's asset value, net worth or
other established valuation criteria and may not be indicative of prices that
may prevail at any time or from time to time in the public market for the Common
Stock. See "Underwriting."
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NO PRIOR PUBLIC TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE
Prior to the Offering, there has been no public market for the Common Stock
and there can be no assurance that an active trading market will develop or be
sustained after the Offering. The initial public offering price may not be
indicative of prices that will prevail in the trading market. The market prices
for securities of companies in the Company's industry have at times in the past
been volatile. The dissemination of news reflecting unrest or hostilities in the
Middle East or other regions of the world where the Company operates or plans to
operate could have a significant impact on the market price of the Common Stock.
The announcement of new commercial products or services by the Company or its
competitors, governmental regulations, regulatory approvals or developments
relating to the transportation industry generally, as well as period-to-period
fluctuations in financial results and general economic, political and market
conditions, may have a significant impact on the market price of the Common
Stock.
RIGHTS OF SHAREHOLDERS UNDER BERMUDA LAW
The Company is incorporated under the laws of Bermuda and is headquartered
in Jordan. Principles of law relating to such matters as the validity of
corporate procedures, the fiduciary duties of the Company's management and
directors and the rights of its shareholders, including those persons who will
become shareholders of the Company in connection with the Offering, are governed
by Bermuda law and the Company's Memorandum of Association and Bye-laws. Such
principles of law may differ from those that would apply if the Company were
incorporated in a jurisdiction in the United States. In addition, the Company
has been advised by Conyers, Dill & Pearman, its Bermuda counsel, that there is
uncertainty as to whether the courts of Bermuda would enforce (i) judgments of
United States courts obtained against the Company or its officers and directors
resident in foreign countries predicated upon the civil liability provisions of
the securities laws of the United States or any state or (ii) in original
actions brought in Bermuda, liabilities against the Company or such persons
predicated upon the securities laws of the United States or any state. The
Company has been further advised by the Ali Sharif Zu'bi & Sharif Ali Zu'bi Law
Firm, Jordanian counsel to the Company, that the enforcement of foreign
judgements in Jordan is governed by Law No. 8 of 1952. Basically, a foreign
judgement may be enforced in Jordan by means of an application to the competent
court without retrial and re-examination of the merits or issues of the case.
Jordanian courts may, however, decline to enforce a foreign judgement (i) if the
court which passed the judgement was without competent jurisdiction, (ii) if the
defendant has not carried on any business within the jurisdiction of the court
which passed the judgement or was not resident within its jurisdiction and did
not willfully appear before the court or did not recognize its jurisdiction,
(iii) if the defendant was not notified to appear before the court which issued
the judgement or was not duly or properly served with notice, (iv) if the
judgement has been passed in a fraudulent manner, (v) if the defendant is able
to persuade the court that the judgement is not final, (vi) if the judgement
contravenes Jordanian public policy, and (vii) if the laws of the country of the
court which passed the judgement do not recognize and enforce judgements of
Jordanian courts. See "Description of Capital Stock--Bermuda Law."
STOCK ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have a total of 4,429,688
shares of Common Stock outstanding. Of these shares, the 1,000,000 shares
(1,150,000 shares if the Underwriters' over-allotment option is exercised in
full) sold in this Offering will be freely tradeable without restriction or
registration under the Securities Act by persons other than "affiliates" of the
Company, as defined under the Securities Act. The remaining 3,429,688 shares of
Common Stock outstanding upon completion of this Offering will be "restricted
stock" as that term is defined by Rule 144 as promulgated under the Securities
Act and may not be sold in the absence of registration under the Securities Act
unless an exemption from registration is available, including the exemption
provided by Rule 144. All officers, directors and shareholders of the Company
and all holders of any options, warrants or other securities convertible into,
or exercisable or exchangeable for, shares of Common Stock have agreed that they
will not, directly or indirectly, offer, sell, offer to sell, contract to sell,
pledge, grant any option to purchase or otherwise sell or
16
<PAGE>
dispose of any shares of Common Stock or other capital stock of the Company, or
any securities convertible into, or exercisable or exchangeable for, any shares
of Common Stock or other capital stock of the Company without the prior written
consent of the Representative, on behalf of the Underwriters, for a period of 12
months after the effective date of the Registration Statement of which this
Prospectus is a part; provided, however, that (i) any such person may make
private sales or bona fide gifts of securities of the Company during such period
if the proposed transferee agrees to be bound by the above restrictions and (ii)
such restrictions shall not apply with respect to the laws of descent and
distribution. In addition, Airborne has been granted certain "piggyback"
registration rights pursuant to the Airborne Stock Purchase. See "Certain
Transactions." Any future sales of shares of Common Stock may have an adverse
effect on the market price of the Common Stock. See "Principal and Selling
Shareholders," "Stock Eligible for Future Sale," "Management--Stock Option
Plans," and "Underwriting."
BROAD DISCRETION OF MANAGEMENT AND THE BOARD OF DIRECTORS IN USE OF PROCEEDS
Although the Company intends to apply the net proceeds of the Offering in
the manner described under "Use of Proceeds," the Company's management and the
Board of Directors have broad discretion within such proposed uses as to the
precise allocation of the net proceeds, the timing of expenditures and all other
aspects of the use thereof. The Company reserves the right to reallocate the net
proceeds of the Offering among the various categories set forth under "Use of
Proceeds" as it, in its sole discretion, deems necessary or advisable based upon
prevailing business conditions and circumstances. See "Use of Proceeds."
EFFECT OF PREFERRED STOCK AND STAGGERED BOARD
The Company's Board of Directors has the authority to issue up to 5,000,000
shares of undesignated preferred stock and to determine the price, rights,
preferences and privileges of those shares without any further vote or action by
the shareholders. The rights of holders of Common Stock will be subject to, and
may be adversely affected by, the rights of holders of any preferred stock that
may be issued in the future. There are presently no shares of preferred stock
outstanding. Although the Company has no present intention to issue shares of
preferred stock after consummation of the Offering, any issuance of undesignated
preferred stock, while potentially providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company.
In addition, the Company's Bye-laws provide for a classified Board of
Directors. This could inhibit a change of control of the Company because it will
take at least two annual meetings to change control of the Board of Directors by
shareholder vote. See "Management--Directors and Executive Officers."
CONTROL BY EXISTING SHAREHOLDERS; BENEFITS OF OFFERING TO EXISTING SHAREHOLDERS
Following the Offering, the Company's existing shareholders will
beneficially own approximately 78.4% of the outstanding shares of Common Stock
(assuming no exercise of the Underwriters' Over-Allotment Option). As a result
of such ownership, these shareholders will be able to control the election of
all directors and other actions submitted to a vote of the Company's
shareholders. See "Use of Proceeds," "Dilution," "Principal and Selling
Shareholders" and "Certain Transactions."
DILUTION
Purchasers of the shares of Common Stock offered hereby (at an assumed
initial public offering price of $7.50 per share) will incur an immediate
dilution in net tangible book value per share of Common Stock of $4.33 (58.0%)
per share. Additional dilution to future net tangible book value per share may
occur upon the exercise of the Representative's Warrants and options and
warrants that are outstanding or to be issued under the Company's stock option
plan or otherwise. See "Capitalization," "Dilution" and "Certain Transactions."
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EFFECT OF SHAREHOLDERS AGREEMENT
In connection with the Airborne Stock Purchase, the existing shareholders of
the Company entered into a Shareholders Agreement which provides, among other
things, that in the event the Company transfers (as defined in the Shareholders
Agreement) any shares of Common Stock to certain listed competitors of Airborne
or to any other company primarily engaged in the transportation of air freight
or air express shipments, Airborne has the right to sell all of its shares of
Common Stock to the Company on the same terms and conditions as the sale to such
other company. In the event that Messrs. Kingson and Ghandour and/or Ms. Rula
Ghandour transfer any shares of Common Stock to certain listed competitors to
Airborne or any other company primarily engaged in the transportation of air
freight or air express shipments, it shall be a condition of such transfer that
Airborne shall be offered the right to sell to such competitor all of its shares
of Common Stock on the same terms and conditions as the sale by Messrs. Kingson
and Ghandour and/or Ms. Rula Ghandour. Such provision may deter or frustrate a
takeover of the Company.
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USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,000,000 shares of
Common Stock offered hereby are estimated to be approximately $6,190,000,
assuming a public offering price of $7.50 per share, after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company.
The Company presently anticipates utilizing the net proceeds of this
Offering (i) to expand into existing and emerging markets by acquiring ownership
interests or increasing existing participation interests in local service
providers, the amount and timing of which use of proceeds cannot be determined
at this time (ii) approximately $0.75 million to open additional SHOP THE WORLD
DIRECT catalog centers, (iii) approximately $1.0 million in technology and
systems infrastructure in order to introduce logistics management services, and
(iv) approximately $2.0 million to acquire additional vehicles for operation of
domestic and cross border ground transportation. The balance of the net proceeds
of this Offering will be used for working capital and general corporate
purposes, including funding accounts receivable.
As part of its growth strategy, the Company routinely considers acquisitions
of local service partners and complementary businesses; however, except as
described herein, the Company does not presently have any plans, arrangements or
agreements with respect to any potential acquisitions and there can be no
assurance that any acquisitions will be consummated.
The foregoing represents the Company's best estimates based upon its current
plans and certain assumptions regarding industry and general economic conditions
and the Company's future revenues and expenditures. If any of these factors
change, the Company may find it necessary or advisable to reallocate some of the
proceeds within the above-described categories or to use portions thereof for
other purposes or may be required to seek additional financing. There can be no
assurance that additional financing will be available to the Company on
acceptable terms, if at all. Pending application thereof, the net proceeds will
be invested in short-term, investment-grade, interest bearing securities.
The Company will not receive any proceeds from the sale of stock by the
Selling Shareholders upon the exercise of the Over-Allotment Option.
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DILUTION
The pro forma net tangible book value of the Company's Common Stock as of
September 30, 1996, after giving effect to the Airborne Stock Purchase, was
$7,850,260, or approximately $2.29 per share. Net tangible book value per share
represents the total amount of tangible assets less total liabilities (including
minority interests) divided by the number of shares of Common Stock issued and
outstanding. After giving effect to the sale of the 1,000,000 shares of Common
Stock offered hereby at an assumed initial public offering of $7.50 per share
and after deducting underwriting discounts and commissions and estimated
offering expenses payable by the Company, the pro forma net tangible book value
of the Company at September 30, 1996 would have been $14,040,260, or
approximately $3.17 per share. This represents an immediate increase in net
tangible book value of $0.88 per share to existing shareholders and an immediate
dilution in net tangible book value of $4.33 per share to new investors. The
following table illustrates dilution to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share of Common Stock........... $7.50
Pro forma net tangible book value per share prior to the Offering....... $2.29
Increase per share attributable to new investors........................ $0.88
---------
Pro forma net tangible book value per share after the Offering............ $3.17
---------
Dilution per share to new investors....................................... $4.33
---------
---------
</TABLE>
The following table summarizes the number of shares of Common Stock
purchased, the percentage of total consideration paid, and the average price per
share paid by the existing shareholders and new investors in the Offering. The
calculation below is based on an assumed initial public offering price of $7.50
per share (before deducting the Underwriting discounts and commissions and other
estimated expenses of the Offering payable by the Company).
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- -------------------------- PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing Shareholders(1).......................... 3,429,688 77.4% $ 2,258,457 23.1% $ 0.66
New Investors..................................... 1,000,000 22.6% $ 7,500,000 76.9% $ 7.50
---------- ----- ------------- -----
Total....................................... 4,429,688 100.0% $ 9,758,457 100.0%
---------- ----- ------------- -----
---------- ----- ------------- -----
</TABLE>
- ------------------------
(1) Excludes 300,000 shares of Common Stock issuable upon exercise of
outstanding options and 100,000 shares issuable upon exercise of the
Representative's Warrants. See "Management" and "Underwriting."
DIVIDEND POLICY
The Company has not declared or paid cash dividends on its Common Stock
since 1992. The Company made a cash distribution aggregating $0.26 million in
1992 and $0.08 million in 1991. For the nine months ended September 30, 1996 and
1995, respectively, payments to minority interests aggregated $0.1 million and
$0.8 million, respectively. In 1995, 1994 and 1993, payments to minority
interests were $0.9 million, $0.4 million and $0.4 million, respectively. The
Company presently intends to retain earnings for use in its business and does
not anticipate paying cash dividends in the foreseeable future. The payment of
future cash dividends by the Company on its Common Stock will be at the
discretion of the Board of Directors and will depend on its earnings, financial
condition, cash flows, capital requirements and such other considerations as the
Board of Directors may consider relevant with respect to the payment of
dividends.
20
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated short-term and long-term
debt and capitalization of the Company at September 30, 1996, and on a pro
forma, as adjusted basis to reflect (i) the Airborne Stock Purchase in October
1996 and (ii) the sale of the Common Stock offered hereby, assuming an initial
public offering price of $7.50 per share, after deducting underwriting discounts
and commissions and estimated offering expenses payable by the Company. See "Use
of Proceeds." The information set forth below should be read in conjunction with
the Consolidated Financial Statements including the Notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
------------------------
<S> <C> <C>
PRO FORMA, AS
ACTUAL ADJUSTED
--------- -------------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
SHORT TERM DEBT AND CURRENT PORTION OF NOTES PAYABLE.................................... $ 1,092 $ 1,092
LONG-TERM DEBT.......................................................................... 15 15
--------- -------------
Total Debt.................................................................... $ 1,107 $ 1,107
--------- -------------
Minority interests in subsidiaries...................................................... $ 284 $ 284
--------- -------------
SHAREHOLDERS' EQUITY(1):
Preferred Stock, $0.01 par value; 5,000,000 shares authorized; zero shares issued and
outstanding......................................................................... $ -0- $ -0-
Common Stock, $0.01 par value; 15,000,000 shares authorized; 3,125,000 shares issued
and outstanding; 4,429,688 shares issued and outstanding pro forma, as adjusted..... $ 31 $ 44
Additional paid-in capital............................................................ $ 228 $ 8,405
Cumulative translation adjustment..................................................... (146) (146)
Retained Earnings..................................................................... $ 5,737 $ 5,737
--------- -------------
Total shareholders' equity........................................................ $ 5,850 $ 14,040
--------- -------------
Total capitalization.......................................................... $ 7,241 $ 15,431
--------- -------------
--------- -------------
</TABLE>
- ------------------------
(1) Excludes 300,000 shares of Common Stock issuable upon exercise of
outstanding options and 100,000 shares of Common Stock issuable upon the
exercise of the Representative's Warrants. See "Management" and
"Underwriting."
21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected consolidated financial data as of December 31 1994
and 1995 and for the years ended December 31, 1993, 1994 and 1995 have been
derived from the Company's audited Consolidated Financial Statements included
herein. The selected consolidated financial data as of December 31, 1993 have
been derived from the Company's audited consolidated financial statements not
included herein. The selected consolidated financial data as of and for the
years ended December 31, 1991 and 1992 and as of September 30, 1996 and for the
nine-month periods ended September 30, 1995 and 1996 have been derived from
unaudited consolidated financial statements of the Company which, in the opinion
of management, include all adjustments (consisting of normal recurring
adjustments) necessary to fairly present such data. The information should be
read in conjunction with the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus and "Management's Discussion and Analysis
of Financial Condition and Results of Operations." Operating results for the
nine-month period ended September 30, 1996 are not necessarily indicative of the
results to be expected for future periods, including for the year ending
December 31, 1996.
The Company's Consolidated Financial Statements have been prepared in
accordance with international accounting standards, which, for purposes of the
Company's financial statements, are substantially consistent with U.S. GAAP.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
STATEMENT OF INCOME DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Express............................. $ 11,350 $ 15,692 $ 19,802 $ 22,349 $ 25,491 $ 18,467 $ 21,394
Freight Forwarding.................. 4,479 6,211 6,544 13,104 14,306 10,707 10,421
Domestic(1)......................... 438 585 833 1,291 2,007 1,407 2,099
Other(2)............................ 887 590 1,635 1,385 1,798 1,179 1,982
--------- --------- --------- --------- --------- --------- ---------
Total revenues.................... 17,154 23,078 28,814 38,129 43,602 31,760 35,896
Shipping costs........................ 9,343 11,208 13,676 19,992 23,045 17,109 18,623
--------- --------- --------- --------- --------- --------- ---------
Gross profit...................... 7,811 11,870 15,138 18,137 20,557 14,651 17,273
Operating expenses.................... 3,089 4,213 6,099 6,877 7,986 5,803 6,456
Selling, general and administrative
expenses............................ 3,434 6,467 7,885 10,232 10,664 7,774 9,050
--------- --------- --------- --------- --------- --------- ---------
Operating income.................. 1,288 1,190 1,154 1,028 1,907 1,074 1,767
Interest expense...................... 0 (14) (4) (46) (61) (13) (10)
Gain (loss) on sale of fixed assets... 0 23 7 (4) (1) (39) --
Exchange gain (loss).................. 63 47 (182) (55) 31 84 (6)
Other income (loss)................... 46 112 (200) (123) 69 (26) 1
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes........ 1,397 1,358 775 800 1,945 1,080 1,752
Provision for income taxes............ 0 24 56 227 266 233 180
Minority interests.................... 270 317 633 278 157 95 124
--------- --------- --------- --------- --------- --------- ---------
Net income........................ $ 1,127 $ 1,017 $ 86 $ 295 $ 1,522 $ 752 $ 1,448
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net income per common share(3)........ $ 0.36 $ 0.33 $ 0.03 $ 0.09 $ 0.49 $ 0.24 $ 0.46
Weighted average number of common
shares outstanding(3)............... 3,125 3,125 3,125 3,125 3,125 3,125 3,125
Cash Dividends Per Share Declared..... $ 0.026 $ 0.083 -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
DECEMBER 31, --------------------------
----------------------------------------------------- PRO FORMA, AS
1991 1992 1993 1994 1995 ACTUAL ADJUSTED(4)(5)
--------- --------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................................. $ 1,465 $ 2,371 $ 2,239 $ 1,915 $ 2,867 $ 3,800 $ 11,990
Total assets..................................... 5,118 7,184 10,297 13,178 14,344 17,513 25,703
Total liabilities................................ 2,743 3,565 6,908 9,715 9,649 11,379 11,379
Shareholders' equity............................. $ 2,374 $ 3,619 $ 2,612 $ 2,889 $ 4,404 $ 5,850 $ 14,040
</TABLE>
- --------------------------
(1) Domestic revenue are derived from the intracountry delivery of packages,
primarily by ground transportation.
(2) Other revenues include revenue derived from the Company's remail and special
services and for the nine months ended September 30, 1996, include $0.6
million of revenues from the Company's Middle East Direct Marketing (MED)
business.
(3) Assumes consummation of the Reorganization and excludes 300,000 shares of
Common Stock issuable upon exercise of outstanding options and 100,000
shares of Common Stock issuable upon the exercise of the Representative's
Warrants. See "Management" and "Underwriting."
(4) Gives effect to the sale of 304,688 shares of Common Stock to Airborne in
October 1996 for an aggregate purchase price of $2.0 million (the "Airborne
Stock Purchase"). See "Certain Transactions."
(5) Adjusted to reflect the sale of the shares of Common Stock offered hereby at
an assumed initial public offering price of $7.50 per share (after deducting
estimated offering expenses and underwriting discounts and commissions). See
"Capitalization" and "Use of Proceeds."
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's historical financial condition and
results of operations should be read in conjunction with the Consolidated
Financial Statements, including the Notes thereto and the other financial
information appearing elsewhere in this Prospectus. Except for historical
information, this Management's Discussion and Analysis of Financial Condition
and Results of Operations and other parts of this Prospectus contain
forward-looking information that involve risks and uncertainties. The Company's
actual results could differ materially from those anticipated by such
forward-looking information. Factors that may cause such differences include,
but are not limited to, those discussed under "Risk Factors" and elsewhere in
this Prospectus. All amounts and percentages have been rounded.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentages of
total sales represented by certain items reflected in the Company's consolidated
statements of income:
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Revenues:.................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Express.................................................... 68.7 58.6 58.5 58.1 59.6
Freight Forwarding......................................... 22.7 34.4 32.8 33.7 29.0
Domestic................................................... 2.9 3.4 4.6 4.4 5.8
Other...................................................... 5.7 3.6 4.1 3.7 5.5
Shipping costs............................................... 47.5 52.4 52.9 53.9 51.9
Gross profit............................................... 52.5 47.6 47.1 46.1 48.1
Operating expenses........................................... 21.2 18.0 18.3 18.3 18.0
Selling, general and administrative expenses................. 27.4 26.8 24.5 24.5 25.2
Operating income........................................... 4.0 2.7 4.4 3.4 4.9
Income before income taxes................................. 2.7 2.1 4.5 3.4 4.9
Provision for income taxes................................... 0.2 0.6 0.6 0.7 0.5
Minority interests......................................... 2.2 0.7 0.4 0.3 0.3
Net income................................................. 0.3 0.8 3.5 2.4 4.0
</TABLE>
The Company recognizes revenues when shipments are completed. For "door to
door" shipments, revenues are recognized upon delivery of freight at the
destination. For other shipments, revenues are recognized upon delivery of
freight to the air carrier, at which time the revenue process is completed.
Shipping costs include linehaul expenses, distribution expenses, inbound
costs and cargo airfreight and related expenses, the latter constituting the
largest component of direct costs. The Company's operating expenses are
primarily the expenses of the Company's stations and include salaries and fringe
benefits, communication, travel expenses, vehicle expenses, operating material,
depreciation expense, office rent and utilities, printing and stationery,
maintenance expenses, governmental fees and uniform expenses. The Company's
operating expenses also include expenses of the Company's General Services
Office ("GSO"), which is located in Amman, Jordan and oversees all shipments
throughout Aramex's distribution network and charges local stations. Selling,
general and administrative expenses include executive salaries, corporate
overhead at the GSO and selling and marketing expenses for the Company as a
whole.
Aramex sells its products and services mainly to customers in the Middle
East, Europe and North America. Revenues are generally recognized at the source,
I.E., by the station which invoices the ultimate customer. The table below shows
the breakdown of revenues by geographic region for 1995 and the Nine Month
Period.
23
<PAGE>
GEOGRAPHIC BREAKDOWN OF REVENUES
(DOLLARS IN MILLIONS)
1995
<TABLE>
<CAPTION>
FREIGHT
EXPRESS FORWARDING DOMESTIC & TOTAL
(60%) (32%) OTHER (8%) COMPANY
-------------------- -------------------- -------------------- --------------------
REGION $ % $ % $ % $ %
- ----------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Middle East.................. 27.7 72 9.2 65 3.6 94 40.6 71
Europe....................... 8.0 21 2.1 14 .1 3 10.1 18
North America................ 3.0 7 3.0 21 .1 3 6.1 11
Elimination(1)............... (13.2) -- -- -- -- -- (13.2) --
--------- --------- --------- --------- --- --------- --------- ---------
Total 1995 Revenues.... $ 25.5 100% $ 14.3 100% $ 3.8 100% $ 43.6 100%
--------- --------- --------- --------- --- --------- --------- ---------
--------- --------- --------- --------- --- --------- --------- ---------
</TABLE>
NINE MONTH PERIOD
<TABLE>
<CAPTION>
FREIGHT DOMESTIC
EXPRESS FORWARDING & OTHER TOTAL
(60%) (29%) (11%) COMPANY
-------------------- -------------------- -------------------- --------------------
REGION $ % $ % $ % $ %
- --------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Middle East................ 23.8 73 7.3 70 3.7 91 34.8 74
Europe..................... 6.3 19 1.5 14 .1 2 7.9 17
North America.............. 2.4 8 1.6 16 .3 7 4.3 9
Elimination(1)............. (11.1) -- -- -- -- -- (11.1) --
--------- --------- --------- --------- --- --------- --------- ---------
Total Nine Month
Period Revenues.... $ 21.4 100% $ 10.4 100% $ 4.1 100% $ 35.9 100%
--------- --------- --------- --------- --- --------- --------- ---------
--------- --------- --------- --------- --- --------- --------- ---------
</TABLE>
- ------------------------
(1) Revenues between stations that are wholly-owned subsidiaries are priced at
cost. Transactions with other affiliated stations are priced at cost plus
10%. All intercompany transactions have been eliminated in consolidation.
The Company's business is seasonal in nature. Historically, the Company
experiences a decrease in demand for its services during the first and third
quarters, the post-winter holiday and summer vacation seasons. The Company
traditionally experiences its highest volume in the fourth quarter due to the
holiday season. The seasonality of the Company's sales may cause a variation in
its quarterly operating results and a significant decrease in second or fourth
quarter revenue may have an adverse effect on the Company's results of
operations for that fiscal year.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 TO NINE MONTHS ENDED
SEPTEMBER 30, 1995
REVENUES. Consolidated revenues of the Company increased by $4.1 million,
or 12.9%, to $35.9 million for the Nine Month Period from $31.8 million for the
nine months ended September 30, 1995 (the "1995 Period"). Express revenues
increased by $2.9 million, or 15.8%, to $21.4 million for the Nine Month Period
from $18.5 million in the 1995 Period, primarily as a result of an increase in
the demand for the Company's express services particularly in Dubai and the Gulf
region, which is experiencing economic growth. The increase in revenues is also
attributable to the addition of new accounts in Greece and Kuwait and increases
in the GSO's wholesale business. Express revenues for the Nine Month Period also
include express delivery service revenues attributable to the new MED business.
Freight forwarding revenue decreased by $0.3 million, or 2.8%, to $10.4
million for the Nine Month Period from $10.7 million for the 1995 Period
primarily as a result of the closure of three stations in the U.S. (Los Angeles,
Houston and New Jersey). Excluding these stations, the Company's freight
forwarding revenues increased 4.0% and total revenues increased 16.0% for the
Nine Month Period from the 1995
24
<PAGE>
Period. During the Nine Month Period the Company achieved better margins on its
freight forwarding business due to improved buying rates from airlines as well
as achieving better selling rates in its markets.
Domestic and other revenue increased by $1.5 million, or 57.8%, to $4.1
million for the Nine Month Period from $2.6 million for the 1995 Period,
primarily as a result of aggressive sales efforts to promote these services
station-wide. Additionally, the Company's MED business generated revenues of
$0.6 million for the Nine Month Period from sales commissions in the sale of
mail order products.
SHIPPING COSTS. Shipping costs increased by $1.5 million, or 8.8% to $18.6
million for the Nine Month Period from $17.1 million for the 1995 Period,
primarily as a result of increased revenues and, to a lesser extent, increased
MED product costs (which are included in shipping costs).
OPERATING EXPENSES. Operating expenses increased by $0.7 million, or 12.1%,
to $6.5 million for the Nine Month Period from $5.8 million for the 1995 Period,
primarily as a result of an increase in local ground delivery expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $1.3 million, or 16.4%, to $9.1 million for
the Nine Month Period from $7.8 million for the 1995 Period. The Company
incurred additional promotional, travel, market research and other expenses for
the Nine Month Period related to its MED business.
NET INCOME. Net income increased by $0.7 million, or 93%, to $1.4 million
for the Nine Month Period from $0.8 million for the 1995 Period.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
REVENUES. Consolidated revenue of the Company increased by $5.5 million, or
14.4%, to $43.6 million for the year ended December 31, 1995 ("1995") from $38.1
million for the year ended December 31, 1994 ("1994"). Express revenue increased
by $3.1 million, or 14.0%, to $25.5 million in 1995 from $22.4 million for 1994,
primarily as a result of increased revenues from the Company's operations in the
Gulf region and the newly established Greek operations. In addition, the Company
experienced increased revenues from its London hub. In 1995, Aramex reorganized
its United States operation by closing its Houston office and merging its
business with Airborne Express. The Company currently maintains a Middle East
desk in the Airborne Express office. At the same time, due to a dispute with the
Company's local partner in Los Angeles, the office was closed. In New Jersey,
the Company bought its minority partner and merged the operation with its New
York operation. The Company believes that this reorganized structure is adequate
to serve the United States market.
Freight forwarding revenue increased by $1.2 million, or 9.2%, to $14.3,
million for 1995 from $13.1 million for 1994, primarily as a result of increased
revenues generated by the Company's stations in the Middle East.
Domestic and other revenue increased by $1.1 million, or 42.2%, to $3.8
million for 1995 from $2.7 million for 1994, primarily as a result of the
introduction of domestic service in additional stations in the Middle East.
SHIPPING COSTS. Shipping costs increased by $3.1 million, or 15.3%, to
$23.0 million for 1995 from $20.0 million for 1994.
OPERATING EXPENSES. Operating expenses increased by $1.1 million, or 16.0%,
to $8.0 million for 1995 from $6.9 million for 1994, primarily as a result of
increased communications and related expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $0.5 million, or 4.2%, to $10.7 million for
1995 from $10.2 million for 1994, primarily as a result of increased advertising
and promotional campaigns associated with the Company's growth. In particular,
selling expenses increased 21.0% for 1995 from 1994.
25
<PAGE>
NET INCOME. Net income increased by $1.2 million, or 416%, to $1.5 million
for 1995 from $0.3 million for 1994.
COMPARISON OF YEAR ENDED DECEMBER 31, 1994 TO YEAR ENDED DECEMBER 31, 1993
REVENUE. Consolidated revenue of the Company increased by $9.3 million, or
32.3%, to $38.1 million for 1994 from $28.8 million for the year ended December
31, 1993 ("1993"). Express revenue increased by $2.5 million, or 12.6%, to $22.3
million for 1994 from $20.0 million for 1993, primarily as a result of increased
revenues generated by the Company's stations in Europe and the Middle East. The
growth in 1994 total revenues was offset by the loss in February 1994 of the
Federal Express wholesale account (which, in 1993 accounted for 7.8% of total
revenue) after it secured a license to operate outbound express business in
Saudi Arabia.
Freight forwarding revenue increased by $6.6 million, or 100%, to $13.1
million for 1994 from $6.6 million for 1993, primarily as a result of the
introduction in 1993 of freight forwarding services on a system-wide basis.
Domestic and other revenue increased by $0.2 million, or 8%, to $2.7 million
for 1994 from $2.5 million for 1993, primarily as a result of increased revenues
generated by the Company's operations in Dubai and Saudi Arabia.
SHIPPING COSTS. Shipping costs increased by $6.3 million, or 46.2%, to
$20.0 million for 1994 from $13.7 million for 1993, primarily as a result of an
increase in cargo cost of service of $5.5 million, or 116%. The increase in
cargo cost is attributable to a 100% increase in cargo revenues during 1994.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $2.3 million, or 29.8%, to $10.2 million
for 1994 from $7.9 million for 1993, primarily as a result of increased employee
related and advertising expenses associated with the opening of the Cyprus and
Greece offices and the newly launched freight forwarding operation.
NET INCOME. Net income increased by $0.21 million, or 243%, to $0.30
million for 1994 from $.09 million for 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements to date have been funding its
accounts receivable. The requirements have been met primarily by internally
generated funds and bank financings.
The Company's working capital was $3.8 million at September 30, 1996, as
compared to $2.9 million at September 30, 1995 and $5.9 million at December 31,
1995.
The Company's cash balances were $1.4 million at September 30, 1996 as
compared to $0.9 million at September 30, 1995 and $1.3 million at December 31,
1995. Net cash flow from operating activities was $0.8 million for the Nine
Month Period as compared to $0.4 million for the 1995 Period and $1.5 million
for 1995 as compared to $1.5 million for 1994. Net cash used in investing
activities was $0.7 million for the Nine Month Period as compared to $0.5
million for the 1995 Period and $0.8 million for 1995 as compared to $1.4
million for 1994. Net cash used in financing activities was $0.1 million for the
Nine Month Period as compared to $0.01 million for the 1995 period and $0.2
million for 1995 as compared to $0.7 million for 1994.
The Company leases office space and office and transportation equipment
under various operating leases, some of which are renewable annually. Rent
expense related to these leases amounted to $0.7 million, $0.9 million and $0.9
million for the Nine Month Period, 1994 and 1995, respectively.
The Company maintains several lines of credit with various banks aggregating
$0.8 million, $0.6 million and $0.5 million at September 30, 1996, and December
31, 1995 and 1994, respectively. The Company had $0.9 million, $0.6 million and
$0.2 million outstanding under these lines of credit at September 30, 1996, and
December 31, 1995 and 1994, respectively. The weighted average interest rates on
the Company's lines of credit were 12.3%, 11.3% and 10.3% at September 30, 1996,
and December 31,
26
<PAGE>
1995 and 1994, respectively. Historically, the Company's lines of credit have
been personally guaranteed by Mr. Fadi Ghandour, the Company's President and
Chief Executive Officer. Additionally, in 1996, the Company secured a three-year
term loan from NatWest Bank in the principal amount of $0.2 million bearing
interest at 9.875% per annum. The remaining amounts due to banks of $0.2
million, $0.2 million and $0.1 million at September 30, 1996, and December 31,
1995 and 1994, respectively, represent bank overdrafts. The Company has from
time to time experienced a need for cash to fund its receivables and sourced
such need with bank overdrafts and/or available credit under its lines of
credit.
For the nine months ended September 30, 1996 and 1995, respectively,
payments to minority interests aggregated $0.1 million and $0.8 million,
respectively. In 1995, 1994 and 1993, payments to minority interests were $0.9
million, $0.4 million and $0.4 million, respectively.
In October 1996, the Company consummated the sale to Airborne, a member of
the OEC and a wholesale customer of the Company for over 10 years, of 304,688
shares of Common Stock for an aggregate consideration of $2.0 million. See
"Certain Transactions."
The Company presently anticipates utilizing the net proceeds of this
Offering (i) to expand into existing and emerging markets by acquiring ownership
interests or increasing existing participation interests in local service
providers, the amount and timing of which use of proceeds cannot be determined
at this time (ii) approximately $0.75 million to open additional SHOP THE WORLD
DIRECT catalog centers, (iii) approximately $1.0 million in technology and
systems infrastructure in order to introduce logistics management services, and
(iv) approximately $2.0 million to acquire additional vehicles for operation of
domestic and cross border ground transportation. The balance of the net proceeds
of this Offering will be used for working capital and general corporate
purposes, including funding accounts receivable. See "Use of Proceeds" and
"Business." Other than the foregoing, the Company presently does not have any
material commitment for capital expenditures in the next 12 months.
In management's opinion, proceeds from this Offering coupled with cash flows
from operations and borrowing capacity anticipated to be available to the
Company following the Offering, will provide adequate flexibility for financing
the Company's expansion plans.
IMPACT OF INFLATION AND CURRENCY FLUCTUATIONS
The Company does not believe that inflation or currency fluctuations has had
a material adverse effect on revenues and results of operations. However, demand
for the Company's services is influenced by general economic conditions,
including inflation and currency fluctuations. Periods of economic recession,
high inflation or the devaluation of currencies in countries in which the
Company operates could have a material adverse effect on the express and freight
forwarding industry and the Company's results of operations.
EFFECTIVE CORPORATE TAX RATES
The Company's consolidated effective tax rate was 13.7% and 28.3% for 1995
and 1994, respectively. The principal differences between the effective tax
rates and the statutory tax rate applicable in the United States of 35% are
exemptions from income taxes of many of the Company's subsidiaries operating in
the Middle East and lower statutory rates at certain other locations.
OTHER
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123 "Accounting for Stock-Based Compensation." This standard encourages, but
does not require, recognition of compensation expense based on the fair value of
equity instruments granted to employees. The Company does not plan to adopt the
recognition provisions of this standard. The disclosures required by this
standard will be included in a note to the 1997 financial statements.
The Company has adopted statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and For Long-Lived Assets to
be Disposed of" ("SFAS 121"). SFAS 121 requires the assessment of certain
long-lived assets for possible impairment when events or circumstances indicate
their carrying amounts may not be recoverable. Adoption of this standard had no
material effect on the Company's financial statements.
27
<PAGE>
BUSINESS
THE COMPANY
Aramex provides express delivery and freight forwarding services from its
main hubs in Dubai, London, New York and Amman primarily to, from and within
destinations in the Middle East and the Indian Sub-Continent. Aramex has over
800 full-time employees and operates through a network of 36 stations/offices
and 11 service providers located in 29 countries, and holds a majority interest
in its MED direct marketing and mail order business, which operates five SHOP
THE WORLD DIRECT catalog centers. The Company's strategy is to focus on its core
business and to expand its services to include (i) warehouse management in
designated free trade zone locations; (ii) multi-modal regional transportation
and distribution (offering the options of express air freight forwarding and
ground distribution); (iii) inventory management; and (iv) local warehousing in
certain areas of the Middle East. From 1991 to 1995, the Company's revenues grew
from $17.2 million to $43.6 million. The Company generated revenues of $43.6
million and $35.9 million, with corresponding net income of $1.5 million and
$1.4 million, for the year ended December 31, 1995 and the Nine Month Period,
respectively. Aramex uses commercial airline service to carry its express
parcels and freight, resulting in lower capital expenditures and greater pricing
flexibility. Aramex is a founding member of OEC, which is a global alliance
among certain leading independent express companies that functions as a
worldwide delivery network for its members. In October 1996, Airborne, a member
of the OEC, invested $2.0 million in the Company's Common Stock.
The Company has been operating in the Middle East since 1982. It has been
estimated that real GDP for the Middle East will grow at approximately 3.5% per
year to $740 billion by 2015. Because of its strategic location at the
crossroads of Asia, Europe and Africa, the Middle East is becoming a major
center for world air freight distribution. In early 1996, Boeing reported that
air traffic and transshipments from Dubai, where the Company operates one of its
major hubs, increased 23% and 41% from 1995, respectively. The Company believes
it is well positioned to benefit from the economic growth forecasted for the
Middle East which it believes should result in an increased demand for express
freight forwarding and regional trucking services.
INDUSTRY BACKGROUND
EXPRESS. The international express delivery market has grown rapidly in
recent years. In the United States, the express segment of the domestic air
freight market has averaged 25% growth per year since 1977, accounting for a
reported 60% of the U.S. domestic market in 1995. Boeing reports in its
1996/1997 WORLD AIR CARGO FORECAST, that international express has grown more
than 25% from its 1993 level to achieve a 5% market share in 1994. Boeing also
estimates that the international express market will average an annual growth
rate of 18% to achieve a 31% market share of the world air cargo market in 2014.
INTERNATIONAL EXPRESS MARKET SHARE
[CHART]
Source: 1996/1997 WORLD AIR CARGO FORECAST (The Boeing Commercial Airplane
Group)
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The Company believes that a number of factors have contributed to the
increase in demand for express services. Such factors include the growing need
for timely delivery of documents, small packages, and other time-sensitive items
in an information and service-oriented economy and the development of
centralized distribution systems.
The Company believes that the Middle East's strategic location at the
crossroads of Asia, Europe and Africa, positions it to become a major center for
air distribution. Markets in which the Company operates, including, but not
limited to, Dubai, Lebanon, Jordan, Saudi Arabia, Syria, and Qatar are growing
rapidly. The Middle East market has grown at an average rate of 15% per year
since since 1995.
FREIGHT FORWARDING (CARGO). In its 1996/1997 WORLD AIR CARGO FORECAST,
Boeing estimates an annual growth rate of 6.6% for worldwide air cargo traffic
through 2015.
WORLD AIR CARGO TRAFFIC
[CHART]
Source: 1996/1997 WORLD AIR CARGO FORECAST (The Boeing Commercial Airplane
Group)
Boeing estimates that the international market growth will continue to
outpace U.S. domestic growth, exceeding 80% of total revenue tonne kilometers
(RTKs), a measure used in the industry to compare performance, by the year 2014.
According to Boeing, the U.S. airline share of the world market is expected to
decline from 32% in 1994 to 29% in the year 2014. According to Boeing, in
contrast to the U.S., Middle Eastern world air traffic increased nearly 18%
during 1994.
DOMESTIC. The Middle East also fosters relatively little cross-border
ground transportation of packages and shipments, due largely to complex
regulations and time-consuming customs procedures that accompany such shipments.
Management believes that this regional attribute, coupled with the generally
inefficient public postal systems in the region, gives Aramex, which has an
established network, future growth potential.
THE COMPANY'S PRODUCTS AND SERVICES
INTERNATIONAL SMALL PARCEL EXPRESS SERVICE. Express shipments consist of
small packages, typically ranging in weight between 0.5 and 50 kilograms, with
time-sensitive delivery requirements. The Company offers its express delivery
services on an international basis to both retail and wholesale express accounts
and offers its customers the ability to track their shipments on the world wide
web through the Company's web site (www.aramex.com). At September 30, 1996, the
Company had approximately 20,000 retail express accounts and 640 wholesale
express accounts.
The Company's experience is that customers require rapid tracing of express
shipments, which in the case of Aramex is provided instantaneously worldwide by
an on-line system linking all the Company's offices. Express customers pay a
premium for the level of service provided for deliveries, especially on
international shipments.
From 1982 to 1987, Aramex built its revenue base and its station base in the
Middle East on the strength of its local delivery services for a few large
wholesale express accounts. Wholesale customers
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<PAGE>
consist primarily of express delivery companies (such as Airborne Express,
Emery, Purolator Canada, UPS), which originate express packages that have a
Middle Eastern destination and require Aramex's network in the region to deliver
their shipments. The end-user remains a customer of Aramex's wholesale client.
Based upon its knowledge of the Middle East market, management believes that the
Company is the leading independent wholesaler to the Middle East. Revenues from
wholesale accounts were $11.6 million (or 27% of total revenues) and $9.5
million (or 26% of total revenues) for 1995 and the Nine Month Period,
respectively.
Beginning in 1987, in order to diversify and strengthen its express customer
base into retail accounts, Aramex began to develop sales and marketing
capability at all of its offices. Retail express customers include trading
companies, pharmaceutical companies, banks, service and information companies
and manufacturing and regional distribution companies. Revenues from retail
accounts were $13.7 million (or 31% of total revenues) and $11.7 million (or 32%
of total revenues) for 1995 and the Nine Month Period, respectively. The Company
currently has over 20,000 retail customers worldwide, none of whom accounted for
more than 1.2% of the Company's total revenues for 1995 or the Nine Month
Period, respectively.
The Aramex express business, especially with the increasing strength of the
retail portion, serves as a foundation for the development of additional revenue
sources. The retail express customer often becomes a freight forwarding or
customized special services customer. The Company can also market services such
as its SHOP THE WORLD DIRECT catalog centers to its express customer base.
The Company is a founding member of the OEC, which is a global alliance
among certain leading independent express companies that functions as a
worldwide delivery network for its members. The OEC was formed in 1990 by
Airborne Express, Aramex, Purolator Courier--Canada, International Bonded
Couriers and Trans Africa Express. The current OEC board members are Airborne
Express, Airborne Express Japan, Aramex, I.B.C. (International Bonded Couriers),
Purolator Canada, Servicio Urgente de Transportes S.A. ("SEUR") and Ziegler, a
Belgian company. The OEC sets rates for deliveries by members in each of the
member markets and establishes standards for service and performance. OEC
members, who each have valuable knowledge of their respective markets, conduct
joint marketing efforts and participate in committees that meet periodically to
address the operations of the network as a whole. The OEC in aggregate employs
more than 30,000 people in 180 countries.
The six OEC members serve these areas:
<TABLE>
<CAPTION>
OEC BOARD MEMBER REGION SERVED
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Airborne Express U.S., U.K., Far East & Holland
Airborne Express Japan Japan
Aramex Middle East & Indian Sub-continent
I.B.C. (International Bonded Couriers) South & Central America
Purolator Canada Canada
Seur Spain
Ziegler France, Belgium, Luxembourg, Switzerland & Denmark
</TABLE>
FREIGHT FORWARDING. The Company offers a wide range of freight forwarding
(i.e. cargo delivery) services, including air and ocean freight forwarding
consolidation, warehousing, customs clearance and breakbulk services. Aramex
provides full "door to door" service from, to and within the Middle East and the
Indian Sub-Continent. A significant portion of the Company's freight forwarding
business involves consignee sales (imports) and, to a lesser extent exports.
Freight forwarding shipments (or "cargo" shipments) typically have gross weights
in excess of 50 kilograms, often require more handling and are normally less
time-sensitive than express shipments.
Aramex launched its freight forwarding business in 1987 at selected stations
in order to build upon the strength of its wholesale and retail express
operation, and to satisfy demand for that service by its express customers.
Freight forwarding sales were introduced in 1993 at every Aramex station.
Revenues from the
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Company's freight forwarding operations were $14.3 million (or 33% of total
revenues) and $10.4 million (or 29.0% of total revenues) for 1995 and the Nine
Month Period, respectively. Of the Company's more than 500 accounts, none
exceeded 1% of the total 1995 or Nine Month Period freight forwarding revenues,
respectively. Whereas express shipments in the Aramex network virtually always
pass through one of its four international hubs (Dubai, London, New York,
Amman), cargo shipments are routed direct from sender to destination by way of
the commercial carrier routing that is best suited to the size, weight and time
sensitivity of the shipment.
SHOP THE WORLD DIRECT CATALOG CENTERS (MED). Aramex launched MED, a direct
marketing and mail order catalog service in Amman, Jordan in 1995 with the
objective of developing distribution and sales of international mail order
products throughout the Middle East. At September 30, 1996, MED had exclusive
Middle East rights to sell and distribute products offered by approximately 20
catalogs including Brooks Brothers, The Chef's Catalog, Hammacher Schlemmer,
J.C. Penney, and Littlewoods (UK) and others (with the exception of Saudi
Arabia, Kuwait and the Gulf States in the case of J.C. Penney). The Company
operates SHOP THE WORLD DIRECT catalog centers in Jordan, Kuwait, Egypt, Lebanon
and Qatar, where the Company sells, processes and delivers mail order products
to its customers. The Company receives a commission on each MED product sale and
generates revenue on the delivery of the product to the customer. Revenue
generated from such sales by MED accounted for $0.6 million (or 2.0% of total
revenue) in the Nine Month Period.
CATALOGUES SERVICED BY MED
<TABLE>
<S> <C> <C>
Barrie Pace Hammacher Schlemmer La Costa Spa
Brooks Brothers Harolds Littlewoods (UK)
Bullocks and Jones J.C. Penney The Reader's Catalog
The Chef's Catalog Johnston & Murphy The Right Start
Collections Jos A. Bank Self Care
Domestications Kenneth Cole Sundance
Kideo
</TABLE>
The Company developed MED in response to Middle Eastern client requests to
receive goods marketed through foreign catalogs. A typical MED catalog center is
located adjacent to or near an Aramex station, is 50 square meters and carries
approximately 20 catalogs from which the customer can order through Aramex. The
Company takes delivery of all orders at airport locations in New York City and
London (UK) and delivers the product to the customer.
Each MED catalog center is staffed by one or two salespersons who assist the
customer in placing orders. Customers may also place orders by telephone by
calling the Company's customer service representatives. The Company offers a
limited guarantee on each purchase.
DOMESTIC AND REGIONAL GROUND EXPRESS TRANSPORTATION SERVICES. The Company
has developed an extensive network for the delivery of small parcels for its
customers including local distributors, pharmaceutical companies, banks and a TV
home shopping network. Domestic revenues accounted for $2.0 million (or 4.6% of
total revenues) and $2.1 million (or 6.0% of total revenues) for 1995 and the
Nine Month Period, respectively. Aramex plans to expand its ground
transportation network to offer cross-border trucking and ground transportation
for small parcels and fast-moving consumer goods in the region, servicing what
the Company perceives to be a highly underdeveloped market. By developing a
parcel shuttle service linking the main cities in the Middle East, Aramex would
be able to lower the cost of linehauling by reducing air freight movement and
thereby offering customers the option of deferred service at lower prices. This
service will be an extension of Aramex's logistics management service.
Management believes the addition of such complementary businesses should help
strengthen the core business of Aramex.
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<PAGE>
GROWTH STRATEGY
The Company's strategy is to provide a full range of express, freight
forwarding, logistics, ground transportation, and mail order services to its
customers. The Company believes that it competes in an industry and a region
characterized by a growing need among customers for more comprehensive services.
By offering a wide range of distinct delivery and transportation services at a
reasonable price, the Company plans to position itself as a leading provider of
express, freight forwarding and logistics services in its core markets.
The express, transportation and logistics services businesses are very
information technology intensive businesses. The Company historically has made
significant investments in technology systems to provide a strong platform for
enhanced service and future growth. The Company currently has implemented a re-
design and reengineering plan of its office and has a number of ongoing
technological initiatives including (i) an agreement with Computer Associates
which has commenced installing its accounting software in all of the Company's
offices; (ii) a global LAN access agreement with Societe Internationale de
Transport Aerien ("SITA"), the global airline communications network of which
Aramex is a member, permitting all of the Company's offices to be linked
together on-line in real time; (iii) an agreement with Symbol Technologies to
provide Aramex with scanner technology for all its offices around the world; and
(iv) an agreement with Soligitics to develop a new software program for Aramex
to manage its express and air freight which includes a customer connectivity
feature to permit customers' electronic interface "EDI."
The Aramex management team has been carefully building the Company's
infrastructure, creating the technology and management systems, employee base
and strategic alliances required both to support future growth in the Company's
current business lines and to serve as a platform for the expansion of the
Company's services in the Middle East and emerging markets to include:
LOGISTICS. Corporations increasingly purchasing materials from sources
throughout the world contract for or perform manufacturing and assembly
operations in different countries, distribute their products globally, and rely
on just-in-time inventory management practices. As the volume and cost of
international freight have increased, so have the importance and complexity of
effectively managing international freight transportation logistics. To
effectively manage their shipping needs, many corporations use freight
forwarders to provide logistics management services. Aramex is planning to
introduce logistics management as a new Aramex service product that will target
a new clientele base, in addition to certain categories of Aramex existing
customers. Worldwide logistics management is expected to be one of the fastest
growth areas in the next five to ten years, providing multi-modal alternative
solutions to customers.
Items to be handled will typically be high value and time sensitive, such as
mail order items, spare parts and consumer electronics. The target market for
this service will consist of:
- Aviation, automobile, computer and electronics companies
- Light assembly factories
- Local companies interested in outsourcing some or all of their logistics
operations
- Wholesale freight forwarders
The range of products to be offered to customers will include: (i) free
trade zone warehouse management in locations such as Jebel Ali, Dubai Airport
and Amman Queen Alia Airport; (ii) multi-modal regional transportation and
distribution (offering the options of express air freight, air freight
forwarding and ground distribution); (iii) inventory management; and (iv) local
warehousing in Saudi Arabia, Egypt and Syria.
GEOGRAPHIC EXPANSION. The Company is implementing a strategy focused on
expanding its geographic presence in the Middle East, the Indian Sub-Continent,
and other emerging markets such as North Africa and certain former Soviet
Central Asian Republics. Each of these emerging markets is characterized by
large populations and growing economies which are liberalizing and opening their
markets to the
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<PAGE>
private sector and to foreign investors. By expanding its distribution network
in these regions, Aramex management believes it can (i) enhance its regional
market share and presence; (ii) expand its customer base; and (iii) further
reduce its geographic revenue concentration. The Company has targeted a portion
of the proceeds from the Offering to acquire an equity interest in the
operations of its current service providers and joint ventures located in India,
Sri Lanka, Pakistan and Turkey. Recently the Company entered into an agreement
with a service provider in Uzbekistan to commence operations in early 1997 and
plans to commence joint ventures in certain North African countries and other
Central Asian Republics, such as Kazakhstan and Azerbaijan.
ADDITIONAL MED SHOP THE WORLD DIRECT CATALOG CENTERS AND ADVERTISING. In an
effort to add additional sources of revenue and as a natural extension of the
basic express business, the Company plans to open additional MED catalog centers
with a portion of the proceeds from the Offering and to commence local
advertising of its mail order services. The Company's goal is to open at least
five additional MED centers in the next twelve months with a long-term view to
including an MED showroom in or near each of its stations in the Middle East.
The Company plans to continue to seek to offer similar value-added customized
special services to its growing customer base.
MARKETS FOR THE COMPANY'S PRODUCTS AND SERVICES
Aramex sells its products and services mainly to customers in the Middle
East, Europe and North America. Revenues are generally recognized at the source,
I.E., by the station which invoices the ultimate customer. The table below shows
the geographic breakdown of revenues by geographic region for 1995 and the Nine
Month Period.
GEOGRAPHIC BREAKDOWN OF REVENUES
(DOLLARS IN MILLIONS)
1995
<TABLE>
<CAPTION>
FREIGHT FORWARDING DOMESTIC & OTHER
EXPRESS (59%) (32%) (9%) TOTAL COMPANY
-------------------- -------------------- -------------------- --------------------
REGION $ % $ % $ % $ %
- ---------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Middle East................. 27.7 72 9.2 65 3.6 94 40.6 71
Europe...................... 8.0 21 2.1 14 .1 3 10.1 18
North America............... 3.0 7 3.0 21 .1 3 6.1 11
Elimination(1).............. (13.2) -- -- -- -- -- (13.2) --
--------- --------- --------- --------- --- --------- --------- ---------
Total 1995 Revenues..... $ 25.5 100% $ 14.3 100% $ 3.8 100% $ 43.6 100%
--------- --------- --------- --------- --- --------- --------- ---------
--------- --------- --------- --------- --- --------- --------- ---------
</TABLE>
NINE MONTH PERIOD
<TABLE>
<CAPTION>
FREIGHT FORWARDING DOMESTIC & OTHER
EXPRESS (60%) (29%) (11%) TOTAL COMPANY
-------------------- -------------------- -------------------- --------------------
REGION $ % $ % $ % $ %
- ---------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Middle East................. 23.8 73 7.3 70 3.7 91 34.8 74
Europe...................... 6.3 19 1.5 14 .1 2 7.9 17
North America............... 2.4 8 1.6 16 .3 7 4.3 9
Elimination(1).............. (11.1) -- - -- -- -- (11.1) --
--------- --------- --------- --------- --- --------- --------- ---------
Total Nine Month Period
Revenues.............. $ 21.4 100% $ 10.4 100% $ 4.1 100% $ 35.9 100%
--------- --------- --------- --------- --- --------- --------- ---------
--------- --------- --------- --------- --- --------- --------- ---------
</TABLE>
- ------------------------
(1) Revenues between stations that are wholly-owned subsidiaries are priced at
cost. Transactions with other affiliated stations are priced at cost plus
10%. All intercompany transactions have been eliminated in consolidation.
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<PAGE>
According to Boeing, the Middle East, Europe and North American air freight
markets are estimated to grow at annual rates of 6%, 4.5% and 5.5%,
respectively.
MIDDLE EASTERN AIRBORNE GROWTH
[CHART]
Source: 1996/1997 WORLD AIR CARGO FORECAST (The Boeing Commercial Airplane
Group)
While the express market is generally less developed in the Middle East than
in Europe and North America, the Middle East airborne markets reportedly
experienced growth of approximately 10% during 1994 and 12% during 1995. The
Middle East's strategic location between the manufacturers of the Far East and
the consumer markets of the West have contributed to the growth of new
international trade hubs such as Dubai. Boeing reports total air traffic through
Dubai in early 1996 increased 23% and transshipments increased 41% from 1995.
Aramex maintains a strong presence in Dubai, one of the most active ocean and
air freight ports in the world.
The growth in the Middle East air freight market is attributable to economic
expansion in the region. Middle East real GDP is expected to grow at about 3.5%
per year to reach nearly $740 billion by 2015. Many countries comprising the
Middle East, such as the UAE, are also developing trade as a basis for their
economies to reduce the effect of lower oil prices.
Saudi Arabia represents the largest market in the Middle East, accounting
for nearly 28% of the region's GDP and, together with the UAE, for the majority
of its air trade traffic. Aramex has maintained a limited presence in Saudi
Arabia's three major cities since 1985. However, in June 1996, the Company
acquired a permit to operate in the Kingdom. The Company plans to utilize a
portion of the proceeds to upgrade the operations in Saudi Arabia and
aggressively market its services there.
On a broad scale, the Middle East is a net importer of goods and services.
This "import" orientation has shaped Aramex's express and freight forwarding
marketing and sales efforts in very different ways. Express provides a valuable
delivery network for Aramex and OEC packages incoming from worldwide
destinations. The Company's freight forwarding service, from its inception, has
focused on generating "routings" or consignee sales from importers, which are
then fulfilled by Aramex stations in Europe and the United States, the two major
exporters to the Middle East. In addition, Aramex is expanding its retail
customer base.
According to Boeing, Europe represents approximately 40% of the Middle
East's air market while North America represents approximately 60% of such
market. Air traffic between Europe and the Middle East has grown 15.6% per year.
This success reflects Europe's relative proximity to the Middle East as well as
its long history of involvement and investment in the region.
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<PAGE>
For Aramex, the European market serves as: (i) a facilitator in the delivery
network wherein most of the system's express packages pass through London; and
(ii) an important source of wholesale express revenue. Other than wholesale
express accounts generated from the GSO based in Amman, Paris and London are the
largest wholesale revenue sources for Aramex. Aramex has a long-established
presence in those two cities, which represent very important trade gateways to
the Middle East.
The North American express market is the world's largest and most developed.
Its sheer size creates wholesale and retail express sales opportunities for
Aramex. Aramex is increasingly conducting sales and marketing efforts in the
U.S., targeting Arab companies or organizations with interests and activities in
the Middle East.
From the perspective of freight forwarding, the U.S. is the single largest
exporter of goods to the Middle East, creating freight forwarding "routings" for
Aramex throughout the country. Aramex has a well established position in New
York's JFK airport, which represents the most important gateway for Middle East
trade, as well as in Washington, D.C.
EXPANSION INTO NEW MARKETS. Aramex is planning to expand horizontally into
the following new and emerging geographic markets in order to: (i) enhance its
regional market share and presence; (ii) expand its customer base; and (iii)
further reduce its revenue sensitivity and exposure:
- THE INDIAN SUB-CONTINENT.
India is a very large market for both express and freight forwarding.
Aramex is the OEC board member serving the Indian Sub-Continent and has
negotiated a major partnership in India that establishes a full operation
network there. In Sri Lanka and Pakistan, Aramex has had a presence
through service providers operations. Aramex plans to increase its
ownership in those operations.
- NORTH AFRICA.
Morocco, Tunisia and Algeria are three emerging markets that are
liberalizing and opening their markets to the private sector and to
foreign investors. Their economies are growing at a rapid pace.
Historically, all three markets have been closed and remain closed to
express companies. In Morocco, only one express company is allowed to have
full service into and out of the country. In Tunisia and Algeria, the
government-owned company has a monopoly. The Company plans to expand in
these markets once they are liberalized and opened to the private sector
and to foreign investors.
- FORMER SOVIET CENTRAL REPUBLICS.
Uzbekistan, Kazakhstan and Azerbaijan are emerging markets. The Company
believes that due to the economic policies their governments are pursuing,
their reasonable political stability, their vast raw resources and their
diversified industrial base, economic recovery is expected. The inflow of
foreign capital and technological expertise has already commenced making
this region a major world supplier of oil, natural gas and raw materials.
The Company believes that Uzbekistan, Kazakhstan and Azerbaijan are
currently poorly served by freight and express companies and therefore
sees potential for expansion in the area. Aramex believes that its
multi-cultural inclination and its Middle East background will be very
helpful to penetrate these nations. The Company recently entered into an
agreement with a service provider in Uzbekistan to commence operations in
early 1997.
35
<PAGE>
CUSTOMERS
Aramex has a diverse customer base, totaling over 20,000 accounts, which
spans a broad geographic area worldwide and includes companies in a wide range
of industries. Its customers, both retail and wholesale, are also diverse in
terms of their service needs. Aramex's broad product mix has developed in
response to the growing diversity of its customers. Aramex customers make
increasing use of the high value-added services provided by Aramex, from
reliable express services to cost effective door-to-door air freight forwarding
to customized special services.
Aramex has both retail and wholesale customers. Retail customers, I.E.,
those who are serviced and billed directly by Aramex, include both express and
freight forwarding accounts. Wholesale customers consist primarily of express
accounts.
OPERATIONS
GENERAL. Aramex is a very decentralized company, permitting each station a
necessary degree of flexibility and independence in running its operations to
accommodate local customers' needs. The Company's GSO, which is located in
Amman, oversees all shipments throughout Aramex's distribution network and
charges local offices accordingly. The GSO provides general corporate,
marketing, advertising, auditing, and strategic and technical support to the
stations. The following table shows Aramex stations and service providers by
country and office.
<TABLE>
<CAPTION>
ARAMEX STATIONS ARAMEX SERVICE PROVIDERS
- -------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C>
PRINCIPAL PRINCIPAL OTHER
COUNTRY STATION OTHER OFFICES COUNTRY STATIONS OFFICES
- ------------- ------------- -------------- ------------ -------------- ------------
Bahrain Manama Ethiopia Addis Ababa
Canada Montreal Sri Lanka Colombo
Cyprus Nicosia Larnaca, Switzerland Geneva
Limassol
Egypt Cairo Main Cairo Down Pakistan Karachi Islamabad,
Office Town, 10th of Lahore
Ramadan, India Bombay
Alexandria,
Heliopolis
France Paris Sudan Khartoum
Greece Athens Thessaloniki Oman Muscat
Jordan Amman Aqaba Yemen Sana'a Aden
Kuwait Kuwait Bulgaria Sofia
Lebanon Beirut Ain Mreisseh, Iran Tehran Ahwaz,
Jounieh Shiraz,
Mashhad,
Tabriz,
Kish Island
Qatar Doha Bangladesh Dhaka
Saudi Arabia Jeddah, Hong Kong Hong Kong
Riyadh,
Dhahran Uzbekistan Samarkand
Syria Damascus Lattakia,
Homs, Aleppo
Turkey Istanbul
UAE Dubai, Abu Fujeirah,
Dhabi Alain, Jebel
Ali
UK London
USA New York,
Washington
Jerusalem Ramallah
</TABLE>
36
<PAGE>
Aramex has commenced a major re-engineering effort designed to transform the
structure of its stations from a department setup (E.G., express, freight
forwarding, etc.) into cross-functional personalized customer teams. Those
teams, each specializing in the different market segments to which Aramex's
customers belong to, will be the main vehicle to providing a "One Stop Shop"
service. Aramex started the re-engineering effort in 1994 with the Amman station
as a pilot site. Management believes that this model has created significant
improvements in the delivery of Aramex service and has improved market
penetration.
The interactive structure of the GSO provides a natural environment for
effective management and problem-solving. As importantly, it has improved the
information flow within Aramex and between the Company and its markets and
customers. In addition, the structure builds and fosters creativity among the
entire GSO middle management team.
COMPUTER SYSTEMS. Aramex currently utilizes the SITA system for its
communications needs with both its stations and customers around the world. The
SITA system is widely used by airlines and related companies around the world.
For tracking and tracing of its express shipments worldwide, Aramex utilizes the
FOCUS tracking system which is owned and operated by Airborne Express. All OEC
members utilize the FOCUS system for express package tracking.
Aramex has engaged Andersen Consulting to conduct a study of its information
systems needs and to develop Aramex's own private communication network and
integrated information system, develop a centralized information bank, provide
customers and suppliers with direct electronic connectivity to the Aramex
network, and acquire bar coding technology to replace manual process. Management
believes that its investments in technology should yield improvements in its
operations and overall quality of service.
COMPETITION
The express and freight forwarding industry is highly competitive. The
principal competitive factors within the express and freight forwarding industry
include price, frequency and capacity of scheduled service, extent of geographic
coverage and reliability. Many of the Company's competitors have well
established reputations and possess substantially greater financial, marketing,
personnel and other resources than the Company. The Company's principal
competitors are DHL Worldwide Express, Federal Express and TNT Express, Inc. In
addition, the Company competes against other express and freight forwarding
companies, such as United Parcel Service, who wish to establish or broaden their
presence in the Middle Eastern express and freight forwarding markets. The
Company competes primarily by seeking to offer customers competitive pricing, a
high level of service and on-time delivery. The Company believes its competitive
position is enhanced by (i) its knowledge of the Middle East based upon its 14
year presence in the region; (ii) its decentralized operation which allows local
management to respond to local market requirements quickly; (iii) its strong
management team; and (iv) its emphasis on operating cost controls.
EMPLOYEES
As of September 30, 1996, the Company had approximately 800 employees with
165 in administration, 433 in operations and 236 in service and sales. The
Company also uses temporary employees as necessary. The Company's future success
will depend, in part, on its ability to attract, retain and motivate qualified
personnel. The Company believes that relations with its employees are
satisfactory. None of the Company's employees are covered by labor contracts or
other collective bargaining agreements.
SALES AND MARKETING
The Company markets its services through the efforts of its sales force of
over 100 persons. Sales representatives educate consumers and businesses as to
the Company's services through in-person meetings and demonstrations. The
Company believes its personalized service differentiates it from its competition
and provides the Company with a competitive advantage in its core markets. The
Company has
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<PAGE>
undergone a two year quality review in order to be awarded an ISO 9002
Certification, an international quality standard. The Company's Jordanian and
U.K. operations are currently certified. The Company anticipates that an
additional 8 locations will be certified by the Spring of 1997.
Aramex in Jordan acts as the General Sales Agent worldwide for Marriott
Hotels. The Company's Amman office makes a commission on every Marriott
reservation it makes for travelers outbound from Jordan.
The Company also generates brand awareness of its services and educates
consumers as to the timeliness, reliability and costs of its services through
targeted advertising. The Company advertises in regional print media. The
Company maintains agreements with various regional publications whereby the
Company provides courier services in exchange for advertising space. The Company
plans to use a portion of the proceeds from the Offering to increase its
advertising through print and other media.
The Company receives positive publicity through its participation and
sponsorship of business, charity and sporting events. The Company sponsors and
manages a Jordanian basketball club which is comprised of six teams including
the female national champions for the past three years, a men's team which
competes in the national league and a children's team. The popularity of
basketball and the success of the Company sponsored teams has given the Company
publicity and media exposure and increased the Company's name recognition. The
Company believes that continued participation and sponsorship of such events
will increase consumer awareness of the Company's services.
FACILITIES
The Company's principal executive offices are located at Amman, Jordan. Such
offices are leased by the Company under a one year lease, renewable annually,
commencing January 1996, for approximately 1200 square meters of office space.
Annual rent payments under the lease are approximately $70,000. See "Certain
Transactions."
The Company also leases 53 other facilities aggregating approximately 10,948
square meters of office space in 16 countries. The terms of such leases range
from one to six years with the last lease to expire in December 2000. The
aggregate annual rental under such leases is approximately $0.9 million for
1996.
The Company believes it will have access to facilities adequate to meet its
needs for the foreseeable future. Should the Company need additional space for
its business activities in the foreseeable future, management believes it will
be able to secure such facilities on reasonable forms. The Company believes its
facilities are sufficient to conduct its operations.
GOVERNMENT REGULATION
The Company's operations require and will require various licenses, permits
and approvals in each jurisdiction where it operates. The loss or revocation of
any existing licenses, permits or approvals or the failure to obtain any
necessary licenses, permits or approvals in new jurisdictions where the Company
intends to do business would have an adverse effect on the ability of the
Company to conduct its business and/or on its ability to expand into such
jurisdictions. Authorization to commence operations will be required in each
country in which the Company intends to operate. No assurance can be given that
the Company will obtain such authorization, licenses or necessary approvals. In
addition, countries in which the Company wishes to operate may have regulatory
systems that impose other impediments on the Company's operations. There can be
no assurance that the Company will be able to profitably operate in light of
these restrictions.
INTELLECTUAL PROPERTY
The Company believes that its Aramex trade name is material to its business
and takes steps to protect it where it deems appropriate.
LEGAL PROCEEDINGS
The Company is involved in pending and threatened legal actions and
proceedings arising in the ordinary course of its business. In the opinion of
management, the outcome of such legal actions or proceedings will not have a
material adverse effect on the Company.
38
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the directors and executive officers of the
Company, their ages and the positions held by them with the Company.
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
- ------------------------------------- --- --------------------------------------------------------------
<S> <C> <C>
William Kingson 56 Chairman of the Board
Fadi Ghandour 37 President, Deputy Chairman,
Chief Executive Officer and Director
Hazem Malhas 36 Vice President-COO Express
Safwan Tannir 47 Vice President-COO Freight Forwarding
Camille Tam Nasrallah 50 Vice President-Corporate Affairs
Emad Shishtawi 38 Accounting and Finance Manager
Yousef Ghandour 47 Managing Director of MED
Rula Ghandour 38 Director
</TABLE>
Pursuant to a Stock Purchase Agreement, Airborne was granted the right to
appoint one director to the Company's Board of Directors for so long as it owns
at least half of the shares acquired in the Airborne Stock Purchase. Airborne
has not designated a Board appointee as of the date hereof. Upon consummation of
the Offering, the Representative has been granted the right to designate one
director acceptable to the Company for a three year term. The Representative has
not designated a Board appointee as of the date hereof.
The Company has a classified Board of Directors currently consisting of
three members. The directors are divided into three classes consisting of one
director in each class. The term of office of the directors expires following
the date of this Prospectus as follows: Class 1, at the first annual meeting of
shareholders; Class 2, at the second annual meeting of shareholders; and Class
3, at the third annual meeting of shareholders. Thereafter, the term of office
of each director will expire at the third annual meeting of shareholders
following his or her election. Ms. Rula Ghandour is a Class 1 director, Mr.
William Kingson is a Class 2 director and Mr. Fadi Ghandour is a Class 3
director. As soon as practicable, but not later than 90 days following the
completion of the Offering, the Company's Board of Directors intends to increase
the size of the Board to five members and to elect two new members who are not
paid employees of the Company and who will qualify as independent directors for
purposes of the Nasdaq National Market. Each newly elected director will be a
Class 1 or Class 2 director, respectively. Having a classified Board of
Directors may be viewed as inhibiting a change of control of the Company and
having a possible anti-takeover effect because it would take at least two annual
meetings to change control of the Board of Directors by shareholder vote.
The business experience of each of the Company's directors and executive
officers during at least the past five years is set forth below.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
WILLIAM KINGSON has been the Company's Chairman since 1982. Mr. Kingson is
President of New York based DHX Group, Ltd., co-Chairman of The Pointe Group and
has had long and extensive involvement in the airline and aerospace industries.
He has served on the board of numerous airlines, and has had many years'
experience in the leasing and sale of aircraft, trading in parts and
instruments, especially in Asia and the Far East, including dealings with Cathay
Pacific, Korean Air, China Airlines and Singapore Airlines. Mr. Kingson was
formerly a joint-venture partner of E.F. Hutton. While at E.F. Hutton, Mr.
Kingson initiated and accomplished financial transactions with Gulfstream
Aerospace and Summit Air, in both of
39
<PAGE>
which he was a major shareholder. Mr. Kingson co-founded Aramex with Mr.
Ghandour in 1982, has been an active member of management and has, along with
Mr. Ghandour, been instrumental in the overall development of the business. Mr.
Kingson pilots his own airplanes and holds eighteen world and/or national
records for type and class of aircraft. Mr. Kingson holds a B.S. in Economics
from the University of Rhode Island.
FADI GHANDOUR has been the Company's President, Deputy Chairman and Chief
Executive Officer since 1982, when he co-founded Aramex with Mr. Kingson. Mr.
Ghandour has been largely responsible for the creation of the Aramex network in
the Middle East and Gulf region, Europe and the United States. Mr. Ghandour
serves on the Board of the OEC network and is Chairman of the Express
Association of the Middle East ("EAME"), a group which consists of TNT, UPS,
FedEx and Aramex and acts to protect the interests of express companies
throughout the region. Mr. Ghandour holds a B.A. in Political Science from the
George Washington University.
HAZEM MALHAS has been the Company's Vice President and Chief Operating
Officer Express since 1993. Mr. Malhas began his career with Aramex in 1986 when
he held the position of Freight Forwarding Sales Manager, based in the Amman
office. In 1987, he became Country Manager for Jordan. From 1987 to 1993 Mr.
Malhas shared responsibility for Aramex's strategic and operations planning in
his position as Vice President-Operations and Planning. As part of his current
position, in 1994, Mr. Malhas oversaw the extensive re-engineering of the
General Services Office into a cross-functional team structure. Mr. Malhas also
implemented a team-structured sales organization in a pilot program in the Amman
station, which is being introduced throughout the Aramex organization. Prior to
joining Aramex he worked in engineering and construction management positions
with two different Amman-based companies. Mr. Malhas holds a B.S. in Civil
Engineering from the University of Texas, Austin.
SAFWAN TANNIR has been the Company's Vice President and Chief Operating
Officer Freight Forwarding since 1991. Mr. Tannir began his career in the air
transportation industry in 1976 with Trans Mediterranean Airways ("TMA"), a
Lebanon-based international air-cargo airline, where he served as Assistant
Manager of the Taiwan office and Country Manager--Italy. He served in strategic
planning, sales and operations positions and traveled to many of the Company's
offices worldwide during his 10 years with TMA. After several years in sales and
marketing management positions (Jordan Marketing Corp.-- Amman and Banari
Packaging - Jeddah), Mr. Tannir joined Aramex in 1986 as General Manager of Air
Cargo Jordan, the predecessor to the Company's freight forwarding network. While
developing the freight forwarding operations, he held positions as Vice
President--Marketing and Sales and Vice President Middle East until 1990 when he
assumed responsibility for all North America operations. In his current
position, Mr. Tannir has been largely responsible for establishing freight
forwarding operations in all of Aramex's stations worldwide. Mr. Tannir holds a
B.A. in Political Studies & Public Administration from The American University
of Beirut.
CAMILLE TAM NASRALLAH has been the Company's Vice President - Corporate
Affairs since 1993. Mr. Nasrallah began his 30-year career in the air
transportation industry with Trans Mediterranean Airways, where he served in
various sales, reservations, traffic and financial capacities for eight years
beginning in 1966. He later served as Manager for Airlink International Ltd., as
Managing Director of the Zakhour Agency, a Beirut-based freight forwarding and
ticketing company, and as Branch Manager for the Saudi General Transport
Company, where he established trucking operations in Jeddah. He served in
various management positions from 1982 to 1988 in the freight forwarding
operations of Al Zouman Aviation, a combination carrier. Mr. Nasrallah joined
Aramex in 1988, where he first served as General Manager-U.A.E., then later as
Vice President-Gulf and Indian Sub-continent.
EMAD SHISHTAWI has been the Company's Accounting and Finance Manager since
1994. After graduating from Jordan University in Amman, Mr. Shishtawi worked as
an accountant for the Jordanian National Army and, later, for Royal Jordanian
Airlines. He conducted audits of industrial and financial companies in Amman
with the local affiliate of Arthur Andersen & Company from 1982 to 1984.
40
<PAGE>
Mr. Shishtawi joined Aramex in 1984 as Accountant in the Amman headquarters and
was later promoted to Financial Manager. He was Controller from 1988 to 1992
during which time he (i) supervised the conversion of the accounting to its
current format and technology; (ii) established the Internal Audit Department;
and (iii) managed and supervised a staff of ten and the reporting from all of
Aramex's stations worldwide. He is responsible for the financial reporting,
management, standards and policies of Aramex and acts as financial consultant
and advisor to the President. Mr. Shishtawi holds a B.A. in Accounting from the
University of Jordan.
YOUSEF GHANDOUR has been Managing Director of MED since 1994 and is
responsible for the implementation and management of MED's growth strategy
worldwide. Prior to such time, Mr. Ghandour was employed by the "Dunlop"
distributor in Jordan.
RULA GHANDOUR has been a principal stockholder and manager of Silsal, a
pottery company, for over five years. Ms. Ghandour holds a B.A. in Sociology
from Santa Clara University and an M.A. in International Affairs from Georgetown
University.
Directors currently do not receive any additional remuneration for services
on the Board of Directors. Except for Mr. Fadi Ghandour and Ms. Rula Ghandour
being husband and wife and Mr. Yousef Ghandour being Mr. Fadi Ghandour's uncle,
there are no family relationships among directors or executive officers of the
Company. The Company may compensate directors who are not employees of the
Company. Members of the Board of Directors will also be eligible for the grant
of options under the Stock Option Plan.
COMMITTEES OF THE BOARD
The Board has an Executive Committee which consists of two directors. The
Executive Committee can exercise all of the powers of the Board between meetings
of the Board. The present members of the Executive Committee are Messrs. Kingson
and Ghandour.
Effective upon consummation of the Offering and election of the two new
directors, the Board will establish an Audit Committee which will consist of
four directors, at least two of whom cannot be an employee of the Company. The
Audit Committee will be responsible for the engagement of the Company's
independent auditors and will review with them the scope and timing of their
audit services and any other services they are asked to perform, their report on
the Company's financial statements following completion of their audit and the
Company's policies and procedures with respect to internal accounting and
financial controls. The members of the Audit Committee will be Messrs. Kingson
and Ghandour and two other directors.
See "--Stock Option Plan" for a description of the Committee administering
the Company's Stock Option Plan.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the Company's
President and Chief Executive Officer for the year ended December 31, 1995 (the
"Named Executive Officer"). No other executive officer of the Company received a
total annual salary and bonus in excess of $100,000 during the year ended
December 31, 1995.
41
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
-------------
<S> <C>
NAME AND PRINCIPAL POSITION SALARY
- --------------------------------------------------------------------------------------------------- -------------
Fadi Ghandour $ 42,000
President, Deputy Chariman and Chief Executive Officer(1)
All Directors and Officers as a Group (8 persons) $ 279,900
</TABLE>
- ------------------------
(1) Mr. Ghandour will enter into an employment agreement which provides for an
increase in his annual salary upon completion of the offering. See
"--Employment Agreements."
STOCK OPTION PLAN
The Company's Stock Option Plan (the "Plan") permits the granting of both
incentive stock options (which are entitled to certain favorable treatment under
the Internal Revenue Code of 1986) and nonqualified stock options (I.E., options
which are not intended to be incentive stock options). A total of 400,000 shares
of Common Stock has been authorized for issuance pursuant to options granted
under the Plan. Employees and consultants of the Company and its subsidiaries
and non-employee members of the Board of Directors of the Company are eligible
to be selected to receive one or more options.
The Plan is administered by a committee of nonemployee members of the Board
of Directors (the "Committee"). Subject to the terms of the Plan, the Committee
has the sole discretion to determine the employees and consultants to whom
options will be granted and the terms and conditions of such options. However,
the exercise price of any option granted under the Plan cannot be less than 100%
of the fair market value (on the date of grant) of the shares covered by the
option (110% of fair market value in the case of certain incentive stock
options).
Pursuant to the Plan, Mr. Kingson has been granted incentive stock options
to purchase 100,000 shares of Common Stock at an exercise price of 110% of the
initial public offering price. Each of Mr. Kingson's options are exercisable for
a period of five years from the date of vesting.
Mr. Ghandour has been granted non-qualified stock options to purchase
100,000 shares of Common Stock at an exercise price of 100% of the initial
public offering price per share. Mr. Ghandour's options are exercisable for a
period of ten years from the date of vesting.
In connection with the Offering, stock options to purchase an additional
aggregate 100,000 shares of Common Stock at an exercise price equal to 100% of
the initial public offering price per share will be issued to certain of the
Company's executive officers and station managers. Such options will vest over a
five-year period on the basis of one-quarter each year following the first year
anniversary of the grant of such option.
INDEMNIFICATION; LIMITATION OF LIABILITY
Bermuda law permits a company to indemnify its directors and officers,
except for any act of fraud or dishonesty. The Company has provided in its
Bye-Laws that the directors and officers of the Company will be indemnified and
held harmless against any expenses, judgments, fines, settlements and other
amounts incurred by reason of any act or omission in the discharge of their
duty, other than in the case of fraud or dishonesty.
Bermuda law and the Bye-Laws of the Company also permit the Company to
purchase insurance for the benefit of directors and officers against any
liability incurred by them for the failure to exercise the requisite care,
diligence and skill in the exercise of their powers and the discharge of their
duties, or indemnifying them in respect of any loss arising or liability
incurred by them by reason of negligence,
42
<PAGE>
default, breach of duty or breach of trust. The Company intends to purchase a
directors' and officers' liability insurance policy upon consummation of this
Offering.
The Company intends to enter into indemnification agreements with the
Company's officers and directors. To the extent permitted by law, the
indemnification agreements may require the Company, among other things, to
indemnify such officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from fraud or dishonesty) and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified.
At present, there is no pending material litigation or proceeding involving
a director or officer of the Company where indemnification will be required or
permitted. In addition, the Company is not aware of any threatened material
litigation or proceeding that may result in a claim for such indemnification.
Bermuda law requires that every officer, including all directors, of the
Company in discharging his duties act honestly and in good faith with a view to
the best interests of the Company, and exercise the care, diligence and skill
that a reasonably prudent person would exercise in comparable circumstances,
including compliance with the Companies Act 1981 of Bermuda (the "Act"), the
regulations thereunder and the Company's Bye-laws. The Company's Bye-laws
provide, however, that no director of the Company shall be liable to the Company
or its shareholders for breach of such director's fiduciary duty as a director,
except for any fraud or dishonesty of which he may be guilty in relation to the
Company.
EMPLOYMENT AGREEMENTS
Effective upon consummation of the Offering, the Company and Mr. Kingson
will enter into a two year employment agreement providing for his employment as
the Company's Chairman of the Board at an initial salary of $85,000. At the same
time, Mr. Ghandour will enter into a two year employment agreement providing for
his employment as the Company's President and Chief Executive Officer at a base
salary of $115,000. Each of the employment agreements provide that in the event
of termination: (i) as a result of a major event (defined to include, but not
limited to, a change of control whereby "any person" (other than persons who
beneficially own more than 30% of the capital stock of the Company on a fully
diluted and as converted basis on the date thereof) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 30% or more of the Company's outstanding capital stock on a fully
diluted and as converted basis at such time, the liquidation, dissolution or
sale of all or substantially all of the Company's assets), without cause or by
Mr. Kingson or Mr. Ghandour for good reason (defined to include, but not limited
to, a reduction in base salary, a relocation of the Company's principal
executive offices and any material breach by the Company of any material
provision in such employment agreements), or by Mr. Kingson or Mr. Ghandour for
cause, Mr. Kingson or Mr. Ghandour, as the case may be, will receive a lump sum
severance allowance in an amount equal to 2.99 times his then annual salary;
(ii) as a result of the disability or incapacity of Mr. Kingson or Mr. Ghandour,
Mr. Kingson or Mr. Ghandour, as the case may be, will be entitled to receive 75%
of his salary during the two years following the termination notice; and (iii)
as a result of the death of Mr. Kingson or Mr. Ghandour, Mr. Kingson or Mr.
Ghandour (or their respective estates), as the case may be will be entitled to
receive a lump sum payment equal to his then annual base salary. Each agreement
includes a one-year non-compete covenant commencing on the termination of
employment.
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<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth information with respect to beneficial
ownership of the Common Stock, the only class of capital stock of the Company of
which shares will be outstanding after this Offering, on a comparative basis, as
of November 1, 1996 and as adjusted to reflect the sale of Common Stock offered
hereby (in each case) by (i) all persons who beneficially own, to the knowledge
of the Company, 5% or more of the Common Stock, (ii) the Selling Shareholders,
(iii) each director of the Company individually, (iv) each Named Executive
Officer that owns stock, and (v) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
OWNERSHIP
NUMBER OF STOCK --------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY BEFORE AFTER
OR NUMBER OF PERSONS IN GROUP OWNED OFFERING OFFERING(1)
------------------------------------------ ----------------- ----------- -------------
<S> <C> <C> <C>
William Kingson(2)(6)................................................... 1,662,500 47.1% 36.7%
Fadi Ghandour(3)(6)..................................................... 1,662,500 47.1% 36.7%
Rula Ghandour(4)(6)..................................................... 1,662,500 47.1% 36.7%
Airborne Freight Corporation(5)(6)...................................... 304,688 8.9% 6.9%
All directors and executive officers as a group
(8 persons)(2)(3)(6).................................................. 3,325,000 91.6% 71.8%
</TABLE>
- ------------------------
(1) Assuming full exercise of the Underwriters' Over-Allotment Option, Mr.
Kingson, Mr. Ghandour and Ms. Ghandour will each beneficially own 1,587,500
shares of Common Stock, or 35.0% after the Offering.
(2) Includes 100,000 shares of Common Stock issuable upon exercise of five year,
incentive stock options held by Mr. Kingson having an initial exercise price
equal to 110% of the initial public offering price per share. Mr. Kingson's
address is c/o Suite 451, 866 United Nations Plaza, New York, New York
10017.
(3) Includes (a) 781,250 shares of Common Stock owned by Mr. Fadi Ghandour's
spouse, Ms. Rula Ghandour and (b) 100,000 shares of Common Stock issuable
upon exercise of ten year, non-qualified options held by Mr. Ghandour having
an exercise price equal to the initial offering price per share. The address
of Mr. Ghandour is in care of the Company at 2 Badr Shaker, Alsayyab Street,
Um Uthayna, Amman, Jordan.
(4) Includes (a) 100,000 shares of Common Stock issuable upon exercise of ten
year, non-qualified options held by Mr. Ghandour having an exercise price
equal to the initial offering price per share and (b) 781,250 shares of
Common Stock held of record by Ms. Ghandour's spouse, Mr. Fadi Ghandour. The
address of Ms. Ghandour is in care of the Company at 2 Badr Shaker, Alsayyab
Street, Um Uthayna, Amman, Jordan.
(5) The address of Airborne Freight Corporation is 3101 Western Avenue, Seattle,
Washington 98121.
(6) Each of the Company's existing shareholders have entered into a Shareholders
Agreement which provides for certain restrictions on transfer and other
rights described in "Certain Transactions."
44
<PAGE>
CERTAIN TRANSACTIONS
Aramex Bermuda has subscribed for 100 Ordinary Shares of Aramex Hong Kong
and each share of Aramex Hong Kong outstanding prior to such subscription was
converted by a special resolution of the shareholders of Aramex Hong Kong into
non-voting Deferred Shares. The Deferred Shares do not carry voting rights and
are effectively subordinated to the Ordinary Shares (all of which are held by
Aramex Bermuda) in respect of all dividends, distributions and liquidation
rights until such as the holders of Ordinary Shares have received $100 billion.
Pursuant to the Reorganization, Aramex Bermuda became the parent holding company
of Aramex Hong Kong. The existing shareholders of Aramex Hong Kong will retain a
nominal interest in Aramex Hong Kong through their ownership of the Deferred
Shares. Aramex Hong Kong will act as an intermediate holding company of the
Company's subsidiaries until Aramex Bermuda completes its reorganization plan to
transfer assets from Aramex Hong Kong to Aramex Bermuda or its subsidiary
companies.
In connection with the Airborne Stock Purchase, Mr. William Kingson, Mr.
Fadi Ghandour, Ms. Rula Ghandour and Airborne Freight Corporation entered into a
Shareholders Agreement, as amended on December 11, 1996, which, among other
things, provides that in the event the Company transfers (as defined in the
Shareholders Agreement) any shares of Common Stock to certain listed competitors
to Airborne or any other company primarily engaged in the transportation of air
freight or air express shipments, Airborne has the right to sell all of its
shares of Common Stock to the Company on the same terms and conditions as the
sale to such other company. In the event that Messrs. Kingson and Ghandour
and/or Ms. Rula Ghandour transfer any shares of Common Stock to certain listed
competitors to Airborne or any other company primarily engaged in the
transportation of air freight or air express shipments, it shall be a condition
of such transfer that Airborne shall be offered the right to sell to such
competitor all of its shares of Common Stock on the same terms and conditions as
the sale by Messrs. Kingson and Ghandour and/or Ms. Rula Ghandour. In addition,
the Shareholders Agreement contains certain other provisions which terminate
upon consummation of this Offering, including: (i) a right of first refusal in
favor of the Company in the event Airborne transfers (as defined in the
Shareholders Agreement) its shares to a company or companies, their
subsidiaries, parents or known affiliates primarily engaged in the
transportation of air freight or air express shipments and (ii) a similar right
of first refusal in favor of Airborne in the event the Company, Mr. Kingson, Mr.
Ghandour or Ms. Ghandour transfer shares to certain listed competitors of
Airborne or to any other Company primarily engaged in the transportation of air
freight or air express shipments. "Transfer" is defined to mean the direct or
indirect, through intermediaries or otherwise, sale, transfer, distribution,
assignment, bequest, pledge, hypothecation, encumbrance, grant of security
interest in, or grant, issuance, sale or conveyance of any option, warrant or
right to acquire, grant of a proxy to vote, or other disposition of shares of
Common Stock of the Company and is defined to exclude a sale on the open market
or the Transfer of shares by the Company in connection with a strategic
acquisition or similar transaction where the Company (directly or through one or
more subsidiaries) is the acquiring party. In connection with the Airborne Stock
Purchase, Airborne was granted certain "piggyback" registration rights relating
to their shares of Common Stock. In addition, under the terms of the Airborne
Stock Purchase, Airborne shall be entitled to appoint one Director to the
Company's Board of Directors.
MED was organized under the laws of the Isle of Jersey in 1996. Of the 100
shares of MED currently outstanding, Aramex owns 75 shares, Yousef Ghandour owns
20 shares and Hazem Malhas owns 5 shares. In connection with this Offering, Mr.
Malhas will transfer his shares of MED to the Company. Mr. Yousef Ghandour is
Mr. Fadi Ghandour's uncle.
The Company leases the premises currently occupied by the Company's London
operations from Mr. Ali Ghandour, the father of Mr. Fadi Ghandour, at an annual
rental of $76,000 pursuant to a lease which renews annually. The Company
believes that the terms of the lease are at least as favorable to the Company as
those available from unaffiliated third parties.
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<PAGE>
The Company leases the premises currently occupied by the Company's
corporate offices in Amman, Jordan, from ARAM, an investment company controlled
by the Ghandour family at an annual rental of $70,000. The lease renews
annually. The Company believes that the terms of the lease are at least as
favorable to the Company as those available from unaffiliated third parties.
From time to time, Mr. Fadi Ghandour has personally guaranteed lines of
credit and bank overdrafts on behalf of the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 8 to Notes to Consolidated Financial Statements. To the extent any of the
proceeds from the Offering are used to repay such indebtedness, the personal
guarantee of Mr. Ghandour will be extinguished.
Messrs. William Kingson and Fadi Ghandour have at various times made
non-interest bearing loans to the Company which at December 31, 1995 aggregated
$395,697. During the Nine Month Period, the loans were repaid.
In addition, see "Management" for a discussion of employment agreements and
option agreements with Messrs. Kingson and Ghandour.
The Company has entered into nominee shareholder agreements with Fadi
Ghandour and Raghida Ghandour, the sister of Fadi Ghandour, the owners of 78%
and 22% of the share capital of Arab American International Express Company
(Aramex) Limited, the entity through which the Company conducts its Jordanian
operations. Pursuant to such agreements, Mr. and Ms. Ghandour confirm that they
are holding their respective shares in the name of the Company and that they
will abide by any written instructions given by the Company concerning the
shares. The Company agreed that they will reimburse and indemnify Mr. and Ms.
Ghandour for all expenses incurred in acquiring and holding the shares. Arab
American International Express Company (Aramex) Limited has been included in the
consolidated financial statements of the Company as a wholly-owned subsidiary.
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DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 15,000,000 shares of
Common Stock, par value $.01 per share and 5,000,000 shares of Preferred Stock,
par value $.01 per share. As of the date of this Prospectus, 3,429,688 shares of
Common Stock are outstanding. After giving effect to the sale of the shares of
Common Stock offered hereby, there will be 4,429,688 shares of Common Stock
outstanding.
COMMON STOCK
The holders of shares of Common Stock are entitled to one vote per share on
all matters submitted to a vote at a meeting of shareholders. Each shareholder
may exercise such vote either in person or by proxy. Shareholders are not
entitled to cumulate their votes for the election of directors, which means that
the holders of more than 50% of the Common Stock voting for the election of
directors can elect all of the directors to be elected by holders of Common
Stock, in which event the holders of the remaining Common Stock voting will not
be able to elect any director. The Company has a staggered Board of Directors.
Subject to preferences to which holders of Preferred Stock issued after the sale
of the Common Stock offered hereby may be entitled, the holders of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the Board out of funds legally available therefor. The Company
does not presently anticipate paying cash dividends in the foreseeable future.
See "Dividend Policy." In the event of a liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to share ratably in all
assets of the Company which are legally available for distribution to
shareholders, subject to the prior rights on liquidation of creditors and to
preferences to which holders of Preferred Stock issued after the sale of the
Common Stock offered hereby may be entitled. The holders of Common Stock have no
preemptive, subscription, redemption or sinking fund rights. The Common Stock
currently outstanding, and the Common Stock offered hereby, is and will be
validly issued, fully paid and nonassessable.
PREFERRED STOCK
The Board has the authority to issue Preferred Stock in one or more series
and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption (including sinking fund provisions), redemption prices and
liquidation preferences, and the number of shares constituting and the
designation of any such series, without further vote or action by the
shareholders. At present, the Company has no plans to issue any of the Preferred
Stock and is not aware of any pending or proposed transaction that would be
affected by such an issuance.
BERMUDA LAW
The following discussion is based upon the advice of Conyers, Dill &
Pearman, Bermuda counsel for the Company.
Prior to the effective date of the Registration Statement of which this
Prospectus is a part, the Reorganization was effected. See "The Company's
Organization" and "Certain Transactions." The Company is an exempted company
under the Companies Act 1981 of Bermuda (the "Act"). The rights of the Company's
shareholders, including those persons who will become shareholders of the
Company in connection with this Offering, are governed by Bermuda law and the
Company's Memorandum of Association and Bye-laws. The Act differs in certain
material respects from laws generally applicable to United States corporations
and their shareholders. The following is a summary of certain provisions of
Bermuda law and the Company's organizational documents. This summary is not a
comprehensive description of such laws and documents and is qualified in its
entirety by appropriate reference to Bermuda law and to the organizational
documents of the Company which are filed as exhibits to the Registration
Statement of which this Prospectus is a part.
DIVIDENDS. Under Bermuda law, a company may pay such dividends as are
declared from time to time by its board of directors unless there are reasonable
grounds for believing that the company is or would, after the payment, be unable
to pay its liabilities as they become due or that the realizable value of
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its assets would thereby be less than the aggregate of its liabilities and
issued share capital and share premium accounts.
VOTING RIGHTS. Under Bermuda law, save as otherwise provided in the Act or
the Bye-laws of the Company, questions brought before a general meeting of
shareholders are decided by a majority vote of shareholders present at the
meeting. The Company's Bye-laws provide that, subject to the provisions of the
Act, any questions proposed for the consideration of the shareholders will be
decided by a simple majority of the votes cast, on a show of hands, with each
shareholder present and each person holding proxies for any shareholder entitled
to one vote, unless a poll is requested. If a poll is requested, each
shareholder present in person or by proxy has one vote for each share held. A
poll may only be requested under the Company's Bye-laws by (i) the Chairman of
the meeting, (ii) at least three shareholders present in person or by proxy,
(iii) any shareholder or shareholders, present in person or by proxy, holding
between them not less than 10% of the total voting rights of all shareholders
having the right to vote at such meeting or (iv) a shareholder or shareholders
present in person or by proxy holding voting shares in the company on which an
aggregate sum has been paid equal to not less than 10% of the total sum paid up
on all such voting shares.
RIGHTS IN LIQUIDATION. Under Bermuda law and the Bye-laws, in the event of
liquidation or winding up of a company, after satisfaction in full of all claims
of creditors and subject to the preferential rights accorded to any series of
preferred shares, the proceeds of such liquidation or winding up are distributed
PRO RATA among the holders of common shares.
MEETINGS OF SHAREHOLDERS. Under Bermuda law, a company is required to
convene at least one general shareholders' meeting per calendar year. The
Company will hold its annual general meeting in the United States. Bermuda law
provides that a special general meeting may be called by the board of directors
and must be called upon the request of shareholders holding not less than 10% of
the paid-up capital of the company carrying the right to vote. Bermuda law also
requires that shareholders be given at least five days' advance notice of a
general meeting but the accidental omission to give notice to any person does
not invalidate the proceedings at a meeting. Under the Bye-laws of the Company,
at least ten days' notice of the annual general meeting and of any special
general meeting must be given to each shareholder.
Under Bermuda law, the number of shareholders constituting a quorum at any
general meeting of shareholders is determined by the bye-laws of a company. The
Company's Bye-laws provide that the presence in person or by proxy of the
holders of more than 50% of the voting capital stock of the Company constitutes
a quorum.
ACCESS TO BOOKS AND RECORDS AND DISSEMINATION OF INFORMATION. Members of
the general public have the right to inspect the public documents of a company
available at the office of the Registrar of Companies in Bermuda. These
documents include a company's Certificate of Incorporation, its Memorandum of
Association (including its objects and powers) and any alteration to its
Memorandum of Association. The shareholders have the additional right to inspect
the bye-laws of the company, minutes of general meetings and the company's
audited financial statements, which must be presented at the annual general
meeting. The register of shareholders of a company is also open to inspection by
shareholders without charge and by members of the general public on the payment
of a fee. A company is required to maintain its share register in Bermuda but
may, subject to the provisions of the Act, establish a branch register outside
Bermuda. The Company intends to maintain a share register in New York, New York.
A company is required to keep at its registered office a register of its
directors and officers which is open for inspection for not less than two hours
in each day by members of the public without charge. Bermuda law does not,
however, provide a general right for shareholders to inspect or obtain copies of
any other corporate records.
ELECTION OR REMOVAL OF DIRECTORS. Under Bermuda law and the Company's
Bye-laws, directors are elected or appointed at the annual general meeting and
shall serve until re-elected or re-appointed or until their successors are
elected or appointed, unless they are earlier removed or resign. The Company has
a staggered Board of Directors.
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Under Bermuda law and the Bye-laws of the Company, a director may be removed
at a special general meeting of shareholders specifically called for that
purpose, provided the director is served with at least 14 days' notice. The
director has a right to be heard at such meeting. Any vacancy created by the
removal of a director at a special general meeting may be filled at such meeting
by the election of another director in his or her place or, in the absence of
any such election, by the Board of Directors.
AMENDMENT OF MEMORANDUM OF ASSOCIATION AND BYE-LAWS. Bermuda law provides
that the Memorandum of Association of a company may be amended by a resolution
passed at a general meeting of shareholders of which due notice has been given.
An amendment to the Memorandum of Amalgamation other than an amendment which
alters or reduces a company's share capital as provided in the Act, also
requires the approval of the Bermuda Minister of Finance, who may grant or
withhold approval at his discretion. The Bye-laws may be amended by the Board of
Directors if such amendment is approved by the shareholders by a resolution
passed by a majority of votes cast at a general meeting.
Under Bermuda law, the holders of an aggregate of no less than 20% in par
value of a company's issued share capital or any class thereof have the right to
apply to the Bermuda Court for an annulment of any amendment of the Memorandum
of Association adopted by shareholders at any general meeting, other than an
amendment which alters or reduces a company's share capital as provided in the
Act. Where such an application is made, the amendment becomes effective only to
the extent that it is confirmed by the Bermuda Court. An application for the
annulment of an amendment of the Memorandum of Association must be made within
21 days after the date on which the resolution altering the company's memorandum
is passed and may be made on behalf of the persons entitled to make the
application by one or more of their number as they may appoint in writing for
the purpose. No such application may be made by persons voting in favor of the
amendment.
APPRAISAL RIGHTS AND SHAREHOLDER SUITS. Under Bermuda law, in the event of
an amalgamation of two Bermuda companies, a shareholder who is not satisfied
that fair value has been paid for his stock may apply to the Bermuda Court to
appraise the fair value of his shares. The amalgamation of a company with
another company requires the amalgamation agreement to be approved by the board
of directors and, exept where the amalgamation is between a holding company and
one or more of its wholly owned subsidiaries or between two or more wholly owned
subsidiaries of the stock, by meetings of the holders of shares of each company
and of each class of such shares. Under Bermuda law, an amalgamation also
requires the consent of the Bermuda Minister of Finance, who may grant or
withhold such consent at his discretion.
Class actions and derivative actions are generally not available to
shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be
expected to permit a shareholder to commence an action in the name of a company
to remedy a wrong done to the company where the act complained of is alleged to
be beyond the corporate power of the company or is illegal or would result in
the violation of the company's Memorandum of Association or Bye-laws.
Furthermore, consideration would be given by the Court to acts that are alleged
to constitute a fraud against the minority shareholders or, for instance, where
an act requires the approval of a greater percentage of the company's
shareholders than that which actually approved it.
When the affairs of a company are being conducted in a manner oppressive or
prejudicial to the interests of some part of the shareholders, one or more
shareholders may apply to the Bermuda Court for an order regulating the
company's conduct of affairs in the future or compelling the purchase of the
stock by any shareholder, by other shareholders or by the company.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is the Continental
Stock Transfer and Trust Company, New York, New York.
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STOCK ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has not been any public market for the Common
Stock of the Company. No prediction can be made as to the effect, if any, that
market sales of shares or the availability of shares for sale will have on the
market price prevailing from time to time. Nevertheless, sales of substantial
amounts of Common Stock of the Company in the public market after the
restrictions described below lapse, or the perception that such sales could
occur, could adversely affect the market price of the Common Stock.
Upon completion of this offering, the Company will have outstanding
4,429,888 shares of Common Stock. Of these shares, all of the 1,000,000 shares
sold in this offering will be freely tradeable without restriction or further
registration under the Securities Act, unless purchased by "affiliates" of the
Company, as that term is defined under the Securities Act. The remaining
3,429,888 shares of Common Stock outstanding upon completion of the Offering
will be "restricted securities" as that term is defined by Rule 144 promulgated
under the Securities Act. Those restricted securities may be sold in the public
market only if registered or if they qualify for an exemption from registration
under Rule 144, which is summarized below. In addition, Airborne has been
granted certain "piggyback" registration rights in connection with the Airborne
Stock Purchase. See "Certain Transactions."
In general, under Rule 144, as currently in effect, after two years have
elapsed since the later of the date of acquisition of restricted stock from the
Company or from an affiliate of the Company, the acquirer or subsequent holder
will be entitled to sell in any three-month period the number of shares that
does not exceed the greater of (i) 1% of the then outstanding number of Common
Stock, or (ii) the average weekly trading volume of the Common Stock during the
four calendar weeks immediately preceding the date on which notice of the sale
is filed with the Commission. The Commission has proposed certain amendments to
Rule 144 which would reduce the requisite holding period from two years to one
year. Sales pursuant to Rule 144 also are subject to certain other requirements
relating to manner of sale, notice and availability of current public
information about the Company. A person (or persons whose shares are aggregated)
who is not deemed to have been an affiliate of the Company at any time during
the three months immediately preceding a sale of restricted securities is
entitled to sell the securities pursuant to Rule 144(k) without regard to the
volume limitations described above, provided that three years have expired since
the later of the date on which such restricted shares were first acquired from
the Company or from an affiliate of the Company.
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CERTAIN FOREIGN ISSUER CONSIDERATIONS
The following discussion is based on the advice of Conyers, Dill & Pearman,
Bermuda counsel to the Company.
The Company has been designated as a non-resident for exchange control
purposes by the Bermuda Monetary Authority ("BMA"). Consent under the Exchange
Control Act 1972 (and regulations promulgated thereunder) has been obtained from
the BMA for the sale or transfer to non-residents of Bermuda for exchange
control purposes of the Common Stock being offered pursuant to the Offering. In
addition, prior to this Offering, this Prospectus will be filed with the
Registrar of Companies in Bermuda in accordance with Bermuda law.
IT MUST BE DISTINCTLY UNDERSTOOD THAT, IN GRANTING SUCH CONSENT AND
ACCEPTING THIS PROSPECTUS FOR FILING, THE BMA AND THE REGISTRAR OF COMPANIES IN
BERMUDA WILL ACCEPT NO RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF ANY
PROPOSAL OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS
EXPRESSED HEREIN.
Under Bermuda law, there are no limitations on the rights of non-Bermuda
owners of the Common Stock to hold or vote their shares. Because the Company has
been designated as a non-resident for Bermuda exchange control purposes, there
are no restrictions on its ability to transfer funds in and out of Bermuda or to
pay dividends to United States residents who are holders of the Company's Common
Stock, other than in respect of local Bermuda currency.
In the case of an applicant acting in a special capacity (for example, as an
executor or trustee), certificates may, at the request of the applicant, record
the capacity in which the applicant is acting. Notwithstanding the recording of
any such special capacity, the Company is not bound to investigate or see to the
execution of a trust pursuant to which any of its shares are held. The Company
will take no notice of any trust applicable to any of its shares whether or not
it had notice of such trust.
Under Bermuda law, the Company is an exempted company (that is, it is
exempted from the provisions of Bermuda law which stipulate that at least 60% of
the equity must be beneficially owned by Bermudians). Consents under The
Exchange Control Act 1972 of Bermuda and the regulations made thereunder have
been obtained for the issue and all subsequent transfers of the shares of Common
Stock offered by this Prospectus to and among persons not resident in Bermuda
for exchange control purposes. Persons regarded as residents of Bermuda for
exchange control purposes require specific consent under The Exchange Control
Act 1972 to acquire securities issued by the Company. The Act permits companies
to adopt bye-law provisions relating to the transfer of securities. Neither
Bermuda law, the Memorandum of Association nor the Bye-laws of the Company
impose limitations on the right of foreign nationals or nonresidents of Bermuda
to hold shares of the Company or vote such shares. Pursuant to the provisions of
Section 28 of the Companies Act 1981 of Bermuda, there is no minimum
subscription which must be raised by the issue of the Common Stock to provide
the funds required to be provided in respect of the matters set forth in that
section.
As an exempted company, the Company may not participate in certain business
transactions, including: (1) the acquisition or holding of land in Bermuda
(except that required for its business and held by way of lease or tenancy for
terms of not more than 21 years) without the express authorization of the
Bermuda legislature; (2) the taking of mortgages on land in Bermuda to secure an
amount in excess of $50,000 without the consent of the Bermuda Minister of
Finance; or (3) the carrying on of business of any kind in Bermuda, except in
furtherance of the business of the Company carried on outside Bermuda or under a
license granted by the Bermuda Minister of Finance. In addition, present BMA
policy permits no more than 20% of the share capital of an exempted Company to
be held by Bermudians.
The Bermuda government actively encourages foreign investment in exempted
entities like the Company that are based in Bermuda but do not operate in
competition with local business. In addition to
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having no restrictions on the degree of foreign ownership, the Company is
subject neither to taxes on its income or dividends nor to any foreign exchange
controls in Bermuda. In addition, there is no capital gains tax in Bermuda, and
profits can be accumulated by the Company, as required, without limitation.
The following is a summary of the law relating to the enforcement of foreign
judgements in Jordan and represents the opinion of Ali Sharif Zu'bi & Sharif Ali
Zu'bi Law Firm, Jordan counsel to the Company, that the enforcement of foreign
judgements in Jordan is governed by Law No. 8 of 1952. Basically, a foreign
judgement may be enforced in Jordan by means of an application to the competent
court without retrial and re-examination of the merits or issues of the case.
Jordanian courts may, however, decline to enforce a foreign judgement (i) if the
court which passed the judgement was without competent jurisdiction, (ii) if the
defendant has not carried on any business within the jurisdiction of the court
which passed the judgement or was not resident within its jurisdiction and did
not willfully appear before the court or did not recognize its jurisdiction,
(iii) if the defendant was not notified to appear before the court which issued
the judgement or was not duly or properly served with notice, (iv) if the
judgement has been passed in a fraudulent manner, (v) if the defendant is able
to persuade the court that the judgement is not final, (vi) if the judgement
contravenes Jordanian public policy, and (vii) if the laws of the country of the
court which passed the judgement do not recognize and enforce judgements of
Jordanian courts.
TAXATION
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain of the principal United States
federal income tax consequences relating to an investment in the Common Stock as
of the date hereof and represents the opinion of Orrick, Herrington & Sutcliffe
LLP, special United States counsel to the Company. The summary is based on the
Internal Revenue Code of 1986 (the "Code"), and existing final, temporary and
proposed Treasury Regulations, Revenue Rulings and judicial decisions, all of
which are subject to prospective and retroactive changes. The Company will not
seek a ruling from the Internal Revenue Service (the "IRS") with regard to the
United States federal income tax treatment relating to an investment in the
Common Stock and, therefore, there can be no assurance that the IRS will agree
with the conclusions set forth below. The summary does not purport to address
all federal income tax consequences that may be relevant to particular
investors. For example, the summary applies only to holders who hold the Common
Stock as a capital asset within the meaning of Section 1221 of the Code, and
does not address the tax consequences that may be relevant to investors in
special tax situations (including, for example, life insurance companies,
tax-exempt organizations, dealers in securities or currency, banks or other
financial institutions, or investors that hold the Common Stock as part of a
hedge, straddle or conversion transaction). Further, it does not address the
alternative minimum tax consequences of an investment in the Common Stock or the
indirect consequences to holders of equity interests in investors in the Common
Stock. ACCORDINGLY, PERSONS CONSIDERING THE PURCHASE OF THE COMMON STOCK SHOULD
CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF UNITED STATES
FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN
TAXING JURISDICTION, TO THEIR PARTICULAR SITUATIONS.
For purposes of this discussion, "Company" refers to Aramex International
Limited and "U.S. Holder" means a holder of Common Stock that is a citizen or
resident of the United States, a partnership or corporation created or organized
in the United States or any State thereof (including the District of Columbia),
or an estate or trust the income of which is subject to United States federal
income tax regardless of its source. The term "non-U.S. Holder" refers to any
holder of Common Stock other than a U.S. Holder.
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TAXATION OF THE COMPANY
The Company believes that most of the Company's income currently is and,
according to the Company's plans set forth in "Business" above, will be from
sources outside the United States and will not be effectively connected with the
conduct by the Company of a trade or business within the United States. However,
the Company may decide in the future to directly engage in a trade or business
within the United States. The Company generally will not be subject to United
States federal income tax on its income from sources outside the United States
that is not effectively connected with the conduct of a trade or business within
the United States. If the Company is treated as engaged in the conduct of a
trade or business within the United States it will be subject to United States
federal income tax on its United States effectively connected income in the same
manner as if it were a United States corporation, and will be subject to a
United States branch profits tax equal to 30% of such effectively connected
income, subject to adjustments.
In addition, the Company may be classified as a personal holding company (a
"PHC") for United States federal income tax purposes if both of the following
tests are satisfied: (i) at any time during the last half of the Company's
taxable year, five or fewer individuals (without regard to their citizenship or
residency) own or are deemed to own under certain attribution rules more than
50% of the stock of the Company by value (the "PHC Ownership Test") and (ii) the
Company receives 60% or more of its United States related gross income, as
specifically adjusted, from certain passive sources (the "PHC Income Test"). A
corporation classified as a PHC is taxed (currently at a rate of 39.6%) on
certain of its undistributed United States source income (e.g., dividends from
United States corporations) and United States effectively connected income, to
the extent such income is not distributed to shareholders.
Prior to and after this Offering, five or fewer individuals likely will own
or be deemed to own more than 50% of the Common Stock. Furthermore, the Company
likely will receive distributions from United States corporations after this
Offering. As a result, the PHC Ownership Test and the PHC Income Test likely
will be satisfied after this Offering. The Company currently intends to manage
its affairs so as to minimize liability for the PHC tax, but there can be no
assurance that the Company will be successful in minimizing such tax. Further,
in the future the Company may determine that the Company's funds are better used
for purposes other than making the distributions required to minimize such tax.
TAXATION OF U.S. HOLDERS
DISTRIBUTIONS OF COMMON STOCK. Distributions made by the Company with
respect to Common Stock generally will constitute dividends for federal income
tax purposes and will be taxable to a U.S. Holder as ordinary income to the
extent of the Company's undistributed current or accumulated earnings and
profits (as determined for United States federal income tax purposes).
Distributions in excess of the Company's current or accumulated earnings and
profits will be treated first as a nontaxable return of capital reducing the
U.S. Holder's tax basis in the Common Stock, thus increasing the amount of any
gain (or reducing the amount of any loss) which might be realized by such holder
upon the sale or exchange of such Common Stock. Any such distributions in excess
of the U.S. Holder's tax basis in the Common Stock will be treated as capital
gain to the U.S. Holder and will be either long-term or short-term capital gain
depending upon the U.S. Holder's federal income tax holding period for the
Common Stock. Dividends paid by the Company generally will not be eligible for
the dividends received deduction available to certain United States corporate
shareholders under Code Sections 243 and 245.
SALE OR EXCHANGE OF COMMON STOCK. A U.S. Holder of Common Stock generally
will recognize capital gain or loss upon the sale or exchange of the Common
Stock measured by the difference between the amount realized and the U.S.
Holder's tax basis in the Common Stock. The gain or loss on such disposition
will be long term capital gain or loss if the Common Stock has been held for
more than one year.
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PASSIVE FOREIGN INVESTMENT COMPANY. A foreign corporation generally will be
treated as a passive foreign investment company (a "PFIC") if, after applying
certain "look-through" rules, either (i) 75% or more of its gross income is
passive income or (ii) 50% or more of the average value of its assets is
attributable to assets that produce or are held to produce passive income.
Passive income for this purpose generally includes dividends, interest, rents,
royalties and gains from securities and commodities transactions. The
look-through rules require a foreign corporation that owns at least 25%, by
value, of an operating subsidiary to treat that proportion of the subsidiary's
assets and income as held or received directly by the foreign parent.
The Company does not believe that it is currently a PFIC nor does it
anticipate that it will be a PFIC in the future because it expects that less
than 75% of its annual gross income will be passive income and less than 50% of
its assets will be passive assets, based on the look-through rules, the current
income and assets of the Company and its subsidiaries, and the manner in which
the subsidiaries are anticipated to conduct their businesses in the future.
However, there can be no assurance that the Company is not or will not be
treated as a PFIC in the future. If the Company were to be treated as a PFIC,
all U.S. Holders may be required, in certain circumstances, to pay an interest
charge together with tax calculated at maximum rates on certain "excess
distributions," including any gain on the sale of Common Stock. Alternatively, a
U.S. Holder may be permitted to make a "qualified electing fund" election, in
which case, in lieu of such treatment would be required to include in their
taxable income certain undistributed amounts of the Company's income. Neither
the Company nor its advisors have the duty to or will undertake to inform U.S.
Holders of changes in circumstances that would cause the Company to become a
PFIC. U.S. Holders should consult their own tax advisors concerning the status
of the Company as a PFIC at any point in time after the date of this Prospectus.
There can be no assurance that the Company will be willing or able to take the
action necessary for a U.S. Holder to make a "qualified electing fund" election
in the event the Company is determined to be a PFIC.
CONTROLLED FOREIGN CORPORATION. If more than 50% of the stock (vote or
value) of the Company is owned, directly or indirectly, by U.S. Holders, each of
whom owns or is deemed to own under certain attribution rules 10% or more of the
total combined voting power of all classes of stock of the Company ("10%
Shareholder"), the Company will be treated as a "controlled foreign corporation"
(a "CFC") under Subpart F of the Code. One of the Company's existing
shareholders who is a 10% Shareholder may be considered as owning approximately
36% of the Common Stock immediately after this Offering. It is unclear how
controlling blocks of stock will be valued for these purposes. Accordingly, an
investor who purchases Common Stock and becomes a 10% Shareholder may result in
the Company being treated as a CFC for United States federal income tax
purposes.
The Company does not believe that it is a CFC and it is not anticipated that
the Company will become a CFC as a result of this Offering; however, no
assurance can be given that the Company will not be a CFC immediately after this
Offering or that it will not become a CFC as a result of future changes in its
ownership. If the Company were to be treated as a CFC, each 10% Shareholder
would be required to include in its taxable income as a deemed dividend its PRO
RATA share of certain undistributed income of the Company (which possibly could
be substantial) and certain investments by the Company in United States
property, and all or a portion of the gain from the sale or exchange of Common
Stock may be treated under Section 1248 of the Code as dividend income. Neither
the Company nor its advisors have the duty to or will undertake to inform U.S.
Holders of changes in circumstances that would cause the Company to become a
CFC. U.S. Holders should consult their own tax advisors concerning the status of
the Company as a CFC at any point in time after the date of this Prospectus.
FOREIGN PERSONAL HOLDING COMPANY. A foreign corporation may be classified
as a foreign personal holding company (a "FPHC") for federal income tax purposes
if both of the following tests are satisfied: (i) at any time during the taxable
year five or fewer individuals who are United States citizens or residents own
or are deemed to own (under certain attribution rules) more than 50% of its
stock (vote or value) and (ii) at least 60% (50% for years subsequent to the
year in which it becomes a FPHC) of its gross income
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(regardless of its source), as specifically adjusted, is "foreign personal
holding company income," which includes dividends, interest, rents, royalties
and gain from the sale of stock or securities.
The Company does not believe that it is currently a FPHC nor does it
anticipate that it will be a FPHC in the future; however, no assurance can be
given that the Company is not or will not become a FPHC as a result of future
changes of ownership or changes in the nature of the income of the Company. If
the Company were to be classified as a FPHC, each U.S. Holder would be required
to include in income as a taxable constructive dividend its PRO RATA share of
the Company's undistributed foreign personal holding company income.
FORM 5471. Any U.S. Holder who owns 5% or more in value of the stock of the
Company may be required to file IRS Form 5471 with the IRS to report certain
acquisitions or dispositions of stock of the Company. In addition, annual
filings of IRS Form 5471 would be required (i) by any U.S. Holder of 10% or more
in value of the stock of the Company, if the Company were treated as a CFC or
FPHC, and (ii) by any U.S. Holder owning more than 50%, in voting power or
value, of the stock of the Company.
FORM 926. U.S. Holders may be required to report an investment in the
Common Stock to the IRS on IRS Form 926, and that nonreporting may subject the
U.S. Holder to substantial penalties. Recently enacted Code Section 1494(c)
imposes a 35 percent penalty on certain reportable property transfers between
United States persons and foreign persons. Property transfers subject to
reporting literally appear potentially to include transfers of cash through the
purchase of a security such as the Common Stock; if reportable but not reported,
the purchase would subject the U.S. Holder to a penalty equal to 35 percent of
the Common Stock's cost. Any such penalty for nonreporting would not be subject
to reimbursement by the Company. The Code generally requires that a return be
filed with respect to reportable property transfers on the date of the transfer;
however, the IRS recently announced its intention to issue guidance with respect
to this reporting requirement before the end of 1996, and also announced that it
would not impose a penalty if any required return is filed within 60 days after
the issuance of that guidance. Accordingly, prospective U.S. Holders should take
precautions to ensure compliance with applicable reporting requirements, whether
by currently filing a protective return with respect to an investment in the
Common Stock or by complying with such guidance as ultimately may be issued by
the IRS.
TAXATION OF NON-U.S. HOLDERS
DISTRIBUTIONS ON COMMON STOCK. Distributions made by the Company with
respect to the Common Stock to non-U.S. Holders who are not engaged in the
conduct of a trade or business within the United States will be subject to
United States federal income tax only if 25% or more of the gross income of the
Company (from all sources for the three-year period ending with the close of the
taxable year preceding the declaration of the distribution) was effectively
connected with the conduct of a trade or business in the United States by the
Company. The Company does not anticipate engaging in the conduct of a trade or
business within the United States, except through its subsidiaries. However, if
the 25% threshold for such period is exceeded, a portion of any distribution
paid by the Company to a non-U.S. Holder could be subject to federal income tax
withholding at the rate of 30%; the portion of the distribution that could be
subject to withholding would correspond to the portion of the Company's gross
income for the period that is effectively connected to its conduct of a trade or
business within the United States.
SALE OR EXCHANGE OF COMMON STOCK. A non-U.S. Holder will not be subject to
United States federal income tax on any gain realized upon the sale or exchange
of the Common Stock if such holder has no connection with the United States
other than holding the Common Stock and in particular (i) such gain is not
effectively connected with a trade or business in the United States of the
non-U.S. Holder, (ii) in the case of a non-U.S. Holder who is an individual
which has a "tax home" (as defined in Section 911(d)(3) of the Code) in the
United States, such non-U.S. Holder is not present in the United States for 183
days or more in the taxable year of such disposition, and (iii) the Company is
not and has not been at any time
55
<PAGE>
within 5 years preceding such disposition a "U.S. real property holding
corporation" (a "USRPHC") for federal income tax purposes.
The Company believes that it is not and does not currently intend to become
a USRPHC, but no assurance can be given that the Company is not or will not
become a USRPHC in the future. In general, if the Company is determined to be a
USRPHC then non-U.S. Holders may be subject to United States federal income tax
on the sale or exchange of the Common Stock, and to withholding at a rate of 10%
on any such disposition. However, a non-U.S. Holder will not be subject to these
special rules even if the Company is determined to be a USRPHC provided that (i)
such non-U.S. Holder did not at any time during the five years ending on the
date of sale or disposition actually or constructively own more than 5% of the
Common Stock of the Company and (ii) the Common Stock is then "regularly traded"
on an established securities market in the United States. Since it is expected
that the Common Stock will be traded on the Nasdaq stock market and it is
expected that it will be regularly quoted by broker dealers, the Common Stock
should be considered to be "regularly traded" on an established securities
market. However, it is possible to interpret the current Temporary Regulations
as concluding that the Common Stock will not be considered "regularly traded" at
any time during which 50% or more thereof is owned by 100 or fewer persons,
which will be the case after this Offering and for some time to come.
UNITED STATES BUSINESS. A non-U.S. Holder engaged in a trade or business in
the United States whose income from the Common Stock (including gain from the
sale or exchange thereof) is effectively connected with the conduct of such
trade or business will generally be subject to regular United States federal
income tax on such income in the same manner as if it were a U.S. Holder. In
addition, if such a holder is a foreign corporation, it may be subject to a
branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to adjustments.
BACKUP WITHHOLDING
Distributions made by the Company with respect to the Common Stock and the
gross proceeds received from the disposition of the Common Stock may be subject
to certain information reporting to the IRS and to a 31% backup withholding tax.
However, backup withholding generally will not apply to payments made to certain
exempt recipients (such as a corporation or financial institution) or to a
holder who furnishes a correct taxpayer identification number or provides a
certificate of foreign status and provides certain other required information.
If backup withholding applies, the amount withheld is not an additional tax, but
is credited against such holder's United States federal income tax liability.
CERTAIN BERMUDA TAX CONSIDERATIONS
This section is a summary of the principal Bermuda tax considerations that
may be relevant to prospective purchasers of the Common Stock and in the opinion
of Conyers, Dill & Pearman, special Bermuda counsel to the Company, insofar as
the discussion constitutes summaries of Bermuda tax laws, is accurate in all
material respects. At the present time, there is no Bermuda income or profits
tax, withholding tax, capital gains tax, capital transfer tax, estate duty or
inheritance tax payable by a Bermuda company or its shareholders, other than
shareholders ordinarily resident in Bermuda. The Company has obtained an
assurance from the Minister of Finance under the Exempted Undertakings Tax
Protection Act 1966 that, in the event that any legislation is enacted in
Bermuda imposing any tax computed on profits or income, or computed on any
capital asset, gain or appreciation, or any tax in the nature of an estate duty
or inheritance tax, such tax shall not, until March 28, 2016, be applicable to
the Company or to any of its operations or to the shares, debentures or other
obligations of the Company except insofar as such tax applies to persons
ordinarily resident in Bermuda or any tax payable pursuant to the Land Tax Act
1967 in relation to any land leased to the Company. Therefore, there will be no
Bermuda tax consequences with respect to the sale of the Common Stock or the
Warrants or with respect to distributions in respect of the Common Stock or the
Warrants. As an exempted company, the Company is liable to pay in Bermuda an
annual fee based upon its authorized share capital and the premium on its
shares. The annual fee payable
56
<PAGE>
by the Company in 1996 will be $1,680 being 50% of the fee otherwise payable
since the Company was incorporated after August 31.
OTHER COUNTRIES
The Company (and its subsidiaries) will likely be subject to tax on income
earned in each of the countries in which it does business (directly or through
subsidiaries or joint ventures). In addition, dividends from the Company's
subsidiaries may be subject to withholding tax when paid to the Company. The
Company has not to date analyzed the tax consequences of doing business in any
jurisdiction other than those described above.
57
<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters"), for which Commonwealth
Associates is acting as representative (the "Representative"), have agreed,
severally but not jointly, subject to the terms and conditions contained in the
underwriting agreement among the Company, the Selling Shareholders and the
Underwriters (the "Underwriting Agreement"), to purchase from the Company and
the Company has agreed to sell to the several Underwriters, an aggregate of
1,000,000 shares of Common Stock. The number of shares of Common Stock that each
Underwriter has agreed to purchase is set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------------------------------------------------------------------------------- ----------
<S> <C>
Commonwealth Associates............................................................
----------
Total........................................................................ 1,000,000
----------
----------
</TABLE>
The Underwriters are committed on a "firm commitment" basis to purchase and
pay for all the shares of Common Stock offered hereby (other than shares offered
by the Selling Shareholders pursuant to the Underwriters' Over-Allotment
Option), if any shares are purchased. The shares are being offered by the
Underwriters, subject to prior sale, when, as, and if delivered to and accepted
by the Underwriters and subject to approval of certain legal matters by counsel
and to certain other conditions.
Through the Representative, the Underwriters have advised the Company that
the Underwriters propose to offer the shares of Common Stock to the public at
the public offering price set forth on the cover page of this Prospectus and the
Underwriters may allow to certain dealers who are members of the National
Association of Securities Dealers, Inc. (the "NASD") concessions not in excess
of $0. per share, of which not in excess of $0. per share may be
reallowed to other dealers who are members of the NASD. After commencement of
the Offering, the public offering price, the concessions, and reallowance may be
changed by the Underwriters. The Underwriters have informed the Company that
they do not expect any sales of the shares of Common Stock offered hereby to be
made to discretionary accounts of the Underwriters.
The Selling Shareholders have granted to the Underwriters an option
exercisable for 45 days from the date of this Prospectus to purchase up to an
additional 150,000 shares of Common Stock at the public offering price set forth
on the cover page of this Prospectus, less the underwriting discounts and
commissions. The Underwriters may exercise this option in whole or, from time to
time, in part, solely for the purpose of covering over-allotments, if any, made
in connection with the sale of the shares of Common Stock offered hereby.
The Company has agreed to pay the Representative, in its individual rather
than representative capacity, a non-accountable expense allowance equal to 1% of
the gross proceeds of the Offering, including any proceeds derived from the sale
of the Over-allotment Stock, in connection with certain expenses incurred by the
Representative and to reimburse the Representative for certain other expenses
incurred by the Representative.
The Company has agreed to sell, for an aggregate purchase price of $100, to
the Representative and its designees warrants (the "Representative's Warrants")
to purchase up to 100,000 shares of Common Stock at an exercise price per share
equal to 120% of the public offering price set forth on the cover of this
Prospectus. The Representative's Warrants are not redeemable and may not be
sold, transferred, assigned, pledged or hypothecated for a period of one year
from the date of this Prospectus, except that they may be assigned, in whole or
in part, to any successor, officer or partner of the Representative, or to
officers or partners of any such successor or partner, and are exercisable
during the four-year period commencing one year after the effective date of the
Registration Statement of which this Prospectus is a part (the "Warrant
58
<PAGE>
Exercise Term"). During the Warrant Exercise Term, the holders of the
Representative's Warrants are given, at nominal cost, the opportunity to profit
from a rise in the market price of the Common Stock. To the extent that the
Representative's Warrants are exercised or exchanged, dilution to the interests
of the Company's shareholders will occur. Further, the terms upon which the
Company will be able to obtain additional equity capital may be adversely
affected since the holders of the Representative's Warrants can be expected to
exercise or exchange them at a time when the Company would, in all likelihood,
be able to obtain any needed capital on terms more favorable to the Company than
those provided in the Representative's Warrants. Any profit realized by the
Representative on the sale of the Representative's Warrants or the underlying
shares of Common Stock may be deemed additional underwriting compensation. The
Representative's Warrants provide, subject to certain conditions, for a period
of four years commencing one year from the effective date of the Registration
Statement of which this Prospectus is a part, one "demand" registration right
and will provide, subject to certain conditions, for a period of three years
commencing two years from the effective date of the Registration Statement of
which this Prospectus is a part, certain "piggyback" registration rights.
In addition, the Company has agreed to pay the Representative a corporate
finance advisory fee of $35,000 plus 3% of the gross proceeds of this Offering,
the unpaid balance of which is payable at the closing of this Offering.
Upon completion of the Offering, the Company has agreed, for a period of
three years from the date of this Prospectus, if so requested by the
Representative, to nominate and use best efforts to elect a designee of the
Representative acceptable to the Company as director of the Company.
The Company, the Selling Shareholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.
Except for the 150,000 shares of Common Stock to be sold by the Selling
Shareholders pursuant to the Over-Allotment Option, all of the Company's
officers, directors and shareholders and all holders of any options, warrants or
other securities convertible into or exercisable for, shares of Common Stock
have agreed that they will not, directly or indirectly, offer, sell, offer to
sell, contract to sell, pledge, grant any option to purchase or otherwise sell
or dispose of any shares of Common Stock or other capital stock of the Company,
or any securities convertible into, or exercisable or exchangeable for, any
shares of Common Stock or other capital stock of the Company without the prior
written consent of the Representative, on behalf of the Underwriters, for a
period of 12 months after the effective date of the Registration Statement of
which this Prospectus is a part, provided, however, that (i) any such person may
make private sales or bona fide gifts of securities of the Company during such
period if the proposed transferee agrees to be bound by the above restrictions
and (ii) such restrictions shall not apply with respect to the laws of descent
and distribution.
Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price has been arbitrarily determined by negotiation
between the Company and the Underwriters. In determining the offering price the
Underwriters and the Company considered, among other things, market prices of
similar securities of comparable publicly traded companies, the financial
condition and operating information of companies engaged in activities similar
to those of the Company, the financial condition and prospects of the Company
and the general condition of the securities market.
The foregoing includes a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to the copy of
the Underwriting Agreement that is on file as an exhibit to Registration
Statement of which this Prospectus is a part.
59
<PAGE>
LEGAL MATTERS
The validity of the Stock of Common Stock offered hereby and certain other
matters of Bermuda law will be passed upon for the Company by Conyers, Dill &
Pearman, located at Clarendon House, Church Street, Hamilton HM CX Bermuda.
Allen & Overy, located at Three Exchange Square, 8 Connaught Place, Hong Kong,
has acted as special counsel to the Company with respect to certain legal
matters of Hong Kong law. Ali Sharif Zubi & Sharif Ali Zu'bi Law Firm, located
at Astra Building, Jebel, Amman, 11180, Jordan, has acted as counsel to the
Company with respect to certain matters of Jordanian law. Certain legal matters
with respect to United States law will be passed upon for the Company by Orrick,
Herrington & Sutcliffe LLP, located at 666 Fifth Avenue, New York, New York
10103. Certain legal matters will be passed upon for the Underwriters by Morgan
Lewis & Bockius LLP, located at 101 Park Avenue, New York, New York 10178-6070.
EXPERTS
The financial statements included in this prospectus and elsewhere in the
registration statement, to the extent and for the periods indicated in their
reports, have been audited by Arthur Andersen and Khleif & Co., a member firm of
KPMG Peat Marwick, independent public accountants, and are included herein in
reliance upon the authority of said firms as experts in giving said reports.
With respect to the financial statements for 1993, 1994 and 1995, the report of
each firm states that with respect to certain subsidiaries its report is based
on the reports of other independent public accountants, including Dr. Mohammed
Al-Amri, Mehta & Tengra, Edward Isaacs & Co., LLP, Talal Abu-Ghazaleh & Co. and
Hachem Albert. The financial statements for 1993, 1994 and 1995 referred to
above have been included herein in reliance, in part, upon the authority of
those firms as experts in giving said reports.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a registration statement on Form F-1
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted from this Prospectus
in accordance with the Commission's rules and regulations. For further
information, reference should be made to the Registration Statement and to the
exhibits filed thereto. For further information with respect to the Company and
the Common Stock, reference is made to the Registration Statement and the
exhibits and schedules thereto which may be inspected without charge or copied
at the public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, 7 World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Commission's
Public Reference Section at prescribed rates. Registration statements
transmitted through the Commission's Electronic Data Gathering, Analysis and
Retrieval System are also publicly available through the Commission's Internet
site on the World Wide Web (http://www.sec.gov). Descriptions contained in this
Prospectus as to the contents of any contract or other documents filed as an
exhibit to the Registration Statement are not necessarily complete and each such
description is qualified by reference to such contract or document. In addition,
it is anticipated that the Common Stock will be quoted on the Nasdaq National
Market under the symbol "ARMX." Reports and other information concerning the
Company may be inspected at the offices of The Nasdaq Stock Market, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and an opinion thereon expressed by
independent certified public accountants and quarterly reports for the first
three quarters of each fiscal year containing unaudited financial information.
Such audited financial statements and unaudited quarterly financial information
will be prepared in accordance with International Accounting Standards (with
reconciliations to generally accepted accounting principles in the United
States). While the Company is exempt from the rules under the Exchange Act
prescribing the content and distribution of proxy statements, it intends to
substantially comply with the rules governing the preparation of proxy
statements and the solicitation of proxies (excluding provisions requiring
60
<PAGE>
disclosures relating to corporate reorganizations, and the inclusion of
shareholder proposals in proxy materials prepared by the Company) to the extent
deemed advisable by the Company under the circumstances of particular
solicitations. In addition, requirements with regard to the accuracy of proxy
disclosures will be governed by certain Bye-law provisions interpreted under
Bermuda law. The Company has been advised that, under Bermuda law, the record
owners of Common Stock will, to the extent indicated in the Company's Bye-laws,
also be bound by such principles incorporated from Commission rules relating to
proxy statements and the solicitation of proxies. See "Description of Capital
Stock-- Periodic Reports and Proxy Statements."
61
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Condensed Consolidated Balance Sheets as of September 30, 1996 (unaudited) and December 31, 1995......... F-2
Condensed Consolidated Statements of Income for the nine-month periods ended
September 30, 1996 and 1995 (unaudited)................................................................ F-3
Statement of Changes in Shareholders' Equity for the nine-month period ended
September 30, 1996..................................................................................... F-4
Condensed Consolidated Statements of Cash Flows for the nine-month periods ended
September 30, 1996 and 1995 (unaudited)................................................................ F-5
Notes to Unaudited Interim Consolidated Financial Statements............................................. F-6
Report of Independent Public Accountants................................................................. F-8
Auditors' Report......................................................................................... F-9
Consolidated Balance Sheets at December 31, 1995 and 1994................................................ F-10
Consolidated Statements of Income for the years ended December 31, 1995, 1994 and 1993................... F-11
Statements of Changes in Shareholders' Equity for the years ended December 31, 1995, 1994 and 1993....... F-12
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993............... F-13
Notes to Consolidated Financial Statements............................................................... F-14
Other Auditors' Reports on certain Consolidated Financial Statements (separate financial statements not
included herein)....................................................................................... F-26
</TABLE>
F-1
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------- -----------------
<S> <C> <C>
UNAUDITED
ASSETS
CURRENT ASSETS
Cash on hand and at banks................................................ 1,361 1,341
Receivables.............................................................. 10,889 8,922
Deferred income taxes.................................................... 20 20
Other current assets..................................................... 2,188 1,038
------ ------
TOTAL CURRENT ASSETS................................................. 14,458 11,321
Property, plant and equipment............................................ 2,620 2,655
Investment in affiliates, at cost........................................ 67 67
Other assets............................................................. 368 301
------ ------
TOTAL ASSETS......................................................... 17,513 14,344
------ ------
------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Due to banks............................................................. 1,014 777
Current portion of notes payable......................................... 78 115
Payables................................................................. 5,868 4,690
Other current liabilities................................................ 3,698 2,872
------ ------
TOTAL CURRENT LIABILITIES............................................ 10,658 8,454
------ ------
Long term notes payable.................................................. 15 30
Deferred income taxes.................................................... 27 27
Other liabilities........................................................ 679 1,138
------ ------
721 1,195
------ ------
MINORITY INTERESTS IN SUBSIDIARIES......................................... 284 291
------ ------
SHAREHOLDERS' EQUITY
Share capital............................................................ 31 31
Additional paid in capital in excess of par.............................. 228 228
Cumulative translation adjustment........................................ (146) (144)
Retained earnings........................................................ 5,737 4,289
------ ------
TOTAL SHAREHOLDERS' EQUITY........................................... 5,850 4,404
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................... 17,513 14,344
------ ------
------ ------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
UNAUDITED UNAUDITED
Revenues.................................................................. 35,896 31,760
Shipping costs............................................................ (18,623) (17,109)
------------------ ------------------
Gross profit.......................................................... 17,273 14,651
Operating expenses........................................................ (6,456) (5,803)
Selling, general and administrative expenses.............................. (9,050) (7,774)
------------------ ------------------
Operating income...................................................... 1,767 1,074
------------------ ------------------
Other income (expenses):
Interest expense.......................................................... (10) (13)
Loss on sale of property, plant and equipment............................. -- (39)
Exchange (losses) gains................................................... (6) 84
Other income (loss)....................................................... 1 (26)
------------------ ------------------
(15) 6
------------------ ------------------
Income before income taxes............................................ 1,752 1,080
Provision for income taxes................................................ (180) (233)
Minority interests........................................................ (124) (95)
------------------ ------------------
Net income............................................................ 1,448 752
------------------ ------------------
------------------ ------------------
Earnings per share........................................................ 0.46 0.24
------------------ ------------------
------------------ ------------------
Weighted average number of shares outstanding............................. 3,125,000 3,125,000
------------------ ------------------
------------------ ------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
RETAINED EARNINGS
SHARE CAPITAL ADDITIONAL CUMULATIVE ------------------------- TOTAL
--------------------- PAID IN TRANSITION LEGAL UNAPPROPRIATED SHAREHOLDERS'
SHARES AMOUNT CAPITAL ADJUSTMENTS RESERVE EARNINGS EQUITY
---------- --------- ----------- ----------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1996........ 3,125,000 31 228 (144) 50 4,239 4,404
Net income...................... -- -- -- -- -- 1,448 1,448
Translation adjustment.......... -- -- -- (2) -- -- (2)
---------- --------- ----------- ----------- --------- -------------- -------------
BALANCE AT SEPTEMBER 30, 1996..... 3,125,000 31 228 (146) 50 5,687 5,850
---------- --------- ----------- ----------- --------- -------------- -------------
---------- --------- ----------- ----------- --------- -------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
UNAUDITED UNAUDITED
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes.......................................................... 1,752 1,080
Adjustment to reconcile income before tax to net cash from operating activities:
Depreciation...................................................................... 665 616
Loss on sale of property, plant and equipment..................................... -- 39
------------- ------
2,417 1,735
Increase in receivables............................................................. (1,967) (1,138)
Increase in other current assets.................................................... (1,364) (454)
(Decrease) increase in payables..................................................... 1,177 (534)
(Decrease) increase in other liabilities............................................ (63) 14
Increase in other current liabilities............................................... 734 820
------------- ------
CASH GENERATED FROM OPERATIONS.................................................. 934 443
Income taxes paid................................................................... (86) (33)
------------- ------
NET CASH FROM OPERATING ACTIVITIES.............................................. 848 410
------------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment........................................... (707) (425)
Proceed from sale of property, plant and equipment.................................. 92 35
Increase in other assets............................................................ (67) (108)
------------- ------
NET CASH USED IN INVESTING ACTIVITIES........................................... (682) (498)
------------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to banks, net................................................................... 236 378
Proceed from notes payable.......................................................... -- 5
Repayment of notes payable.......................................................... (52) (5)
Proceeds from issue of common stock to minority interests........................... 214 266
Payments to minority interests...................................................... (137) (751)
Due to shareholders, net............................................................ (396) 94
------------- ------
NET CASH USED IN FINANCING ACTIVITIES........................................... (135) (13)
------------- ------
Effect of exchange rate changes on cash on hand and at banks........................ (11) (2)
------------- ------
Net increase (decrease) in cash on hand and at banks................................ 20 (103)
CASH ON HAND AND AT BANKS, BEGINNING OF PERIOD...................................... 1,341 994
------------- ------
CASH ON HAND AND AT BANKS, END OF PERIOD............................................ 1,361 891
------------- ------
------------- ------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying interim condensed consolidated balance sheet of ARAMEX
International Limited, a Bermuda company, and subsidiaries (ARAMEX or the
"Company") as of September 30, 1996 and the related interim consolidated
statement of changes in shareholders' equity for the nine-month period ended
September 30, 1996 and interim consolidated statements of income and cash flows
for the nine-month periods ended September 30, 1996 and 1995 are unaudited. In
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of these interim financial
statements have been included therein. Interim results are not necessarily
indicative of results for the entire year.
Aramex International Limited was incorporated under the laws of Bermuda in
October 1996 to be the successor to Aramex International, Limited, a Hong Kong
company which was incorporated in February 1986 ("Aramex Hong Kong"). On
December 13, 1996, Aramex Bermuda subscribed for 100 shares of Aramex Hong Kong
(the "Ordinary Shares") and each share of Aramex Hong Kong outstanding prior to
such subscription has been converted by a special resolution of the shareholders
of Aramex Hong Kong into non-voting deferred shares (the "Deferred Shares")
(collectively, the "Reorganization"). The Deferred Shares do not carry voting
rights (other than in respect of resolutions affecting their class rights) and
are effectively subordinated to the Ordinary Shares (all of which are held by
Aramex Bermuda) in respect of all dividends, distributions and liquidation
rights until such time as the holders of Ordinary Shares have received $100
billion. Accordingly, no value has been assigned to the Deferred Shares.
Pursuant to the Reorganization, Aramex Bermuda became the parent holding company
of Aramex Hong Kong. The existing shareholders of Aramex Hong Kong will retain a
nominal interest in Aramex Hong Kong through their ownership of the Deferred
Shares. Aramex Hong Kong will act as an intermediate holding company of the
Company's subsidiaries until the Company completes its reorganization plan to
transfer all of its assets from Aramex Hong Kong to Aramex Bermuda or into other
subsidiary companies. The accompanying condensed interim consolidated financial
statements have been presented to give effect to the Reorganization as if it had
taken place as of the beginning of the earliest period presented.
The interim consolidated financial statements included herein have been
prepared on a basis consistent with that of the audited consolidated financial
statements presented elsewhere in this document, in accordance with
international accounting standards (IAS). For purposes of these interim
consolidated financial statements, there are no significant differences between
the Company's accounting principles utilized and the accounting principles
generally accepted in the United States.
For the purposes of these interim consolidated financial statements, certain
information and disclosures normally included in financial statements prepared
in accordance with IAS have been condensed or omitted. These unaudited interim
financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto at December 31, 1995 and 1994.
2. COMMITMENTS AND LITIGATION
Information with respect to the Company's commitments and litigation matters
at December 31, 1995 is presented in Notes 12 and 14, respectively, to the 1995
audited consolidated financial statements.
In the opinion of management, no developments have occurred since December
31, 1995 which would require an adjustment to those financial statements.
F-6
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
3. MIDDLE EAST DIRECT MARKETING
Effective January 1, 1996, the Company formally inaugurated its direct
marketing and mail order catalog service at certain stations in the Middle East.
The service, called Middle East Direct ("MED"), provides assistance to customers
in selecting, ordering and delivering merchandise through catalogs of retail
companies based principally in the United States and Western Europe. Revenues
from this service includes a service charge paid by the customer and a discount
provided by the retailer to the Company.
The Company recognized revenues from MED upon delivery of merchandise to the
customer. Such revenues were $0.6 million for the nine-month period ended
September 30, 1996.
4. SUBSEQUENT EVENTS
Subsequent to September 30, 1996, the following events took place:
On October 21, 1996, ARAMEX International, Limited, a Hong Kong company
("ARAMEX Hong Kong"), sold 195 shares of common stock (304,688 shares after the
reorganization) to Airborne Freight Corporation ("Airborne") for an aggregate
consideration of $2,000 ("the Airborne stock purchase"). In connection with such
purchase, the shareholders of ARAMEX Hong Kong entered into a Shareholders
Agreement (the "Shareholders Agreement") which provides, among other things,
that in the event the Company, Messrs. Kingson and Ghandour and/or Ms. Rula
Ghandour transfer (as defined in the Shareholders Agreement) any shares of
common stock to certain listed competitors of Airborne or any other company
primarily engaged in the transportation of air freight or air express shipments,
Airborne has the right to sell all of its shares of common stock to the Company
on the same terms and conditions as the sale to such other company. In addition,
the Shareholders Agreement contains certain other provisions which terminate
upon consummation of an initial public offering, including: (i) a right of first
refusal in favor of the Company in the event Airborne transfers (as defined in
the Shareholders Agreement) its shares to a company or companies, their
subsidiaries, parents or known affiliates primarily engaged in the
transportation of air freight or air express shipments and (ii) a similar right
of first refusal in favor of Airborne in the event the Company, Mr. Kingson, Mr.
Ghandour or Ms. Ghandour transfer shares to certain listed competitors of
Airborne or any other company primarily engaged in the transportation of air
freight or air express shipments. In connection with the Airborne stock
purchase, Airborne was granted certain "piggyback" registration rights relating
to their shares of common stock. In addition, under the terms of the Airborne
stock purchase, Airborne is entitled to appoint one director to the Company's
Board of Directors for as long as Airborne continues to own at least half of the
shares it acquired in the Airborne stock purchase.
The Company plans to adopt a stock option plan (the "Plan"). The Plan
provides for the grant of options to acquire up to 400,000 shares of common
stock at an exercise price equal to the fair value of the stock at the date of
grant. No options have been granted to date; however, the Company plans to grant
approximately 300,000 of such options prior to its planned initial public
offering.
In October 1996, the Company has commenced planning for an initial public
offering of 1,000,000 shares of its common stock.
F-7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
ARAMEX INTERNATIONAL LIMITED
We have audited the accompanying consolidated balance sheets of ARAMEX
International Limited (a Bermuda Corporation as defined in Note 1 to
consolidated financial statements) and subsidiaries as of December 31, 1995 and
1994 and the related consolidated statements of income, changes in shareholders'
equity and cash flows for the years then ended. These consolidated financial
statements, as revised (see Note 2), are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the financial
statements of certain subsidiaries operating in Saudi Arabia, United Kingdom,
United States and France, which reflect total assets and total revenue of 41
percent and 39 percent in 1995, and 49 percent and 43 percent in 1994,
respectively, of the consolidated totals. Those statements were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it
relates to the amounts included for those entities is based solely on the
reports of the other auditors.
We conducted our audits in accordance with International Auditing Standards
which are substantially consistent with those in the United States. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts (including the conversions of the financial statements of the
subsidiaries referred to above to international accounting standards) and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statements presentation. We believe that our
audits and the reports of other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ARAMEX International
Limited and subsidiaries as of December 31, 1995 and 1994 and the consolidated
results of the operations and the consolidated cash flows for the years then
ended in conformity with International Accounting Standards.
ARTHUR ANDERSEN
Certified Public Accountants
Manama--Bahrain
October 31, 1996
(except with respect to the "Reorganization" discussed
in the first paragraph of Note 1 and in the third
paragraph of Note 17 and except with respect to the
December 11, 1996 amendment to the Shareholders
Agreement discussed in the second paragraph of Note 17,
as to which the date is December 13, 1996)
F-8
<PAGE>
AUDITORS' REPORT
TO THE SHAREHOLDERS OF
ARAMEX INTERNATIONAL LIMITED
We have audited the accompanying consolidated balance sheet of ARAMEX
International Limited [as defined in Note 1 to consolidated financial
statements] as at December 31, 1993, and the related consolidated statements of
income and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit. We did not audit
the financial statements of Beirut, Jeddah, London and the United States
stations, which statements reflect total assets and revenues of 30% and 41%
respectively of the consolidated totals. Those statements were audited by other
auditors whose reports have been furnished to us, and our opinion, in so far as
it relates to the amounts included for those stations, is based solely on the
report of the other auditors.
We conducted our audit in accordance with International Standards on Auditing
which are substantially consistent with those in the United States. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audit and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ARAMEX International
Limited as at December 31, 1993 and the consolidated results of its operations
and its consolidated cash flows for the year then ended in accordance with
International Accounting Standards.
Khleif & Co.
Adnan J. Khleif
License no. 332 (A)
/s/ A. J. KHLEIF
Amman, Jordan
29 October 1996
F-9
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
NOTES 1995 1994
----- --------- ---------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash on hand and at banks............................................................ 1,341 994
Receivables.......................................................................... 3 8,922 8,438
Due from minority interest holder.................................................... 15 214 0
Deferred income taxes................................................................ 13 20 7
Other current assets................................................................. 4 824 699
--------- ---------
TOTAL CURRENT ASSETS............................................................. 11,321 10,138
Property, plant and equipment.......................................................... 5 2,655 2,854
Investments in affiliates, at cost..................................................... 67 66
Other assets........................................................................... 301 120
--------- ---------
TOTAL ASSETS..................................................................... 14,344 13,178
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Due to banks......................................................................... 8 777 342
Current portion of notes payable..................................................... 9 115 117
Payables............................................................................. 6 4,690 5,756
Other current liabilities............................................................ 7 2,872 2,008
--------- ---------
TOTAL CURRENT LIABILITIES........................................................ 8,454 8,223
--------- ---------
Long term notes payable................................................................ 9 30 118
Deferred income taxes.................................................................. 13 27 1
Other liabilities...................................................................... 2 742 1,048
Due to shareholders.................................................................... 15 396 325
--------- ---------
1,195 1,492
--------- ---------
MINORITY INTERESTS IN SUBSIDIARIES..................................................... 291 574
--------- ---------
SHAREHOLDERS' EQUITY
Share capital........................................................................ 31 31
Additional paid in capital in excess of par.......................................... 228 228
Cumulative translation adjustment.................................................... (144) (137)
Retained earnings.................................................................... 4,289 2,767
--------- ---------
TOTAL SHAREHOLDERS' EQUITY....................................................... 4,404 2,889
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....................................... 14,344 13,178
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-10
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
<TABLE>
<CAPTION>
NOTES 1995 1994 1993
----- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues..................................................... 10 43,602 38,129 28,814
Shipping costs............................................... 11 (23,045) (19,992) (13,676)
Gross profit............................................. 20,557 18,137 15,138
Operating expenses........................................... (7,986) (6,877) (6,099)
Selling, general and administrative expenses................. (10,664) (10,232) (7,885)
------------- ------------- -------------
Operating income......................................... 1,907 1,028 1,154
------------- ------------- -------------
Other income (expenses):
Interest expense............................................. (61) (46) (4)
(Loss) gain on sale of property, plant and equipment......... (1) (4) 7
Exchange gain (loss)......................................... 31 (55) (182)
Other income (loss).......................................... 69 (123) (200)
------------- ------------- -------------
38 (228) (379)
------------- ------------- -------------
Income before income taxes............................... 1,945 800 775
Provision for income taxes................................... 13 (266) (227) (56)
Minority interests........................................... (157) (278) (633)
------------- ------------- -------------
Net income............................................... 1,522 295 86
------------- ------------- -------------
------------- ------------- -------------
Earnings per share........................................... 0.49 0.09 0.03
------------- ------------- -------------
------------- ------------- -------------
Weighted average number of shares outstanding................ 3,125,000 3,125,000 3,125,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-11
<PAGE>
ARAMEX INTERNATIONAL, LIMITED AND SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
RETAINED EARNINGS
SHARE CAPITAL ADDITIONAL CUMULATIVE ------------------------- TOTAL
--------------------- PAID IN TRANSITION LEGAL UNAPPROPRIATED SHAREHOLDERS'
SHARES AMOUNT CAPITAL ADJUSTMENTS RESERVE EARNINGS EQUITY
---------- --------- ----------- ----------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1993........ 3,125,000 31 228 (133) 4 2,382 2,512
Net income...................... -- -- -- -- 17 69 86
Translation adjustment.......... -- -- -- 14 -- -- 14
---------- --------- ----------- ----------- --------- -------------- -------------
BALANCE AT DECEMBER 31, 1993...... 3,125,000 31 228 (119) 21 2,451 2,612
Net income...................... -- -- -- -- 25 270 295
Translation adjustment.......... -- -- -- (18) -- -- (18)
---------- --------- ----------- ----------- --------- -------------- -------------
BALANCE AT DECEMBER 31, 1994...... 3,125,000 31 228 (137) 46 2,721 2,889
Net income...................... -- -- -- -- 4 1,518 1,522
Translation adjustment.......... -- -- -- (7) -- -- (7)
---------- --------- ----------- ----------- --------- -------------- -------------
BALANCE AT DECEMBER 31, 1995...... 3,125,000 31 228 (144) 50 4,239 4,404
---------- --------- ----------- ----------- --------- -------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-12
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income taxes............................................... 1,945 800 775
Adjustments to reconcile income before tax to net cash from operating
activities --
Depreciation........................................................... 891 515 361
Loss on sale of property, plant and equipment.......................... -- 5 --
Deferred income taxes.................................................. 14 (7) --
Provisions for closure of stations and bad debt........................ -- -- 605
----------- ----------- -----------
2,850 1,313 1,741
Increase in receivables.................................................. (484) (2,358) (2,583)
(Increase) decrease in other current assets.............................. (125) (274) 184
(Decrease) increase in payables.......................................... (1,065) 2,086 1,374
(Decrease) increase in other liabilities................................. (307) 734 48
Increase in other current liabilities.................................... 659 174 1,069
----------- ----------- -----------
CASH GENERATED FROM OPERATIONS....................................... 1,528 1,675 1,833
Income taxes paid........................................................ (62) (200) (24)
----------- ----------- -----------
NET CASH FROM OPERATING ACTIVITIES................................... 1,466 1,475 1,809
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment................................ (757) (1,366) (1,152)
Proceed from sale of property, plant and equipment....................... 67 5 --
Increase in other assets................................................. (180) (27) --
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES................................ (870) (1,388) (1,152)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Due to banks, net........................................................ 435 62 134
Proceed from notes payable............................................... 5 36 --
Repayment of notes payable............................................... (95) (53) --
Proceeds from issue of common stock to minority interests................ 266 -- --
Payments to minority interests........................................... (929) (442) (434)
Due to shareholders, net................................................. 71 (331) 54
----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES................................ (247) (728) (246)
----------- ----------- -----------
Effect of exchange rate changes on cash on hand and at banks............. (2) 14 14
----------- ----------- -----------
Net increase (decrease) in cash on hand and at banks..................... 347 (627) 425
CASH ON HAND AND AT BANKS, BEGINNING OF YEAR............................. 994 1,621 1,196
----------- ----------- -----------
CASH ON HAND AND AT BANKS, END OF YEAR................................... 1,341 994 1,621
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-13
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
1. BUSINESS AND ORGANIZATION
ARAMEX International Limited ("ARAMEX" or the "Company") was incorporated
under the laws of Bermuda on October 31, 1996 to be the successor to Aramex
International, Limited, a Hong Kong company which was incorporated in February
1986 ("Aramex Hong Kong"). On December 13, 1996, ARAMEX subscribed for 100
shares of Aramex Hong Kong (the "Ordinary Shares") and each share of Aramex Hong
Kong outstanding prior to such subscription was converted by a special
resolution of the shareholders of Aramex Hong Kong into non-voting deferred
shares (the "Deferred Shares") (collectively, the "Reorganization"). The
Deferred Shares do not carry voting rights (other than in respect of resolutions
affecting their class rights) and are effectively subordinated to the Ordinary
Shares (all of which are held by ARAMEX) in respect of all dividends,
distributions and liquidation rights until such time as the holders of Ordinary
Shares have received $100 billion. Accordingly, no value has been assigned to
the Deferred Shares. Pursuant to the Regorganization, ARAMEX became the parent
holding company of Aramex Hong Kong. The existing shareholders of Aramex Hong
Kong will retain a nominal interest in Aramex Hong Kong through their ownership
of the Deferred Shares. Aramex Hong Kong will act as an intermediate holding
company of the Company's subsidiaries until the Company completes its
reorganization plan to transfer all of its assets from Aramex Hong Kong to
ARAMEX or into other subsidiary companies.
ARAMEX is authorized to issue 15,000,000 shares of common stock with a par
value of $0.01 per share. After giving effect to the Reorganization described
above, at December 31, 1995, the share ownership is expected to be detailed as
follows:
<TABLE>
<CAPTION>
OWNER SHARES OWNED
- ------------------------------------------------------------------------------- -------------
<S> <C>
Mr. Bill Kingson............................................................... 1,562,500
Mr. Fadi Ghandour.............................................................. 781,250
Mrs. Rula Ghandour............................................................. 781,250
-------------
3,125,000
-------------
-------------
</TABLE>
The Company is also authorized to issue 5,000,000 shares of preferred stock
with a par value of $0.01 per share none of which has been issued or is
outstanding. On October 22, 1996, the Company issued 304,688 shares of capital
stock to Airborne Freight Corporation, see note (17) for further discussion.
The accompanying consolidated financial statements have been presented to
give effect to the reorganization as if it had taken place as of the beginning
of the earliest period presented.
PRINCIPAL ACTIVITIES
ARAMEX provides express delivery and freight forwarding services from its
main stations (hubs) in Dubai, London, New York and Amman primarily to, from and
within destinations in the Middle East. ARAMEX's operations are controlled
through a regional office which was registered in Jordan on March 15, 1988 under
the name of ARAMEX International Limited (the "Regional Office") pursuant to the
foreign companies law No. (58) of 1985. The operations of the Regional Office
are facilitated by the hubs of the ARAMEX network.
F-14
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
2. SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF PRESENTATION
The consolidated financial statements of the Company have been prepared in
accordance with International Accounting Standards (IAS). For purposes of these
financial statements, there are no significant differences between the Company's
accounting principles utilized and the accounting principles generally accepted
in the United States.
B. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and all of its subsidiaries that are controlled directly and indirectly through
agreements that provide the Company with authority to govern the financial and
operating affairs of the subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Following is a listing of the subsidiaries, comprising the consolidated
financial statements together with the respective percentage and investment
amounts owned by ARAMEX International Limited:
<TABLE>
<CAPTION>
INVESTMENT OWNERSHIP
-------------------- -------------------------------
SUBSIDIARIES 1995 1994 1995 1994 1993
- -------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
% % %
Amman............................................. AMM 249 249 100 100 100
Damascus.......................................... DAM 6 6 60 60 60
Beirut............................................ BEY*** 0 0 50 50 50
Beirut CGO........................................ BEY CGO*** 1 1 50 50 50
Cairo............................................. CAI*** 8 8 49 49 49
Dubai............................................. DXB 245 245 100 100 100
Abu Dhabi......................................... AUH 75 75 100 100 100
Doha.............................................. DOH 20 20 100 100 100
Bahrain........................................... BAH 3 3 100 100 100
Jeddah............................................ JED*** 80 53 50 33 33
Nicosia........................................... NIC 0 0 100 100 49
Paris............................................. PAR 19 16 100 85 85
London............................................ LON 804 804 100 100 100
Washington, D.C................................... DCA 15 15 100 100 100
New York.......................................... JFK 1,000 1,000 100 100 100
Texas............................................. HOU* 0 30 0 99 49
Montreal.......................................... YUL*** 7 7 19.5 19.5 19.5
Kuwait............................................ KWI 0 0 100 100 50
New Jersey........................................ EWR** 5 5 51 51 51
Athens............................................ ATH** 192 49 100 51 --
</TABLE>
- ------------------------
* The Houston station was closed in 1995.
** Subsidiaries that are indirectly controlled.
F-15
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
*** Controlled through shareholder agreements.
C. USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those estimates.
D. CONCENTRATION OF RISK IN GEOGRAPHIC AREA
The Company derived approximately 71%, 69% and 72%, respectively, of 1995,
1994 and 1993 revenues from operations in the Middle East. The risk of doing
business in this region could adversely affect the Company, as the region has
been subject to many destabilizing political and economic factors over the
years.
E. REVENUE RECOGNITION
Revenues are recognized when shipments are completed. For door-to-door
shipments, revenues are recognized upon delivery of freight at the destination.
For other shipments, revenues are recognized upon delivery of freight to the air
carrier, at which time, the revenue process is completed.
Certain customers pay in advance, giving rise to deferred revenue.
F. TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN STATIONS
The Company's functional currency is the United States Dollar. The financial
statements of foreign subsidiaries where the local currency is the functional
currency (substantially all stations) are translated into U.S dollars using
exchange rates in effect at period end for assets and liabilities and average
exchange rates during each reporting period for results of operations.
Adjustments resulting from translation of financial statements are reflected as
a separate component of shareholders' equity.
Exchange gains and losses resulting from transactions of the Company and its
subsidiaries which are made in currencies different from their own are included
in income as they occur.
G. FIXED ASSETS
Fixed assets are recorded at cost and are depreciated over their estimated
useful lives using primarily the straight line method.
The estimated useful lives of these assets are:
<TABLE>
<S> <C>
Furniture and fixtures............................................. 7 years
Office equipment................................................... 7 years
Computers.......................................................... 5 years
Vehicles........................................................... 5 years
</TABLE>
F-16
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. INCOME TAXES
The Company provides income taxes in accordance with IAS 12. As an offshore
company incorporated in Bermuda, profits from operations of foreign subsidiaries
are not subject to Bermudan taxes. For certain operations in the Middle East,
the Company is exempt from income taxes. For other operations, deferred income
taxes have been provided, using the liability method under IAS 12, for the
difference between the book and tax bases of assets and liabilities.
Deferred income taxes have not been provided on the undistributed earnings
of subsidiaries operating outside of Bermuda, as such earnings are expected to
be indefinitely reinvested or, if distributed, are expected to be distributed
tax free.
I. EMPLOYEE TERMINATION INDEMNITIES
Certain of the Company's subsidiaries are required, by the labor law of each
related country, to provide indemnity payments upon termination of relationship
with their employees. The benefit accrues to employees on a pro-rata basis
during their employment period and is based on each employee's current salary.
Other liabilities in the accompanying consolidated financial statements reflects
the maximum amounts of the indemnities as of the balance sheet dates of $638 and
$507, respectively, at December 31, 1995 and 1994.
J. REVISIONS TO FINANCIAL STATEMENTS
The Company has restated its previously published financial statements to
recognize the effects of certain additional information that became available to
the Company subsequent to the date of the original statements. The adjustments,
which are principally related to intercompany accounts and deferred income
taxes, reduced net income and earnings per share for the years ended December
31, 1995, 1994 and 1993, as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Net Income......................................................... $ 431 $ 772 $ 1,709
--------- --------- ---------
--------- --------- ---------
Earnings per share................................................. $ 0.14 $ 0.25 $ 0.55
--------- --------- ---------
--------- --------- ---------
</TABLE>
3. RECEIVABLES
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Trade receivables............................................................ 9,050 8,598
Employee advances............................................................ 307 240
Other........................................................................ 525 460
--------- ---------
9,882 9,298
Less: Allowance for doubtful accounts........................................ (960) (860)
--------- ---------
8,922 8,438
--------- ---------
--------- ---------
</TABLE>
F-17
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
3. RECEIVABLES (CONTINUED)
All employee advances bear no interest and are due within one year.
Geographic concentrations of accounts receivables as of December 31, 1995
are the following:
<TABLE>
<S> <C>
Middle East........................................................... 65.2%
Europe................................................................ 25.2%
North America......................................................... 9.6%
</TABLE>
Management believes that all receivables, net of related allowances, will be
collected in due course.
Movements in the allowance for doubtful accounts are as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ---------
<S> <C> <C>
Balance--Beginning of the year......................................... 860 530
Provision.............................................................. 268 417
Write-offs............................................................. (168) (87)
---------- ---------
Balance--End of the year............................................... 960 860
---------- ---------
---------- ---------
</TABLE>
4. OTHER CURRENT ASSETS
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Prepaid expenses........................................................ 414 361
Refundable deposits..................................................... 164 133
Advances................................................................ 10 2
Tax withholdings........................................................ 31 28
Supplies and stationary................................................. 41 48
Other................................................................... 164 127
--------- ---------
824 699
--------- ---------
--------- ---------
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT
This item consists of the following:
<TABLE>
<CAPTION>
AT THE AT THE END
BEGINNING DIFFERENCES OF THE
OF THE YEAR PURCHASES DISPOSALS OF EXCHANGE YEAR
--------------- ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Furniture and fixtures...... 1,053 112 (6) 1 1,160
Office equipment............ 575 129 (20) 1 685
Computers................... 1,175 198 (12) -- 1,361
Vehicles.................... 1,327 318 (192) 4 1,457
--------------- ----------- ----------- ----- ----------
4,130 757 (230) 6 4,663
--------------- ----------- ----------- ----- ----------
--------------- ----------- ----------- ----- ----------
</TABLE>
F-18
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
5. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Accumulated depreciation:
<TABLE>
<CAPTION>
AT THE AT THE END
BEGINNING DEPRECIATION DIFFERENCES OF THE
OF THE YEAR EXPENSE DISPOSALS OF EXCHANGE YEAR
--------------- ------------ ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Furniture and fixtures.... 279 218 (5) -- 493
Office equipment.......... 178 103 (14) 1 268
Computers................. 403 250 (5) 1 648
Vehicles.................. 416 320 (138) 1 599
--------------- ------------ ----------- ----- ----------
1,276 891 (162) 3 2,008
--------------- ------------ ----------- ----- ----------
--------------- ------------ ----------- ----- ----------
Net book value............ 2,854 2,655
--------------- ----------
--------------- ----------
</TABLE>
6. PAYABLES
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Trade payables...................................................... 4,357 5,372
Due to employees*................................................... 104 103
Other............................................................... 229 281
---------- ----------
4,690 5,756
---------- ----------
---------- ----------
</TABLE>
- ------------------------
* Amounts represent reimbursements owed to employees for travel and
entertainment expenses.
7. OTHER CURRENT LIABILITIES
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Accrued expenses.................................................... 1,104 752
Deferred revenue.................................................... 546 488
Income taxes payable................................................ 407 216
Social securities payable........................................... 551 317
Sales taxes and other............................................... 189 22
Provision for closure of station.................................... -- 73
Other............................................................... 75 140
---------- ----------
2,872 2,008
---------- ----------
---------- ----------
</TABLE>
F-19
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
8. DUE TO BANKS
ARAMEX and its subsidiaries maintain lines of credit with various banks in
the aggregate of $580 and $460, respectively, at December 31, 1995 and 1994. At
December 31 1995 and 1994, the Company had $554 and $239 outstanding under these
lines of credit. The lines of credit are personally guaranteed by one of the
shareholders of the Company. The weighted average interest rates on the
Company's lines of credit were 11.3% and 10.3% at December 31, 1995 and 1994,
respectively. The remaining balances of $223 and $103 in Due to Banks as of
December 31, 1995 and 1994, respectively, represent bank overdrafts.
9. LONG TERM NOTES PAYABLE
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Various vehicle notes payable in monthly installments with original
average maturities of three years, at interest rates ranging from
6.75% to 13 %....................................................... 145 235
Less: current maturities.............................................. (115) (117)
---------- ----------
Long term portion..................................................... 30 118
---------- ----------
---------- ----------
</TABLE>
The aggregate amounts of annual principal maturities of long-term
obligations are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------
<S> <C>
1996............................................................................ 115
1997............................................................................ 20
1998............................................................................ 10
</TABLE>
Long term debt including current maturities are payable in various
currencies including the U.S. Dollar.
10. REVENUES
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Express............................................. 25,491 22,349 19,802
Freight forwarding.................................. 14,306 13,104 6,544
Domestic............................................ 2,007 1,291 833
Other*.............................................. 1,798 1,385 1,635
------------ ------------ ------------
43,602 38,129 28,814
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
- ------------------------
* Amounts represent revenues from other services which the Company renders
such as airline ticketing and travel. All related costs are reflected in
shipping costs.
F-20
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
11. SHIPPING COSTS
This item consists of the following:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Linehaul expenses--Express.......................... 5,608 4,597 4,800
Distribution expenses--Express...................... 4,347 3,429 3,406
Inbound costs--Express.............................. 949 1,083 --
Freight forwarding and related expenses............. 11,279 10,197 4,727
Other............................................... 862 686 743
------------ ------------ ------------
23,045 19,992 13,676
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
12. COMMITMENTS
The Company leases office space and office and transportation equipment
under various operating leases, some of which are renewable annually. Rent
expense related to these leases amounted to $892, $867 and $595 for the years
ended December 31, 1995, 1994 and 1993, respectively. The Company believes that
most operating leases should be renewable at comparable rates to the expiring
leases.
The approximate minimum annual rental commitments of the Company under the
existing lease agreements are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1995
-----------------
<S> <C>
1996....................................................................... 540
1997....................................................................... 230
1998....................................................................... 170
1999....................................................................... 153
2000....................................................................... 127
Thereafter................................................................. 11
</TABLE>
13. INCOME TAXES
The provision for income taxes on results of operations of foreign
subsidiaries is comprised of the following:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Current...................................................... 252 234 56
Deferred..................................................... 14 (7) --
--------- --------- ---------
266 227 56
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-21
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
13. INCOME TAXES (CONTINUED)
Deferred income taxes are provided in accordance with the liability method
under IAS 12, for the temporary differences between the financial reporting
basis and the tax basis of the Company's assets and liabilities. The composition
of deferred taxes reflected on the balance sheet is as follows:
<TABLE>
<CAPTION>
ASSETS (LIABILITIES)
1995 1994
---------- -----------
<S> <C> <C>
Current --
Provision for doubtful accounts...................................... 1 3
Termination indemnities.............................................. 14 1
Donation carryover................................................... 5 3
---------- -----------
20 7
---------- -----------
Non-current --
Depreciation......................................................... (7) (12)
Organizational costs................................................. (103) (51)
Net operation losses carryforward.................................... 433 246
Other................................................................ 6 --
Valuation allowance.................................................. (356) (184)
---------- -----------
(27) (1)
---------- -----------
(7) 6
---------- -----------
---------- -----------
</TABLE>
At December 31, 1995, the Company and its subsidiaries had net operating
losses carryforward of approximately $1,400 which expire between 1998 and 2009.
The Company's consolidated effective tax rate was 13.7%, 28.4% and 7.2% for
1995, 1994 and 1993, respectively. The principal difference between these
effective rates and the statutory tax rate applicable in the United States of
35% are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Computed tax at U.S. rate of 35%........................................................... 681 280 271
Effects of tax exemptions.................................................................. (228) (144) (90)
Effect of lower rates in certain countries................................................. (518) (224) (221)
Losses not benefited....................................................................... 253 251 93
Other...................................................................................... 78 64 3
--- --- ---
Provisions for income taxes................................................................ 266 227 56
--- --- ---
--- --- ---
</TABLE>
In certain countries the tax returns have not yet been reviewed by the tax
authorities. However, the Company is satisfied that adequate provisions have
been provided for potential tax contingencies.
At December 31, 1995, approximately $1,829 of retained earnings of
subsidiaries have not been distributed to the Company. Such earnings are
expected to be indefinitely reinvested or if distributed, are expected to be
distributed tax free.
F-22
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
14. LITIGATION
In September 1995, an action was brought by a station manager against the
Company, claiming $1,000 in damages for certain breaches of contracts and other
matters. The Company's legal counsel has filed a motion for summary judgment,
however the litigation is in its preliminary stages and the outcome cannot
presently be determined. Management believes that this action should not have a
material adverse effect on the financial position or results of operations of
the Company.
15. RELATED PARTY TRANSACTIONS
Due to shareholders represents various advances from shareholders. These
advances are interest free.
On January 4, 1995, the Company purchased the minority interest of one of
its Middle Eastern stations and immediately sold it to another third party for
$640. As part of the transaction, the new minority shareholder paid during 1995
$266 in cash, $160 is to be netted against any future dividend payments, and the
balance of $214 is to be paid during 1996. The current outstanding balance at
December 31, 1995 was $374. The station subsequent to year end has received the
$214.
Payments to minority interests in the accompanying statements of cash flows
represent dividends paid to minority shareholders in subsidiaries and, in 1995,
the cost of purchasing the Middle Eastern Stations discussed above.
The Company leases the premises currently occupied by the Company's London
operations from Mr. Ali Ghandour, the father of Mr. Fadi Ghandour (CEO), at an
annual rental of $76 (GBP 50). The lease is open-ended and is renewed annually.
The Company believes that the terms of the lease are at least as favorable to
the Company as those available from unaffiliated third parties.
During 1996, the Company leased the premises currently occupied by the
Company's corporate offices in Amman, Jordan, from ARAM, an investment company
controlled by the CEOs family at an annual rental of $70 (JD 50). The lease is
open-ended and is renewed annually. The Company believes that the terms of the
lease are at least as favorable to the Company as those available from
unaffiliated third parties.
Mr. Fadi Ghandour has personally guaranteed bank overdrafts in Jordan in the
aggregate amount of $180. To the extent any of the proceeds from the Company's
initial public offering is used to repay such indebtedness, it is anticipated
that following the offering, the personal guarantee of Mr. Fadi Ghandour will be
extinguished.
16. RESTRICTIONS ON UNAPPROPRIATED EARNINGS
The legal reserve of the Company represents earnings restricted from payment
of dividends in accordance with the local laws of the domiciles of certain
subsidiaries. The law dictates that a fixed percentage which is 10% of the net
income of the applicable subsidiary must be annually appropriated.
F-23
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
17. SUBSEQUENT EVENTS
Subsequent to December 31, 1995, the following events took place:
On October 21, 1996, ARAMEX International, Limited, a Hong Kong company
(ARAMEX Hong Kong), sold 195 shares of common stock (304,688 shares after the
Reorganization) to Airborne Freight Corporation (Airborne) for an aggregate
consideration of $2,000 (the Airborne stock purchase). In connection with such
purchase, the stockholders of ARAMEX Hong Kong entered into a Shareholders
Agreement (the Shareholders Agreement), as amended on December 11, 1996, which
provides, among other things, that in the event the Company transfer (as defined
in the Shareholders Agreement) any shares of common stock to certain listed
competitors of Airborne or any other company primarily engaged in the
transportation of air freight or air express shipments, Airborne has the right
to sell all of its shares of common stock to the Company on the same terms and
conditions as the sale to such other company. In the event that Messrs. Kingson
and Ghandour and/or Ms. Rula Ghandour transfer any shares of Common Stock to
certain listed competitors to Airborne or any other company primarily engaged in
the transportation of air freight or air express shipments, it shall be a
condition of such transfer that Airborne shall be offered the right to sell to
such competitor all of its shares of Common Stock on the same terms and
conditions as the sale by Messrs. Kingson and Ghandour and/or Ms. Rula Ghandour.
In addition, the Shareholders Agreement contains certain other provisions which
terminate upon consummation of an initial public offering, including: (i) a
right of first refusal in favor of the Company in the event Airborne transfers
(as defined in the Shareholders Agreement) its shares to a company or companies,
their subsidiaries, parents or known affiliates primarily engaged in the
transportation of air freight or air express shipments and (ii) a similar right
of first refusal in favor of Airborne in the event the Company, Mr. Kingson, Mr.
Ghandour or Ms. Ghandour transfer shares to certain listed competitors of
Airborne or any other company primarily engaged in the transportation of air
freight or air express shipments. In connection with the Airborne stock
purchase, Airborne was granted certain piggyback registration rights relating to
their shares of common stock. In addition, under the terms of the Airborne stock
purchase, Airborne is entitled to appoint one director to the Company's Board of
Directors for as long as Airborne continues to own at least half of the shares
it acquired in the Airborne stock purchase.
On December 13, 1996, the Company effected the Reorganization discussed in
Note 1. The officers and directors of the Company remained in office after the
Reorganization.
The Company plans adopt a stock option plan (the Plan). The Plan provides
for the grant of options to acquire up to 400,000 shares of common stock at an
exercise price equal to the fair value of the stock at the date of grant. No
options have been granted to date, however, the Company plans to grant
approximately 300,000 of such options prior to its planned initial public
offering.
In October 1996, the Company commenced planning for an initial public
offering of 1,000,000 shares of its common stock.
F-24
<PAGE>
ARAMEX INTERNATIONAL LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR SHARES AND PER SHARE DATA)
18. INDUSTRY SEGMENT AND GEOGRAPHIC AREA
The Company operates predominantly in a single industry as a courier and
cargo freight forwarder. The following is a summary of financial data by
geographic area:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
REVENUES(1)
Middle East...................................... 40,580 34,245 27,709
North America.................................... 6,097 7,379 5,799
Europe........................................... 10,148 7,719 5,055
Eliminations..................................... (13,223) (11,214) (9,749)
------------- ------------- -------------
Total revenues............................... 43,602 38,129 28,814
------------- ------------- -------------
------------- ------------- -------------
OPERATING PROFIT (LOSS)
Middle East...................................... 2,017 1,239 933
North America.................................... (51) (94) (45)
Europe........................................... (44) (117) 266
Eliminations..................................... (15) -- --
------------- ------------- -------------
Total operating profit....................... 1,907 1,028 1,154
------------- ------------- -------------
------------- ------------- -------------
IDENTIFIABLE ASSETS
Middle East...................................... 16,359 13,575
North America.................................... 1,345 1,801
Europe........................................... 4,321 4,132
------------- -------------
Total identifiable assets.................... 22,025 19,508
Eliminations..................................... (7,748) (6,395)
Investments in affiliates........................ 67 65
------------- -------------
Total assets................................. 14,344 13,178
------------- -------------
------------- -------------
</TABLE>
- ------------------------
(1) Revenues between stations that are wholly-owned subsidiaries are priced at
cost. Transactions with other affiliated stations are priced at cost plus
10%. All intercompany transactions have been eliminated in consolidation.
19. SUPPLEMENTAL FINANCIAL STATEMENT DISCLOSURES
A. DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS:
The carrying amounts of cash, current receivables, accounts payable,
payables, due to banks and long term notes payable approximate their fair market
values.
F-25
<PAGE>
ARAMEX (UK) INTERNATIONAL COURIERS LIMITED
REPORT OF THE AUDITORS
We have audited the accompanying balance sheet of Aramax (UK) International
Courier Ltd. as of 31 December 1993 and the related statements of income for the
year then ended. The company's directors are responsible for the preparation of
the financial statements. It is our responsibility to form an independent
opinion, based on our audit, on those financial statements and to report our
opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which are accepted as
substantially consistent with those in the United States. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the group's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of affairs of the company at 31 December 1993 and of its profit, total
recognised gains for the year then ended and have been properly prepared in
accordance with the Companies Act 1985.
<TABLE>
<S> <C>
/s/ MEHTA & TENGRA
---------------------------------------------
Mehta & Tengra
Chartered Accountants
Registered Auditors
4 Wellington Terrace
Bayswater Road
London W2 4LW
</TABLE>
Date: 10 December 1996
F-26
<PAGE>
ARAMEX (UK) INTERNATIONAL COURIER LIMITED
REPORT OF THE AUDITORS
We have audited the accompanying balance sheet of Aramax (UK) International
Courier Ltd. as of 31 December 1994 and the related statements of income for the
year then ended. The company's directors are responsible for the preparation of
the financial statements. It is our responsibility to form an independent
opinion, based on our audit, on those financial statements and to report our
opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which are accepted as
substantially consistent with those in the United States. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of affairs of the company at 31 December 1994 and of its profit, for the
year then ended and have been properly prepared in accordance with the Companies
Act 1985.
<TABLE>
<S> <C>
/s/ MEHTA & TENGRA
---------------------------------------------
Mehta & Tengra
Chartered Accountants
Registered Auditors
4 Wellington Terrace
Bayswater Road
London W2 4LW
</TABLE>
Date: 10 December 1996
F-27
<PAGE>
ARAMEX (UK) INTERNATIONAL COURIER LIMITED
REPORT OF THE AUDITORS
We have audited the accompanying balance sheet of Aramax (UK) International
Courier Ltd. as of 31 December 1995 and the related statements of income tax for
the year then ended. The company's directors are responsible for the preparation
of the financial statements. It is our responsibility to form an independent
opinion, based on our audit, on those financial statements and to report our
opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which are accepted as
substantially consistent with those in the United States. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of affairs of the company at 31 December 1995 and of its profit, for the
year then ended and have been properly prepared in accordance with the Companies
Act 1985.
<TABLE>
<S> <C>
/s/ MEHTA & TENGRA
---------------------------------------------
Mehta & Tengra
Chartered Accountants
Registered Auditors
4 Wellington Terrace
Bayswater Road
London W2 4LW
</TABLE>
Date: 10 December 1996
F-28
<PAGE>
AUDITORS' REPORT
TO: THE PARTNERS OF
ALAWSAT INTERNATIONAL
TRANSPORT COMPANY LIMITED
(A SAUDI LIMITED LIABILITY COMPANY)
JEDDAH-SAUDI ARABIA
We have audited the accompanying balance sheet of Alawsat International
Transport Company Limited (A Saudi Limited Liability Company) as of December 31,
1993 and the related statements of income and retained earnings for the period
from April 25, 1993 to December 31, 1993, including the related notes from No. 1
to No. 12 which form an integral part of these financial statements. These
financial statements are the responsibility of Alawsat International Transport
Company Limited's management and were prepared to comply with applicable
articles of regulations for companies. We have obtained all information and
explanations which we considered necessary for our audit.
We conducted our audit in accordance with the Saudi and other generally
accepted auditing standards. Those standards require that we plan and perform
the audit which includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles, as well as evaluating the overall financial
statements presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements taken as a whole:
-- Present fairly the financial position of Alawsat International
Transport Company Limited (A Saudi Limited Liability Company) as of
December 31, 1993 and the results of its operations for the period
then ended in conformity with generally accepted accounting
principles and the accounting policies relevant to the company's
activities mentioned in note (2) and,
-- Comply with requirements of the regulations for companies and Alawsat
International Transport Company Limited articles of association with
respect to the preparation and presentation of financial statements.
-- The company decided that the financial year will be according to the
explanation mentioned in note (1).
For Dr. Mohamed Al-Amri & Co.
/s/ Mohamed A. Al-Amri
Dr. Mohamed A. Al-Amri
Certified Public Accountant Date: 15.10.1414 (H)
Registration No. (60) 27.03.1994 (G)
F-29
<PAGE>
AUDITORS' REPORT
TO: THE PARTNERS OF
AL-AWSAT INTERNATIONAL
TRANSPORT COMPANY LIMITED
(A LIMITED LIABILITY COMPANY)
We have audited the accompanying consolidated balance sheet of Al-Awsat
International Transport Company Limited as of December 31, 1994 and the
consolidated statements of income and retained earnings and cash flows for the
year then ended, including the related notes from No. 1 to No. 11. These
consoldiated financial statements are the responsibility of the Company's
management and were prepared to comply with applicable articles of regulations
for companies. We have obtained all information and explanations which we
considered necessary for our audit.
We conducted our audit in accordance with generally accepted auditing
standards. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used, as well as evaluating the overall
financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements taken as a whole:
-- Present fairly the consolidated financial position of Al-Awsat
International Transport Company Limited as of December 31, 1994 and
the results of its operations and cash flows for the year then ended
in conformity with generally accepted accounting principles and,
-- Comply with requirements of the Regulations for Companies and the
Company's Articles of Association with respect to the preparation and
presentation of consolidated financial statements.
* These financial statements include the accounts of the head office in
Jeddah and Riyadh branch.
For Dr. Mohamed Al-Amri & Co.
/s/ Mohamed A. Al-Amri
Dr. Mohamed A. Al-Amri
Certified Public Accountant Date: Shawal 28, 1415 (H)
Registration No. (60) March 29, 1995 (G)
F-30
<PAGE>
AUDITORS' REPORT
TO: THE PARTNERS OF
AL-AWSAT INTERNATIONAL
TRANSPORT COMPANY LIMITED
(A LIMITED LIABILITY COMPANY)
We have audited the accompanying consolidated balance sheet of Al-Awsat
International Transport Company Limited as of December 31, 1995 and the
consolidated statements of income (loss) and retained earnings (deficit) and
cash flows for the year then ended including the related notes from No. 1 to No.
10. These consolidated financial statements are the responsibility of the
company's management and were prepared to comply with applicable articles of
regulations for companies. We have obtained all information and explanations
which we considered necessary for our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements taken as a whole:
-- Present fairly the financial position of Al-Awsat International
Transport Company Limited as of December 31, 1995 and the results of
its operations and cash flows for the year then ended in conformity
with generally accepted accounting principles; and,
-- Comply with requirements of the Regulations for Companies and the
Company's Articles of Association with respect to the preparation and
presentation of consolidated financial statements.
* The previous partners sold their total shares to new partners as Note
No. 8 indicates.
For Dr. Mohamed Al-Amri & Co.
/s/ Mohamed A. Al-Amri
Dr. Mohamed A. Al-Amri
Certified Public Accountant Shawal 07, 1416 (H)
Registration No. (60) February 25, 1996 (G)
F-31
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Aramex International Courier of Virginia, Inc.
Falls Church, Virginia
We have audited the balance sheets of Aramex International Courier of
Virginia, Inc. as of December 31, 1995 and 1994, and the related statements of
income and retained earnings, and cash flows for the years then ended (none of
which are shown separately herein). These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Aramex International Courier
of Virginia, Inc. as of December 31, 1995 and 1994, and the results of its
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.
EDWARD ISAACS & COMPANY LLP
New York, New York
February 23, 1996
F-32
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Aramex International Courier, Ltd.
New York, New York
We have audited the consolidated balance sheets of Aramex International
Courier, Ltd. and subsidiary as of December 31, 1995, 1994 and 1993, and the
related consolidated statements of operations and accumulated deficit, and cash
flows for each of the three years in the period ended December 31, 1995 (none of
which are shown separately herein). These consolidated financial statements are
the responsibility of the Companies' management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Aramex
International Courier, Ltd. and subsidiary as of December 31, 1995, 1994 and
1993, and the results of their operations and cash flows for the each of the
years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
EDWARD ISAACS & COMPANY LLP
New York, New York
March 30, 1996
F-33
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Aramex International Courier--Texas, Ltd.
Houston, Texas
We have audited the balance sheet of Aramex International Courier--Texas,
Ltd. (a partnership) as of December 31, 1994, and the related statements of
operations and partners' equity deficiency and cash flows for the year then
ended (none of which are shown separately herein). These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Aramex International
Courier--Texas, Ltd. as of December 31, 1994, and the results of its operations
and cash flows for the year then ended in conformity with generally accepted
accounting principles.
EDWARD ISAACS & COMPANY LLP
New York, New York
March 14, 1996
F-34
<PAGE>
INDEPENDENT AUDITORS' REPORT
March 9, 1994
Board of Directors
Aramex International Courier of Virginia
Falls Church, Virginia
We have audited the accompanying balance sheet of Aramex International
Courier of Virginia of December 31, 1993, and the related statements income and
accumulated deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Aramex International Courier
of Virginia as of December 31, 1993, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
BISH & HAFFEY
F-35
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SHAREHOLDERS OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO
THE DATE HEREOF.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
The Company's Organization................................................ 10
Risk Factors.............................................................. 12
Use of Proceeds........................................................... 18
Dilution.................................................................. 19
Dividend Policy........................................................... 19
Capitalization............................................................ 20
Selected Consolidated Financial Data...................................... 21
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 22
Business.................................................................. 27
Management................................................................ 38
Principal and Selling Shareholders........................................ 43
Certain Transactions...................................................... 44
Description of Capital Stock.............................................. 46
Stock Eligible for Future Sale............................................ 49
Certain Foreign Issuer Considerations..................................... 50
Taxation.................................................................. 51
Underwriting.............................................................. 57
Legal Matters............................................................. 59
Experts................................................................... 59
Additional Information.................................................... 59
Index to Financial Statements............................................. F-1
</TABLE>
------------------------
UNTIL JANUARY , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
1,000,000 SHARES
[LOGO]
[LOGO]
ARAMEX
INTERNATIONAL
LIMITED
COMMON STOCK
---------------------
PROSPECTUS
---------------------
COMMONWEALTH ASSOCIATES
DECEMBER , 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses expected to be incurred by the
Company (on behalf of itself and the Selling Shareholders) in connection with
this offering.
<TABLE>
<CAPTION>
NATURE OF FEES AND EXPENSES AMOUNT(1)
- ------------------------------------------------------------------------------- -------------
<S> <C>
SEC Registration Fee........................................................... $ 2,962.12
NASD Filing Fee................................................................ 1,477.50
Nasdaq National Market Listing Fee............................................. 30,199.22
Accounting Fees and Expenses................................................... 110,000.00
Legal Fees and Expenses........................................................ 200,000.00
Blue Sky Qualification Fees and Expenses....................................... 15,000.00
Transfer Agent and Registrar Fees.............................................. 5,000.00
Printing Expenses.............................................................. 75,000.00
Miscellaneous.................................................................. 10,361.16
-------------
Total.................................................................... $ 450,000.00
-------------
-------------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(i) Section 98 of The Companies Act 1981 of Bermuda renders void any
provisions, whether contained in a company's bye-laws or in any contract between
the company and any officer thereof, exempting such officer from, or
indemnifying such officer against, any liability which by virtue of any rule of
law would otherwise attach to him in respect of any fraud or dishonesty of which
he may be guilty in relation of the company; provided, that a, company may
indemnify such officer against any liability incurred by him in defending any
proceedings, criminal or civil, in which judgment is given in such officer's
favor or in which he is acquitted or when relief is granted to such officer by
the Supreme Court of Bermuda as provided for by The Companies Act 1981.
(ii) Section 98A of The Companies Act 1981 of Bermuda provides that a
company may purchase and maintain insurance for the benefit of any officer of
the Company against any liability incurred by him in his capacity as an officer
of the company with respect to a violation of his duty to exercise the care,
diligence and skill that a reasonably prudent person would exercise in
comparable circumstances or indemnifying such officer in respect of any loss
arising or liability attaching to him by virtue of any rule of law in respect of
any negligence, default, breach of duty or breach of trust of which the officer
may be guilty in relation to the company or any subsidiary and that no provision
of the Companies Act 1981 shall render any such insurance policy void or
voidable. The registrant intends to obtain such an insurance policy prior to the
closing of the offering pursuant to this registration statement.
(iii) The Bye-laws of the registrant provide that the directors, secretary
and other officers for the time being of the Company and the liquidatory or
trustees (if any) for the time being acting in relation to any of the affairs of
the Company and every one of them, and their heirs, executors and
administrators, shall be indemnified and secured harmless out of the assets of
the Company from and against all actions, costs, charges, losses, damages and
expenses which they or any of them, their heirs, executors or administors, shall
or may incur or sustain by or by reason of any act done, concurred in or omitted
in or about the execution of their duty, or supposed duty, or in their
respective offices or trusts, and none of them shall be answerable for the acts,
receipts, neglects or defaults of the others of them or for joining in any
receipts for the sake of conformity, or for any bankers or other persons with
whom any moneys or effects belonging to the Company shall or may be lodged or
deposited for safe custody, or for the insufficiency or deficiency of
II-1
<PAGE>
any security upon which any moneys or or belonging to the Company shall be
placed out on or invested, or for any other loss, misfortune or damage which may
happen in the execution of their respective offices or trusts, or in relation
thereto, PROVIDED THAT this indemnity shall not extend to any matter in respect
of any fraud or dishonesty which may attach to any of said persons.
The Bye-laws also provide that the registrant may purchase insurance on
behalf of any person, including officers and directors, serving at the request
of the registrant against any liability asserted against such person.
The registrant intends to enter into agreements with its directors and
executive officers which provide for indemnification of such persons against
judgments, fines, penalties, charges and expenses suffered or incurred by them
in their capacity as representatives of the registrant. The agreements will
provide that, in certain circumstances, the registrant may reimburse or advance
funds to any person m respect of expenses incurred in advance of the final
disposition of any suit, claim or proceeding.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) (i) On October 22, 1996, Aramex International, Limited, a Hong Kong
company ("Aramex Hong Kong"), and the Company's predecessor sold 195 shares (or
304,688 shares giving effect to the Reorganization) of common stock to Airborne
Freight Corporation for an aggregate consideration of $2 million. The shares
were offered in reliance on Section 4(2) of the Securities Act of 1933.
(ii) On December 13, 1996, Aramex International Limited subscribed for 100
shares of Aramex Hong Kong and each share of Aramex Hong Kong outstanding prior
to such subscription was converted by a special resolution of the shareholders
of Aramex Hong Kong into non-voting deferred shares.
(iii) Prior to the effective date of this Offering, Messrs. William Kingson,
Fadi Ghandour, Ms. Rula Ghandour and Airborne Freight Corporation subscribed for
an aggregate of 3,125,688 shares of Aramex Bermuda.
(b) There were no underwriters, brokers or finders employed in connection
with any of the transactions set forth in Item 15(a).
II-2
<PAGE>
INDEX TO EXHIBITS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The exhibits listed in the following table have been filed as part of
this registration statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Memorandum of Association of Aramex International Limited
3.2 Bye-laws of Aramex International Limited
4.1 Specimen of Common Stock Certificate
4.2 Form of Underwriter's Warrant Agreement including form of Redeemable Warrant Certificate
5.1 Opinion of Conyers, Dill & Pearman
8.1 Opinion of Conyers, Dill & Pearman relating to tax matters
8.2 Opinion of Orrick, Herrington & Sutcliffe LLP relating to tax matters
10.1 Stock Option Plan
10.2 Form of Agreement granting a license to use the "Aramex" name**
10.3 Form of Management Agreement**
10.4 Form of Agreement with each of the Company's Middle East (MED) Mail Order Catalog Companies**
10.5 Employment Agreement dated as of November 4, 1996 between Aramex International Limited and William
Kingson
10.6 Employment Agreement dated as of November 4, 1996 between Aramex International Limited and Fadi
Ghandour**
10.7 Form of Indemnification Agreement, between Aramex International Limited and members of the Board of
Directors
10.8 Stock Purchase Agreement dated as of October 22, 1996 between Aramex International Limited and Airborne
Freight Corporation**
10.9 Shareholders Agreement dated October 22, 1996 between William Kingson, Fadi Ghandour, Rula Ghandour and
Airborne Freight Corporation**
10.10 Amendment No. 1 to Shareholders Agreement dated as of December 11, 1996 between William Kingson, Fadi
Ghandour, Rula Ghandour and Airborne Freight Corporation
21.1 List of subsidiaries of Aramex International Limited**
23.1 Consent of Conyers, Dill & Pearman (included in Exhibit 5.1)
23.2 Consent of Allen & Overy**
23.3 Consent of Arthur Andersen
23.4 Consent of Khleif & Co.
23.5 Consent of Khleif & Co.
23.6 Consent of Khleif & Co.
23.7 Consent of Khleif & Co.
23.8 Consent of Khleif & Co.
23.9 Consent of Khleif & Co.
23.10 Consent of Khleif & Co.
23.11 Consent of Dr. Mohamed Al-Amri
23.12 Consent of Mehta & Tengra
23.13 Consent of Edward Isaacs & Co. LLP
23.14 Consent of Irene P. TSE, J.D.***
23.15 Consent of Frank E. Stanley & Co.*
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
23.16 Consent of Bish & Haffey PC
23.17 Consent of Talal Abu-Ghazaleh & Co.
23.18 Consent of Talal Abu-Ghazaleh & Co.
23.19 Consent of Hachem Albert
23.20 Consent of KPMG Peat Marwick
23.21 Consent of KPMG Peat Marwick
23.22 Consent of KPMG Peat Marwick
23.23 Consent of Orrick, Herrington & Sutcliffe LLP
23.24 Supplemental Letter from Mohamed Al-Amri
23.25 Consent of Ali Sharif Zu'bi & Sharif Ali Zu'bi
24.1 Powers of attorney executed by certain officers and directors of the Registrant (included on signature
page)
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
*** Intentionally omitted.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
II-4
<PAGE>
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form F-1, and has duly caused this Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, on December 13,
1996.
ARAMEX INTERNATIONAL LIMITED
By: /s/ WILLIAM KINGSON
-----------------------------------------
William Kingson
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 2 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE OF CAPACITIES DATE
- ------------------------------ --------------------------- -------------------
/s/ WILLIAM KINGSON Chairman of the Board
- ------------------------------ (Principal Executive December 13, 1996
William Kingson Officer)
/s/ FADI GHANDOUR* President, Deputy Chairman
- ------------------------------ and December 13, 1996
Fadi Ghandour Chief Executive Officer
/s/ RULA GHANDOUR* Director
- ------------------------------ December 13, 1996
Rula Ghandour
Accounting and Finance
/s/ EMAD SHISTAWI* Manager
- ------------------------------ (Principal Accounting December 13, 1996
Emad Shistawi Officer)
*By:/s/ WILLIAM KINGSON
as attorney-in-fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Memorandum of Association of Aramex International Limited
3.2 Bye-laws of Aramex International Limited
4.1 Specimen of Common Stock Certificate
4.2 Form of Underwriter's Warrant Agreement including form of Redeemable Warrant Certificate
5.1 Opinion of Conyers, Dill & Pearman
8.1 Opinion of Conyers, Dill & Pearman relating to tax matters
8.2 Opinion of Orrick, Herrington & Sutcliffe LLP relating to tax matters
10.1 Stock Option Plan
10.2 Form of Agreement granting a license to use the "Aramex" name**
10.3 Form of Management Agreement**
10.4 Form of Agreement with each of the Company's Middle East (MED) Mail Order Catalog Companies**
10.5 Employment Agreement dated as of November 4, 1996 between Aramex International Limited and William
Kingson
10.6 Employment Agreement dated as of November 4, 1996 between Aramex International Limited and Fadi
Ghandour**
10.7 Form of Indemnification Agreement, between Aramex International Limited and members of the Board of
Directors
10.8 Stock Purchase Agreement dated as of October 22, 1996 between Aramex International Limited and Airborne
Freight Corporation**
10.9 Shareholders Agreement dated October 22, 1996 between William Kingson, Fadi Ghandour, Rula Ghandour and
Airborne Freight Corporation**
10.10 Amendment No. 1 to Shareholders Agreement dated as of December 11, 1996 between William Kingson, Fadi
Ghandour, Rula Ghandour and Airborne Freight Corporation
21.1 List of subsidiaries of Aramex International Limited**
23.1 Consent of Conyers, Dill & Pearman (included in Exhibit 5.1)
23.2 Consent of Allen & Overy**
23.3 Consent of Arthur Andersen
23.4 Consent of Khleif & Co.
23.5 Consent of Khleif & Co.
23.6 Consent of Khleif & Co.
23.7 Consent of Khleif & Co.
23.8 Consent of Khleif & Co.
23.9 Consent of Khleif & Co.
23.10 Consent of Khleif & Co.
23.11 Consent of Dr. Mohamed Al-Amri
23.12 Consent of Mehta & Tengra
23.13 Consent of Edward Isaacs & Co. LLP
23.14 Consent of Irene P. TSE, J.D.***
23.15 Consent of Frank E. Stanley & Co.*
23.16 Consent of Bish & Haffey PC
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
23.17 Consent of Talal Abu-Ghazaleh & Co.
23.18 Consent of Talal Abu-Ghazaleh & Co.
23.19 Consent of Hachem Albert
23.20 Consent of KPMG Peat Marwick
23.21 Consent of KPMG Peat Marwick
23.22 Consent of KPMG Peat Marwick
23.23 Consent of Orrick, Herrington & Sutcliffe LLP
23.24 Supplemental Letter from Mohamed Al-Amri
23.25 Consent of Ali Sharif Zu'bi & Sharif Ali Zu'bi
24.1 Powers of attorney executed by certain officers and directors of the Registrant (included on signature
page)
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
*** Intentionally omitted.
<PAGE>
EXHIBIT 1.1
ARAMEX INTERNATIONAL LIMITED
1,000,000 shares of Common Stock, US $0.01 par value
UNDERWRITING AGREEMENT
Commonwealth Associates, New York, New York
as Representative of the Underwriters
named on Schedule A hereto December ___, 1996
733 Third Avenue
New York, New York 10017
Ladies and Gentlemen:
Aramex International Limited, a Bermuda corporation (the "Company"),
proposes to issue and sell to the underwriters listed on Schedule A hereto (the
"Underwriters") for whom Commonwealth Associates is acting as representative
(the "Representative") an aggregate of one million (1,000,000) shares of its
common stock, par value US $0.01 per share (the "Offered Shares"), which Offered
Shares are presently authorized but unissued shares of the Company's common
stock, par value US $0.01 per share (individually a "Common Share" and
collectively the "Common Shares"). In addition, the Underwriters, in order to
cover over-allotments in the sale of the Offered Shares, may purchase from
William S. Kingson, Fadi Ghandour and Rula Ghandour (the "Selling
Shareholders"), to the extent indicated on Schedule B hereto, up to an aggregate
of one hundred fifty thousand (150,000) Common Shares (the "Optional Shares";
the Offered Shares and the Optional Shares are hereinafter sometimes
collectively referred to as the "Shares").
The Company also proposes to issue and sell to the Representative, for
its own account and/or the accounts of its designees, warrants to purchase an
aggregate of one hundred thousand (100,000) Common Shares at an exercise price
of $_______ [120% of IPO price] per share (the "Representative's Warrants"),
which sale will be consummated in accordance with the terms and conditions of
the form of Representative's Warrant Agreement filed as an exhibit to the
Registration Statement (as defined below)
Prior to the date hereof, the Company consummated the Reorganization
(as defined in the Prospectus hereinafter referred to) pursuant to which all
assets and the business of Aramex International Limited, a Hong Kong company
(the "Predecessor"), were transferred to and acquired by the Company. Unless
the context otherwise requires, references herein to the "Company" shall refer
to the Predecessor.
<PAGE>
The Company and the Selling Shareholders hereby confirm their
respective agreements with each of the Underwriters as follows:
1. PURCHASE AND SALE OF OFFERED SHARES. On the basis of the
representations and warranties herein contained, but subject to the conditions
set forth in Section 7 hereof and the other terms and conditions set forth
herein, the Company hereby agrees to sell the Offered Shares to the
Underwriters, severally, and each Underwriter agrees severally and not jointly,
to purchase from the Company, at a purchase price of $______ per share, the
number of Offered Shares set forth opposite the name of such Underwriter in
Schedule A attached hereto, plus any additional Offered Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 11 hereof. The Underwriters plan to offer the Offered Shares to the
public at a public offering price of $_____ per share.
2. PAYMENT AND DELIVERY.
(a) Payment for the Offered Shares will be made to the Company by
certified or official bank check or checks payable to its order in New York
Clearing House funds, at the offices of the Representative, 733 Third Avenue,
New York, New York 10017, against delivery of the Offered Shares to the
Underwriters. Such payment and delivery will be made at 10:00 a.m., New York
City time, on December ___, 1996 (the date and time of such payment and
delivery being herein called the "Closing Date"). The certificates representing
the Offered Shares to be delivered will in such denominations and registered in
such names as the Underwriters may request not less than two full business days
prior to the Closing Date, and will be made available to the Underwriters for
inspection, checking and packaging at the office of _______________, the
Company's transfer agent, at __________, not less than one full business day
prior to the Closing Date.
(b) On the Closing Date, the Company will sell the Representative's
Warrants to the Representative or to its designees. The Representative's
Warrants will be in the form of, and in accordance with, the provisions of the
Representative's Warrant Agreement filed as an exhibit to the Registration
Statement. The aggregate purchase price for the Representative's Warrants is
$100. The Representative's Warrants will be restricted from sale, transfer,
assignment or hypothecation for a period of one year from the date hereof,
except to any successor, officer, director, employee or partner of the
Representative, or to officers, directors, employees or partners of any such
successor or partner. Payment for the Representative's Warrants will be made to
the Company by check or checks payable to its order on the Closing Date against
delivery of the certificates representing the Representative's Warrants. The
certificates representing the Representative's Warrants will be in such
denominations and such names as the Representative may request prior to the
Closing Date.
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<PAGE>
3. OPTION TO PURCHASE OPTIONAL SHARES
(a) For the purposes of covering any over-allotments in connection
with the distribution and sale of the Offered Shares as contemplated by the
Prospectus (as defined below), the Underwriters, severally and not jointly, are
hereby granted an option to purchase all or any part of the Optional Shares from
the Selling Shareholders. Any election to purchase Optional Shares from the
Selling Shareholders shall be made in proportion to the maximum number of
Optional Shares to be sold by each Selling Shareholder as set forth in Schedule
B hereto. The purchase price to be paid for the Optional Shares will be the
same price per Optional Share as the price per Offered Share set forth in
Section 1 hereof. The option granted hereby may be exercised by the
Underwriters as to all or any part of the Optional Shares at any time and from
time to time within 45 days after the Effective Date. The Underwriters will not
be under any obligation to purchase any Optional Shares prior to the exercise of
such option.
(b) The option granted hereby may be exercised by the Underwriters by
giving oral notice to the Selling Shareholders, which must be confirmed by a
letter, telefacsimile, telex or telegraph setting forth the number of Optional
Shares to be purchased, the date and time for delivery of and payment for the
Optional Shares and stating that the Optional Shares referred to therein are to
be used for the purpose of covering over-allotments in connection with the
distribution and sale of the Offered Shares. If such notice is given prior to
the Closing Date, the date set forth therein for such delivery and payment will
not be earlier than the Closing Date. If such notice is given on or after the
Closing Date, the date set forth therein for such delivery and payment will not
be earlier than three full business days thereafter. In either event, the date
so set forth will not be more than 15 full business days after the date of such
notice. The date and time set forth in such notice is herein called the "Option
Closing Date." Upon exercise of such option, the Selling Shareholders will
become obligated to convey to the Underwriters, and, subject to the terms and
conditions set forth in Section 3(d) hereof, the Underwriters, acting severally
and not jointly, will become obligated to purchase, that proportion of the total
number of Optional Shares specified in such notice which the number of Offered
Shares set forth in Schedule A hereto opposite the name of such Underwriter
bears to the total number of Offered Shares, subject in each case to such
adjustment as the Representative in its discretion shall make to eliminate any
sales or purchases of fractional shares. In the event that one or more Selling
Shareholders fails to deliver the number of Optional Shares to be purchased on
the date indicated in such notice, or if for any reason the Underwriters would
not be obligated to purchase such Optional Shares, the Underwriters shall have
the right to purchase from the Company, in lieu of any such Optional Shares, and
on the terms and conditions set forth herein, such number of additional Shares
equal to the Optional Shares not so delivered. Such additional Shares shall be
delivered together with the Optional Shares or as soon as practicable thereafter
but in no event later than one business day after the date specified in the
notice referred to above.
(c) Payment for the Optional Shares will be made to each Selling
Shareholder by certified or official bank check or checks payable to such
Selling Shareholder's order in New York Clearing House funds, at the office of
the Representative, against delivery of the Optional
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<PAGE>
Shares to the Underwriters. The certificates representing the Optional Shares
to be delivered will be in such denomination and registered in such names as the
Underwriters request not less than two full business days prior to the Option
Closing Date, and will be made available to the Underwriters for inspection,
checking and packaging at the aforesaid office of the Company's transfer agent
not less than one full business day prior to the Option Closing Date.
(d) The obligation of the Underwriters to purchase and pay for any of
the Optional Shares is subject to the conditions set forth in Section 7 hereof
and the other terms and conditions set forth herein.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Underwriters that:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of Bermuda, with full power and authority,
corporate and other, to own or lease and operate its properties and to conduct
its business as described in the Prospectus and to execute, deliver and perform
this Agreement and the Representative's Warrant Agreement and to consummate the
transactions contemplated hereby and thereby. The Reorganization has been
consummated as described in the Prospectus. The Company is duly qualified to do
business as a foreign corporation and is in good standing in all jurisdictions
wherein such qualification is necessary and failure to so qualify could have a
material adverse effect on the financial condition, results of operations,
business or properties of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Effect"). Schedule C hereto lists all subsidiaries of the
Company, including, without limitation, all entities included in the
consolidated financial statements included in the Prospectus, (the
"Subsidiaries"), their jurisdiction of incorporation and the ownership interest
of the Company therein. Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority, corporate and other, to own or
lease and operate its property and to conduct its business as described in the
Prospectus, and each is duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions wherein such qualification is
necessary and failing to so qualify could have a Material Adverse Effect. All
the issued and outstanding shares of capital stock of the Subsidiaries have been
validly authorized and issued and are fully paid and non-assessable, and, to the
extent indicated on Schedule C, are owned by the Company, directly or through
Subsidiaries, free and clear of any lien, security interest or pledge. There
are no options to purchase, warrants or other rights to subscribe for, or any
securities or obligations convertible into, exercisable or exchangeable for, or
any contracts or commitments to issue or sell shares of capital stock of any
Subsidiary or any such warrants, convertible, exercisable or exchangeable
securities or obligations.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company, and the
Representative's Warrant Agreement, when executed and delivered by the Company
on the Closing Date, will be
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<PAGE>
the valid and binding obligation of the Company, each enforceable against the
Company in accordance with their respective terms, except that enforceability of
the indemnification provision set forth in Section 8 hereof and the contribution
provision set forth in Section 9 hereof may be limited by the United States
federal and state security laws or the public policy underlying such laws. The
execution, delivery and performance of this Agreement and the Representative's
Warrant Agreement by the Company, the consummation by the Company of the
transactions herein and therein contemplated, the compliance by the Company with
the terms of this Agreement and the Representative's Warrant Agreement and the
consummation of the Reorganization have been duly authorized by all necessary
corporate action and do not and will not, with or without the giving of notice
or the lapse of time, or both, (i) result in any violation of the Company's
Memorandum of Association or its Bye-Laws; (ii) result in a breach of or
conflict with any of the terms or provisions of, or constitute a default under,
or result in the modification or termination of, or result in the creation or
imposition of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or a Subsidiary pursuant to any indenture,
mortgage, note, contract, commitment or other agreement or instrument to which
the Company or a Subsidiary is a party or by which the Company or a Subsidiary
or any of their properties or assets is or may be bound or affected; (iii)
violate any existing applicable law rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or a Subsidiary or any of their properties or business; or (iv)
have any effect on any permit, certification, registration, approval, consent,
license or franchise necessary for the Company or a Subsidiary to own or lease
and operate its properties and to conduct its business or the ability of the
Company or such Subsidiary to make use thereof.
(c) No authorization, approval, consent, order, registration, license
or permit of any court or governmental agency or body, other than under the
Securities Act of 1933, as amended (the "Act"), the rules and regulations (the
"Regulations") promulgated by the Securities and Exchange Commission (the
"Commission") and applicable state securities or Blue Sky laws, is required for
the valid authorization, issuance, sale and delivery of the Shares to the
Underwriters, and the consummation by the Company of the transactions
contemplated by this Agreement and the Representative's Warrant Agreement. All
authorizations, approvals, consents, orders, registrations, licenses or permits
of any court or governmental agency or body necessary for the consummation of
the Reorganization have been obtained or effected and are in full force and
effect.
(d) The Company has prepared in conformity with the requirements of
the Act and the Regulations and filed with the Commission a registration
statement (File No. 333-15639) on Form F-1 and has filed one or more amendments
thereto, covering the registration of the Shares under the Act. Such
registration statement and any post-effective amendment thereto, each in the
form heretofore delivered to the Underwriters, have been declared effective by
the Commission in such form; no other document with respect to such registration
statement has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of such registration statement has been issued and
no proceeding for that purpose has been initiated
- 5 -
<PAGE>
or threatened by the Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant to Rule 424(a) of
the rules and regulations of the Commission under the Securities Act of 1933, as
amended (the "Act"), being hereinafter called a "Preliminary Prospectus"; the
various parts of such registration statement, including all exhibits thereto and
including the information contained in the form of final prospectus filed with
the Commission pursuant to Rule 424(b) under the Act in accordance with Section
6(c) hereof and deemed by virtue of Rule 430A under the Act to be part of the
registration statement at the time it was declared effective, each as amended at
the time such part of the registration statement at the time it was declared
effective, each as amended at the time such part of the registration statement
became effective, being hereinafter called the "Registration Statement"; the
effective date of the Registration Statement being hereinafter called the
"Effective Date"; and such final prospectus, in the form first filed pursuant to
Rule 424(b) under the Act, being hereinafter called the "Prospectus").
(e) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any Preliminary Prospectus
or has instituted or, to the best of the Company's knowledge, threatened to
institute any proceedings with respect to such an order.
(f) The Registration Statement when it became effective, the
Prospectus as of its date, and both documents as of the Closing Date or the
Option Closing Date referred to below, contained or will contain all statements
which are required to be stated therein in accordance with the Act and the
Regulations, and neither the Registration Statement nor the Prospectus on such
dates, contained or will contain any untrue statement of a material fact or, in
the case of the Prospectus, omitted or will omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or in the
case of the Registration Statement, omitted or will omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty does
not apply to statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company in connection with the
Registration Statement or Prospectus or any amendment or supplement thereto by
any Underwriter expressly for use therein.
(g) The Company had at the date or dates indicated in the Prospectus
a duly authorized and outstanding capitalization as set forth in the Prospectus.
Based on the assumptions stated in the Prospectus, the Company will have on the
Closing Date, the adjusted capitalization set forth therein.
(h) The descriptions in the Prospectus of contracts and other
documents are accurate and present fairly the information required to be
disclosed, and there are not contracts or other documents required to be
described in the Prospectus or to be filed as exhibits to the Registration
Statement under the Act or the Regulations which have not been so described or
filed as required.
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<PAGE>
(i) Arthur Andersen, Khleif & Co., Mehta & Tengra, Dr. Mohamed
Al-Amri & Co., and Edward Isaacs & Company LLP, whose reports respecting certain
of the Company's financial statements has been filed as part of the Registration
Statement and included in the Prospectus, are each independent public
accountants with respect to the Company within the meaning of the Act and
Regulations. The financial statements and schedules and the notes thereto filed
as part of the Registration Statement and included in the Prospectus comply with
the requirements applicable to a registration statement on Form F-1, and are
complete, correct and present fairly the consolidated financial position of the
Company and the Subsidiaries as of the dates thereof, and the consolidated
results of operations and changes in financial position of the Company and the
Subsidiaries for the periods indicated therein, all in conformity with
international accounting standards, which for the purposes of such financial
statements are substantially consistent United States generally accepted
accounting principles, applied on a consistent basis throughout the periods
involved except as otherwise stated in such financial statements. The selected
financial data set forth in the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with that of the audited
and unaudited financial statements included in the Prospectus.
(j) The Company and each Subsidiary has filed with the appropriate
governmental authorities all tax returns which are required to be filed or has
duly obtained extensions of time for the filing thereof and has paid all taxes
shown on such returns and all assessments received by it to the extent that the
same have become due; and the provisions for income taxes payable, it any, shown
on the financial statements filed as part of the Registration Statement and
included in the Prospectus are sufficient for all accrued and unpaid taxes,
whether or not disputed, and for all periods to and including the dates of such
financial statements. Neither the Company nor any Subsidiary has executed or
filed with any taxing authority, any agreement extending the period for
assessment or collection of any income taxes and is not a party to any pending
action or proceeding by any foreign or domestic governmental agency for
assessment or collection of taxes; and no claims for assessment or collection of
taxes have been asserted against the Company or any Subsidiary.
(k) The outstanding Common Shares, including without limitation, the
Optional Shares, have been duly authorized, validly issued and are fully paid
and nonassessable. None of the outstanding Common Shares or options or warrants
to purchase Common Shares has been issued (including without limitation, in
connection with the Reorganization) in violation of the preemptive rights of any
shareholder of the Company. None of the holders of the outstanding Common
Shares is subject to personal liability solely by reason of being such a holder.
All offers and sales by or on behalf of the Company of Common Shares and options
and warrants to purchase Common Shares (including without limitation, in
connection with the Reorganization) were at all relevant times either registered
under the Act and the applicable state securities or Blue Sky laws or exempt
from such registration requirements. The Common Shares conform to the
description thereof contained in the Prospectus. Except as set forth in the
Prospectus, on the Effective Date and the Closing Date, there will be no
outstanding options or warrants for the purchase of, or other outstanding rights
to purchase, or securities convertible into, or exercisable
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<PAGE>
or exchangeable for, Common Shares. Except as set forth in the Prospectus, no
holder of any of the Company's securities has any rights, "demand," "piggyback"
or otherwise, to have such securities registered under the Act.
(l) No securities of the Company have been sold by the Company, or by
or on behalf of, or for the benefit of, any person or persons controlling,
controlled by, or under common control with the Company, within the three years
prior to the date hereof, except as disclosed in the Registration Statement.
(m) The issuance and sale of the Offered Shares have been duly
authorized and, when issued and duly delivered against payment therefor as
contemplated by this Agreement, the Offered Shares will be validly issued, fully
paid and nonassessable, and the holders thereof will not be subject to personal
liability solely by reason of being such holders. The Offered Shares are not
subject to preemptive rights of any shareholder of the Company. The Optional
Shares have been duly authorized, validly issued and are fully paid and
nonassessable, and the holders thereof are not and will not be subject to
personal liability solely by reason of being said holders.
(n) The issuance and sale of the Representative's Warrants have been
duly authorized and, when such Representative's Warrants have been issued and
duly delivered against payment therefor as contemplated by the Representative's
Warrant agreement, such Representative's Warrants will be validly issued, fully
paid and non-assessable. The issuance and sale of the Common Shares issuable
upon exercise of the Representative's Warrants have been duly authorized and,
when such Common Shares have been duly delivered against payment therefor, in
accordance with the terms of the Representative's Warrant Agreement, such Common
Shares will be validly issued, fully paid and nonassessable. Holders of
Representative's Warrants, or Common Shares issuable upon the exercise of the
Representative's Warrants, will not be subject to personal liability solely by
reason of being such holders. Neither the Representative's Warrants nor the
Common Shares issuable upon exercise thereof will be subject to preemptive
rights of any shareholder of the Company. The Common Shares issuable upon
exercise thereof will be subject to preemptive rights of any shareholder of the
Company. The Common Shares issuable upon exercise of the Representative's
Warrants have been duly reserved for issuance upon exercise of the
Representative's Warrants in accordance with the provisions of the
Representative's Warrant Agreement. The Representative's Warrants conform to
the descriptions thereof contained in the Prospectus.
(o) Neither the Company nor any Subsidiary is in violation of, or in
default under, (i) any term or provision of its constituent documents; (ii) any
term, provision or covenant of any indenture, mortgage, contract, joint venture
agreement, sponsorship agreement, agency agreement, commitment or other
agreement or instrument to which it is a party or by which it or any of its
property or business is or may be bound or affected; or (iii) any existing
applicable law, rule, regulation, judgement, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over it or any of its
properties or business. Each of the Company
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<PAGE>
and the Subsidiaries owns, possesses or has obtained all governmental and other
(including those obtainable from third parties) licenses, permits,
certifications, registrations, approvals and consents and other authorizations
necessary to own or lease, as the case may be, and to operate its properties,
whether tangible or intangible, and to conduct its business or operations as
presently conducted and all such licenses, permits, certifications,
registrations, approvals, consents and other authorizations are outstanding and
in good standing, and there are no proceedings pending nor, to the best of the
Company's knowledge, threatened, seeking to cancel, terminate or limit such
licenses, permits, certifications, registrations, approvals or consents or other
authorizations nor, to the best of the Company's knowledge, is there any basis
for such proceeding.
(p) Except as set forth in the Prospectus, there are no claims,
actions, suits, proceedings, arbitrations, investigations or inquiries before
any governmental agency, court or tribunal, domestic or foreign, or before any
private arbitration tribunal, pending, or to the best of the Company's
knowledge, threatened against the Company or a Subsidiary or involving its
properties or business which, if determined adversely to the Company or a
Subsidiary, could, individually or in the aggregate, result in a Material
Adverse Effect or which question the validity of the capital stock of the
Company, this Agreement or the Representative's Warrant Agreement or of any
action taken or to be taken by the Company pursuant to, or in connection with,
this Agreement or the Representative's Warrant Agreement; nor, to the best of
the Company's knowledge, is there any basis for any such claim, action, suit,
proceeding, arbitration, investigation or inquiry. There are no outstanding
orders, judgments or decrees of any court, governmental agency or other tribunal
naming the Company or a Subsidiary and enjoining the Company or such Subsidiary
from taking, or requiring the Company or such Subsidiary to take, any action, or
to which the Company or the Company's or such Subsidiary's properties or
business in bound or subject.
(q) Neither the Company nor any of its affiliates has incurred any
liability for any finder's fees or similar payments in connection with the
Reorganization or the transactions herein contemplated.
(r) Each of the Company and the Subsidiaries owns or possesses
adequate and enforceable rights to use all trademarks, trade names, service
marks, copyrights, rights, trade secrets, confidential information, patents,
patent applications, processes and formulations used or proposed to be used in
the conduct of its business as described in the Prospectus (collectively the
"Intangibles"); to the best of the Company's knowledge, neither the Company nor
a Subsidiary has infringed or is infringing the rights of others with respect to
Intangibles; the Company has no notice of any conflict with the asserted rights
of others with respect to the Intangibles which could, singly or in the
aggregate, result in a Material Adverse Effect, and the Company knows of no
basis therefor; and, to the best of the Company's knowledge, no third party has
infringed upon the Intangibles.
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<PAGE>
(s) Since the respective dates as of which information is given in
the Prospectus, the Company and the Subsidiaries have not incurred any material
liability or obligation, direct or contingent, or entered into any material
transaction, whether or not in the ordinary course of business, and have not
sustained any material loss or interference with their business from fire,
storm, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree; and
since the respective dates as of which information is given in the Prospectus,
there have not been, and prior to the Closing Date referred to below there will
not be, or any material adverse change in or affecting the general affairs,
management, financial condition, shareholders' equity, results of operations or
prospects of the Company and the Subsidiaries, other than as set forth or
contemplated in the Prospectus.
(t) The Company and each Subsidiary has good and marketable title in
fee simple to all real property and good title to all personal property
(tangible and intangible) owned by it, free and clear of all security interests,
charges, mortgages, liens, encumbrances and defects, except such as are
described in the Prospectus or such as do not materially affect the value or
transferability of such property and do not interfere with the use of such
property made, or proposed to be made, by the Company or such Subsidiary. The
leases, licenses or other contracts or instruments under which the Company or a
Subsidiary leases, holds or is entitled to use any property, real or personal,
are valid, subsisting and enforceable, with only such exceptions as are not
material and do not interfere with the use of such property made, or proposed to
be made, by the Company or such Subsidiary, and all rentals, royalties or other
payments accruing thereunder which became due prior to the date of this
Agreement have been duly paid, and neither the Company or any Subsidiary, nor,
to the best of the Company's knowledge, any other party is in default thereunder
and, to the best of the Company's knowledge, no event has occurred which, with
the passage of time or the giving of notice, or both, would constitute a default
thereunder. The Company is not aware of any violation of any applicable law,
ordinance, regulation, order or requirement relating to its or the Subsidiaries'
owned or leased properties. The Company has adequately insured its and the
Subsidiaries' properties against loss or damage by fire or other casualty and
maintains, in adequate amounts, such other insurance as is usually maintained by
companies engaged in the same or similar businesses.
(u) Each contract or other instrument (however characterized or
described) to which the Company or a Subsidiary is a party or by which its
property or business is or may be bound or affected and to which reference is
made in the Prospectus, including, without limitation, the sponsorship
agreements, joint venture agreements and agency agreements referred to therein,
has been duly and validly executed, is in full force and effect in all material
respects and is enforceable against the parties thereto in accordance with its
terms, and neither the Company or a Subsidiary nor, to the best of the Company's
knowledge, any other party is in default thereunder and, to the best of the
Company's knowledge, no event has occurred which, with the lapse of time or the
giving of notice, or both, would constitute a default thereunder. None of the
material provisions of such contracts or instruments violates any existing
applicable
- 10 -
<PAGE>
law, rule, regulation, judgment, order or decree of any governmental agency or
court having jurisdiction over the Company or a Subsidiary or any of their
assets or business.
(v) The employment, consulting, confidentiality and non-competition
agreements between the Company and its officers, employees and consultants,
described in the Prospectus, are binding and enforceable obligations upon the
respective parties thereto in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws or arrangements affecting creditors' rights
generally and subject to principles of equity.
(w) The Company has no employee benefit plans (including, without
limitation, profit sharing and welfare benefit plans) or deferred compensation
arrangements that are subject to the provisions of the Employee Retirement
Income Security Act of 1974.
(x) To the best of the Company's knowledge, no labor problem exists
with any of the Company's employees or is imminent which could adversely affect
the Company.
(y) Neither the Company nor any Subsidiary has, directly or
indirectly, at any time (i) made any contributions to any candidate for
political office, or failed to disclose fully any such contribution, in
violation of law or (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments or contributions required or allowed by
applicable law. The Company's internal accounting controls and procedures are
sufficient to cause the Company and the Subsidiary to comply in all material
respects with the Foreign Corrupt Practices Act of 1977, as amended.
(z) The Shares have been approved for listing on the Nasdaq National
Market System.
(aa) No transaction has occurred between or among the Company or any
Subsidiary, on the one hand, and any of the officers or directors thereof or an
affiliate or affiliates of any such officer or director that is required to be
described in Prospectus and that is not so described therein.
(bb) To the knowledge of the Company, no officer or director of the
Company or a Subsidiary has any affiliation or association with the National
Association of Securities Dealers, Inc. ("NASD") or any member thereof.
(cc) Neither the Company any Subsidiary is an "investment company" nor
a Company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, nor will it become such after giving
effect to the transactions contemplated herein.
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<PAGE>
(dd) The Company has complied and will comply with all provisions of
Florida Statutes, Section 517-075 (Chapter 92-198, Laws of Florida). Neither
the Company or any Subsidiary, nor any affiliate thereof, does business with the
government of Cuba or with any person located in Cuba.
(ee) The Company has not taken, directly or indirectly, any action
designed to cause or result in, or which has constituted, the stabilization or
manipulation of the price of the Common Shares to facilitate the sale or resale
of the Shares.
Any certificate signed by an officer of the Company or by the Selling
Shareholders and delivered to the Underwriters Counsel shall be deemed to be a
representation and warranty by the Company or the Selling Shareholders, as the
case may be, to the Underwriters as to the matters covered thereby.
Whenever any representation and warranty is made "to the knowledge of
the Company" or such representation and warranty states that "the Company is not
aware" or "the Company has received no notice" or words of similar meaning, such
representation and warranty shall be deemed to be made to the actual knowledge
of the officers of the Company and each Subsidiary, and as to such knowledge
that such individuals would have had upon the exercise of reasonable inquiry.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
of the Selling Shareholders represents and warrants (as to himself or herself
only) to the Underwriters that:
(a) The Optional Shares to be sold by such Selling Shareholder are,
and on the Option Closing Date will be, duly and validly authorized and validly
issued, fully paid and nonassessable; such Selling Shareholder will have on the
Option Closing Date valid, marketable title to such Optional Shares, free and
clear of all liens, encumbrances and claims whatsoever, with full right and
authority to sell and deliver such Optional Shares; and upon the delivery of and
payment for such Optional Shares as herein contemplated the Underwriters will
receive valid, marketable title thereto, free and clear of all liens,
encumbrances and claims, except any that may be created by the Underwriters' own
action.
(b) No information furnished to the Company in writing by such
Selling Shareholder for use in, or in connection with the preparation of, the
Registration Statement or the Prospectus contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. Each Selling
Shareholder hereby confirms he or she has furnished to the Company for such use
the statements with respect to such Selling Shareholder contained in the
"Principal and Selling Shareholders" section of the Prospectus.
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<PAGE>
(c) Such Selling Shareholder has duly authorized _______________ to
act as attorney-in-fact (the "Attorney-in-Fact") for such Selling Shareholder
pursuant to a power of attorney the ("Power of Attorney") executed by such
Selling Shareholder pursuant to which the Attorney-in-Fact is authorized on
behalf of such Selling Shareholder to execute any documents necessary or
desirable in connection with the sale of the Optional Shares, to make delivery
of the certificates for the Optional Shares, to receive the proceeds of the sale
of the Shares and to give a receipt therefor and to distribute the proceeds from
the sale of such Selling Shareholder's Optional Shares to such Selling
Shareholder. Such Selling Shareholder has duly executed a custody agreement
(the "Custody Agreement") with the Attorney-in Fact, and pursuant thereto has
caused a certificate or certificates for the number of Optional Shares to be
sold by such Selling Shareholder hereunder to be delivered to the
Attorney-in-Fact with instructions and irrevocable authority to purchase all
requisite stock transfer tax stamps and to hold such certificate or certificates
in custody for delivery, or for exchange for other certificates in proper form
for delivery, pursuant to the provisions hereof on the Option Closing Date.
(d) Each of the Power of Attorney, the Custody Agreement and this
Agreement constitutes the valid and binding obligation of such Selling
Stockholder, enforceable against such Selling Shareholder in accordance with its
terms subject, as to enforcement of remedies, to applicable bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally and the discretion of courts in
granting equitable remedies and except that enforceability of the
indemnification provisions set forth in Section 8 hereof and the contribution
provisions set forth in Section 9 hereof may be limited by the United States
federal securities laws or the public policy underlying such laws.
(e) All authorizations and consents necessary for the execution and
delivery by such Selling Shareholder of this Agreement and the sale and delivery
hereunder of such Selling Shareholder's Optional Shares have been obtained and
are in full force and effect on the date hereof and will be in full force and
effect at the Closing Date.
(f) The sale of such Selling Shareholder's Optional Shares by such
Selling Shareholder pursuant to this Agreement is not prompted by any material
information concerning the Company known by such Selling Shareholder which is
not set forth in the Prospectus.
6. CERTAIN COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS.
Each of the Company and the Selling Shareholders covenants with the Underwriters
as follows:
(a) The Company will not at any time, whether before the Effective
Date or thereafter during such period as the Prospectus is required by law to be
delivered in connection with the sales of the Shares by the Underwriters or a
dealer, file or publish any amendment or supplement to the Registration
Statement or Prospectus of which the Underwriters have not been previously
advised and furnished a copy, or to which the Underwriters shall have objected
in writing.
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(b) The Company will advise the Underwriters immediately, and, if
requested by the Underwriters, confirm such advice in writing, (i) when any
post-effective amendment to the Registration Statement or any supplemented
Prospectus is filed with the Commission; (ii) of the receipt of any
communication from the Commission; (iii) of any request of the Commission for
amendment or supplementation of the Registration Statement or Prospectus or for
additional information; and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any Preliminary Prospectus, or of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the initiation of any proceedings for any of such purposes.
The Company will use its best efforts to prevent the issuance of any such stop
order or of any order preventing or suspending such use and to obtain as soon as
possible the lifting thereof, if any such order is issued.
(c) The Company will prepare the Prospectus in a form approved by the
Underwriters and, if required, filed such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than two (2) business days after the
Effective Date. The Company will deliver to each Underwriter, without charge,
such number of copies of the Prospectus (as supplemented, if the Company makes
any supplements to the Prospectus) as each Underwriter may reasonably request.
The Company has consented to the use of the Preliminary Prospectuses and
consents to the use of the Prospectus for all purposes permitted by the Act and
the Regulations. The Company has furnished or will furnish to each Underwriter
a signed copy of the Registration Statement as originally filed and of all
amendments thereto, whether filed before or after the Registration Statement
becomes effective, a copy of all exhibits filed therewith and a signed copy of
all consents, opinions and certificates of experts.
(d) The Company will comply with the Act, the Regulations, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder so as to permit the continuance of sales of and dealings
in the Offered Shares and in any Optional Shares which may be issued and sold.
If, at any time when a prospectus relating to the Shares is required to be
delivered under the Act, any event occurs as a result of which the Registration
Statement and Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend or supplement the
Registration Statement and Prospectus to comply with the Act or the Regulations,
the Company will promptly file with the Commission, subject to Section 6(a)
hereof, an amendment or supplement which will correct such statement or omission
or which will effect such compliance.
(e) The Company will use best efforts to qualify the Shares for offering
and sale under the securities or Blue Sky laws relating to the offering or for
sale in such jurisdictions as the Underwriters may reasonably designate,
provided that no such qualification will be required in any jurisdiction where,
solely as a result thereof, the Company would be subject to
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general service of process or to taxation or qualification as a foreign
corporation doing business in such jurisdiction.
(f) The Company will make generally available to its security holders, in
the manner specified in Rule 158(b) under the Act, and deliver to the
Underwriters as soon as practicable and in any event not later than 45 days
after the end of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, an earning statement
meeting the requirements of Rule 158(a) under the Act covering a period of at
least 12 consecutive months beginning after the Effective Date of the
Registration Statement.
(g) For a period of five years from the Effective Date, the Company will
deliver to the Underwriters, on a timely basis (i) a copy of each report or
document, including exhibits thereto, filed or furnished to the Commission, any
securities exchange or the NASD on the date each such report or document is so
filed or furnished; (ii) as soon as practicable, copies of any reports or
communications (financial or other) of the Company mailed to its security
holders; (iii) as soon as practicable, a copy of any Schedule 13D, 13G, 14D-1 or
13E-3 received or prepared by the Company from time to time; (iv) monthly
statements setting forth such information regarding the Company's results of
operations and financial position (including balance sheet, profit and loss
statements and data regarding outstanding purchase orders) as is regularly
prepared by management of the Company; and (v) such additional information
concerning the business and financial condition of the Company as the
Underwriters may from time to time reasonably request and which can be prepared
or obtained by the Company without unreasonable effort or expense. The Company
will furnish to its shareholders annual reports containing audited financial to
its shareholders annual reports containing audited financial statements and such
other periodic reports as it may determine to be appropriate or as may be
required by law.
(h) Neither the Company nor any Selling Shareholder nor any person that
controls, is controlled by or is under common control with the Company or the
Selling Shareholders will take any action designed to or which might be
reasonably expected to cause or result in the stabilization or manipulation of
the price of the Common Shares.
(i) The Company will pay or cause to be paid the following: all costs and
expenses incident to the performance of the obligations of the Company under
this Agreement, including, but not limited to, the fees and expenses of
accountants and counsel for the Company, the preparation, printing, mailing and
filing of the Registration Statement (including financial statements and
exhibits), Preliminary Prospectuses and the Prospectus, and any amendments or
supplements thereto, the printing and mailing of this Agreement, and other
underwriting documents, the preparation of the certificates for the Shares and
the Representative's Warrants; the issuance and delivery of the Shares to the
Underwriters; all taxes, if any, on the issuance of the Shares; the fees,
expenses and other costs of qualifying the Shares for sale under the "Blue Sky"
or securities laws of those states in which the Shares are to be offered or
sold, the cost of printing and mailing the "Blue Sky Survey", and the fees and
disbursements of Underwriters'
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counsel incurred in connection with such "Blue Sky" qualifications; the filing
fees incident to securing any required review by the NASD; the cost of
furnishing to the Underwriters copies of the Registration Statement, Preliminary
Prospectuses and the Prospectus as herein provided; the costs of placing
"tombstone advertisements" (not to exceed $40,000), and all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 6(i). In addition, at the
Closing Date and the Option Closing Date, if any, the Company will pay to the
Representative, for its own account, an amount equal to one percent (1%) of the
gross proceeds of the offering, as payment for the Representative's
nonaccountable expense allowance relating to the transactions contemplated
hereby. In the event the sale of the Offered Shares contemplated hereby is not
consummated for any reason, the Company will pay all reasonable, accountable,
out-of-pocket expenses incurred by the Representative in connection herewith
(including fees or disbursements of counsel); provided that such expenses
(exclusive of the expenses of Underwriters' counsel incurred in connection with
"Blue Sky" qualifications) shall not exceed $75,000.
(j) On the Closing Date, and on any Option Closing Date, the Company will
pay to the Representative, for its own account, in amount equal to three percent
(3%) of the gross proceeds of the offering, as payment for the Representative's
corporate finance advisory services.
(k) The Company intends to apply the net proceeds from the sale of the
Shares for the purposes set forth in the Prospectus. The Company will file with
the Commission all required reports on Form SR in accordance with the provisions
of Rule 463 promulgated under the Act and will provide a copy of each such
report to the Underwriters and Underwriters' counsel.
(l) During the period of twelve (12) months following the date hereof,
none of the Company's officers, directors or holders of any of the outstanding
Common Shares or options or warrants to purchase Common Shares or securities
convertible into, or exercisable or exchangeable for, Common Shares, will offer
for sale or sell or otherwise dispose of, directly or indirectly, any securities
of the Company (other than the Optional Shares and securities disposed of
pursuant to private transfers in connection with which the transferees agree to
be bound by this same provision), in any manner whatsoever, whether pursuant to
Rule 144 of the Regulations or otherwise, without the prior written consent of
the Underwriters. The Company will deliver to the Underwriters the undertakings
as of the date hereof in form satisfactory to the Underwriter, of its officers,
directors and security holders to this effect.
(m) The Company will not file any registration statement relating to the
offer or sale of any of the Company's securities, including any registration
statement on Form S-8, during the twelve (12) months following the date hereof
without Underwriters' prior written consent.
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(n) The Company maintains and will continue to maintain a system of
internal accounting controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary in order to
permit preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(o) The Company will use its best efforts to maintain the listing of the
Shares on the Nasdaq National Market system for so long as the Shares are
qualified for such listing.
(p) The Company will, concurrently with the Effective Date, register the
class of equity securities of which the Shares are a part under Section 12(g) of
the Exchange Act and the Company will maintain the registration for a minimum of
five years after the Effective Date.
(q) The Company shall retain Continental Stock Transfer and Trust Company
as its transfer agent for the Common Shares, or another transfer agent
reasonably acceptable to the Underwriters, for a period of five years following
the Effective Date. In addition, for a period of one year following the
Effective Date, the Company, at its own expense, shall cause such transfer agent
to provide the Underwriters, if so requested in writing, with copies of the
Company's quarterly transfer sheets and when requested by the Underwriters, a
current list of the Company's security holders, including a list of the
beneficial owners of securities held by a depository trust company and other
nominees.
(r) The Company shall, as of the date hereof, have applied for listing in
Standard & Poor's Corporation Records Service (including annual report
information) or Moody's Industrial Manual (Moody's OTC Industrial Manual not
being sufficient for these purposes) and shall use its best efforts to have the
Company listed in such manual at or prior to the Effective Date and shall
maintain such listing for a period of five years following the Effective Date.
(s) For a period of five years from the Effective Date, the Company shall
provide the Underwriters, on a not less than annual basis, with internal
forecasts setting forth projected results of operations for each quarterly and
annual period in the two fiscal years following the respective dates of such
forecasts. Such forecasts shall be provided to the Underwriters more frequently
than annually if prepared more frequently by management, and revised forecasts
shall be prepared and provided to the Underwriters when required to reflect more
current information, revised assumptions or actual results that differ
materially from those set forth in the forecasts.
(t) For a period of five years following the Effective Date, the Company
shall continue to retain Arthur Andersen (or such other nationally recognized
accounting firm
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acceptable to the Underwriters; it being agreed that any member of the "Big Six"
accounting firms is acceptable) as the Company's independent public accountants.
(u) For a period of five years following the Effective Date, the Company,
at its expense, shall cause its independent certified public accountants, as
described in Section 6(t) above, to review (but not audit) the Company's
financial statements for each of the first three fiscal quarters prior to the
announcement of quarterly financial information.
(v) For a period of two years following the Effective Date, the Company
shall promptly submit to the Underwriters copies of all auditors' audit response
letters and accountants' management reports submitted to or by the Company's
accountants to or on behalf of the Company.
(w) For a period of two years following the Effective Date, the Company
will not offer or sell any of its securities pursuant to Regulation S of the Act
without the prior written consent of the Underwriters.
(x) For a period of twenty-five days following the Effective Date, neither
the Company nor any Selling Shareholder will issue press releases or engage in
any other publicity without the Underwriters' prior written consent, other than
normal and customary releases issued in the ordinary course of the Company's
business or those releases required by law.
(y) For a period of two years following the Effective Date, the Company
shall engage and retain a public relations firm reasonably acceptable to the
Underwriters as the Company's public relations firm.
(z) For a period of three years following the Effective Date, the Company
shall nominate and use best efforts to cause to be elected to, and remain a
member of, the Company's Board of Directors a designee of the Representative;
provided such individual is acceptable to the Company.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATION TO PURCHASE SHARES FROM THE
COMPANY AND THE SELLING SHAREHOLDERS. The obligation of the Underwriters to
purchase and pay for the Offered Shares on the Closing Date and any Optional
Shares on the Option Closing Date is subject (as of the date hereof and the
Closing Date or Option Closing Date) to the accuracy of and compliance in all
material respects with the representations and warranties of the Company and the
Selling Shareholders herein, to the accuracy of the statements of the Company,
its officers or the Selling Shareholders made pursuant hereto, to the
performance in all material respects by the Company and the Selling Shareholders
of their respective obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement shall have become effective under the
Act; the Prospectus shall have been filed in accordance with Rule 424(b) of the
Regulation; no stop order
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suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated, shall be
pending or shall be contemplated by the Commission; and any request on the part
of the Commission for additional information shall have been complied with to
the satisfaction of the Underwriters.
(b) The Underwriters shall have received an opinion of Orrick,
Herrington & Sutcliffe LLP, counsel for the Company ("Company Counsel"), dated
as of the Closing Date or the Option Closing Date, as the case may be (which
opinion may rely on opinions of Bermuda, Hong Kong and other local counsel
satisfactory to the Underwriters provided copies of such other opinions are
provided to the Underwriters, and provided Company Counsel states it has no
reason to believe it is not justified in relying thereon), reasonably
satisfactory to the Underwriters Counsel, to the effect that:
(i) The Company and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with full power and authority, corporate and
other, and all licenses, permits, certifications, registrations, approvals,
consents and franchises to own or lease and operate its properties and to
conduct its business as described in the Registration Statement. The Company
and each Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions wherein such qualification is
necessary and failure so to qualify could have a Material Adverse Effect. All
the issued and outstanding shares of capital stock of the Subsidiaries have been
validly authorized and issued and are fully paid and nonassessable, and to
extent indicated on a schedule annexed to such opinion, are owned by the
Company, directly or through Subsidiaries, free and clear of any lien, security
interest or pledge. The Reorganization has been consummated as described in the
Prospectus.
(ii) The Company has full power and authority, corporate and
other, to execute, deliver and perform this Agreement and the Representative's
Warrant Agreement and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
Representative's Warrant Agreement by the Company, the consummation by the
Company of the transactions herein and therein contemplated, the compliance by
the Company with the terms of this Agreement and the Representative's Warrant
Agreement and the consummation of the Reorganization have been duly authorized
by all necessary corporate action, this Agreement and the Representative's
Warrant Agreement have been duly executed and delivered by the Company and this
Agreement has been duly executed and delivered by each Selling Shareholder.
This Agreement and the Representative's Warrant Agreement are valid and binding
obligations of the Company, and this Agreement is a valid and binding obligation
of each Selling Shareholder, in each case enforceable in accordance with their
respective terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting the
rights of creditors generally and the discretion of courts in granting equitable
remedies and except that enforceability of the indemnification provisions set
forth in Section 8 hereof and the contribution provisions set forth
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in Section 9 hereof may be limited by the federal securities laws or the public
policy underlying such laws.
(iii) The execution, delivery and performance of this Agreement
and the Representative's Warrant Agreement by the Company, the consummation by
the Company of the transactions herein and therein contemplated, the compliance
by the Company with the terms of this Agreement and the Representative's Warrant
Agreement and the consummation of the Reorganization do not, and will not, with
or without the giving of notice or the lapse of time, or both, (A) result in a
violation of the Company's Memorandum of Association or its Bye-laws, (B) result
in a breach of or conflict with any terms or provisions of, or constitute a
default under, or result in the modification or termination of, or result in the
creation or imposition of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company or a Subsidiary pursuant to
any indenture, mortgage, note, contract, commitment or other material agreement
or instrument to which the Company or a Subsidiary is a party or by which the
Company or a Subsidiary or any of the Company's or a Subsidiary's properties or
assets are or may be bound or affected; (C) violate any existing applicable law,
rule, regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or a Subsidiary or any
of their properties or business; or (D) have any effect on any permit,
certification, registration, approval, consent, license or franchise necessary
for the Company or a Subsidiary to own or lease and operate its properties and
to conduct its business or the ability of the Company to make use thereof.
(iv) No authorization, approval, consent, order registration,
license or permit of any court or governmental agency or body (other than under
the Act, the Regulations and applicable state securities or Blue Sky laws) is
required for the valid authorization, issuance, sale and delivery of the Shares
or the Representative's Warrants to the Underwriters, and the consummation by
the Company of the transactions contemplated hereby or by Representative's
Warrants. All authorizations, approvals, consents, orders, registrations,
licenses or permits of any court or governmental agency or body necessary for
the consummation of the Reorganization have been obtained or effected and are in
full force and effect.
(v) The Registration Statement has become effective under the
Act; to the best of Company Counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceedings
for that purpose have been instituted or are pending, threatened or
contemplated.
(vi) The Registration Statement and the Prospectus, as of the
Effective Date, and each amendment or supplement thereto as of its effective or
issue date (except for the financial statements and other financial data
included therein or omitted therefrom, as to which Company Counsel need not
express an opinion) comply as to form in all material respects with the
requirements of the Act and Regulations.
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(vii) The descriptions in the Prospectus of statutes,
regulations, contracts and other documents are accurate in all material respects
and present fairly the information required to be disclosed, and there are no
material statutes or regulations or, to the best of Company Counsel's knowledge,
material contracts or documents, of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement, which are not so described or filed as required. None
of the material provisions of the contracts or instruments described above
violates any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court having jurisdiction over the Company
or a Subsidiary or any of their assets or businesses.
(viii) The outstanding Common Shares, including, without
limitation, the Optional Shares, have been duly authorized, validly issued and
are fully paid and nonassessable. None of the outstanding Common Shares or
options or warrants to purchase Common Shares has been issued (including without
limitation, in connection with the Reorganization) in violation of the
preemptive rights of any shareholder of the Company. None of the holders of the
outstanding Common Shares is subject to personal liability solely by reason of
being such a holder. All offers and sales of the outstanding Common Shares
(including without limitation, in connection with the Reorganization) were at
all relevant times either registered under the Act and the applicable state
securities or Blue Sky laws or exempt from such registration requirements. The
Common Shares conform to the description thereof contained in the Prospectus.
(ix) The issuance and sale of the Offered Shares has been duly
authorized and, when the Offered Shares have been issued and duly delivered
against payment therefor as contemplated by this Agreement, the Offered Shares
will be validly issued, fully paid and nonassessable, and the holders thereof
will not be subject to personal liability solely by reason of being such
holders. The Offered Shares are not subject to preemptive rights of any
shareholder of the Company. The Optional Shares are duly and validly authorized
and issued, fully paid and nonassessable; each Selling Shareholder has valid,
marketable title to the Optional Shares purported to be owned thereby, free and
clear of all liens, encumbrances and claims whatsoever, with full right and
authority to sell and deliver such Optional Shares. The certificates
representing the Shares are in proper legal form. Upon delivery of the Shares
to the Underwriters against payment therefor as provided in this Agreement, the
Underwriters (assuming each is a bona fide purchaser within the meaning of the
Uniform Commercial Code) will acquire good title to the Shares, free and clear
of all liens, encumbrances, equities, security interests and claims.
(x) The issuance and sale of the Representative's Warrants
have been duly authorized and, when such Representative's Warrants have been
issued and duly delivered against payment therefor as contemplated by the
Representative's Warrant Agreement, such Representative's Warrants will be
validly issued, fully paid and non-assessable. The issuance and sale of the
Common Shares issuable upon exercise of the Representative's Warrants have been
duly authorized and, when such Common Shares have been duly delivered against
payment
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therefor, in accordance with the terms of the Representative's Warrants, such
Common Shares will be validly issued, fully paid and nonassessable. Holders of
the Representative's Warrants, or the Common Shares issuable upon exercise of
the Representative's Warrants, will not be subject to personal liability solely
by reason of being such holders. Neither the Representative's Warrants nor the
Common Shares issuable upon exercise thereof will be subject to preemptive
rights of any shareholder of the Company. The Common Shares issuable upon
exercise of the Representative's Warrants have been duly reserved for issuance
upon exercise of the Representative's Warrants in accordance with the provisions
of the Representative's Warrant Agreement.
(xi) To the best of Company Counsel's knowledge, there are no
claims, actions, suits, proceedings, arbitrations, investigations or inquiries
before any governmental agency, court or tribunal, foreign or domestic, or
before any private arbitration tribunal, pending or threatened against the
Company or any Subsidiary, or involving the Company's or any Subsidiary's
properties or business, other than as described in the Prospectus, such
description being accurate, and other than litigation incident to the kind of
business conducted by the Company which, individually and in the aggregate, is
not material.
In such opinion Company Counsel shall state that it has
participated in reviews and discussions with representatives of the Company in
connection with the preparation of the Registration Statement and the
Prospectus, and in the course of such reviews and discussions and such other
investigation as Company Counsel deemed necessary, no facts came to its
attention which lead it to believe that (A) the Registration Statement (except
as to the financial statements and other financial data contained therein, as to
which Company Counsel need not express an opinion), on the Effective Date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that (B) the Prospectus (except as to the financial
statements and other financial data contained therein, as to which Company
Counsel need not express an opinion) contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering its opinion, Company Counsel may rely upon the
certificates of government officials and officers of the Company as to matters
of fact, provided that Company Counsel shall state that they have no reason to
believe, and do not believe, that they are not justified in relying upon such
certificates of government officials and officers of the Company as to matters
of fact.
The opinion letter delivered pursuant to this Section 7(b) shall
state that any opinion given therein qualified by the phrase "to the best of our
knowledge" is being given by Company Counsel after due investigation of the
matters therein discussed.
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(c) There shall have been delivered to the Underwriters an opinion of
Morgan, Lewis & Bockius LLP, dated as of the Closing Date or the Optional
Closing Date, as the case may be, with respect to the incorporation and legal
existence of the Company, the validity of the Shares, the validity of this
Agreement (subject, as to the enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the rights of
creditors generally and the discretion of courts in granting equitable remedies
and except that enforceability of the indemnification provisions set forth in
Section 8 hereof and the contribution provisions set forth in Section 9 hereof
may be limited by the federal securities laws or the public policy underlying
such laws) and such other related matters as the Underwriters may require. As
to matters of Bermuda law, such opinion may rely on the opinion of the Company's
Bermuda counsel.
(d) Since the respective dates as of which information is given in
the Prospectus, there shall not have been any material adverse change in the
financial condition, results of operations or general affairs of the Company
from that set forth or contemplated in the Prospectus.
(e) There shall have been delivered to the Underwriters a certificate
signed by the Chairman and the Chief Executive Officer of the Company, dated the
Closing Date or the Option Closing Date, as the case may be, stating that the
representations and warranties of the Company set forth in Section 4 hereof were
accurate and complete in all material respects when made and are accurate and
complete in all material respects on such date as if then made; that the Company
has performed all covenants and complied with all conditions required by this
Agreement to be performed or complied with by the Company prior to or as of such
date; and that, as of such date, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that purpose
have been initiated or, to the best of his knowledge, are contemplated or
threatened. In addition, the Underwriters will have received such other and
further certificates of officers of the Company and the Subsidiaries, as the
Underwriters may reasonably request. On the Option Closing Date, there shall
have been delivered to the Underwriters a certificate signed by each Selling
Shareholder dated such Option Closing Date stating that the representations and
warranties of such Selling Shareholder set forth in Section 5 were accurate and
complete in all material respects when made and are accurate and complete in all
material respects on such date as if then made.
(f) At the time that this Agreement is executed and at the Closing
Date and the Option Closing Date, the Underwriters shall have received a signed
letter from Arthur Andersen, dated the date such letter is to be received by the
Underwriters and addressed to them, confirming that it is a firm of independent
public accountants within the meaning of the Act and Regulations and stating
that: (i) insofar as reported on by it, in its opinion, the financial statements
of the Company included in the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act and the
applicable Regulations; (ii) on the basis of procedures and inquiries (not
constituting an examination in accordance with generally accepted auditing
standards) consisting of a reading of the unaudited interim financial statements
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of the Company, if any, appearing in the Registration Statement and the
Prospectus and the latest available unaudited interim financial statements of
the Company, if more recent than that appearing in the Registration Statement
and the Prospectus, inquiries of officers of the Company responsible for
financial and accounting matters as to the transactions and events subsequent to
the date of the latest audited financial statements of the Company, and a
reading of the minutes of meetings of the shareholders, the Board of Directors
of the Company and any committees of the Board of Directors, as set forth in the
minute books of the Company, nothing has come to its attention which, in its
judgment, would indicate that (A) during the period from the date of the latest
financial statements of the Company appearing in the Registration Statement and
Prospectus to a specified date not more than three business days prior to the
date of such letter, there have been any decreases in net current assets or net
assets as compared with amounts shown in such financial statements or decreases
in net sales or decreases in total or per share net income compared with the
corresponding period in the preceding year or any change in the capitalization
or long-term debt of the Company, except in all cases as set forth in or
contemplated by the Prospectus, and (B) the unaudited interim financial
statements of the Company, if any, appearing in the Registration Statement and
the Prospectus, do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Regulations or are not
fairly presented in conformity with generally accepted accounting principles and
practices on a basis substantially consistent with the audited financial
statements included in the Registration Statement or the Prospectus; and (iii)
it has compared specific dollar amounts, numbers of shares, numerical data,
percentages of revenues and earnings, and other financial information pertaining
to the Company set forth in the Prospectus (with respect to all dollar amounts,
numbers of shares, percentages and other financial information contained in the
Prospectus, to the extent that such amounts, numbers, percentages and
information may be derived from the general accounting records of the Company,
and excluding any questions requiring an interpretation by legal counsel) with
the results obtained from the application of specified readings, inquiries and
other appropriate procedures (which procedures do not constitute an examination
in accordance with generally accepted auditing standards) set forth in the
letter, and found them to be in agreement.
(g) No action shall have been taken by the Commission or the NASD the
effect of which would make it improper, at any time prior to the Closing Date or
the Option Closing Date, as the case may be, for any member firm of the NASD to
execute transactions (as principal or as agent) in the Shares, and no
proceedings for the purpose of taking such action shall have been instituted or
shall be pending, or, to the best of the Underwriters or the Company's
knowledge, shall be contemplated by the Commission or the NASD.
(h) All proceedings taken at or prior to the Closing Date or the
Option Closing Date, as the case may be, in connection with the authorization,
issuance and sale of the Shares shall be reasonably satisfactory in form and
substance to the Underwriters and the Underwriters shall have been furnished
with all such documents, certificates and opinions as they may request in order
to evidence the accuracy and completeness of any of the representations,
warranties or
- 24 -
<PAGE>
statements of the Company, the performance of any covenants of the Company, or
the compliance by the Company with any of the conditions herein contained.
If any of the conditions specified in this Section 7 have not been
fulfilled, this Agreement may be terminated by the Underwriters by notice to the
Company or the Selling Shareholders.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless (i) each
Underwriter, (including specifically any person that may be substituted for an
Underwriter as provided in Section 11 hereof) each officer, director, partner,
employee and agent of any Underwriter, and each person, if any, who controls any
of the Underwriters within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act, and (ii) each Selling Shareholder, from and against any and
all losses, claims, damages, expenses or liabilities, joint or several (and
actions in respect thereof), to which they or any of them may become subject
under the Act or under any other statute or at common law or otherwise, and,
except as hereinafter provided, will reimburse each of the Underwriters and each
such person, if any, for any legal or other expenses incurred by them or any of
them in connection with investigating or defending any actions, whether or not
resulting in any liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained (i) in the Registration
Statement, in any Preliminary Prospectus or in the Prospectus or (ii) in any
application or other document executed by the Company, or based upon written
information furnished by or on behalf of the Company, filed in any jurisdiction
in order to qualify the Shares under the securities laws thereof (hereinafter
"application"), or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, unless such
untrue statement or omission was made in such Registration Statement,
Preliminary Prospectus, Prospectus or application in reliance upon and in
conformity with information furnished in writing to the Company in connection
therewith and expressly for use therein by: (i) in the case of the Underwriters
or any person entitled to indemnification as a result of such person's
affiliation with an Underwriter, any Underwriter, and (ii) in the case of a
Selling Shareholder, such Selling Shareholder; provided, however, that the
indemnity agreement contained in this Section 8(a) with respect to any
Preliminary Prospectus will not inure to the benefit of an Underwriter (or to
the benefit of any other person that may be indemnified pursuant to this Section
8(a) as a result of such person's affiliation with such Underwriter) if (A) the
person asserting any such losses, claims, damages, expenses or liabilities
purchased the Shares which are the subject thereof from such Underwriter; (B)
such Underwriter failed to send or give a copy of the Prospectus to such person
at or prior to the written confirmation of the sale of such Shares to such
person; and (C) the Prospectus did not contain any untrue statement or alleged
untrue statement or omission or alleged omission giving rise to such cause,
claim, damage, expense or liability.
- 25 -
<PAGE>
(b) Each of the Selling Shareholders, severally and not jointly,
agrees to indemnify and hold harmless (i) each Underwriter (including
specifically any person that may be substituted for an Underwriter as provided
in Section 11 hereof), each officer, director, partner, employee and agent of
any Underwriter, and each person, if any, who controls any of the Underwriters
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, and (ii) the Company, each of its directors, each of its officers who have
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, from and against any and all losses, claims, damages, expenses or
liabilities, joint or several (and actions in respect thereof), to which they or
any of them may become subject under the Act or under any other statute or at
common law or otherwise, and, except as hereinafter provided, will reimburse
each such indemnified persons for any legal or other expenses incurred by them
or any of them in connection with investigating or defending any actions,
whether or not resulting in any liability, insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are based upon (A) any
action taken by such Selling Shareholder in connection with the offering of the
Optional Shares (including, without limitation, the dissemination of any written
materials or the making of any oral statement); or (B) any untrue statement or
alleged untrue statement of a material fact contained (i) in the Registration
Statement, in any Preliminary Prospectus or in the Prospectus or (ii) in any
application (including any applicable for registration of the Shares under state
securities or Blue Sky laws), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company in connection
therewith by such Selling Shareholder expressly for use therein; provided,
however, that the indemnity agreement contained in this Section 8(b)(B) with
respect to any Preliminary Prospectus will not inure to the benefit of the
Underwriter (or to the benefit of any other person that may be indemnified
pursuant to this Section 8(b) as a result of such person's affiliation with such
Underwriter) if (1) the person asserting any such losses, claims, damages,
expenses or liabilities purchased the Shares which are the subject thereof from
such Underwriter or other indemnified person; (2) such Underwriter or other
indemnified person failed to send or give a copy of the Prospectus to such
person at or prior to the written confirmation of the sale of such Shares to
such person; and (3) the Prospectus did not contain any untrue statement or
alleged untrue statement or omission or alleged omission giving rise to such
cause, claim, damage, expense or liability.
(c) Each Underwriter (including specifically each person that may be
substituted for an Underwriter as provided in Section 11 hereof) severally and
not jointly, agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, and each Selling Shareholder, from and
against any and all losses, claims, damages, expenses or liabilities, joint or
several (and actions in respect thereof), to which they or any of them may
become subject under the Act or under any other statute or at common law or
otherwise, and, except as hereinafter
- 26 -
<PAGE>
provided, will reimburse the Company or such other persons for any legal or
other expenses incurred by them or any of them in connection with investigating
or defending any actions, whether or not resulting in any liability, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained (i) in the Registration Statement, in any Preliminary Prospectus
or in the Prospectus or (ii) in any application (including any application for
registration of the Shares under state securities or Blue Sky laws), or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, in light of the circumstances under which
they were made, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company in connection therewith by such Underwriter expressly for use therein.
(d) Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against any indemnifying
party under this Section 8, the indemnified party will notify the indemnifying
party in writing of the commencement thereof, and the indemnifying party will,
subject to the provisions hereinafter stated, assume the defense of such action
(including the employment of counsel satisfactory to the indemnified party and
the payment of expenses) insofar as such action relates to an alleged liability
in respect of which indemnity may be sought against the indemnifying party.
After notice from the indemnifying party of its election to assume the defense
of such claim or action, the indemnifying party shall no longer be liable to the
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
if, in the reasonable judgment of the indemnified party or parties, it is
advisable for the indemnified party or parties to be represented by separate
counsel, the indemnified party or parties shall have the right to employ a
single counsel to represent the indemnified parties who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the indemnified parties thereof against the indemnifying party, in which
event the fees and expenses of such separate counsel shall be borne by the
indemnifying party. Any party against whom indemnification may be sought under
this Section 8 shall not be liable to indemnify any person that might otherwise
be indemnified pursuant hereto for any settlement of any action effected without
such indemnifying party's consent, which consent shall not be unreasonably
withheld.
9. CONTRIBUTION. To provide for just and equitable contribution, if
(i) an indemnified party makes a claim for indemnification pursuant to Section 8
hereof (subject to the limitations thereof) and it is finally determined, by a
judgment, order or decree not subject to further appeal, that such claim for
indemnification may not be enforced, even though this Agreement expressly
provides for indemnification in such case; or (ii) any indemnified or
indemnifying party seeks contribution under the Act, the Exchange Act, or
otherwise, then the Company (including, for this purpose, any contribution made
by or on behalf of any Selling Shareholder, any director of the Company, any
officer of the Company who signed the Registration Statement and any controlling
person of the Company) as one entity and the
- 27 -
<PAGE>
Underwriters (including, for this purpose, any contribution by or on behalf of
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and each officer, director,
partner, employee and agent of any of the Underwriters) as a second entity,
shall contribute to the losses, liabilities, claims, damages and expenses
whatsoever to which any of them may be subject, so that the Underwriters are
responsible for the proportion thereof equal to the percentage which the
underwriting discount per Share set forth on the cover page of the Prospectus
represents of the initial public offering price per Share set forth on the cover
page of the Prospectus and the Company is responsible for the remaining portion;
provided, however, that if applicable law does not permit such allocation, then,
if applicable law permits, other relevant equitable considerations such as the
relative fault of the Company and the Underwriters in connection with the facts
which resulted in such losses, liabilities, claims, damages and expenses shall
also be considered. The relative fault, in the case of an untrue statement,
alleged untrue statement, omission or alleged omission, shall be determined by,
among other things, whether such statement, alleged statement, omission or
alleged omission relates to information supplied by a Selling Shareholder or the
Company or by the Underwriters, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement,
alleged statement, omission or alleged omission. The Company and the Selling
Shareholders, on one hand, and the Underwriters, on the other hand, agree that
it would be unjust and inequitable if the respective obligations of the Company,
the Selling Shareholders and the Underwriters for contribution were determined
by PRO RATA or PER CAPITA allocation of the aggregate losses, liabilities,
claims, damages and expenses or by any other method of allocation that does not
reflect the equitable considerations referred to in this Section 9. No person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) will be entitled to contribution from any person who is not guilty of
such fraudulent misrepresentation. For purposes of this Section 9, each person,
if any, who controls any of the Underwriters within the meaning of Section 15 of
the Act or Section 29(a) of the Exchange Act and each officer, director,
partner, employee and agent of any of the Underwriters will have the same rights
to contribution as the Underwriters, and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 29(a) of the
Exchange Act, each officer of the Company who has signed the Registration
Statement and each director of the Company will have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 9. Anything in this Section 9 to the contrary notwithstanding, no party
will be liable for contribution with respect to the settlement of any claim or
action effected without its written consent. This Section 9 is intended to
supersede, to the extent permitted by law, any right to contribution under the
Act or the Exchange Act or otherwise available.
10. SURVIVAL OF INDEMNITIES, CONTRIBUTION, WARRANTIES AND
REPRESENTATIONS. The respective indemnity and contribution Company, the Selling
Shareholders and the Underwriters contained in Sections 8 and 9 hereof, and the
representations and warranties of the Company and the Selling Shareholders
contained in this Agreement shall remain operative and in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Underwriters, the Company or any of
its directors and
- 28 -
<PAGE>
officers, the Selling Shareholders or any controlling person referred to in said
Sections, and shall survive the delivery of, and payment for, the Shares.
11. SUBSTITUTION OF UNDERWRITERS.
(a) If one Underwriter should default in its obligation to purchase
and pay for any Shares which it is obligated to purchase on such date hereunder
and if the aggregate number of such Shares which the Underwriter so defaulting
has agreed to purchase does not exceed 10% of the total number of the Shares to
be purchased on such date, the non-defaulting Underwriters will be obligated to
purchase and pay for (in addition to the number of Shares set forth opposite
their names in Schedule A attached hereto, or proportionate number in the case
of the Optional Shares) the full number of Shares agreed to be purchased by the
defaulting Underwriter, and not so purchased. In such event the nondefaulting
Underwriters, may take up and pay for all or any part of such additional Shares
to be purchased by such Underwriter under this Section 11(a), and may postpone
the Closing Date or Option Closing Date, as the case might be, to a time not
exceeding three full business days after the Closing Date or Option Closing
Date, as the case might be. Such Shares shall be allocated to each
non-defaulting Underwriter based upon the proportion of the Offered Shares or
Optional Shares otherwise to be purchased by such non-defaulting Underwriter to
the aggregate number of Offered Shares or Optional Shares, as the case may be,
otherwise to be purchased by all non-defaulting Underwriters.
(b) If one Underwriter should default in its obligation to purchase
and pay for any Shares which it is obligated to purchase on such date hereunder
and if the aggregate number of such Shares exceeds 10% of the total number of
Shares to be purchased on such date, or if one Underwriter for any reason
permitted hereunder should cancel its obligation to purchase and pay for Shares
which it is obligated to purchase on such date hereunder, the non-canceling and
non-defaulting Underwriters (hereinafter called the "remaining Underwriters")
will have the right to purchase such Shares at the Closing Date or Option
Closing Date, as the case might be, in accordance with the procedures set forth
in Section 11(a). If the remaining Underwriters do not purchase and pay for all
such Shares at such Closing Date or Option Closing Date, as the case might be,
the Closing Date or Option Closing Date, as the case might be, will be postponed
for 24 hours and the remaining Underwriters will have the right to purchase such
Shares, or to substitute another person or persons to purchase the same, or
both, at such postponed Closing Date or Option Closing Date, as the case might
be. If purchasers have not been found for such Shares by such postponed Closing
Date, or Option Closing Date, as the case might be, the Closing Date or Option
Closing Date, as the case might be, will be postponed for a further 24 hours,
and the Company will have the right to substitute another person or persons,
reasonably satisfactory to the remaining Underwriters to purchase such Shares at
such second postponed Closing Date or Option Closing Date, as the case might be.
If the Company has not found such purchasers for such Shares by such second
postponed Closing Date or Option Date, as the case might be, then this Agreement
will automatically terminate, and neither the Company nor the remaining
Underwriters will be under any obligation under this Agreement (except that the
Company and the Underwriters will remain liable to the extent provided in
Sections 8 and 9
- 29 -
<PAGE>
hereof and the Company will also remain liable to the extent provided in Section
6(j) hereof). As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 11(b). Nothing in
Section 11(b) will obligate any Underwriter to purchase or find purchasers for
any Shares in excess of those agreed to be purchased by such Underwriter under
the terms of Section 2 or Section 3 hereof, as the case may be.
12. TERMINATION OF AGREEMENT.
(a) This Agreement, including without limitation, the obligation to
purchase the Shares and the obligation to purchase the Optional Shares after
exercise of the option referred to in Section 3 hereof, are subject to
termination in the absolute discretion of the Underwriters, by notice given to
the Company and the Selling Shareholders prior to delivery of and payment for
all the Offered Shares or the Optional Shares, as the case may be, if, prior to
such time, any of the following shall have occurred: (i) the Company withdraws
the Registration Statement from the Commission or the Company does not or cannot
expeditiously proceed with the public offering; (ii) the representations and
warranties in Section 4 or Section 5 hereof are not materially correct or cannot
be complied with; (iii) trading in securities generally on the New York Stock
Exchange or the American Stock Exchange shall have been suspended; (iv) limited
or minimum prices shall have been established on either such Exchange; (v) a
banking moratorium shall have been declared either by federal or New York State
authorities; (vi) any other restrictions on transactions in securities
materially affecting the free market for securities or the payment for such
securities, including the Offered Shares or the Optional Shares, shall be
established by either of such Exchanges, by the Commission, by any other federal
or state agency, by action of the Congress or by Executive Order (vii) trading
in any securities of the Company shall have been suspended or halted by any
national securities exchange, the NASD or the Commission; (viii) there shall
have been a materially adverse change in the condition (financial or otherwise),
prospects or obligations of the Company; (ix) the Company shall have sustained a
material loss, whether or not insured, by reason of fire, flood, accident or
other calamity; (x) any action shall have been taken by the government of the
United States or any department or agency thereof which, in the judgment of the
Underwriters, has had a material adverse effect upon the market or potential
market for securities in general; or (xi) the market for securities in general
or political, financial or economic conditions shall have so materially
adversely changed that, in the judgment of the Underwriters, it would be
impracticable to offer for sale, or to enforce contracts made by the
Underwriters for the resale of, the Offered Shares or the Optional Shares, as
the case may be.
(b) If this Agreement is terminated pursuant to Section 7 hereof or
this Section 12 or if the purchases provided for herein are not consummated
because any condition of the Underwriters' obligations hereunder is not
satisfied or because of any refusal, inability or failure on the part of the
Company or the Selling Shareholders to comply with any of the terms or to
fulfill any of the conditions of this Agreement, or if for any reason the
Company or the Selling Shareholders shall be unable to or do not perform all of
their obligations under this Agreement, the Company or the Selling Shareholders
will remain liable to the extent provided in Sections 6(i), 8, 9 and 10 of this
Agreement.
- 30 -
<PAGE>
13. INFORMATION FURNISHED BY THE UNDERWRITER TO THE COMPANY. It is
hereby acknowledged and agreed by the parties hereto that for the purposes of
this Agreement, including, without limitation, Sections 4(f), 8(a), 8(b) and 9
hereof, the only information given by the Underwriters to the Company for use in
the Prospectus are the statements set forth in the last sentence of the last
paragraph on the cover page, the statement appearing in the last paragraph on
page 2 with respect to stabilizing the market price of Shares, the information
in the third paragraph on page [56] with respect to concessions and
reallowances, and the information in the fifth paragraph on page [57] with
respect to the determination of the public offering price, as such information
appears in any Preliminary Prospectus and in the Prospectus.
14. NOTICES AND GOVERNING LAW. All communications hereunder will be
in writing and, except as otherwise provided, will be delivered by hand against
written receipt at, or mailed by certified mail, return receipt requested, to
the following addresses: if to the Underwriters, to Commonwealth Associates, 733
Third Avenue, New York, New York 10017, Attention: Mr. Barton P. Ferris, Jr.
with a copy to Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York
10178, Attention: Samuel B. Fortenbaugh III, Esq.; if to the Company or the
Selling Shareholders, to the Company, at 2 Badr Shaker Alsayyab Street, Um
Uthayna, Amman, Jordon, with a copy to Orrick, Herrington & Sutcliffe LLP, 666
Fifth Avenue, New York, New York 10103, Attention: Laurence B. Fisher, Esq.
This Agreement shall be deemed to have been made and delivered in New
York City and shall be governed as to validity, interpretation, construction,
effect and in all other respects by the internal laws of the State of New York.
The Company and the Selling Shareholders (i) agree that any legal suit, action
or proceeding arising out of or relating to this Agreement shall be instituted
exclusively in New York State Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York, (ii) waive
any objection which any of them may have now or hereafter to the venue of any
such suit, action or proceeding, and (iii) irrevocably consent to the
jurisdiction of the New York State Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any suit,
action or proceeding. The Company and the Selling Shareholders further agree to
accept and acknowledge service of any and all process which may be served in any
such suit, action or proceeding in the New York State Supreme Court, County of
New York, or in the United States District Court for the Southern District of
New York agree that service of process upon the Company or the Selling
Shareholders mailed by certified mail to the Company's address shall be deemed
in every respect effective service of process upon the Company and the Selling
Shareholder, as the case may be, in any such suit, action or proceeding.
15. PARTIES IN INTEREST. This Agreement is made solely for the
benefit of the Underwriters, the Representative, the Company and the Selling
Shareholders and, to the extent expressed, any person controlling the Company or
the Underwriters, each officer, director, partner, employee and agent of the
Underwriters, the directors of the Company, its officers who have signed the
Registration Statement, and their respective executors, administrators,
successors and assigns, and, no other person will acquire or have any right
under or by virtue of this
- 31 -
<PAGE>
Agreement. The term "successors and assigns" will not include any purchaser of
the Shares from any of the Underwriters, as such purchaser.
- 32 -
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Shareholders and the
Underwriters in accordance with its terms.
Very truly yours,
ARAMEX INTERNATIONAL LIMITED
By:
---------------------------
Name:
Title:
------------------------------
William S. Kingson
------------------------------
Fadi Ghandour
------------------------------
Rula Ghandour
Confirmed and accepted in New York,
New York as of the date first above
written:
COMMONWEALTH ASSOCIATES
By: Commonwealth Associates
Management Company, Inc.,
General Partner
By:
---------------------------------
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<PAGE>
SCHEDULE A
TO THE UNDERWRITING AGREEMENT
UNDERWRITERS
Number of Offered
Name of Underwriter Shares to be Purchased
------------------- ----------------------
Commonwealth Associates. . . . . . . . . . . . . . .
TOTAL. . . . . . . . . . . . . . . . . . . . . . . 1,000,000
- 34 -
<PAGE>
SCHEDULE B
SELLING STOCKHOLDERS
Name Maximum Option Shares
---- ---------------------
William S. Kingson 75,000
Fadi Ghandour 37,500
Rula Ghandour 37,500
-------
Total 150,000
- 35 -
<PAGE>
SCHEDULE C
SUBSIDIARIES
- 36 -
<PAGE>
Exhibit 3.1
[LOGO]
BERMUDA
THE COMPANIES ACT 1981
MEMORANDUM OF ASSOCIATION OF
COMPANY LIMITED BY SHARES
(Section 7(1) and (2))
MEMORANDUM OF ASSOCIATION OF
Aramex International Limited
(hereinafter referred to as "the Company")
1. The liability of the members of the Company is limited to the amount
(if any) for the time being unpaid on the shares respectively held by them.
2. We, the undersigned, namely,
NAME ADDRESS BERMUDIAN NATIONALITY NUMBER OF
STATUS SHARES
(Yes/No) SUBSCRIBED
C.F.A. Cooper Clarendon House Yes British One
Church Street
Hamilton
Bermuda
John Buckley " Yes British One
John C.R. Collis " Yes British One
do hereby respectively agree to take such number of shares of the Company as
may be allotted to us respectively by the provisional directors of the
Company, not exceeding the number of shares for which we have respectively
subscribed, and to satisfy such calls as may be made by the directors,
provisional directors or promoters of the Company in respect of the shares
allotted to us respectively.
<PAGE>
3. The Company is to be an exempted Company as defined by the Companies Act
1981.
4. The Company has power to hold land situated in Bermuda not exceeding in
all, including the following parcels-
N/A
5. The authorized share capital of the Company is US$2000,000 divided into
shares of US$0.01 each. The minimum subscribed share capital of the
Company is US$12,2000.
6. The objects for which the Company is formed and incorporated are -
1. To engage in and car ry on any or all o f the following
businesses: (i) domestic and international parcel express delivery
service; (ii) freight forwarding services, including but not limited
to, air and ocean freight forwarding, consolidation, warehousing,
customs clearance and breakbulk services; (iii) direct marketing and
mail order catalog services, including but not limited to, the
operation of catalog showrooms and a television or Internet shopping
service; (iv) ground transportation services; (v) logistics
management; (vi) warehousing, warehouse management and inventory
management; (vii) multi-modal transportation and distribution;
(viii) inventory management; (ix) travel services; and (x) trading
in goods and services of all kinds;
2. As set forth in paragraphs (b) to (n) and (p) to (u) inclusive
of Second Schedule to the Companies Act 1981.
7. Powers of Company
1. The Company shall, pursuant to Section 42 of the Companies Act 1981,
have the power to issue preference shares which are, at the option of
the holder, liable to be redeemed.
<PAGE>
Signed by each subscriber in the presence of at least one witness attesting
the signature thereof -
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
(Subscribers) (Witnesses)
SUBSCRIBED this 29th day of October, 1996.
<PAGE>
STAMP DUTY (To be affixed)
RC3
<PAGE>
EXHIBIT 3.2
B Y E - L A W S
OF
ARAMEX INTERNATIONAL LIMITED
<PAGE>
TABLE OF CONTENTS
Bye-Law Page
1. Interpretation......................................................... 1
2. Board of Directors..................................................... 2
3. Management of the Company.............................................. 2
4. Power to appoint managing director or chief executive officer.......... 3
5. Power to appoint manager............................................... 3
6. Power to authorise specific actions.................................... 3
7. Power to appoint attorney.............................................. 4
8. Power to delegate to a committee....................................... 4
9. Power to appoint and dismiss employees................................. 4
10. Power to borrow and charge property.................................... 5
11. Exercise of power to purchase shares of or discontinue the Company..... 5
12. Election of Directors.................................................. 5
13. Defects in appointment of Directors.................................... 6
14. Alternate Directors.................................................... 7
15. Removal of Directors................................................... 7
16. Vacancies on the Board................................................. 8
17. Notice of meetings of the Board........................................ 9
18. Quorum at meetings of the Board........................................ 9
19. Meetings of the Board.................................................. 9
20. Unanimous written resolutions.......................................... 10
21. Contracts and disclosure of Directors' interests....................... 10
22. Remuneration of Directors.............................................. 10
23. Officers of the Company................................................ 11
24. Appointment of Officers................................................ 11
25. Remuneration of Officers............................................... 11
26. Duties of Officers..................................................... 11
27. Chairman of meetings................................................... 12
28. Register of Directors and Officers..................................... 12
29. Obligations of Board to keep minutes................................... 12
30. Indemnification of Directors and Officers of the Company............... 13
31. Waiver of claim by Member.............................................. 13
32. Notice of annual general meeting....................................... 14
33. Notice of special general meeting...................................... 14
34. Accidental omission of notice of general meeting....................... 14
35. Meeting called on requisition of Members............................... 14
36. Short notice........................................................... 15
37. Postponement of meetings............................................... 15
38. Quorum for general meeting............................................. 15
39. Adjournment of meetings................................................ 16
40. Attendance at meetings................................................. 16
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41. Written resolutions.................................................... 16
42. Attendance of Directors................................................ 18
43. Voting at meetings..................................................... 18
44. Voting an show of hands................................................ 18
45. Decision of chairman................................................... 18
46. Demand for a poll...................................................... 19
47. Seniority of joint holders voting...................................... 20
48. Instrument of proxy.................................................... 20
49. Representation of corporations at meetings............................. 21
50. Rights of shares....................................................... 22
51. Power to issue shares.................................................. 24
52. Variation of rights, alteration of share capital and
purchase of shares of the Company...................................... 25
53. Registered holder of shares............................................ 26
54. Death of a joint holder................................................ 26
55. Share certificates..................................................... 27
56. Calls on shares........................................................ 27
57. Forfeiture of shares................................................... 28
58. Contents of Register of Members........................................ 28
59. Inspection of Register of Members...................................... 28
60. Determination of record dates.......................................... 29
61. Instrument of transfer................................................. 29
62. Restriction on transfer................................................ 29
63. Transfers by joint holders............................................. 30
64. Representative of deceased Member...................................... 30
65. Registration on death or bankruptcy.................................... 31
66. Declaration of Dividends by Board...................................... 31
67. Other distributions.................................................... 31
68. Reserve fund........................................................... 32
69. Deduction of amounts due to the Company................................ 32
70. Issue of bonus shares.................................................. 32
71. Records of account..................................................... 33
72. Financial year end..................................................... 33
73. Financial statements................................................... 33
74. Appointment of Auditor................................................. 33
75. Remuneration of Auditor................................................ 34
76. Vacation of office of Auditor.......................................... 34
77. Access to books of the Company......................................... 34
78. Report of the Auditor.................................................. 34
79. Notices to Members of the Company...................................... 35
80. Notices to joint Members............................................... 35
81. Service and delivery of notice......................................... 35
83. Manner in which seal is to be affixed.................................. 36
84. Winding-up/distribution by liquidator.................................. 36
85. Alteration of Bye-laws................................................. 37
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INTERPRETATION
1. INTERPRETATION
(1) In these Bye-laws the following words and expressions shall, where
not inconsistent with the context, have the following meanings
respectively:
(a) "Act" means the Companies Act 1981 as amended from time to time;
(b) "Alternate Director" means an alternate Director appointed in
accordance with these Bye-laws;
(c) "Auditor" includes any individual or partnership;
(d) "Board" means the Board of Directors appointed or elected
pursuant to these Bye-laws and acting by resolution in accordance
with the Act and these Bye-laws or the Directors present at a
meeting of Directors at which there is a quorum;
(e) "Company" means the company for which these Bye-laws are approved
and confirmed;
(f) "Director" means a director of the Company and shall include an
Alternate Director;
(g) "Member" means the person registered in the Register of Members as
the holder of shares in the Company and, when two or more persons
are so registered as joint holders of shares, means the person
whose name stands first in the Register of Members as one of such
joint holders or all of such persons as the context so requires;
(h) "notice" means written notice as further defined in these Bye-laws
unless otherwise specifically stated;
(i) "Officer" means any person appointed by the Board to hold an office
in the Company;
(j) "Register of Directors and Officers" means the Register of
Directors and Officers referred to in these Bye-laws;
(k) "Register of Members" means the Register of Members referred to in
these Bye-laws; and
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(l) "Secretary" means the person appointed to perform any or all the
duties of secretary of the Company and includes any deputy or
assistant secretary.
(2) In these Bye-laws, where not inconsistent with the context:
(a) words denoting the plural number include the singular number and
vice versa;
(b) words denoting the masculine gender include the feminine gender;
(c) words importing persons include companies, associations or bodies
of persons whether corporate or not;
(d) the word:
(i) "may" shall be construed as permissive;
(ii) "shall" shall be construed as imperative; and
(e) unless otherwise provided herein words or expressions defined in
the Act shall bear the same meaning in these Bye-laws.
(3) Expressions referring to writing or written shall, unless the
contrary intention appears, include facsimile, printing, lithography,
photography and other modes of representing words in a visible form.
(4) Headings used in these Bye-laws are for convenience only and are not
to be used or relied upon in the construction hereof.
BOARD OF DIRECTORS
2. BOARD OF DIRECTORS
The business of the Company shall be managed and conducted by the Board.
3. Management of the Company
(1) In managing the business of the Company, the Board may exercise all
such powers of the Company as are not, by statute or by these Bye-laws,
required to be exercised
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by the Company in general meeting subject, nevertheless, to these Bye-laws,
the provisions of any statute and to such directions as may be prescribed by
the Company in general meeting.
(2) No regulation or alteration to these Bye-laws made by the Company
in general meeting shall invalidate any prior act of the Board which would
have been valid if that regulation or alteration had not been made.
(3) The Board may procure that the Company pays all expenses incurred
in promoting and incorporating the Company.
4. POWER TO APPOINT MANAGING DIRECTOR OR CHIEF EXECUTIVE OFFICER
The Board may from time to time appoint one or more Directors to the
office of managing director or chief executive officer of the Company who
shall, subject to the control of the Board, supervise and administer all of
the general business and affairs of the Company.
5. POWER TO APPOINT MANAGER
The Board may appoint a person to act as manager of the Company's day to
day business and may entrust to and confer upon such manager such powers and
duties as it deems appropriate for the transaction or conduct of such
business.
6. POWER TO AUTHORISE SPECIFIC ACTIONS
The Board may from time to time and at any time authorise any company,
firm, person or body of persons to act on behalf of the Company for any
specific purpose and in connection therewith to execute any agreement,
document or instrument on behalf of the Company.
7. POWER TO APPOINT ATTORNEY
The Board may from time to time and at any time by power of attorney
appoint any company, firm, person or body of persons, whether nominated
directly or indirectly by the Board, to be an attorney of the Company for
such purposes and with such powers, authorities
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and discretions (not exceeding those vested in or exercisable by the Board)
and for such period and subject to such conditions as it may think fit and
any such power of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorney as the Board may think
fit and may also authorise any such attorney to sub-delegate all or any of
the powers, authorities and discretions so vested in the attorney. Such
attorney may, if so authorised under the seal of the Company, execute any
deed or instrument under such attorney's personal seal with the same effect
as the affixation of the seal of the Company.
8. POWER TO DELEGATE TO A COMMITTEE
The Board may delegate any of its powers to a committee appointed by the
Board which may consist partly or entirely of non-Directors and every such
committee shall conform to such directions as the Board shall impose on them.
9. POWER TO APPOINT AND DISMISS EMPLOYEES
(1) The Board may appoint, suspend or remove any manager, secretary,
clerk, agent or employee of the Company and may fix their remuneration and
determine their duties.
(2) The Board on behalf of the Company may provide benefits, whether by
the payment of gratuities or pensions or otherwise, for any person including
any Director or former Director who has held any executive office or
employment with the Company or with any body corporate which is or has been a
subsidiary or affiliate of the Company or a predecessor in the business of
the Company or of any such subsidiary or affiliate, and to any member of his
family or any person who is or was dependent on him, and may contribute to
any fund and pay premiums for the purchase or provision of any such gratuity,
pension or other benefit, or for the insurance of any such person.
10. POWER TO BORROW AND CHARGE PROPERTY
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The Board may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital, or any
part thereof, and may issue debentures, debenture stock and other securities
whether outright or as security for any debt, liability or obligation of the
Company or any third party.
11. EXERCISE OF POWER TO PURCHASE SHARES OF OR DISCONTINUE THE COMPANY
(1) The Board may exercise all the powers of the Company to purchase
all or any part of its own shares pursuant to Section 42A of the Act.
(2) The Board may exercise all the powers of the Company to discontinue
the Company to a named country or jurisdiction outside Bermuda pursuant to
Section 132G of the Act.
12. ELECTION OF DIRECTORS
(1) The Board shall consist of not less than three Directors or such
number in excess thereof as the Members may from time to time determine who
shall be elected or appointed in the first place at the statutory meeting of
the Company and thereafter, except in the case of casual vacancy, at the
annual general meeting or at any special general meeting called for the
purpose.
(2) The Board shall be divided into three classes, as nearly as equal
in number as the then total number of directors constituting the whole board
permits, with the term of office of one class expiring each year. At the
next election of director, following adoptions of these Bye-laws, the
Directors of the first class shall be elected to hold office for a term
expiring at the next succeeding annual general meeting, the Directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual general meeting and the Directors of the third class
shall be elected to hold office for a term expiring at the third succeeding
annual general meeting. Subject to the foregoing, at each annual general
meeting, the successors to the class of directors whose term shall then
expire shall be elected to hold office for a term expiring at the third
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succeeding annual general meeting. Subject to the foregoing, at each annual
general meeting, the successors to the class of directors whose term shall
then expire shall be elected to hold office for a term expiring at the third
succeeding annual general meeting and each Director so elected shall hold
office until his successor is elected and qualified, or until his earlier
resignation or removal.
(3) If the number of Directors is changed, any increase or decrease in
the number of Directors shall be apportioned among the three classes so as to
make all classes as nearly equal in number as possible, and the Board shall
decide which class shall contain an unequal number of Directors.
13. DEFECTS IN APPOINTMENT OF DIRECTORS
All acts done bona fide by any meeting of the Board or by a committee of
the Board or by any person acting as a Director shall, notwithstanding that
it be afterwards discovered that there was some defect in the appointment of
any Director or person acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
was qualified to be a Director.
14. ALTERNATE DIRECTORS
(1) Any general meeting of the Company may elect a person or persons to
act as a Director in the alternative to any one or more of the Directors of
the Company or may authorise the Board to appoint such Alternate Directors.
Unless the Members otherwise resolve, any Director may appoint a person or
persons to act as a Director in the alternative to himself or herself by
notice in writing deposited with the Secretary. Any person so appointed
shall have all the rights and powers of the Director or Directors for whom
such person is
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appointed in the alternative provided that such person shall not be counted
more than once in determining whether or not a quorum is present.
(2) An Alternate Director shall be entitled to receive notice of all
meetings of the Board and to attend and vote at any such meeting at which a
Director for whom such Alternate Director was appointed in the alternative is
not personally present and generally to perform at such meeting all the
functions of such Director for whom such Alternate Director was appointed.
(3) An Alternate Director shall cease to be such if the Director for
whom such Alternate Director was appointed ceases for any reason to be a
Director but may be reappointed by the Board as alternate to the person
appointed to fill the vacancy in accordance with these Bye-laws.
15. REMOVAL OF DIRECTORS
(1) Subject to any provision to the contrary in these Bye-laws, the
Members may, at any special general meeting convened and held in accordance
with these Bye-laws, remove a Director provided that the notice of any such
meeting convened for the purpose of removing a Director shall contain a
statement of the intention so to do and be served on such Director not less
than 14 days before the meeting and at such meeting such Director shall be
entitled to be heard on the motion for such Director's removal.
(2) A vacancy on the Board created by the removal of a Director under
the provisions of subparagraph (1) of this Bye-law may be filled by the
Members at the meeting at which such Director is removed and, in the absence
of such election or appointment, the Board may fill the vacancy.
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16. VACANCIES ON THE BOARD
(1) The Board shall have the power from time to time and at any time to
appoint any person as a Director to fill a vacancy on the Board occurring as
the result of the death, disability, disqualification or resignation of any
Director and to appoint an Alternate Director to any Director so appointed.
(2) The Board may act notwithstanding any vacancy in its number but, if
and so long as its number is reduced below the number fixed by these Bye-laws
as the quorum necessary for the transaction of business at meetings of the
Board, the continuing Directors or Director may act for the purpose of (1)
summoning a general meeting of the Company or (ii) preserving the assets of
the Company.
(3) The office of Director shall be vacated if the Director:
(a) is removed from office pursuant to those Bye-laws or is
prohibited from being a Director by law;
(b) is or becomes bankrupt or makes any arrangement or composition
with his creditors generally;
(c) is or becomes of unsound mind or dies;
(d) resigns his or her office by notice in writing to the Company.
17. NOTICE OF MEETINGS OF THE BOARD
(1) A Director may, and the Secretary on the requisition of a Director
shall, at any time summon a meeting of the Board.
(2) Notice of a meeting of the Board shall be deemed to be duly given
to a Director if it is given to such Director verbally in person or by
telephone or otherwise communicated or sent to such Director by post, cable,
telex, telecopier, facsimile or other mods of representing
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words in a legible and non-transitory form at such Director's last known
address or any other address given by such Director to the Company for this
purpose.
18. QUORUM AT MEETINGS OF THE BOARD
The quorum necessary for the transaction of business at a meeting of the
Board shall be three Directors.
19. MEETINGS OF THE BOARD
(1) The Board may meet for the transaction of business, adjourn and
otherwise regulate its meetings as it sees fit.
(2) Directors may participate in any meeting of the Board by means of
such telephone, electronic or other communication facilities as permit all
persons participating in the meeting to communicate with each other
simultaneously and instantaneously, and participation in such a meeting shall
constitute presence in person at such meeting.
(3) A resolution put to the vote at a meeting of the Board shall be
carried by the affirmative votes of a majority of the votes cast and in the
case of an equality of votes the resolution shall fail.
20. UNANIMOUS WRITTEN RESOLUTIONS
A resolution in writing signed by all the Directors which may be in
counterparts, shall be as valid as if it had been passed at a meeting of the
Board duly called and constituted, such resolution to be effective on the
date on which the last Director signs the resolution. For the purposes of
this Bye-law only, "Director" shall not include an Alternate Director.
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21. CONTRACTS AND DISCLOSURE OF DIRECTORS' INTERESTS
(1) Any Director, or any Director's firm, partner or any company with
whom any Director is associated, may act in a professional capacity for the
Company and such Director or such Director's firm, partner or such company
shall be entitled to remuneration for professional services as if such
Director were not a Director, provided that nothing herein contained shall
authorise a Director or Director's firm, partner or such company to act as
Auditor of the Company.
(2) A Director who is directly or indirectly interested in a contract
or proposed contract or arrangement with the Company shall declare the nature
of such interest as required by the Act.
(3) Following a declaration being made pursuant to this Bye-law, and
unless disqualified by the chairman of the relevant Board meeting, a Director
may vote in respect of any contract or proposed contract or arrangement in
which such Director is interested and may be counted in the quorum at such
meeting.
22. REMUNERATION OF DIRE
The remuneration, (if any) of the Directors shall be determined by the
Company in general meeting and shall be deemed to accrue from day to day.
The Directors may also be paid all travel, hotel and other expenses property
incurred by them in attending and returning from meetings of the Board, any
committee appointed by the Board, general meetings of the Company, or in
connection with the business of the Company or their duties as Directors
generally.
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OFFICERS
23. OFFICERS OF THE COMPANY
The Officers of the Company shall consist of a President and a Vice
President or a Chairman and a deputy Chairman, a Secretary and such
additional Officers as the Board may from time to time determine all of whom
shall be deemed to be Officers for the purposes of these Bye-laws.
24. APPOINTMENT OF OFFICERS
(1) The Board shall, as soon as possible after the statutory meeting of
Members and after each annual general meeting appoint a President and Vice
President or a Chairman and Deputy Chairman who shall be Directors.
(2) The Secretary and additional Officers, if any, shall be appointed
by the Board from time to time.
25. REMUNERATION OF OFFICERS
The Officers shall receive such remuneration as the Board may from time
to time determine.
26. DUTIES OF OFFICERS
The Officers shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to them
by the Board from time to time.
27. CHAIRMAN OF MEETINGS
Unless otherwise agreed by a majority of those attending and entitled to
attend and vote thereat, the Chairman, if there be one, and if not the
President shall act as chairman at all meetings of the Members and of the
Board at which such person is present. In their absence
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the Deputy Chairman, if present, shall act as chairman and in the absence of
all of them the Directors present shall appoint or elect one of their number
to act as chairman.
28. REGISTER OF DIRECTORS AND OFFICERS
The Board shall cause to be kept in one or more books at the registered
office of the Company a Register of Directors and Officers and shall enter
therein the particulars required by the Act.
MINUTES
29. OBLIGATIONS OF BOARD TO KEEP MINUTES
(1) The Board shall cause minutes to be duly entered in books provided
for the purpose:
(a) of all elections and appointments of Officers;
(b) of the names of the Directors present at each meeting of the
Board and of any committee appointed by the Board; and
(c) of all resolutions and proceedings of general meetings of the
Members, meetings of the Board and meetings of committees
appointed by the Board.
(2) Minutes prepared in accordance with the Act and these Bye-laws
shall be kept by the Secretary at the registered office of the Company.
INDEMNITY
30. INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY
(1) The Directors, Secretary and other Officers for the time being of the
Company and the liquidator or trustees (if any) for the time being acting in
relation to any of the affairs of the
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Company and every one of them, and their heirs, executors and administrators,
shall be indemnified and secured harmless out of the assets of the Company
from and against all actions, costs, charges, losses, damages and expenses
which they or any of them, their heirs, executors or administrators, shall or
may incur or sustain by or by reason of any act done, concurred in or omitted
in or about the execution of their duty, or supposed duty, or in their
respective offices or trusts, and none of them shall be answerable for the
acts, receipts, neglects or defaults of the others of them or for joining in
any receipts for the sake of conformity, or for any bankers or other persons
with whom any moneys or effects belonging to the Company shall or may be
lodged or deposited for safe custody, or for insufficiency or deficiency of
any security upon which any moneys of or belonging to the Company shall be
placed out on or invested, or for any other loss, misfortune or damage which
may happen in the execution of their respective offices or trusts, or in
relation thereto, PROVIDED THAT this indemnity shall not extend to any matter
in respect of any fraud or dishonesty which may attach to any of said persons.
(2) In addition to the indemnity provided for in Bye-law 30(1) above, the
Company shall enter into a separate indemnification agreement with each
director of the Company in Form "E" in the Schedule hereto.
(3) Any indemnification under Bye-law 30(1) above which would be
available with regard to the expenses incurred by any Director or officer in
defending any proceedings, whether civil or criminal, may be paid by the
Company in advance of the final disposition of such proceedings or of the
matter giving rise or likely to give rise to such expenses, upon receipt of
an undertaking by the Director or officer subject to the proceedings and
likely to incur such expenses to repay all monies so paid by the Company if
it shall ultimately be determined that such Director or officer was not, as a
matter of law, entitled to any indemnity provided that no monies shall be
paid hereunder in respect of any fraud or dishonesty which may attach to such
Director or officer and unless payment of the same shall be authorised in the
specific case upon a determination that indemnification of the Director or
officer would be proper in the circumstances because he has met the standard
of conduct which would entitle him to the indemnification thereby provided.
31. WAIVER OF CLAIM BY MEMBER
Each Member agrees to waive any claim or right of action such Member
might have, whether individually or by or in the right of the Company,
against any Director or Officer on account of any action taken by such
Director or Officer, or the failure of such Director or Officer to take any
action in the performance of his duties with or for the Company, PROVIDED
THAT such waiver shall not extend to any matter in respect of any fraud or
dishonesty which may attach to such Director or Officer.
MEETINGS
32. NOTICE OF ANNUAL GENERAL MEETING
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The annual general meeting of the Company shall be held in each year
other than the year of incorporation at such time and place as the President
or the Chairman or any two Directors or any Director and the Secretary or the
Board shall appoint. At least five days notice of such meeting shall be
given to each Member stating the date, place and time, at which the meeting
is to be held, that the election of Directors will take place thereat, and as
far as practicable, the other business to be conducted at the meeting.
33. NOTICE OF SPECIAL GENERAL MEETING
The President or the Chairman or any two Directors or any Director and
the Secretary or the Board may convene a special general meeting of the
Company whenever in their judgment such a meeting is necessary, upon not less
than five days' notice which shall state the date, time, place and the
general nature of the business to be considered at the meeting.
34. ACCIDENTAL OMISSION OF NOTICE OF GENERAL MEETING
The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a general meeting by, any person entitled to receive
notice shall not invalidate the proceedings at that meeting.
35. MEETING CALLED ON REQUISITION OF MEMBERS
Notwithstanding anything herein, the Board shall, on the requisition of
Members holding at the date of the deposit of the requisition not less than
one-tenth of such of the paid-up share capital of the Company as at the date
of the deposit carries the right to vote, at general meetings of the Company,
forthwith proceed to convene a special general meeting of the Company and the
provisions of Section 74 of the Act shall apply.
36. SHORT NOTICE
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A general meeting of the Company shall, notwithstanding that it is
called by shorter notice than that specified in these Bye-laws, be deemed to
have been properly called if ft is so agreed by (I) all the Members entitled
to attend and vote thereat in the case of an annual general meeting; and (II)
by a majority in number of the Members having the right to attend and vote at
the meeting, being a majority together holding not less than 95% in nominal
value of the shares giving a right to attend and vote thereat in the case of
a special general meeting.
37. POSTPONEMENT OF MEETINGS
The Secretary may postpone any general meeting called in accordance with
the provisions of these Bye-laws (other than a meeting requisitioned under
these Bye-laws) provided that notice of postponement is given to each Member
before the time for such meeting. Fresh notice of the date. time and place
for the postponed meeting shall be given to each Member in accordance with
the provisions of these Bye-laws.
38. QUORUM FOR GENERAL MEETING
Subject to the third sentence of Bye-law 39, at any general meeting of
the Company two persons present in person and representing in person or by
proxy in excess of 50% of the total issued voting shares in the Company
throughout the meeting shall form a quorum for the transaction of business,
PROVIDED that if the Company shall at any time have only one Member, one
Member present in person or by proxy shall form a quorum for the transaction
of business at any general meeting of the Company held during such time. If
within five (5) minutes or such longer time as the Chairman, or in his
absence, the Deputy Chairman of the meeting may determine from the time
appointed for the meeting a quorum is not present, the meeting shall stand
adjourned to the same day one week later, at the same time and place or to
such other day, time or place as the Secretary may determine.
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39. ADJOURNMENT OF MEETINGS
The chairman of a general meeting may, with the consent of the Members
at any general meeting at which a quorum is present (and shall if so
directed), adjourn the meeting. Unless the meeting is adjourned to a
specific date and time, fresh notice of the date, time and place for the
resumption of the adjourned meeting shall be given to each Member in
accordance with the provisions of these Bye-laws. At such adjourned meeting
two Shareholders present in person or by proxy (whatever the number of shares
held by them) shall be a quorum.
40. ATTENDANCE AT MEETINGS
Members may participate in any general meeting by means of such
telephone, electronic or other communication facilities as permit all persons
participating in the meeting to communicate with each other simultaneously
and instantaneously, and participation in such a meeting shall constitute
presence in person at such meeting.
41. WRITTEN RESOLUTIONS
(1) Subject to subparagraph (6), anything which may be done by
resolution of the Company in general meeting or by resolution of a meeting of
any class of the Members of the Company, may, without a meeting and
without any previous notice being required, be done by resolution in writing
signed by, or, in the case of a Member that is a corporation, association,
partnership, LLC or body of persons or entities, whether or not a company
within the meaning of the Act, on behalf of, all the Members who at the date
of the resolution would be entitled to attend the meeting and vote on the
resolution.
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(2) A resolution in writing may be signed by, or, in the case of a
Member that is a corporation whether or not a company within the meaning of
the Act, on behalf of, all the Members, or any class thereof, in as many
counterparts as may be necessary.
(3) For the purposes of this Bye-law. the date of the resolution is the
date when the resolution is signed by, or, in the case of a Member that is a
corporation whether or not a company within the meaning of the Act, on behalf
of, the last Member to sign and any reference in any Bye-law to the date of
passing of a resolution is, in relation to a resolution made in accordance
with this Bye-law, a reference to such date.
(4) A resolution in writing made in accordance with this Bye-law is as
valid as if, it had been passed by the Company in general meeting or by a
meeting of the relevant class of Members. as the case may be, and any
reference in any Bye-law to a meeting at which a resolution Is passed or to
Members voting in favour of a resolution shall be construed accordingly.
(5) A resolution in writing made in accordance with this Bye-law shall
constitute minutes for the purposes of Sections 81 and 82 of the Act.
(6) This Bye-law shall not apply to:
(a) a resolution passed pursuant to Section 89(5) of the Act; or
(b) a resolution passed for the purpose of removing a Director
before the expiration of his term of office under these
Bye-laws.
42. ATTENDANCE OF DIRECTORS
The Directors of the Company shall be entitled to receive notice of and
to attend and be heard at any general meeting.
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43. VOTING AT MEETINGS
(1) Subject to the provisions of the Act and these Bye-laws, any
question proposed for the consideration of the Members it any general meeting
shall be decided by the affirmative votes of a majority of the votes cast in
accordance with the provisions of these Bye-laws and in the case of an
equality of votes the resolution shall fail.
(2) No Member shall be entitled to vote at any general meeting unless
such Member has paid all the calls on all shares held by such Member.
44. VOTING ON SHOW OF HANDS
At any general meeting a resolution put to the vote of the meeting
shall, in the first instance, be voted upon by a show of hands and, subject
to any rights or restrictions for the time being lawfully attached to any
class of shares and subject to the provisions of these Bye-laws, every Member
present in person and every person holding a valid proxy at such meeting
shall be entitled to one vote and shall cast such vote by raising his or her
hand.
45. DECISION OF CHAIRMAN
At any general meeting a declaration by the chairman of the meeting that
a question proposed for consideration has, on a show of hands, been carried,
or carried unanimously, or by a particular majority, or lost, and an entry to
that effect in a book containing the minutes of the proceedings of the
Company shall, subject to the provisions of these Bye-laws, big conclusive
evidence of that fact.
46. DEMAND FOR A POLL
(1) Notwithstanding the provisions of the immediately preceding two
Bye-laws, at any general meeting of the Company, in respect of any question
proposed for the consideration
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of the Members (whether before or on the declaration of the result of a show
of hands as provided for in these Bye-laws), a poll may be demanded by any of
the following persons:
(a) the chairman of such meeting; or
(b) at least three Members present in person or represented by
proxy; or
(c) any Member or Members present in person or represented by
proxy and holding between them not less than one-tenth of the
total voting rights of all the Members having the right to
vote at such meeting; or
(d) any Member or Members present in person or represented by
proxy holding shares in the Company conferring the right to
vote at such meeting, being shares on which an aggregate sum
has been paid up equal to not less than one-tenth of the total
sum paid up on all such shares conferring such right.
(2) Where, in accordance with the provisions of subparagraph (1) of
this Bye-law, a poll is demanded, subject to any rights or restrictions for
the time being lawfully attached to any class of shares, every person present
at such meeting shall have one vote for each share of which such person is
the holder or for which such person holds a proxy and such vote shall be
counted in the manner set out in sub-paragraph (4) of this Bye-Law or in the
case of a general meeting at which one or more Members are present by
telephone in such manner as the chairman of the meeting may direct and the
result of such poll shall be deemed to be the resolution of the meeting at
which the poll was:demanded and shall replace any previous resolution upon
the same matter which has been the subject of a show of hands.
(3) A poll demanded in accordance with the provisions at subparagraph
(1) of this Bye-law, for the purpose of electing a chairman or an a question
of adjournment, shall be taken forthwith and a poll demanded an any other
question shall be taken in such manner and at such time and place as the
chairman may direct and any business other than that upon which a poll has
been demanded may be proceeded with pending the taking of the poll.
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(4) Where a vote is taken by poll, each person present and entitled to
vote shall be furnished with a ballot paper on which such person shall record
his or her vote in such manner as shall be determined at the meeting having
regard to the nature of the question on which the bote is taken, and each
ballot paper shall be signed or initialed or otherwise marked so as to
identify the voter and the registered holder in the case of a proxy. At the
conclusion of the poll, the ballot papers shall be examined and counted by a
committee of not less than two Members or proxy holders appointed by the
chairman for the purpose and the result of the poll shall be declared by the
chairman.
47. SENIORITY OF JOINT HOLDERS VOTING
In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders, and for this purpose seniority shall be
determined by the order in which the names stand in the Register of Members.
48. INSTRUMENT OF PROXY
(1) Each Member entitled to vote at a meeting of Members may authorise
another person or persons to act for such Members by proxy, but no such proxy
shall be voted or acted upon after eleven months from its date, unless the
proxy provides for a linger period.
(2) The instrument appointing a proxy shall be in writing in the form
of Form "A" in the Schedule hereto or, such form as the Board shall accept or
prescribe, under the hand of the appointor or of the appointor's attorney
duly authorised in writing, or if the appointor is a corporation, either
under its seal, or under the hand of a duly authorised officer or attorney.
The decision of the chairman of any general meeting as to the validity of any
instrument of proxy shall be final.
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(3) A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power, regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Company generally. A Member may revoke any proxy which is
not irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or another duly executed proxy
bearing a later date with the Secretary of the Company.
49. REPRESENTATION OF CORPORATIONS AT MEETINGS
A corporation which is a Member may, by written instrument, authorise
such person as it thinks fit to act as its representative at any meeting of
the Members and the person so authorised shall be entitled to exercise the
same powers on behalf of the corporation which such person represents as that
corporation could exercise if it were an individual Member. Notwithstanding
the foregoing, the chairman of the meeting may accept such assurances as he
or she thinks fit as to the right of any person to attend and vote at general
meetings on behalf of a corporation which is a Member.
SHARE CAPITAL AND SHARES
50. RIGHTS OF SHARES
(a) The share capital of the Company shall be divided into two (2)
classes of shares consisting of (i) 15,000,000 common shares of par value
US$0.01 (the "Common Shares") and (ii) 5,000,000 preferred shares of par
value US$0.01 (the "Preferred Shares").
(b) Subject to the provisions of these Bye-laws, the holders of Common
Shares shall:
(1) be entitled to one (1) vote per Common Share;
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(2) be entitled to such dividends as the Board may from time to
time declare;
(3) in the event of a winding-up or dissolution of the Company,
whether voluntary or involuntary or for the purpose of a
reorganisation or otherwise or upon any distribution of
capital be entitled to the surplus assets of the Company; and
(4) generally be entitled to enjoy all of the rights attaching to
shares.
(c) The Board is authorised, subject to limitations prescribed by law,
to issue the Preferred Shares in one or more series, and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption
(including sinking fund provisions), redemption prices and liquidation
preferences, and the number of shares constituting and the designation of any
such series, without further vote or action by the shareholders.
The authority of the Board with respect to each series shall include,
but not be limited to, determination of the following:
(1) The distinctive designation of that series and the number of
Preferred Shares constituting that series which number (except
as otherwise provided by the Board in the resolution
establishing such series) may be increased or decreased (but
not below the number of shares of such series then
outstanding) from time to time by like action of the Board.
(2) The rights in respect of dividends, if any, of such series of
Preferred Shares, the extent of the preference or relation, if
any, of such dividends to the dividends payable on any other
class or classes or any other series of the same or other
class or classes of shares of the Company, and whether such
dividends shall be cumulative or noncumulative;
(3) The voting powers, if any, of the holders of any series of
Preferred Shares generally or with respect to any particular
matter, which may be less than, equal to or greater than one
vote per share, and which may, without limiting the generality
of the foregoing, include the right, voting as a series by
itself or together with the holders of any other series of
Preferred Shares or all series of Preferred Shares as a class,
or together with the holders of any other class of the capital
stock of the Company to elect one or more directors of the
Company (which, without limiting the generality of the
foregoing, may include a specified number or portion of the
then-existing number of authorised directorships of the
Company or a specified number or portion of directorships in
addition to the then-existing number of authorised
directorships of the Company), generally or under such
specific circumstances and on such conditions, as shall be
provided in the resolution or resolutions of the Board adopted
Pursuant hereto;
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(4) Whether the Preferred Shares may be redeemed and, if so, the
terms and conditions on which they may be redeemed (including,
without limitation, the dates upon or after which they may be
redeemed, which price or prices may be different in different
circumstances or at different redemption dates);
(5) The right, if any, of the holders of such series of Preferred
Shares to convert the same into, or exchange the same for,
shares of any other class or classes or of any other series of
the same or any other class or classes of shares of the
Company and the terms and conditions of such conversion or
exchange, including, without limitation, whether or not the
number of shares of such other class or series into which
shares of such series may be converted or exchanged shall be
adjusted in the event of any share split, stock dividend,
subdivision, combination, reclassification or other
transaction or series of transactions affecting the class or
series into which such series of Preferred Shares may be
converted or exchanged;
(6) The amounts, if any, payable upon the Preferred Shares in the
event of voluntary liquidation, dissolution or winding up of
the Company in preference of shares of any other class or
series or in the event of any merger or consolidation of or
sale of assets by the Company;
(7) The terms of any sinking fund or redemption or purchase
account, if any, to be provided for shares of such series of
Preferred Shares; and
(8) Any other relative rights, preferences, limitations and powers
of that series.
51. POWER TO ISSUE SHARES
(1) Subject to these Bye-laws and to any resolution of the Members to
the contrary and without prejudice to any special rights previously conferred
on the holders of any existing shares or class of shares, the Board shall
have power to issue any unissued shares of the Company an such terms and
conditions as it may determine and any shares or class of shares may be
issued with such preferred, deferred or other special rights or such
restrictions,
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whether in regard to dividend, voting, return of capital or otherwise as the
Company may from time to time by resolution of the Members prescribe.
(2) The Board shall, in connection with the issue of any share, have
the power to pay such commission and brokerage as may be permitted by law.
(3) The Company shall not give, whether directly or indirectly, whether
by means of loan, guarantee, provision of security or otherwise, any
financial assistance for the purpose of a purchase or subscription made or to
be made by any person of or for any shares in the Company, but nothing in
this Bye-Law shall prohibit transactions mentioned in Sections 39A, 39B and
39C of the Act.
(4) The Company may from time to time do any one or more of the
following things:
(a) make arrangements on the issue of shares for a difference between
the Members in the amounts and times of payments of calls on their
shares;
(b) accept from any Member the whole or a part of the amount remaining
unpaid on any shares held by him, although no part of that amount
has been called up;
(c) pay dividends in proportion to the amount paid up on each share
where a larger amount is paid up on some shares than on others; and
(d) issue its shares in fractional denominations and deal with such
fractions to the same extent as its whole shares and shares in
fractional denominations shall have in proportion to the respective
fractions represented thereby all of the rights of whole shares
including (but without limiting the generality of the foregoing)
the right to vote, to receive dividends and distributions and to
participate in a winding up.
52. VARIATION OF RIGHTS, ALTERATION OF SHARE CAPITAL AND PURCHASE OF SHARES
OF THE COMPANY
(1) Subject to the provisions of Sections 42 and 43 of the Act any
preference shares may be issued or converted into shares that, at a
determinable date or at the option of the
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Company, are liable to be redeemed on such terms and in such manner as the
Company before the issue or conversion may by resolution of the Members
determine.
(2) If at any time the share capital is divided into different classes
of shares, the rights attached to any class (unless otherwise provided by the
terms of issue of the shares of that class) may, whether or not the Company
is being wound-up, be varied with the consent in writing of the holders of
three-fourths of the issued shares of that class or with the sanction of a
resolution passed by a majority of the votes cast at a separate general
meeting of the holders of the shares of the class in accordance with Section
47 (7) of the Act. The rights conferred upon the holders of the shares of
any class issued with preferred or other rights shall not, unless otherwise
expressly provided by the terms of issue of the shares of that class, be
deemed to be varied by the creation or issue of further shares ranking pari
passu therewith.
(3) The Company may from time to time by resolution of the Members
change the currency denomination of, increase, after or reduce its share
capital in accordance with the provisions of Sections 45 and 46 of the Act.
Where, on any alteration of share capital, fractions of shares or some other
difficulty would arise, the Board may deal with or resolve the same in such
manner as it thinks fit including, without limiting the generally of the
foregoing, the issue to Members, as appropriate, of fractions of shares
and/or arranging for the sale or transfer of the fractions of shares of
Members.
(4) The Company may from time to time purchase its own shares in
accordance with the provisions of Section 42A of the Act.
53. REGISTERED HOLDER OF SHARES
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(1) Except as ordered by a court of competent jurisdiction or as required
by law or applicable listing rules of the U.S. Securities and Exchange
Commission, the Company shall be entitled to treat the registered holder of
any share as the absolute owner thereof and accordingly shall not be bound to
recognise any equitable or other claim to, or interest in, such share on the
part of any other person.
(2) Any dividend, interest or other moneys payable in cash in respect
of shares may be paid by cheque or draft sent through the post directed to
the Member at such Member's address in the Register of Members or, in the
case of joint holders, to such address of the holder first named in the
Register of Members, or to such person and to such address as the holder or
joint holders may in writing direct, If two or more persons are registered as
joint holders of any shares any one can give an effectual receipt for any
dividend paid in respect of such shares.
54. DEATH OF A JOINT HOLDER
Where two or more persons are registered as joint holders of a share or
shares then in the event of the death of any joint holder or holders the
remaining joint holder or holders shall be absolutely entitled to the said
share or shares and the Company shall recognise no claim in respect of the
estate of any joint holder except in the case of the last survivor of such
joint holders.
55. SHARE CERTIFICATES
(1) Every Member shall be entitled to a certificate under the seal of
the Company (or a facsimile thereof) specifying the number and, where
appropriate, the class of shares held by such Member and whether the same are
fully paid up and, if not, how much has been paid thereon. The Board may by
resolution determine, either generally or in a particular case, that any or
all signatures on certificates may be printed thereon or affixed by
mechanical means.
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(2) The Company shall be under no obligation to complete and deliver a
share certificate unless specifically called upon to do so by the person to
whom such shares have been allotted.
(3) If any such certificate shall be proved to the satisfaction of the
Board to have been worn out, lost, mislaid or destroyed the Board may cause a
new certificate to be issued and request an indemnity for the lost
certificate if it sees fit.
56. CALLS ON SHARES
(1) The Board may from time to time make such calls as it thinks fit
upon the Members in respect of any monies unpaid on the shares allotted to or
held by such Members and, if a call is not paid on or before the day
appointed for payment thereof, the Member may at the discretion of the Board
be liable to pay the Company interest on the amount of such call at such rate
as the Board may determine, from the date when such call was payable up to
the actual date of payment. The joint holders of a share shall be jointly
and severally liable to pay all calls in respect thereof.
(2) The Board may, on the issue of shares, differentiate between the
holders as to the amount of calls to be paid and the times of payment of such
calls.
57. FORFEITURE OF SHARES
(1) If any Member fails to pay, on the day appointed for payment
thereof, any call in respect of any share allotted to or held by such Member,
the Board may, at any time thereafter during such time as the call remains
unpaid, direct the Secretary to forward to such Member a notice in the form,
or as near thereto as circumstances admit, of Form "B" in the Schedule
hereto.
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(2) If the requirements of such notice are not complied with, any such
share may at any time thereafter before the payment of such call and the
interest due in respect thereof be forfeited by a resolution of the Board to
that effect, and such share shall thereupon become the property of the
Company and may be disposed of as the Board shall determine.
(3) A Member whose share or shares have been forfeited as aforesaid
shall, notwithstanding such forfeiture, be liable to pay to the Company all
calls owing an such share or shares at the time of the forfeiture and all
interest due thereon.
REGISTER OF MEMBERS
58. CONTENTS OF REGISTER OF MEMBERS
The Board shall cause to be kept in one or more books a Register of
Members and shall enter therein the particulars required by the Act.
59. Inspection of Register of Members
The Register of Members shall be open to inspection at the registered
office of the Company on every business day, subject to such reasonable
restrictions as the Board may impose, so that not less than two hours in each
business day be allowed for inspect-ion. The Register of Members may, after
notice has been given by advertisement in an appointed newspaper to that
effect, be closed for any time or times not exceeding in the whole thirty
days in each year.
60. DETERMINATION OF RECORD DATES
Notwithstanding any other provision of these Bye-laws, the Board may fix
any date as the record date for:
(a) determining the Members entitled to receive any dividend; and
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(b) determining the Members entitled to receive notice of and to vote
at any general meeting of the Company.
TRANSFER OF SHARES
61. INSTRUMENT OF TRANSFER
(1) An instrument of transfer shall be in the form or as near thereto as
circumstances admit of Form "C" in the Schedule hereto or in such other form
as the Board may require. Such instrument of transfer shall be signed by or on
behalf of the transferor and transferee provided that, in the case of a fully
paid share, the Board may accept the instrument signed by or on behalf of the
transferor alone. The transferor shall be deemed to remain the holder of
such share until the same has been transferred to the transferee in the
Register of Members.
(2) The Board may refuse to recognise any instrument of transfer unless
it is accompanied by the certificate in respect of the shares to which it
relates and by such other evidence as the Board may reasonably require to
show the right of the transferor to make the transfer in compliance with any
applicable law.
62. RESTRICTION ON TRANSFER
(1) The Board may in its absolute discretion and without assigning any
reason therefor refuse to register the transfer of a share. The Board shall
refuse to register a transfer unless all applicable consents, authorisations
and permissions of any governmental body or agency in Bermuda or any other
applicable jurisdiction have been obtained.
(2) If the Board refuses to register a transfer of any share the
Secretary shall, within three months after the date on which the transfer was
lodged with the Company, send to the transferor and transferee notice of the
refusal.
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63. TRANSFERS BY JOINT HOLDERS
The joint holders of any share or shares may transfer such share or
shares to one or more of such joint holders, and the surviving holder or
holders of any share or shares previously held by them jointly with a
deceased Member may transfer any such share to the executors or
administrators of such deceased Member.
TRANSMISSION OF SHARES
64. REPRESENTATIVE OF DECEASED MEMBER
In the case of the death of a Member, the survivor or survivors where
the deceased Member was a joint holder, and the legal personal
representatives of the deceased Member where the deceased Member was a sole
holder, shall be the only persons recognised by the Company as having any
title to the deceased Member's interest in the shares. Nothing herein
contained shall release the estate of a deceased joint holder from any
liability in respect of any share which had been jointly held by such
deceased Member with other persons. Subject to the provisions of Section 52
of the Act, for the purpose of this Bye-law, legal personal representative
means the executor or administrator of a deceased Member or such other person
as the Board may in its absolute discretion decide as being properly
authorised to deal with the shares of a deceased Member.
65. REGISTRATION ON DEATH OR BANKRUPTCY
Any person becoming entitled to a share in consequence of the death or
bankruptcy of any Member may be registered as a Member upon such evidence as
the Board may deem sufficient or may elect to nominate some person to be
registered as a transferee of such share, and in such case the person
becoming entitled shall execute in favour of such nominee an
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instrument of transfer in the form, or as near thereto as circumstances
admit, of Form "D" in the Schedule hereto. On the presentation thereof to
the Board, accompanied by such evidence as the Board may require to prove the
title of the transferee, the transferee shall be registered as a Member but
the Board shall, in either case, have the same right to decline or suspend
registration as it would have had in the case of a transfer of the share by
that Member before such Member's death or bankruptcy, as the case may be.
DIVIDENDS AND OTHER DISTRIBUTIONS
66. DECLARATION OF DIVIDENDS BY THE BOARD
The Board may, subject to these Bye-laws and in accordance with Section
54 of the Act, declare a dividend to be paid to the Members, in proportion to
the number of shares held by them, and such dividend may be paid in cash or
wholly or partly in specie in which case the Board may fix the value for
distribution in specie of any assets.
67. OTHER DISTRIBUTIONS
The Board may declare and make such other distributions (in cash or in
specie) to the Members as may be lawfully made out of the assets of the
Company.
68. RESERVE FUND
The Board may from time to time before declaring a dividend set aside,
out of the surplus or profits of the Company, such sum as it thinks proper as
a reserve fund to be used to meet contingencies or for equalising dividends
or for any other special purpose.
69. DEDUCTION OF AMOUNTS DUE TO THE COMPANY
The Board may deduct from the dividends or distributions payable to any
Member all monies due from such Member to the Company on account of calls or
otherwise.
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CAPITALISATION
70. ISSUE OF BONUS SHARES
(1) The Board may resolve to capitalise any part of the amount for the
time being standing to the credit of any of the Company's share premium or
other reserve accounts or to the credit of the profit and loss account or
otherwise available for distribution by applying such sum in paying up
unissued shares to be allotted as fully paid bonus shares pro rata to the
Members.
(2) The Company may capitalise any sum standing to the credit of a
reserve account or sums otherwise available for dividend or distribution by
applying such amounts in paying up in lull partly paid shares of those
Members who would have been entitled to such sums if they were distributed by
way of dividend or distribution.
ACCOUNTS AND FINANCIAL STATEMENTS
71. RECORDS OF ACCOUNT
The Board shall cause to be kept proper records of account with respect
to all transactions of the Company and in particular with respect to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt and expenditure relates;
(b) all sales and purchases of goods by the Company; and
(c) the assets and liabilities of the Company.
Such records of account shall be kept at the registered office of the Company
or, subject to Section 83 (2) of the Act, at such other place as the Board
thinks fit and shall be available for inspection by the Directors during
normal business hours.
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72. FINANCIAL YEAR END
The financial year end of the Company may be determined by resolution of
the Board and failing such resolution shall be 31st December in each year.
73. FINANCIAL STATEMENTS
Subject to any rights to waive laying of accounts pursuant to Section 88
of the Act, financial statements as required by the Act shall be laid before
the Members in general meeting.
AUDIT
74. APPOINTMENT OF AUDITOR
Subject to Section 88 of the Act, at the annual general meeting or at a
subsequent spacial general meeting in each year, an independent
representative of the Members shall be appointed by them as Auditor of the
accounts of the Company. Such Auditor may be a Member but no Director.
Officer or employee of the Company shall, during his or her continuance in
office, be eligible to act as an Auditor of the Company.
75. REMUNERATION OF AUDITOR
The remuneration of the Auditor shall be fixed by the Company in general
meeting or in such manner as the Members may determine.
76. VACATION OF OFFICE OF AUDITOR
It the office of Auditor becomes vacant by the resignation or death of
the Auditor, or by the Auditor becoming incapable of acting by reason of
illness or other disability at a time when the Auditor's services are
required, the Board shall, as soon as practicable, convene a special general
meeting to fill the vacancy thereby created.
77. ACCESS TO BOOKS OF THE COMPANY
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The Auditor shall at all reasonable times have access to all books kept
by the Company and to all accounts and vouchers relating thereto, and the
Auditor may call on the Directors or Officers of the Company for any
information in their possession relating to the books or affairs of the
Company.
78. REPORT OF THE AUDITOR
(1) Subject to any rights to waive laying of accounts or appointment of
an Auditor pursuant to Section 88 of the Act, the accounts of the Company
shall be audited at least once in every year.
(2) The financial statements provided for by these Bye-laws shall be
audited by the Auditor in accordance with generally accepted auditing
standards. The Auditor shall make a written report thereon in accordance
with generally accepted auditing standards and the report of the Auditor
shall be submitted to the Members in general meeting.
(3) The generally accepted auditing standards referred to in
subparagraph (2) of this Bye-law may be those of a country or jurisdiction
other than Bermuda. If so, the financial statements and the report of the
Auditor must disclose this fact and name such country or jurisdiction.
NOTICES
79. NOTICES TO MEMBERS OF THE COMPANY
A notice may be given by the Company to any Member either by delivering
it to such Member in person or by sending it to such Member's address in the
Register of Members or to such other address given for the purpose. For the
purposes of this Bye-law, a notice may be
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sent by mail, courier service, cable, telex, telecopier, facsimile or other
mode of representing words in a legible and non-transitory form.
80. NOTICES TO JOINT MEMBERS
Any notice required to be given to a Member shall, with respect to any
shares held jointly by two or more persons, be given to whichever of such
persons is named first in the Register of Members and notice so given shall
be sufficient notice to all the holders of such shares.
81. SERVICE AND DELIVERY OF NOTICE
Any notice shall be deemed to have been served at the time when the same
would be delivered in the ordinary course of transmission and, in proving
such service, it shall be sufficient to prove that the notice was properly
addressed and prepaid, if posted, and the time when it was posted, delivered
to the courier or to the cable company or transmitted by telex, facsimile or
other method as the case may be.
SEAL OF THE COMPANY
82. THE SEAL
The seal of the Company shall be in such form as the Board may from time
to time determine. The Board may adopt one or more duplicate seals for use
outside Bermuda.
83. MANNER IN WHICH SEAL IS TO BE AFFIXED
The seal of the Company shall not be affixed to any instrument except
attested by the signature of a Director and the Secretary or any two
Directors, or some other person appointed by the Board for the purpose,
provided that any Director, or Officer, may affix the seal of the Company
attested by such Director or Officer's signature only to any authenticated
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copies of those Bye-laws, the incorporating documents of the Company, the
minutes of any meetings or any other documents required to be authenticated
by such Director or Officer.
WINDING-UP
84. WINDING-UP/DISTRIBUTION BY LIQUIDATOR
If the Company shall be wound up the liquidator may, with the sanction
of a resolution of the Members, divide amongst the Members in specie or in
kind the whole or any part of the assets of the Company (whether they shall
consist of property of the same kind or not) and may, for such purpose, set
such value as he or she deems fair upon any property to be divided as
aforesaid and may determine how such division shall be carried out as between
the Members or different classes of Members. The liquidator may, with the
like sanction, vest the whole or any part of such assets in trustees upon
such trusts for the benefit of the Members as the liquidator shall think fit,
but so that no Member shall be compelled to accept any shares or other
securities or assets whereon there is any liability.
ALTERATION OF BYE-LAWS
85. ALTERATION OF BYE-LAWS
No Bye-law shall be rescinded, altered or amended and no new Bye-law
shall be made until the same has been approved by a resolution of the Board
and by a resolution of the Members.
-36-
<PAGE>
SCHEDULE - FORM A (Bye-law 48)
P R 0 X Y
ARAMEX INTERNATIONAL LIMITED
This proxy is solicited on behalf of the Board of Directors of Aramex
International Limited.
The undersigned shareholder of Aramex International Limited (the
"Company") hereby constitutes and appoints [ ], attorney
and proxy of the undersigned, with power of substitution, to attend, vote and
act for the undersigned at the special meeting of shareholders of the
Company, a Bermuda Company, to be held at the _________________ on
_____________________, 199[ ] at [ ] p.m. local time, at any adjournments
thereof, with respect to the following on the reverse side of this Proxy
card:
(To be continued and signed on reverse side).
/X/ Please mark your votes as in this example
1. Approve the proposed
FOR AGAINST ABSTAIN
/ / / / / /
If not otherwise directed, this proxy will be voted FOR the proposed
.
The Board of Directors recommends voting in favour of/against this
matter.
PLEASE DATE, SIGN AND MAIL AT ONCE IN THE ENCLOSED POSTPAID ENVELOPE.
Signature __________________ Date _____ Signature _________________ Date____
(If held jointly)
NOTE: Please sign exactly as your name appears hereon. If signing
as attorney, executor, administrator, trustee, guardian or the
like, please give your full title as such. If signing for a
corporation, please give your title.
-37-
<PAGE>
SCHEDULE - FORM B (Bye-law 57)
NOTICE OF LIABILITY TO FORFEITURE FOR NON PAYMENT OF CALL
You have failed to pay the call of [amount of call] made on the
____ day of __________, 19__ last, in respect of the [number]
share(s) [numbers in figures] standing in your name in the Register
of Members of the Company, on the ___________ day of ____________,
19__ last, the day appointed for payment of such call. You are
hereby notified that unless you pay such call together with
interest thereon at the rate of ________ per annum computed from
the said ________ day of ____________, 19__ last, on or before the
________ day of ____________, 19__ next at the place of business of
the Company the share(s) will be liable to be forfeited.
Dated this ________ day of ______________, 19__
[Signature of Secretary]
By order of the Board
-38-
<PAGE>
SCHEDULE - FORM C (Bye-law 61)
TRANSFER OF A SHARE OR SHARES
FOR VALUE
RECEIVED______________________________________________________________________
[amount]
______________________________________________________________________________
[transferor]
hereby sell assign and transfer unto
__________________________________________________________________ [transferee]
of____________________________________________________________________________
[address]
____________________________________________________________ [number of shares]
shares of____________________________________________________ [name of Company]
Dated _________________________
_______________________________________
(Transferor)
In the presence of:
______________________________________
(Witness)
_______________________________________
(Transferee)
In the presence of:
_______________________________________
(Witness)
-39-
<PAGE>
SCHEDULE - FORM D (Bye-law 65)
TRANSFER BY A PERSON BECOMING
ENTITLED ON DEATH/BANKRUPTCY OF A MEMBER
I/We having become entitled in consequence of the [death/bankruptcy] of
[name of the deceased Member] to [number] share(s) standing in the
register of members of [Company] in the name of the said [name of
deceased Member] instead of being registered myself/ourselves elect to
have [name of transferee] (the "Transferee") registered as a transferee
of such share(s) and I/we do hereby accordingly transfer the said
share(s) to the Transferee to hold the same unto the Transferee his or
her executors, administrators and assigns subject to the conditions on
which the same were held at the time of the execution thereof; and the
Transferee does hereby agree to take the said share(s) subject to the
same conditions.
WITNESS our hands this ________ day of ____________, 19__
Signed by the above-named )
[person or persons entitled] )
in the presence of: )
Signed by the above-named )
[transferee] )
in the presence of : )
-40-
<PAGE>
EXHIBIT 4.1
ARAMEX [LOGO]
ARAMEX
INTERNATIONAL
LIMITED
COMMON SHARES
INCORPORATED IN THE ISLANDS OF BERMUDA
UNDER THE COMPANIES ACT, 1981
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT CUSIP 604450 10 5
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF
$.01 EACH OF THE COMMON SHARES OF
ARAMEX INTERNATIONAL LIMITED
transferable on the books of the Corporation by the holder hereof in person
or by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Memorandum of
Association and Bye-Laws of the Company and all amendments thereof to all of
which the holder by acceptance hereof assents and shall be transferable in
accordance therewith.
This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
[SEAL]
PRESIDENT, DEPUTY CHAIRMAN
AND CHIEF EXECUTIVE OFFICER CHAIRMAN OF THE BOARD
COUNTERSIGNED AND REGISTERED:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
(Jersey City, NJ)
TRANSFER AGENT
AND REGISTRAR,
BY
AUTHORIZED OFFICER
<PAGE>
FOR VALUE RECEIVED ------------------------------------------------------------
(fill in amount for purposes of stamp duly)
- -------------------------------------------------------------------------------
(name in full of Transferor)
hereby sell, assign and transfer unto -----------------------------------------
(name in full of Transferee)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(address)
- ----------------------------------------------------------------- Common Shares
represented by the within Certificate.
Dated ------------------------------
In the presence of:
- ------------------------------------- ------------------------------------
(Transferor)
- -------------------------------------
(2 witnesses sign here)
In the presence of:
- -------------------------------------
------------------------------------
(Transferee)
- -------------------------------------
(2 witnesses sign here)
Signature(s) Guaranteed:
- -------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17AD-15.
<PAGE>
EXHIBIT 4.2
WARRANT AGREEMENT
This Warrant Agreement, dated as of December __, 1996 between Aramex
International Limited, a Bermuda corporation organized under the laws of Bermuda
(the "COMPANY"), and Commonwealth Associates ("COMMONWEALTH").
WHEREAS, the Company and Commonwealth, as Representative of a group of
underwriters (the "UNDERWRITERS"), have entered into an Underwriting Agreement,
dated as of December __, 1996 (the "UNDERWRITING AGREEMENT"), pursuant to which
the Underwriters agreed, severally and not jointly, to purchase an aggregate of
1,000,000 shares of the Common Stock, $0.01 par value per share, of the Company
(the "COMMON STOCK"), and engage in a public offering of such shares (the
"OFFERING");
WHEREAS, in consideration for Commonwealth's commitment to act as
Representative of the Underwriters in the Offering and the payment to the
Company of one hundred dollars ($100), the Company has agreed to issue warrants
to Commonwealth to purchase an aggregate of 100,000 additional shares of the
Common Stock at a price equal to 120% of the public offering price of the shares
of Common Stock sold in the Offering; and
WHEREAS, on the date hereof, the Company and the Underwriters
completed the purchase and sale of the Common Stock contemplated by the
Underwriting Agreement.
NOW, THEREFORE, in consideration of the premises, the agreements set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Commonwealth agree
as follows:
ARTICLE I
Section 1.01. DEFINITION OF TERMS. As used in the Agreement, the
following capitalized terms shall have the meanings provided therefor in this
Section 1.01 or elsewhere as referred to in this Section 1.01:
(a) BUSINESS DAY. A day other than a Saturday, Sunday or other day
on which banks in the State of New York are authorized by law to remain closed.
(b) CHANGE-IN-CONTROL. Any of: (i) the acquisition of substantially
all the assets of the Company by any person (including entity) or group of
persons; (ii) the participation by the Company in a merger or consolidation of
which the Company is not in economic substance the
<PAGE>
surviving entity; or (iii) the beneficial ownership (within the meaning of Rule
13d-3 under the Exchange act) of more than 50% of the voting stock of the
Company at any time after the date hereof, by any individual, corporation,
partnership or other person or entity (together with its "Affiliates" and
"Associates," as defined in Rule 12b-2 under the Exchange Act) who or which as
of a date twelve (12) months earlier did not have such a voting stock ownership
position of more than 50% of the Company's or its predecessors' stock.
(c) COMMISSION. The Securities and Exchange Commission.
(d) COMMON STOCK. See Preamble.
(e) COMMON STOCK EQUIVALENT. Warrants, options, subscriptions or
purchase rights with respect to shares of Common Stock or any securities
convertible into or exchangeable for shares of Common Stock or warrants,
options, subscription or purchase rights with respect to such convertible or
exchangeable securities.
(f) ELIGIBLE HOLDERS. As of a particular date, all of the holders of
Warrants or Warrant Shares.
(g) EXCHANGE ACT. The Securities Exchange Act of 1934, as amended.
(h) EXERCISE PRICE. $___ per Warrant Share, as such price may be
adjusted from time to time pursuant of Article III hereof.
(i) EXERCISE TIME. The date and time which falls on the earlier of
(i) 9:00 A.M., New York time, on December __, 1997, or (ii) the effective date
and time of any Change-in-Control of the Company.
(j) EXPIRATION DATE. 5:00 P.M., New York time, on December __, 2001,
or if such day is not a Business Day, the next succeeding day which is a
Business Day.
(k) NASD. National Association of Securities Dealers, Inc. and
NASDAQ: the Nasdaq National Market.
(l) OFFERING. See Preamble.
(m) PERSON. An individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency
thereof.
(n) REGISTRATION RIGHTS AGREEMENT. See Section 6.01.
(o) REGISTRATION STATEMENT. Any registration statement of the
Company filed or to be filed with the SEC which covers any of the Warrant
Shares, including all amendments
- 2 -
<PAGE>
(including post-effective amendments) and supplements thereto, all exhibits
thereto and all material incorporated therein by reference.
(p) SECURITIES ACT. The Securities Act of 1933, as amended.
(q) TRANSFER. See Section 5.02.
(r) UNDERWRITERS. See Preamble.
(s) UNDERWRITING AGREEMENT. See Preamble.
(t) WARRANTHOLDER. Commonwealth and any other holders of Warrants
which have been transferred or assigned to such Persons in accordance with the
terms of this Agreement.
(u) WARRANTS. The Warrants represented by the initial Warrant
Certificate issued to Commonwealth hereunder and all other Warrant Certificates
that may be issued in its or their place (together initially evidencing the
right to purchase an aggregate of 100,000 shares of Common Stock).
(v) WARRANT SHARES. Common Stock purchasable upon exercise of the
Warrant or any other securities for which the Warrants may become exercisable
pursuant to Section 3.01 hereof.
ARTICLE II
GRANT, DURATION AND EXERCISE OF WARRANTS
Section 2.01. GRANT OF WARRANTS. In exchange for the payment of one
hundred ($100.00) dollars, the Warrantholder is hereby granted the right to
purchase the Warrant Shares, at any time on or after the Exercise Time and
before the Expiration Date, at the Exercise Price, subject to the terms and
conditions of this Agreement. Except as set forth herein, the Warrant Shares
are in all respects identical to the shares of Common Stock being purchased by
the Underwriters for resale in the Offering pursuant to the terms and provisions
of the Underwriting Agreement.
Section 2.02. WARRANT CERTIFICATE. The warrants shall be evidenced
by one or more Warrant Certificates (each a "WARRANT CERTIFICATE") in the form
of EXHIBIT A hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions and other variations as required or permitted by this
Agreement.
Section 2.03. DURATION OF WARRANTS. The Warrantholder may exercise
the Warrants at any time and from time to time after the Exercise Time, and
before 5:00 P.M., New
- 3 -
<PAGE>
York time, on the Expiration Date. If any of the Warrants are not exercised on
the Expiration date, they shall become void.
Section 2.04. EXERCISE OF WARRANTS.
(a) The Warrantholder may exercise any of the Warrants, as follows:
(i) By presentation and surrender of the Warrant
Certificate representing the Warrants to the Company at its principal
executive offices or at the office of its stock transfer agent, if any,
with a subscription form in the form attached hereto as ANNEX A duly
executed and accompanied by payment of the full Exercise Price for each
Warrant Share to be purchased; or
(ii) By presentation and surrender of the Warrant
Certificate representing the Warrants to the Company at its principal
executive offices with a Net Exercise Form in the form attached hereto as
ANNEX B duly executed (a "NET EXERCISE"). In the event of a Net Exercise,
the Warrantholder shall exchange the Warrant Certificate representing the
Warrants for that number of Warrant Shares determined by multiplying (A)
the number of shares of common stock for which the Warrants are then
exercisable, by (B) a fraction, the numerator of which shall be the
difference between the then current market price per Warrant Share and the
Exercise Price, and the denominator of which shall be the then current
market price per warrant Share. For purposes of any computation under this
Section 2.04 (a)(ii) only, the then current market price per share of
Common Stock at any date shall be deemed to be the last sale price of the
Common Stock on the business day prior to the date of the Net Exercise or,
in case no such reported sales take place on such day, the average of the
last reported bid and asked prices of the Common Stock on such day, in
either case on the principal national securities exchange on which the
Common Stock is admitted to trading or listed, or if not listed or admitted
to trading on any such exchange, the representative closing bid price of
the Common Stock as reported by NASDAQ, or other similar organization if
NASDAQ is no longer reporting such information, or if not so available, the
fair market price of the Common Stock as determined by the Board of
Directors.
(b) Upon receipt of the Warrant Certificate representing the
Warrants, in the case of Section 2.04(a)(i), with the Subscription Form duly
executed and accompanied by payment of the aggregate Exercise Price for the
Warrant Shares for which the warrants are then being exercised, or, in the case
of Section 2.04(a)(ii), with the Net Exercise Form duly executed, the Company
shall cause to be issued certificates for the total number of whole shares of
Common Stock for which the Warrants are being exercised (adjusted to reflect the
effect of any antidilution provisions contained in Article III hereof, if any,
and as provided in Section 2.06) in such denominations as are requested for
delivery to the Warrantholder, and the Company shall thereupon deliver such
certificates to the Warrantholder. The Warrantholder shall be deemed to be the
holder of record of the Warrant Shares issuable upon such exercise,
notwithstanding that
- 4 -
<PAGE>
the stock transfer books of the Company shall then be closed or that
certificates representing such Warrant Shares shall not then be actually
delivered to the Warrantholder. If at the time any warrants are exercised, a
Registration Statement is not in effect to register under the Securities Act the
Warrant Shares issuable upon exercise of such Warrants, the Company may require
the Warrantholder to make such representations, and may place such legends on
certificates representing the Warrant Shares, as may be reasonably required in
the opinion of counsel to the Company to permit the Warrant Shares to be issued
without such registration.
(c) In case the Warrantholder shall exercise Warrants with respect to
less than all of the Warrant Shares that may be purchased under the Warrant
Certificate representing the Warrants, the Company shall execute a new Warrant
Certificate in the form of EXHIBIT A hereto representing warrants to purchase
the balance of such Warrant Shares and deliver such new Warrant Certificate to
the Warrantholder.
(d) The Company shall pay any and all stock transfer and similar
taxes which may be payable in respect of the issue of any Warrant Shares to the
Warrantholder.
Section 2.05. RESERVATION OF SHARES. The Company hereby represents
that there are now, and agrees that at all times there shall be, reserved for
issuance and delivery upon exercise of the Warrants such number of shares of
Common Stock or other shares of capital stock of the Company from time to time
issuable upon exercise of the Warrants. All such shares shall be duly
authorized, and when issued upon such exercise, shall be validly issued, fully
paid and nonassessable, free and clear of all liens, security interests, charges
and other encumbrances or restrictions on sale and free and clear of all
preemptive rights.
Section 2.06. FRACTIONAL SHARES. The Company shall not be required
to issue any fraction of a share of its capital stock in connection with the
exercise of any Warrants, and in any case where the Warrantholder would, except
for the provisions of this Section 2.06, be entitled under the terms of this
Warrant Agreement to receive a fraction of a share upon the exercise of any
Warrants, the Company shall, upon the exercise of such Warrants in accordance
with Section 2.04, issue the largest number of whole shares purchasable upon
exercise of such Warrants. The Company shall not be required to make any cash
or other adjustment in respect of such fraction of a share to which the
Warrantholder would otherwise be entitled.
Section 2.07. LISTING. Prior to the issuance of any Warrant Shares
upon exercise of any of the Warrants, the Company shall secure the listing of
such Warrant Shares upon each national securities exchange or automated
quotation system, if any, upon which shares of the Common Stock are then listed
(subject to official notice of issuance upon exercise of such Warrants) and
shall maintain, so long as any other shares of the same class of capital stock
shall be so listed, such listing of all Warrant Shares from time to time
issuable upon the exercise of such Warrants; and the Company shall so list on
each national securities exchange or automated quotation system, and shall
maintain such listing of any other shares of capital stock of the
- 5 -
<PAGE>
Company issuable upon the exercise of any Warrants if and so long as any shares
of the same class shall be listed on such national securities exchange or
automated quotation system.
ARTICLE III
ADJUSTMENT OF NUMBER AND KIND OF WARRANT SHARES
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article III.
Section 3.01. MECHANICAL ADJUSTMENTS.
(a) If at any time prior to the exercise of the Warrants in full, the
Company shall (i) declare a dividend or make a distribution on the Common Stock
payable in shares of its capital stock (whether shares of Common Stock or of
capital stock of any other class); (ii) subdivide, reclassify or recapitalize
outstanding Common Stock into a greater number of shares; (iii) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number of
shares; or (iv) issue any shares of its capital stock by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or a merger in which the Company is the continuing corporation),
the number and kind of Warrant Shares and the Exercise Price in effect at the
time of the record date of such dividend, distribution, subdivision,
combination, reclassification or recapitalization shall be adjusted so that the
Warrantholder shall be entitled to receive the aggregate number and kind of
shares which, if the Warrants had been exercised in full immediately prior to
such event, it would have owned upon such exercise and been entitled to receive
by virtue of such dividend, distribution, subdivision, or the effective date, in
the case of a subdivision, combination, recapitalization, to allow the purchase
of such aggregate number and kind of shares; provided, however, that the
provisions of this Section 3.01(a) shall not apply to any grants or issuances
under any existing stock option plan of the Company.
(b) If at any time prior to the exercise of the Warrants in full, the
Company shall fix a record date for the issuance or making a distribution to all
holders of Common Stock (including any such distribution to be made in
connection with a consolidation or merger in which the Company is to be the
continuing corporation) of evidences of its indebtedness, any other securities
of the Company or any cash, property or other assets (excluding a combination,
reclassification or recapitalization referred to in Section 3.01 (a), regular
cash dividends or cash distributions paid out of net profits legally available
therefor and in the ordinary course of business and subscription rights, options
or warrants for Common Stock or Common Stock equivalents) (any such non-excluded
event being herein called a "SPECIAL DIVIDEND"), the Exercise Price shall be
decreased immediately after the record date for such Special Dividend to a price
determined by multiplying the Exercise Price then in effect by a fraction, the
numerator of which shall be the then current market price per share of the
Common Stock (as defined in Section 3.01(e)) on such record date less the fair
market value (as determined by the Company's
- 6 -
<PAGE>
Board of Directors) of the evidences of indebtedness, securities or property, or
other assets issued or distributed in such Special Dividend applicable to one
share of Common Stock or of such subscription rights, options or warrants
applicable to one share of Common Stock and the denominator of which shall be
such then current market price per share of Common Stock ( as so determined).
Any adjustment required by this paragraph 3.01(b) shall be made successively
whenever such a record date is fixed and in the event that such distribution is
not so made, the Exercise Price shall again be adjusted to be the Exercise Price
that was in effect immediately prior to such record date.
(c) If at any time prior to the exercise of the Warrants in full, the
Company shall make a distribution to all holders of the Common Stock of a
subsidiary of the Company or securities convertible into or exercisable for such
stock, then in lieu of an adjustment in the Exercise Price or the number of
Warrant Shares purchasable upon the exercise of the Warrants, each
Warrantholder, upon the exercise hereof at any time after such distribution,
shall be entitled to receive from the Company, such subsidiary or both, as the
Company shall determine, the stock or other securities to which such
Warrantholder would have been entitled if such Warrantholder had exercised all
of the Warrants immediately prior thereto, all subject to further adjustment as
provided in this Article III, and the Company shall reserve, for the life of the
Warrants, such securities of such subsidiary or other corporation; provided,
however, that no adjustment in respect of dividends or interest on such stock or
other securities shall be made during the term of the Warrants or upon their
exercise.
(d) For the purpose of any computation under Section 3.01(b), the
current market price per share of Common Stock at any date shall be deemed to be
the average of the daily closing prices for 20 consecutive trading days
commencing 30 trading days before such date. The closing price for each day
shall be the last sale price regular way or, in case no such reported sales take
place on such day, the average of the last reported bid and asked prices regular
way, in either case on the principal national securities exchange on which the
Common Stock is admitted to trading or listed, or if not listed or admitted to
trading on any such exchange, the representative closing bid price as reported
by NASDAQ, or other similar organization if NASDAQ is no longer reporting such
information, or if not so available, the fair market price as determined by the
Board of Directors.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($.05)
in such price; PROVIDED, HOWEVER, that any adjustments which by reason of this
paragraph (e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
3.01 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. Notwithstanding anything in this Section 3.01 to the
contrary, the Exercise Price shall not be reduced to less than the then existing
par value of the Common Stock as a result of any adjustment made hereunder.
- 7 -
<PAGE>
(f) In the event that at any time, as a result of any adjustment made
pursuant to Section 3.01(a), the Warrantholder thereafter shall become entitled
to receive any shares of the Company other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in Section 3.01(a) or this paragraph 3.01(f).
Section 3.02. NOTICES OF ADJUSTMENT. Whenever there is, pursuant to
Section 3.01 hereof, any adjustment in the number and kind of Warrant Shares
purchasable hereunder or any adjustment of the Exercise Price therefor, the
Company shall prepare and deliver forthwith to the Warrantholder a certificate
signed by its President, and by any Vice President, Treasurer or Secretary,
setting forth the adjusted number and kind of stock, securities or assets, as
the case may be, purchasable upon the exercise of the Warrants and the Exercise
Price therefor, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which adjustment was made.
Section 3.03. PRESERVATION OF PURCHASE RIGHTS IN CERTAIN
TRANSACTIONS. In case of any reclassification, capital reorganization or other
change of outstanding shares of Common stock (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the par
value of the Common Stock) or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which the Company is the continuing corporation and that does not result in
any reclassification, capital reorganization or other change of outstanding
shares of Common Stock of the class issuable upon exercise of the Warrants) or
in case of any sale, lease, transfer or conveyance to another corporation of the
property and assets of the Company as an entirety or substantially as an
entirety, the Company shall cause such successor or purchasing corporation, as
the case may be, to execute with the Warrantholder an agreement granting the
Warrantholder the right thereafter, upon payment of the Exercise Price in effect
immediately prior to such action, to receive upon exercise of the Warrants the
kind and amount of shares and other securities and property which he would have
owned or have been entitled to receive, after the happening of such
reclassification, change, consolidation, merger, sale or conveyance, had the
Warrants been exercised immediately prior to such action. Such agreement shall
provide for adjustments in respect of such shares of stock and other securities
and property, which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article III. In the event that in connection
with any such reclassification, capital reorganization, change, consolidation,
merger, sale or conveyance, additional shares of Common Stock shall be issued in
exchange, conversion, substitution or payment, in whole or in part, for, or of ,
a security of the Company other than Common Stock, any such issue shall be
treated as an issue of Common Stock covered by the provisions of Article III.
The provisions of this Section 3.03 shall similarly apply to successive
reclassification, capital reorganizations, consolidations, mergers, sales or
conveyances.
- 8 -
<PAGE>
Section 3.04. FORMS OF WARRANT AGREEMENT AND WARRANT CERTIFICATES
AFTER ADJUSTMENTS. The forms of this Warrant Agreement and any Warrant
Certificates issued in connection herewith need not be changed because of any
adjustments in the Exercise Price or the number or kind of the Warrant Shares,
and Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the applicable Warrant
Certificate, as initially issued.
Section 3.05. TREATMENT OF WARRANTHOLDER. Prior to due presentment
for registration of transfer of the Warrants, the Company may deem and treat the
Warrantholder as the absolute owner of the Warrants (notwithstanding any
notation of ownership or other writing hereon) for all purposes and shall not be
affected by any notice to the contrary.
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
Section 4.01. NO RIGHTS AS SHAREHOLDERS NOTICE TO WARRANT HOLDERS.
Nothing contained in the Warrant Agreement or any Warrant Certificate shall be
construed as conferring upon the Warrantholder the right to vote or to receive
dividends or to consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company or of any
other matter, or any rights whatsoever as shareholders of the Company. The
Company shall give notice to the Warrantholder by certified mail if at any time
prior to the expiration or exercise in full of the Warrants, any of the
following events shall occur:
(a) the Company shall authorize the payment of any dividend payable
in any securities upon shares of Common Stock or authorize the making of any
distribution (other than a regular cash dividend or cash distribution paid out
funds legally available therefor and in the ordinary cause of business) to all
holders of Common Stock;
(b) the Company shall authorize the issuance to all holders of Common
Stock of any additional shares of Common Stock or Common Stock Equivalents or of
rights, options or warrants to subscribe for or purchase Common Stock or Common
Stock Equivalents or of any other subscription rights, options or warrants;
(c) a dissolution, liquidation or winding up of the Company shall be
proposed; or
(d) a capital reorganization or reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock and
other than a change in the par value of the Common Stock) or any consolidation
or merger of the Company with or into another corporation (other than
consolidation or merger which the Company is the continuing corporation and that
does not result in any reclassification or change of Common Stock outstanding)
or in the case of any sale or conveyance to another corporation of the property
of the Company as an entirety or substantially as an entirety.
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Such giving of notice shall be initiated at least ten Business Days
prior to the date fixed as a record date or effective date or the date of
closing of the Company's stock transfer books for the determination of the
shareholders entitled to such dividend, distribution or issuance, or for the
determination of the shareholders entitled to such dividend, distribution or
issuance, or for the determination of the shareholders entitled to vote on such
proposed reorganization, dissolution, liquidation or winding up. Such notice
shall specify such record date or the date of closing the stock transfer books,
as the case may be. Failure to provide such notice shall not affect the
validity of any action taken in connection with such dividend, distribution or
issuance, or such proposed reorganization, dissolution, liquidation or winding
up.
Section 4.02. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT
CERTIFICATES. If any Warrant Certificate is lost, stolen, mutilated or
destroyed, the Company may, on such terms as to indemnity or otherwise as it may
in its discretion impose (which shall, in the case of a mutilated Warrant
Certificate, include the surrender thereof), issue new Warrant Certificate
representing warrants of like denomination and tenor as, and in substitution
for, such Warrant Certificate.
ARTICLE V
SPLIT-UP, COMBINATION
EXCHANGE AND TRANSFER OF WARRANTS
Section 5.01. SPLIT-UP, COMBINATION, EXCHANGE AND TRANSFER OF
WARRANTS. Subject to the provisions of Section 5.02 hereof, any Warrant
Certificate issued pursuant to this Warrant Agreement may be split up, combined
or exchanged for another Warrant Certificate or Certificates containing the same
terms to purchase a like aggregate number of Warrant Shares. If the
Warrantholder desires to split up, combine or exchange any Warrant Certificate
issued pursuant to the Warrant Agreement, it shall make such request in writing
delivered to the Company and shall surrender to the Company such Warrant
Certificate to be so split-up, combined or exchanged. Upon any such surrender
for a split-up, combination or exchange, the Company shall execute and deliver
to the person or persons entitled thereto a Warrant Certificate or any Warrant
Certificate issued pursuant to this Warrant Agreement, as the case may be, as so
requested. The Company shall not be required to effect any split-up,
combination or exchange which will result in (i) the issuance of Warrant
Certificates entitling the Warrantholder thereof to purchase upon exercise a
fraction of a Warrant Share or a fractional Warrant or (ii) more than a total of
20 Warrant Certificates outstanding representing, in the aggregate, the right to
purchase the Warrant Shares represented by the Warrant Certificate originally
issued to Commonwealth. The Company may require such Warrantholder to pay a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any split-up, combination or exchange of Warrants.
Section 5.02. RESTRICTIONS OR TRANSFER. Neither this Warrant
Agreement nor the Warrant Shares may be disposed of or encumbered (any such
action, a "TRANSFER") prior to December __, 1997, except to Commonwealth, any of
the other Underwriters, any successor to the business of any such company, or
any partner or officer of any such company. There shall be
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no restriction on the ability of Commonwealth to transfer beneficial interest in
the Warrants to its successors, partners, directors, officers or employees, or
to the officers, employees or partners of any such successor or partner,
provided that any such transfers of beneficial interest and any Transfers shall
be made only in accordance with and subject to the provisions of the Securities
Act and the rules and regulations promulgated thereunder. If at the time of a
Transfer, a Registration Statement is not in effect to register the Warrants or
the Warrant Shares, the Company may require the Warrantholder to make such
representations, and may place such legends on certificates representing the
Warrants, as may be reasonably required in the opinion of counsel to the Company
to permit a Transfer without such registration.
ARTICLE VI
REGISTRATION RIGHTS
Section 6.01. INCIDENTAL REGISTRATIONS. If, at any time during the
four-year period commencing on December __, 1997, the Company shall file a
registration statement (other than on Form S-4, Form S-8, or any successor
forms) to register shares of Common Stock for its own account with the
Commission while any Warrants or Warrant Shares are outstanding, the Company
shall give all of the Eligible Holders at least 45 days prior written notice of
the filing of such registration statement. If requested by any Eligible Holder
in writing within 30 days after receipt of any such notice, the Company shall,
at the Company's sole expense (other than the fees and disbursements of counsel
for the Eligible Holders), register or qualify all or, at each Eligible Holder's
option, any portion of the Warrant Shares of any Eligible Holders who shall have
made such request, concurrently with the registration of such other securities,
all to the extent required to permit the public offering and sale of the Warrant
Shares through the facilities of all appropriate securities exchanges and the
over-the-counter market, and will use its best efforts through its officers,
directors, auditors and counsel to cause (i) such registration statement to
become effective as promptly as practicable and (ii) to keep such registration
statement effective for at least twelve (12) months. Notwithstanding the
foregoing, if the managing underwriter of any such offering shall advise the
Company in writing that, in its opinion, the distribution of all or a portion of
the Warrant Shares requested to be included in the registration concurrently
with the securities being registered by the Company, would materially adversely
affect the distribution of such securities by the Company for its own account,
then the number of Warrant Shares held by such Eligible Holder to be included in
such registration statement shall be reduced to the extent advised by such
managing underwriter, but not in greater proportion than the smallest
proportionate reduction in the number of shares of Common Stock included in the
registration statement for the account of any person other than the Company.
Section 6.02. DEMAND REGISTRATION. If, on any one occasion during
the four-year period commencing on December __, 1997, the Company shall receive
a written request from Eligible Holders who in the aggregate own (or upon
exercise of all Warrants then outstanding would own) a majority of the total
number of shares of Common Stock then included (or upon such exercises would be
included) in the Warrant Shares to register the sale of all or part of such
Warrant Shares, the Company shall, at the Company's sole expense (other than the
fees and
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disbursements of counsel for the Eligible Holders and the underwriting
discounts, if any, payable in respect of the Warrant Shares sold by any Eligible
Holder) within sixty (60) days of the receipt of such request, prepare and file
with the Commission a registration statement sufficient to permit the public
offering and sale of the Warrant Shares through the facilities of all
appropriate securities exchanges and the over-the-counter market, and will use
its best efforts through its officers, directors, auditors and counsel to (i)
cause such registration statement to become effective as promptly as practicable
and (ii) keep such registration statement effective for at least twelve (12)
months. Within three business days after receiving any request contemplated by
this Section 6.02, the Company shall give written notice to all other Eligible
Holders, advising each of them that the Company is proceeding with such
registration and offering to include therein all or any portion of any such
other Eligible Holder's Warrant Shares, provided that the Company receives a
written request to do so from such Eligible Holder within 30 days after receipt
by him or it of the Company's notice. If, in connection with any underwritten
registration initiated pursuant to this Section 6.02, the underwriter of such
registration advises the Eligible Holders that marketing factors require a
limitation of the number of shares to be underwritten, no Warrant Shares
requested by an Eligible Holder to be included in such registration shall be
excluded from the underwriting unless all securities other than Warrant Shares
are first excluded. The Company shall have no obligation to prepare and file a
registration statement as contemplated by this Section 6.02 provided that,
within twenty days of its receipt of a request for registration with respect to
the Warrants or the Warrant Shares, it agrees to purchase the Warrants or the
Warrant Shares from the requesting holders thereof at a price, in the case of
the Warrants, equal to the difference between the Exercise Price and the then
current market price of the Common Stock and, in the case of the Warrant Shares,
at the then current market price of the Common Stock. The current market price
of the Common Stock, as used in this context, shall mean the average of the
closing bid and ask prices of the Common Stock during the five business day
period preceding the request for registration made by the holders of the
Warrants or the Warrant Shares.
Section 6.03. STATE SECURITIES LAW COMPLIANCE. In the event of a
registration pursuant to the provisions of this Article VI, the Company shall
use its best efforts to cause the Warrant Shares so registered to be registered
or qualified for sale under the securities or blue sky laws of such
jurisdictions as the Eligible Holders may reasonably request; provided, however,
that the Company shall not be required to qualify to do business in any state by
reason of this Section 6.03 in which it is not otherwise required to qualify to
do business.
Section 6.04. REGISTRATION STATEMENTS. The Company shall keep
effective any registration or qualification contemplated by this Article VI for
at least twelve (12) months and shall from time to time amend or supplement each
applicable registration statement, preliminary prospectus, final prospectus,
application, document and communication for such period of time (or such shorter
period as shall be required to permit the Eligible Holders to complete the offer
and sale of the Warrant Shares covered thereby); provided, however, that, if the
Company is required to keep any such registration of qualification in effect as
its relates to securities other than the Warrant Shares beyond such twelve month
period, the Company shall keep any such
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qualification or registration in effect as it relates to the Warrant Shares for
so long as such registration or qualification remains or is required to remain
in effect of such other securities.
Article 6.05. PROSPECTUS. In the event of a registration pursuant to
the provisions of this Article VI, the Company shall furnish to each Eligible
Holder such number of copies of the registration statement and of each amendment
and supplement thereto (including each preliminary prospectus and final
prospectus), all of which shall conform to the requirements of the Act and the
rules and regulations thereunder, and such other documents as any Eligible
Holder may reasonably request to facilitate the disposition of the Warrant
Shares included in such registration.
Article 6.06. OPINIONS OF COUNSEL. In the event of a registration
pursuant to the provisions of Article VI, the Company shall furnish each
Eligible Holder of any Warrant Shares so registered and, in the case of an
underwritten offering, shall furnish the underwriters thereof, with an opinion
of its counsel (reasonably acceptable to the Eligible Holders) to the effect
that (i) the registration statement has become effective under the Act and no
order suspending the effectiveness of the registration statement, preventing or
suspending the use of the registration statement, any preliminary prospectus,
any final prospectus or any amendment or supplement thereto has been issued, nor
has the Commission or any securities or blue sky authority of any jurisdiction
instituted or threatened to institute any proceedings with respect to such
order, (ii) the registration statement and each prospectus forming a part
thereof (including each preliminary prospectus), and any amendment or supplement
thereto, complies as to form with the Act and the rules and regulations
thereunder, and (iii) such counsel has no knowledge of any material misstatement
or omission in such registration statement or any prospectus, as amended or
supplemented and, in the case of an underwritten offering, to such further
effect as the underwriters may reasonably request. Such opinion, or a "blue
sky" survey or memorandum furnished at the Company's expense, shall also state
the jurisdictions in which the Warrant Shares have been registered or qualified
for sale pursuant to the provisions of Section 6.03.
Section 6.07. INDEMNITY AND UNDERWRITING AGREEMENTS. In the event of
an underwritten registration pursuant to the provision of the Article VI, the
Company and, upon the request of the underwriter of the registration, any
Eligible Holder who requests to have Warrant Shares included in such
registration pursuant to Section 6.01, shall enter into a cross-indemnity
agreement and a contribution agreement, each in customary form, with each
underwriter, if any, and, if requested, enter into an underwriting agreement
containing conventional representations, warranties, allocation of expenses and
customary closing conditions, including, without limitation, opinions of counsel
and accountants' cold comfort letters, with any underwriter who acquires any
Warrant Shares; provided that no Eligible Holder shall be required to make
representation or warranty or agree to any obligation in respect of indemnity or
contribution except as to statements or omissions, if any, made in any
registration statement, preliminary prospectus or final prospectus (as from time
to time amended and supplemented), or any amendment or supplement thereto, or in
any application (as defined below), in reliance upon and in conformity with
written information furnished to the Company with respect to the Eligible
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Holder by or on behalf of the Eligible Holder expressly for inclusion in any
such registration statement, preliminary prospectus, or any amendment or
supplement thereto, or in any application, as the case may be.
Section 6.08. RULE 144 INFORMATION. The Company agrees that until
all the Warrant Shares have been sold under a registration statement or pursuant
to Rule 144 under the Act, it shall keep current in filing all reports,
statements and other materials required to be filed with the Commission to
permit holders of the Warrant Shares to sell such securities under Rule 144.
ARTICLE VII
INDEMNITY
Section 7.01. INDEMNITY BY THE COMPANY. Subject to the conditions
set forth below, the Company agrees to indemnify and hold harmless each Eligible
Holder, its officers, directors, partners, employees, agents and counsel, and
each person, if any, who controls any such person within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act, from and against
any and all loss, liability, charge, claim, damage and expense whatsoever (which
shall include, for all purposes of this Article VII, without limitation,
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), as and when incurred, arising out of, based upon, or in connection
with (i) any untrue statement, or alleged untrue statement of a material fact
contained (A) in any registration statement, preliminary prospectus or final
prospectus (as from time to time amended and supplemented), or any amendment or
supplement thereto, relating to the sale of any of the Warrant Shares, or (B) in
any application or other document or communication (in this Article VII
collectively called an "application") executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to register or qualify any of the Warrant shares under
the securities or blue sky laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company, with respect to
such Eligible Holder by or on behalf of such person expressly for inclusion in
any registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(ii) any breach of any representation, warranty, covenant or agreement of the
Company contained in the Warrant Agreement. The foregoing agreement to
indemnify shall be in addition to any liability the Company may otherwise have,
including liabilities arising under this Warrant Agreement.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents or counsel, or any controlling
persons of such person (an
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"indemnified party") in respect of which indemnity may be sought against the
Company pursuant to the foregoing paragraph, such indemnified party or parties
shall promptly notify the Company in writing of the institution of such action
(but the failure so to notify shall not relieve the Company from any liability
other than pursuant to this Section 7.01) and the Company shall promptly assume
the defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties) and payment of expenses.
Such indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless the employment of
such counsel shall have been authorized in writing by the Company in connection
with the defense of such action or the Company shall have promptly employed
counsel reasonably satisfactory to such indemnified party or parties to have
charge of the defense of such action or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties which are different from or
additional to those available to the Company, in any of which events such fees
and expenses shall be borne by the Company, and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this Article VII to the contrary notwithstanding, the
Company shall not be liable for any settlement of any such claim or action
effected without its written consent, which consent shall not be unreasonably
withheld. The Company shall not, without the prior written consent of each
indemnified party that is not released as described in this sentence, settle or
compromise any action, or permit a default or consent to the entry of judgment
in or otherwise seek to terminate any pending or threatened action, in respect
of which indemnity may be sought hereunder (whether or not any indemnified party
is a party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each indemnified party from all liability
in respect of such action. The Company agrees promptly to notify the Eligible
Holders of the commencement of any litigation or proceeding against the Company
or any of its officers or directors in connection with the sale of any Warrant
Shares or any preliminary prospectus, prospectus, registration statement or
amendment or supplement thereto, or any application relating to any sale of any
Warrant Shares.
Section 7.02. INDEMNITY BY ELIGIBLE HOLDERS. Each Eligible Holder
participating in any such registration shall indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed the registration statement covering Warrant Shares held by the
Eligible Holder, each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, and its or their respective counsel, to the same extent as the foregoing
indemnity from the Company to the Eligible Holders in Section 7.01, but only
with respect to statements or omissions, if any, made in any registration
statement, preliminary prospectus or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written information
furnished to the Company with respect to such Eligible Holder by or on behalf of
such Eligible Holder expressly for inclusion in any such registration statement,
preliminary prospectus or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be. If any action
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shall be brought against the Company or any other person so indemnified, based
on any such registration statement, preliminary prospectus or final prospectus,
or any amendment or supplement thereto, or in any application, and in respect of
which indemnity may be sought against such Eligible Holder pursuant to this
Section 7.02, such Eligible Holder shall have the rights and duties given to the
Company and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
7.01.
Section 7.03. CONTRIBUTION. To provide for just and equitable
contribution, if (i) an indemnified party makes a claim for indemnification
pursuant to section 7.01 or 7.02 (subject to the limitations thereof) but it is
found in a final judicial determination, not subject to further appeal, that
such indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Securities Act,
the Exchange Act or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any director of the Company, any officer of
the Company who signed any such registration statement, any controlling person
of the Company, and its or their respective counsel), as one entity, and the
Eligible Holders of the Warrant Shares included in such registration in the
aggregate (including for this purpose any contribution by or on behalf of an
indemnified party), as a second entity, shall contribute to the losses,
liabilities, claims, damages and expenses whatsoever to which any of them may be
subject, on the basis of relevant equitable considerations such as the relative
fault of the Company and such Eligible Holders in connection with the facts
which resulted in such losses, liabilities, claims, damages and expenses. The
relative fault, in the case of an untrue statement, alleged untrue statement,
omission or alleged omission shall be determined by, among other things, whether
such statement, alleged statement, omission or alleged omission relates to
information supplied by the Company or by such Eligible Holders, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement, alleged statement, omission or alleged
omission. The Company and the Warrantholder agree that it would be unjust and
inequitable if the respective obligations of the Company and the Eligible
Holders for the contribution were determined by pro rata or per capita
allocation of the aggregate losses, liabilities, claims, damages and expenses
(even if the Eligible Holder and the other indemnified parties were treated as
one entity for such purpose) or by any other method of allocation that does not
reflect the equitable considerations referred to in this Section 7.03. In no
case shall any Eligible Holder be responsible for a portion of the contribution
obligation imposed on all Eligible Holders in excess of its PRO RATA share based
on the number of shares of Common Stock owned (or which would be owned upon
exercise of all Warrant Shares) by it and included in such registration as
compared to the number of shares of Common Stock owned (or which would be owned
upon exercise of all Warrant Shares) by all Eligible Holders and included in
such registration. No person guilty of a fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 7.03, each person, if any, who
controls any Eligible Holder within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act and each officer, director, partner,
employee, agent and
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counsel of each such Eligible Holder or control person and each, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed any such registration statement, each director of the Company and its or
their respective counsel shall have the same right to contribution as the
Company, subject in each case to the provisions of this Section 7.03. Anything
in this Section 7.03 to the contrary notwithstanding, no party shall be liable
for contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 7.03 is intended to supersede any
right to contribution under the Securities Act, the Exchange Act or otherwise.
ARTICLE VIII
OTHER MATTERS
Section 8.01. COMPANY REPRESENTATION. The Company hereby represents
and warrants that (i) all necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and performance of
this Warrant Agreement and any Warrant Certificates issued in connection
herewith and, upon exercise of the Warrants or any successor warrants, the
issuance of the Warrant Shares, and (ii) this Warrant Agreement and the initial
Warrant Certificate representing the Warrants issued to Warrantholder Associates
have been duly and validly executed and delivered by the Company and constitute
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as the enforceability
hereof or thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by generally equitable principles.
Section 8.02. SUCCESSORS AND ASSIGNS. All the covenants and
provisions of this Warrant Agreement by or for the benefit of the Company or the
Warrantholder shall bind and inure to the benefit of their respective successor
and assigns hereunder.
Section 8.03. NO INCONSISTENT AGREEMENTS. The Company will not on or
after the date of this Warrant Agreement enter into any agreement with respect
to its securities which is inconsistent with the rights granted to the
Warrantholder or otherwise conflicts with the provisions hereof. The rights
granted to the Warrantholder hereunder do not in any way conflict with and are
not inconsistent with the rights granted to holders of the Company's securities
under any other agreements.
Section 8.04. INTEGRATION/ENTIRE AGREEMENT. This Warrant Agreement,
any Warrant Certificate issued in connection herewith and the Underwriting
Agreement are intended by the parties as final expressions of their agreement
and intended to be complete and exclusive statements of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. This Warrant Agreement, any Warrant Certificates issued
hereunder and the Underwriting Agreement supersede all or prior agreements and
understandings between the parties with respect to such subject matter.
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Section 8.05. AMENDMENTS AND WAIVERS. The provisions of this Warrant
Agreement may not be amended, notified, supplemented or waived except pursuant
to a written instrument signed by the Company and a majority in interest of the
Eligible Holders.
Section 8.06. SURVIVAL. The obligations of the Company, the
Warrantholder and each Eligible Holder under Articles V, VI, VII and VIII of
this Warrant Agreement shall survive the exercise of all of the Warrants.
Section 8.07. GOVERNING LAW. This Warrant Agreement and any Warrant
Certificate issued in connection herewith shall be governed by and construed in
accordance with the internal laws of the State of New York.
Section 8.08. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect, and of the
remaining provisions contained herein, shall not be affected or impaired
thereby.
Section 8.09. ATTORNEYS' FEES. In any action or proceeding brought
to enforce any provisions of this Warrant Agreement, or where any provision
hereof is validly asserted as a defense, the successful party shall be entitled
to recover reasonable attorney's fees and disbursements in addition to its costs
and expenses and any other available remedy.
Section 8.10. NOTICE. Any notices or certificates by the Company to
the Warrantholder and by the Warrantholder to the Company shall be deemed
delivered if in writing and delivered in person or by registered mail (return
receipt requested) to the Warrantholder at 733 Third Avenue, New York, New York
10017 or, if the Warrantholder has designated by notice in writing to the
Company any other address, to such other address, and if to the Company,
addressed to it at: 2 Badr Shaker Alsayyab Street, Um Uthayna, Amman, Jordan,
Attention: Mr. Fadi Ghandour.
The Company may change its address by written notice to the
Warrantholder and the Warrantholder may change its address by written notice to
the Company.
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IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by
the Company under its corporate seal as of the ____ day of December, 1996.
ARAMEX INTERNATIONAL LIMITED
By:
-------------------------------
Title:
ACCEPTED AND AGREED
COMMONWEALTH ASSOCIATES
By: COMMONWEALTH ASSOCIATES
MANAGEMENT COMPANY, INC.
By:
-----------------------------
Name:
Title:
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EXHIBIT A TO
WARRANT AGREEMENT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON THE EXERCISE THEREOF MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON DECEMBER __, 2001 OR IF NOT A BUSINESS
DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING
BUSINESS DAY.
THE TRANSFER, ASSIGNMENT, PLEDGE AND HYPOTHECATION OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE TO OTHER THAN THE PARTNERS, DIRECTORS, OFFICERS OR EMPLOYEES
OF COMMONWEALTH ASSOCIATES (OR OF ANY SUCCESSOR THERETO OR PARTNER THEREOF
PRIOR) TO DECEMBER __, 1997 IS RESTRICTED IN ACCORDANCE WITH THE WARRANT
AGREEMENT REFERRED TO HEREIN.
WARRANT CERTIFICATE REPRESENTING
WARRANTS TO PURCHASE SHARES OF THE
COMMON STOCK, $.01 PAR VALUE PER SHARE
OF
ARAMEX INTERNATIONAL LIMITED
No. W-__ _______ Shares
This certifies that ________________ (the "WARRANTHOLDER") is entitled
to purchase from Aramex International Limited, a corporation incorporated under
the laws of Bermuda (the "COMPANY"), subject to the terms and conditions hereof,
at any time on or after the earlier of (i) 9:00 A.M., New York time, on December
__, 1997, or (ii) the effective date of any Change-in-Control (as defined in the
Warrant Agreement described below) of the Company and before 5:00 P.M., New York
time on December __, 2001 (or, if such day is not a Business Day (as defined in
the Warrant Agreement described below), at or before 5:00 P.M., New York time,
on the next following Business Day), _______ fully paid and non-assessable
shares of the Common Stock, $0.01 par value per share, of the Company stated
above at the initial exercise price, subject to adjustment in certain events
(the "EXERCISE PRICE"), of $______ per share of Common Stock upon surrender of
this Warrant Certificate and payment of the Exercise Price at
<PAGE>
an office or agency of the Company, but subject to the conditions set forth
herein and in the Warrant Agreement dated as of December __, 1996, between the
Company and Commonwealth Associates (the "WARRANT AGREEMENT"). Payment of the
Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company and by surrender of
this Warrant Certificate in accordance with the terms of the Warrant Agreement.
Notwithstanding the foregoing, the Warrants represented by this Warrant
Certificate may be exercised pursuant to Section 2.04(a)(ii) of the Warrant
Agreement by delivery hereof with a Net Exercise Form.
All capitalized terms used in this Warrant Certificate which are
defined in the Warrant Agreement shall have the meanings assigned to them in the
Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York time, on
December __, 2001 (the "EXPIRATION DATE"), after which time all Warrants
evidenced hereby, unless exercised prior thereto, shall be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company, the
Warrantholder, and any other holders of the Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and/or the type and/or number of the Company's
securities issuable hereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the Warrantholder, issue a
new Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrant;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or other impair, the rights of
the Warrantholder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any change.
Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing
- 2 -
<PAGE>
hereon made by anyone), for the purpose of any exercise hereof, and of any
distribution to the holder(s) hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of _____________, 199__
ARAMEX INTERNATIONAL LIMITED
[SEAL] By:
-------------------------------
Name:
Title:
Attest:
- -------------------------
Secretary
- 3 -
<PAGE>
ANNEX A
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant pursuant
to Section 2.04(a)(i))
Aramex International Limited:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, ______ shares of Common Stock, as provided for therein, and tenders
herewith payment of the purchase price in full in the form of cash or a
certified or official bank check in the amount of $__________.
Please issue a certificate or certificates for such Common Stock in
the name of, and pay any cash for any fractional share to:
Name:
---------------------------------------------
NOTE: The above signature should correspond
exactly with the name on the first page of
the within Warrant Certificate or with the
name of the assignee appearing in the
Assignment attached hereto.
And if said number of shares shall not be all the shares purchasable
under the within Warrant Certificate, a new Warrant Certificate is to be issued
in the name of said undersigned for the balance remaining of the shares
purchasable thereunder rounded up to the next higher number of shares.
<PAGE>
ANNEX B
NET EXERCISE FORM
(To be executed upon exercise of Warrant
pursuant to Section 2.04(a)(ii))
Aramex International Limited:
The undersigned hereby irrevocably elects a Net Exercise of the right
of purchase represented by the within Warrant Certificate for, and to purchase
thereunder, ______ shares of Common Stock, as provided for in Section
2.04(a)(ii) therein. Attached hereto is a Schedule showing the undersigned's
calculation of the number of Shares issuable on such Net Exercise.
Please issue a certificate or certificates for such Common Stock in
the name of, and pay any cash for any fractional share to:
Name:
--------------------------------------
(Please Print Name, Address
and Social Security No.)
Signature:
---------------------------------
NOTE: The above signature should
correspond exactly with the name
on the first page of the within
Warrant Certificate or with the
name of the assignee appearing in
the Assignment attached hereto.
<PAGE>
EXHIBIT 5.1
December 12, 1996
ARAMEX INTERNATIONAL LIMITED
2 Badyr Shaker Alysayyab Street
Um Uthayna, Amman Jordan
Re: Aramex International Limited
Registration Statement on Form F-1
Ladies and Gentlemen:
At your request, we are rendering this opinion in connection with a proposed
sale by Aramex International Limited, a Bermuda corporation (the "Company"), of
up to 1,000,000 shares of common shares, $0.01 par value (the "Common Shares"),
and the sale by certain Company stockholders of up to 100,000 shares of Common
Stock.
We have examined instruments, documents, and records which we deemed
relevant and necessary for the basis of our opinion hereinafter expressed. In
such examination, we have assumed the following: (a) the authenticity of
original documents and the genuineness of all signatures; (b) the conformity to
the originals of all documents submitted to us as copies; and (c) the truth,
accuracy, and completeness of the information, representations, and warranties
contained in the records, documents, instruments, and certificates we have
reviewed.
Based on such examination, we are of the opinion that the 1,000,000 shares
of Common Stock to be issued and sold by the Company, are duly authorized and
will be, when issued against payment of the purchase price therefor, legally
issued, fully paid and nonassessable.
We are of the further opinion that 150,000 shares of Common Stock to be sold
by the selling stockholders (to cover over-allotments, if any) identified in the
above-referenced Registration Statement are, as of the date hereof, duly
authorized shares of Common Stock, and have been legally issued, fully paid, and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement and to the use of our name wherever it
appears in said Registration Statement, including the Prospectus constituting a
part thereof, as originally filed or as subsequently amended or supplemented. In
giving such consent, we do not consider that we are "experts" within the meaning
of such term as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission issued thereunder, with
respect to any part of the Registration Statement, including this opinion as an
exhibit or otherwise.
Very truly yours,
CONYERS, DILL & PEARMAN
<PAGE>
EXHIBIT 8.1
12 December, 1996
Aramex International Ltd.
Clarendon House
2 Church Street
Hamilton
Bermuda
Dear Sirs:
RE: ARAMEX INTERNATIONAL LTD. (THE "COMPANY")
We have acted as special legal counsel in Bermuda to you in connection with a
proposed sale of up to 1,000,000 common shares, US$0.01 par value each (the
"Common Shares") by the Company and the proposed sale by certain shareholders of
the Company of 150,000 shares of Common Stock which are subject to a 45-day
overallotment option granted by certain shareholders to the underwriters.
For the purposes of giving this opinion, we have examined the registration
statement on Form F-1 initially filed with the Securities and Exchange
Commission under the United States Securities Act of 1933 on 6 November, 1996
and as amended, as at the date hereof (the "Registration Statement") relating to
the registration of the offering of such Common Shares. We have also examined
such other documents and made such enquiries as to questions of law as we have
deemed necessary in order to render the opinion set forth below.
We have assumed (a) the genuineness and authenticity of all signatures and the
conformity to the originals of all copies of documents (whether or not
certified), (b) the accuracy and completeness of all factual representations
made in the Registration Statement and other documents reviewed by us, (c) the
authority of all persons signing any documents reviewed by us, (d) that there is
no provision of the law of any jurisdiction, other than Bermuda, which would
have any implication in relation to the opinions expressed herein.
We have made no investigation of and express no opinion in relation to the laws
of any jurisdiction other than Bermuda. This opinion is governed by and
construed in accordance with the laws of Bermuda and is limited to and is given
on the basis of the current law and practice in Bermuda.
On the basis of, and subject to, the foregoing, we hereby confirm:
1. that the paragraph contained under the heading "Certain Bermuda Tax
Considerations" on page 55 of the Registration Statement, is an accurate
summary of the matters referred to herein; and
2. that the paragraph printed in bold which commences as the last paragraph on
page 7 of the Registration Statement, contains an accurate summary of the
Bermuda position in relation to the enforcement of US civil liability
provisions; and
3. that, excluding the last paragraph thereof, the section entitled "Certain
Foreign Issuer Considerations" on pages 50-51 of the Registration Statement,
excluding the last paragraph thereto, is an accurate summary of the matters
referred to therein.
We hereby consent:
1. to the reference to our name under the caption "Taxation" on page 51 of the
Registration Statement;
2. to the reference to our name on page 7 of the Registration Statement;
<PAGE>
3. to the reference to our name on page 50 of the Registration Statement; and
4. to the filing of this opinion as an exhibit to the Registration Statement.
In giving such consent, we do not consider that we are "experts" within the
meaning of such term as used in the U.S. Securities Act of 1933, as amended, or
the rules and regulations of the Securities and Exchange Commission issued
thereunder, with respect to any part of the Registration Statement, including
this opinion as an exhibit or otherwise.
Yours faithfully,
CONYERS DILL & PEARMAN
<PAGE>
EXHIBIT 8.2
December , 1996
Aramex International Limited
2 Badr Shaker Alsayyab Street
Um Uthayna, Amman, Jordan
Ladies and Gentlemen:
We have acted as United States counsel to Aramex International Limited (the
"Company") in connection with the proposed issuance by the Company of common
stock pursuant to the Registration Statement of the Company on Form F-1 (the
"Registration Statement"), filed on November 6, 1996 with the Securities and
Exchange Commission pursuant to the Securities Act of 1933 (collectively, the
"Securities"). In connection therewith, you have requested our opinion regarding
certain United States federal income tax matters.
In formulating our opinion, we have examined such documents as we have
deemed appropriate, including (but not limited to) the Registration Statement.
In addition, we have obtained such additional factual representations and
information as we have deemed relevant and necessary through consultation with
various officers and representatives of the Company.
Based on the foregoing, we are of the opinion that the statements in the
Registration Statement under the caption "Taxation -- Certain United States
Federal Income Tax Considerations," insofar as such statements constitute
summaries of United States federal income tax laws, are accurate in all material
respects.
The foregoing opinion is based on the Internal Revenue Code of 1986 (the
"Code"), existing final, temporary and proposed Treasury Regulations, Internal
Revenue Service rulings and pronouncements and judicial decisions all of which
are subject to prospective and retroactive changes. You should be aware that an
opinion of counsel is not binding on the Internal Revenue Service or the courts,
and the authorities on which our opinions are based are subject to varying
interpretations. In addition, our opinions cannot be relied upon if any of the
factual information obtained from the Company or facts contained in the
documents that we have examined are, or later become, inaccurate. No opinion is
expressed on any matters other than those specifically referred to herein. We do
not undertake to update this opinion for changes of law or facts that come to
our attention after the date hereof.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and all references to our firm included in or made a part
of the Registration Statement.
Very truly yours,
/s/ ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
ARAMEX INTERNATIONAL LIMITED
STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 EFFECTIVE DATE AND PURPOSE....................................... 1
1.1 Effective Date of Plan............................................. 1
1.2 Purpose of Plan.................................................... 1
SECTION 2
DEFINITIONS............................................................. 1
2.1 "Board"............................................................ 1
2.2 "Code"............................................................. 1
2.3 "Committee"........................................................ 1
2.4 "Company".......................................................... 1
2.5 "Consultant"....................................................... 1
2.6 "Director"......................................................... 1
2.7 "Disability"....................................................... 2
2.8 "Employee"......................................................... 2
2.9 "Fair Market Value"................................................ 2
2.10 "Fiscal Year"...................................................... 2
2.11 "Grant Date"....................................................... 2
2.12 "Incentive Stock Option"........................................... 2
2.13 "Nonemployee Director"............................................. 2
2.14 "Nonqualified Stock Option"........................................ 2
2.15 "Option"........................................................... 2
2.16 "Option Agreement"................................................. 2
2.17 "Option Price"..................................................... 2
2.18 "Participant"...................................................... 3
2.19 "Plan"............................................................. 3
2.20 "Shares"........................................................... 3
2.21 "Subsidiary"....................................................... 3
2.22 "Termination of Service"........................................... 3
SECTION 3 ADMINISTRATION................................................... 3
3.1 The Committee...................................................... 3
3.2 Authority of the Committee......................................... 3
3.3 Delegation by the Committee........................................ 4
3.4 Decisions Binding.................................................. 4
SECTION 4 SHARES SUBJECT TO THE PLAN....................................... 4
4.1 Number of Shares................................................... 4
4.2 Lapsed Options..................................................... 4
4.3 Adjustments in Options and Authorized Shares....................... 4
SECTION 5 OPTIONS.......................................................... 5
5.1 Grant of Options................................................... 5
5.2 Option Agreement................................................... 5
i
<PAGE>
5.3 Option Price....................................................... 5
5.3.1 Nonqualified Stock Options.................................. 5
5.3.2 Incentive Stock Options..................................... 5
5.3.3 Substitute Options.......................................... 5
5.4 Exercisability of Options.......................................... 6
5.5 Expiration of Options.............................................. 6
5.5.1 Expiration Dates............................................ 6
5.5.2 Death of Participant........................................ 6
5.5.3 Committee Discretion........................................ 6
5.6 Payment............................................................ 6
5.7 Restrictions on Share Transferability.............................. 7
5.8 Certain Additional Provisions for Incentive Stock Options.......... 7
5.8.1 Exercisability.............................................. 7
5.8.2 Termination of Service...................................... 7
5.8.3 Employees Only.............................................. 7
5.8.4 Expiration.................................................. 7
5.8.5 Certain Employees Only...................................... 8
5.9 Grant of Reload Options............................................ 8
SECTION 6 MISCELLANEOUS.................................................... 8
6.1 No Effect on Employment or Service................................. 8
6.2 Participation...................................................... 8
6.3 Indemnification.................................................... 8
6.4 Successors......................................................... 9
6.5 Beneficiary Designations........................................... 9
6.6 Nontransferability of Options...................................... 9
6.7 No Rights as Shareholder........................................... 9
6.8 Withholding Requirements........................................... 10
6.9 Withholding Arrangements........................................... 10
6.10 Deferrals......................................................... 10
SECTION 7 AMENDMENT, TERMINATION, AND DURATION............................. 10
7.1 Amendment, Suspension, or Termination.............................. 10
7.2 Duration of the Plan............................................... 10
SECTION 8 LEGAL CONSTRUCTION............................................... 11
8.1 Gender and Number.................................................. 11
8.2 Severability....................................................... 11
8.3 Requirements of Law................................................ 11
8.4 Governing Law...................................................... 11
8.5 Captions........................................................... 11
ii
<PAGE>
ARAMEX INTERNATIONAL LIMITED
STOCK OPTION PLAN
ARAMEX INTERNATIONAL LIMITED, hereby adopts the Aramex International
Limited Stock Option Plan, as follows:
SECTION 1
EFFECTIVE DATE AND PURPOSE
1.1 EFFECTIVE DATE OF PLAN. The Plan is effective as of the date on
which the Company's Registration Statement on Form F-1 (the "Registration
Statement") covering the initial public offering of its Shares is declared
effective by the Securities and Exchange Commission.
1.2 PURPOSE OF PLAN. The Plan is intended to increase incentive and
to encourage Share ownership on the part of Employees, Consultants and
Nonemployee Directors. The Plan also is intended to further the growth and
profitability of the Company.
SECTION 2
DEFINITIONS
The following words and phrases shall have the following meanings
unless a different meaning is plainly required by the context:
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CODE" means the Internal Revenue Code of 1986, as amended and in
effect in the United States of America. Reference to a specific section of the
Code or regulation thereunder shall include such section or regulation, any
valid regulation promulgated under such section, and any comparable provision of
any future legislation or regulation amending, supplementing or superseding such
section or regulation.
2.3 "COMMITTEE" means the committee appointed by the Board (pursuant
to Section 3.1) to administer the Plan.
2.4 "COMPANY" means Aramex International Limited, a Bermuda
corporation, or any successor thereto.
2.5 "CONSULTANT" means any consultant, independent contractor, or
other person who provides significant services to the Company or its
Subsidiaries, but who is neither an Employee nor a Director.
2.6 "DIRECTOR" means any individual who is a member of the Board.
<PAGE>
2.7 "DISABILITY" means a permanent and total disability within the
meaning of section 22(e)(3) of the Code; provided, however, that in the case of
Nonqualified Stock Options, the Committee, in its discretion, may determine
whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by it from time to time.
2.8 "EMPLOYEE" means any employee of the Company or of a Subsidiary,
whether such employee is so employed at the time the Plan is adopted or becomes
so employed subsequent to the adoption of the Plan.
2.9 "FAIR MARKET VALUE" means the average of the highest and lowest
quoted selling prices for Shares on the relevant date, or if there were no sales
on such date, the weighted average of the means between the highest and lowest
quoted selling prices on the nearest day before and the nearest day after the
relevant date, as determined by the Committee. Notwithstanding the preceding
sentence, in the case of Options granted on the date specified in Section 1.1,
"FAIR MARKET VALUE" means the initial public offering price per Share as set
forth on the cover page of the final Prospectus contained in the Registration
Statement.
2.10 "FISCAL YEAR" means the fiscal year of the Company.
2.11 "GRANT DATE" means, with respect to an Option, the date on which
the Option was granted.
2.12 "INCENTIVE STOCK OPTION" means an Option to purchase Shares which
is designated as an Incentive Stock Option and is intended to meet the
requirements of section 422 of the Code.
2.13 "NONEMPLOYEE DIRECTOR" means a Director who is not an Employee.
2.14 "NONQUALIFIED STOCK OPTION" means an Option to purchase Shares
which is not intended to be an Incentive Stock Option.
2.15 "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option granted under the Plan.
2.16 "OPTION AGREEMENT" means the written agreement setting forth the
terms and provisions applicable to each Option.
2.17 "OPTION PRICE" means the price at which a Share may be purchased
by a Participant pursuant to the exercise of an Option.
2.18 "PARTICIPANT" means an Employee, Consultant or Nonemployee
Director to whom an Option has been granted.
2.19 "PLAN" means the Aramex International Limited Stock Option Plan,
as set forth in this instrument and as hereafter amended from time to time.
2
<PAGE>
2.20 "SHARES" means the shares of the Company's common stock, $.01 par
value.
2.21 "SUBSIDIARY" means any corporation or any other entity
(including, but not limited to, partnerships and joint ventures) controlling,
controlled by, or under common control with the Company.
2.22 "TERMINATION OF SERVICE" means (a) in the case of an Employee, a
termination of the employee-employer relationship between the Employee and the
Company or a Subsidiary for any reason, including, but not by way of limitation,
a termination by resignation, discharge, death, Disability, or the
disaffiliation of a Subsidiary, but excluding any such termination where there
is a simultaneous reemployment by the Company or a Subsidiary; (b) in the case
of a Consultant, a termination of the service relationship between the
Consultant and the Company or a Subsidiary for any reason, including, but not by
way of limitation, a termination by resignation, discharge, death, Disability,
or the disaffiliation of a Subsidiary, but excluding any such termination where
there is a simultaneous re-engagement of the Consultant by the Company or a
Subsidiary; and (c) in the case of a Nonemployee Director, a termination of the
Nonemployee Director's service on the Board for any reason.
SECTION 3
ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Committee.
The Committee shall consist of not less than two (2) Directors. The members of
the Committee shall be appointed from time to time by, and shall serve at the
pleasure of, the Board. Notwithstanding any contrary Plan provision, the Board
shall have all of the authority granted under the Plan to the Committee, and may
exercise all of the Committee's powers, during the period prior to the time when
the members of the Committee are first appointed by the Board.
3.2 AUTHORITY OF THE COMMITTEE. It shall be the duty of the
Committee to administer the Plan in accordance with the Plan's provisions. The
Committee shall have all powers and discretion necessary or appropriate to
administer the Plan and to control its operation, including, but not limited to,
the power to (a) determine which Employees shall be granted Options,
(b) determine which Consultants and Nonemployee Directors shall be granted
Nonqualified Stock Options, (c) prescribe the terms and conditions of Options,
(d) interpret the Plan and any Option Agreement, (e) adopt such procedures and
subplans as are necessary or appropriate to permit Employees, Consultants and
Nonemployee Directors who are foreign nationals or employed outside of the
United States to participate in the Plan, (f) adopt rules for the
administration, interpretation and application of the Plan as are consistent
therewith, and (g) interpret, amend or revoke any such rules.
3.3 DELEGATION BY THE COMMITTEE. The Committee, in its sole
discretion and on such terms and conditions as it may provide, may delegate all
or any part of its authority and powers under the Plan to one or more Directors
or officers of the Company; provided, however, that unless otherwise determined
by the Board, the Committee may not delegate its authority and
3
<PAGE>
powers in any way which would jeopardize the Plan's qualification under
section 162(m) of the Code.
3.4 DECISIONS BINDING. All determinations and decisions made by the
Committee, the Board, and any delegate of the Committee pursuant to the
provisions of the Plan shall be final, conclusive, and binding on all persons,
and shall be given the maximum deference permitted by law.
SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in
Section 4.3, the total number of Shares available for grant under the Plan shall
not exceed 400,000. Shares granted under the Plan may be either authorized but
unissued Shares or treasury Shares.
4.2 LAPSED OPTIONS. If an Option (or portion thereof) terminates,
expires, or lapses for any reason, any Shares subject to such Option again shall
be available to be the subject of an Option.
4.3 ADJUSTMENTS IN OPTIONS AND AUTHORIZED SHARES. In the event of
any merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, split-up, Share combination, or other change in the
corporate structure of the Company affecting the Shares, the Committee shall
adjust the number and/or class of Shares which may be delivered under the Plan,
the number, class, and Option Price of Shares subject to outstanding Options,
and the numerical limit of Section 5.1, in such manner as the Committee (in its
sole discretion) shall determine to be appropriate to prevent the dilution or
diminution of such Options. Notwithstanding the preceding sentence, the number
of Shares subject to any Option always shall be a whole number.
SECTION 5
OPTIONS
5.1 GRANT OF OPTIONS. Subject to the terms and provisions of the
Plan, Options may be granted to Employees, Consultants and Nonemployee
Directors at any time and from time to time as determined by the Committee in
its sole discretion. The Committee, in its sole discretion, shall determine the
number of Shares subject to each Option and the terms and conditions of each
such Option, consistent with the Plan; provided, however, that during any Fiscal
Year, no Participant shall be granted Options covering more than 250,000 Shares.
The Committee may grant Incentive Stock Options, Nonqualified Stock Options, or
a combination thereof.
5.2 OPTION AGREEMENT. Each Option shall be evidenced by an Option
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, any conditions to exercise of the
Option, and such other terms and conditions as the Committee, in its discretion,
shall determine. The Option Agreement also shall
4
<PAGE>
specify whether the Option is intended to be an Incentive Stock Option or a
Nonqualified Stock Option.
5.3 OPTION PRICE. Subject to the provisions of this Section 5.3, the
Option Price for each Option shall be determined by the Committee in its sole
discretion.
5.3.1 NONQUALIFIED STOCK OPTIONS. In the case of a Nonqualified
Stock Option, the Option Price shall be not less than one hundred percent (100%)
of the Fair Market Value of a Share on the Grant Date.
5.3.2 INCENTIVE STOCK OPTIONS. In the case of an Incentive Stock
Option, the Option Price shall be not less than one hundred percent (100%) of
the Fair Market Value of a Share on the Grant Date; provided, however, that if
on the Grant Date, the Participant (together with persons whose stock ownership
is attributed to the Participant pursuant to section 424(d) of the Code) owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any of its Subsidiaries, the Option
Price shall be not less than one hundred and ten percent (110%) of the Fair
Market Value of a Share on the Grant Date.
5.3.3 SUBSTITUTE OPTIONS. Notwithstanding the provisions of
Sections 5.3.1 and 5.3.2, in the event that the Company or a Subsidiary
consummates a transaction described in section 424(a) of the Code (E.G., the
acquisition of property or stock from an unrelated corporation), persons who
become Employees or Consultants on account of such transaction may be granted
Options in substitution for options granted by their former employer. If such
substitute Options are granted, the Committee, in its sole discretion and
consistent with section 424(a) of the Code, shall determine the option price of
such substitute Options.
5.4 EXERCISABILITY OF OPTIONS. Options granted under the Plan shall
be exercisable at such times and be subject to such restrictions and conditions
as the Committee, in its sole discretion, shall determine. After an Option is
granted, the Committee, in its sole discretion, may accelerate the
exercisability of the Option.
5.5 EXPIRATION OF OPTIONS.
5.5.1 EXPIRATION DATES. Each Option shall terminate no later
than the first to occur of the following events:
(a) The date for termination of the Option set forth in the
related Option Agreement; or
(b) The expiration of ten (10) years from the Grant Date; or
(c) The expiration of three (3) months from the date of the
Participant's Termination of Service for a reason other than the
Participant's death or Disability; or
5
<PAGE>
(d) The expiration of one (1) year from the date of the
Participant's Termination of Service by reason of Disability.
5.5.2 DEATH OF PARTICIPANT. Notwithstanding Section 5.5.1, if a
Participant dies prior to the expiration of his or her Options, the Committee,
in its discretion, may provide that his or her Options shall be exercisable for
up to one (1) year after the date of death.
5.5.3 COMMITTEE DISCRETION. Subject to the limits of Section
5.5.1(b), 5.5.2 and 5.8, the Committee, in its sole discretion, (a) shall
provide in each Option Agreement when each Option expires and becomes
unexercisable, and (b) may, after an Option is granted, extend the maximum term
of the Option.
5.6 PAYMENT. Options shall be exercised by the delivery by the
Participant (or other person then entitled to exercise such Option or portion
thereof) a written notice of exercise to the Secretary of the Company (or his or
her designee), setting forth the number of Shares with respect to which the
Option is to be exercised, accompanied by full payment for the Shares.
Upon the exercise of any Option, the Option Price shall be payable to
the Company in full in cash or its equivalent, in whichever currency is set
forth in the Option Agreement. The Committee, in its sole discretion, also may
permit exercise (a) by the tender of previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the total Option
Price, or (b) by any other means which the Committee, in its sole discretion,
determines to both provide legal consideration for the Shares, and to be
consistent with the purposes of the Plan and applicable law.
As soon as practicable after receipt of a written notification of
exercise and full payment for the Shares purchased, the Company shall deliver to
the Participant (or the Participant's designated broker), Share certificates
(which may be in book entry form) representing such Shares.
5.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
as it may deem advisable, including, but not limited to, restrictions related to
any domestic or foreign laws, the requirements of any national securities
exchange or system upon which Shares are then listed or traded, or any blue sky
laws.
5.8 CERTAIN ADDITIONAL PROVISIONS FOR INCENTIVE STOCK OPTIONS.
Notwithstanding any contrary Plan provision:
5.8.1 EXERCISABILITY. The aggregate Fair Market Value
(determined on the Grant Date(s)) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by any Employee during any
calendar year (under all plans of the Company and its Subsidiaries) shall not
exceed U.S.$100,000.
5.8.2 TERMINATION OF SERVICE. No Incentive Stock Option may be
exercised more than three (3) months after the Participant's Termination of
Service for any
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reason other than Disability or death, unless (a) the Participant dies during
such three-month period, and (b) the related Option Agreement or the Committee
permits later exercise.
5.8.3 EMPLOYEES ONLY. Incentive Stock Options may be granted
only to persons who are Employees on the Grant Date (I.E., Consultants and
Nonemployee Directors shall not be eligible to receive Incentive Stock Options).
means any corporation in an unbroken chain of corporations beginning with the
Company if each of the corporations other than the last corporation in the
unbroken chain then owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
5.8.4 EXPIRATION. No Incentive Stock Option may be exercised
after the expiration of ten (10) years from the Grant Date; provided, however,
that if the Option is granted to an Employee who, together with persons whose
stock ownership is attributed to the Employee pursuant to section 424(d) of the
Code, owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of the stock of the Company or any of its
Subsidiaries, the Option may not be exercised after the expiration of five (5)
years from the Grant Date.
5.8.5 CERTAIN EMPLOYEES ONLY. Incentive Stock Options may be
granted only to persons who are Employees of the Company or of a "Fifty Percent
Subsidiary" on the Grant Date. For purposes of this Section 5.8.5, the term
"Fifty Percent Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
5.9 GRANT OF RELOAD OPTIONS. The Committee may provide in an Option
Agreement that a Participant who exercises all or part of an Option by payment
of the Option Price with already-owned Shares (if applicable), shall be granted
an additional option (a "RELOAD OPTION") for a number of shares of stock equal
to the number of Shares tendered to exercise the previously granted Option plus,
if the Committee so determines, any Shares withheld or delivered in satisfaction
of any tax withholding requirements. As determined by the Committee, each
Reload Option shall: (a) have a Grant Date which is the date as of which the
previously granted Option is exercised, and (b) be exercisable on the same terms
and conditions as the previously granted Option, except that the Option Price
shall be determined as of the Grant Date.
SECTION 6
MISCELLANEOUS
6.1 NO EFFECT ON EMPLOYMENT OR SERVICE. Nothing in the Plan shall
interfere with or limit in any way the right of the Company or a Subsidiary to
terminate any Participant's employment or service at any time, with or without
cause. For purposes of the Plan, a Participant's transfer of employment between
the Company and any one of its Subsidiaries (or
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between Subsidiaries) shall not be deemed a Termination of Service. Employment
or service with the Company and its Subsidiaries is on an at-will basis only.
6.2 PARTICIPATION. No Employee, Consultant or Nonemployee Director
shall have the right to be selected to receive an Option under this Plan, or,
having been so selected, to be selected to receive a future Option.
6.3 INDEMNIFICATION. Each person who is or shall have been a member
of the Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any Option Agreement, and (b) from any and all
amounts paid by him or her in settlement thereof, with the Company's approval,
or paid by him or her in satisfaction of any judgment in any such claim, action,
suit, or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf; PROVIDED
THAT this indemnification shall not extend to any matter in respect of any fraud
or dishonesty which may attach to any of said persons. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Bye-laws, by contract, as
a matter of law, or otherwise, or under any power that the Company may have to
indemnify them or hold them harmless.
6.4 SUCCESSORS. All obligations of the Company under the Plan, with
respect to Options granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business or assets of the Company.
6.5 BENEFICIARY DESIGNATIONS. If permitted by the Committee, a
Participant may name a beneficiary or beneficiaries to whom any vested but
unexercised Option shall be paid in the event of the Participant's death. Each
such designation shall revoke all prior designations by the Participant and
shall be effective only if given in a form and manner acceptable to the
Committee. In the absence of any such designation, any vested benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate and, subject to the terms of the Plan and of the applicable Option
Agreement, any unexercised vested Option may be exercised by the administrator
or executor of the Participant's estate.
6.6 NONTRANSFERABILITY OF OPTIONS. No Option may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, by the laws of descent and distribution, or to the limited extent
provided in Section 6.5. All rights with respect to an Option granted to a
Participant shall be available during his or her lifetime only to the
Participant.
6.7 NO RIGHTS AS SHAREHOLDER. No Participant (nor any transferee)
shall have any of the rights or privileges of a shareholder of the Company with
respect to any Shares issuable pursuant to an Option (or exercise thereof),
unless and until certificates representing
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such Shares shall have been issued, recorded on the records of the Company or
its transfer agents or registrars, and delivered to the Participant (or
transferee).
6.8 WITHHOLDING REQUIREMENTS. Prior to the delivery of any Shares or
cash pursuant to an Option (or exercise thereof), the Company shall have the
power and the right to deduct or withhold, or require a Participant to remit to
the Company, an amount sufficient to satisfy any applicable taxes (including the
Participant's FICA obligation (if any)) required to be withheld with respect to
such Option (or exercise thereof).
6.9 WITHHOLDING ARRANGEMENTS. The Committee, in its sole discretion
and pursuant to such procedures as it may specify from time to time, may permit
or require a Participant to satisfy all or part of any tax withholding
obligations in connection with an Option by (a) having the Company withhold
otherwise deliverable Shares, or (b) delivering to the Company already-owned
Shares having a Fair Market Value equal to the amount required to be withheld.
The amount of the withholding requirement shall be deemed to include any amount
which the Committee determines, not to exceed the amount determined by using all
the maximum marginal income tax rates applicable to the Participant with respect
to the Option on the date that the amount of tax to be withheld is to be
determined. The Fair Market Value of the Shares to be withheld or delivered
shall be determined as of the date that the taxes are required to be withheld.
6.10 DEFERRALS. The Committee, in its sole discretion, may permit a
Participant to defer receipt of the payment of cash or the delivery of Shares
that would otherwise be delivered to a Participant under the Plan. Any such
deferral elections shall be subject to such rules and procedures as shall be
determined by the Committee in its sole discretion.
SECTION 7
AMENDMENT, TERMINATION, AND DURATION
7.1 AMENDMENT, SUSPENSION, OR TERMINATION. The Board, in its sole
discretion, may amend or terminate the Plan, or any part thereof, at any time
and for any reason. The amendment, suspension, or termination of the Plan shall
not, without the consent of the Participant, alter or impair any rights or
obligations under any Option theretofore granted to such Participant. No Option
may be granted during any period of suspension or after termination of the Plan.
7.2 DURATION OF THE PLAN. The Plan shall commence on the date
specified in Section 1.1, and subject to Section 7.1 (regarding the Board's
right to amend or terminate the Plan), shall remain in effect thereafter.
However, without further stockholder approval, no Incentive Stock Option may be
granted under the Plan after December , 1996.
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SECTION 8
LEGAL CONSTRUCTION
8.1 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
8.2 SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
8.3 REQUIREMENTS OF LAW. The granting of Options and the issuance of
Shares under the Plan shall be subject to all applicable domestic and foreign
laws, rules, and regulations, and to such approvals by any governmental agencies
or national securities exchanges as may be required.
8.4 GOVERNING LAW. The Plan and all Option Agreements shall be
construed in accordance with and governed by the laws of Bermuda.
8.5 CAPTIONS. Captions are provided herein for convenience only, and
shall not serve as a basis for interpretation or construction of the Plan.
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EXECUTION
IN WITNESS WHEREOF, the Company, by its duly authorized officer, has
executed the Plan on the date indicated below.
ARAMEX INTERNATIONAL LIMITED
Dated: ______________, 1996 By ____________________________________
Title:
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EXHIBIT 10.5
FORM OF EMPLOYMENT AGREEMENT
This agreement ("Agreement") is made effective the date set forth at
the end of this Agreement by and between ARAMEX INTERNATIONAL LIMITED, a
Bermuda corporation (the "Corporation") and the employee named at the end of
this Agreement (the "Executive").
In consideration of the mutual covenants herein contained, the
parties agree as follows:
1. POSITION AND RESPONSIBILITIES.
1.1 The Executive shall serve in the position and capacity
identified on Exhibit A attached to this Agreement and shall perform the
duties commensurate with such capacity for the Corporation and for any
subsidiary or affiliate of the Corporation, if applicable. The Company shall
also take all steps within the Company's control to cause the Executive to be
a member of the Board of Directors of the Company. The Executive shall not be
assigned any duties inconsistent with his position as identified on Exhibit A
hereto.
1.2 The Executive shall devote such time to the business and
affairs of the Corporation and to the promotion of its interests as is
necessary or advisable.
2. EMPLOYMENT TERM.
2.1 The initial term of employment shall be for a period of two
years, commencing with the effective date hereof, unless sooner terminated as
provided in this Agreement. This Agreement shall be renewed annually for a
term of one year unless the Corporation or the Executive gives notice to the
other of termination at least 30 days prior to
<PAGE>
the expiration of the initial term, or any successive term, as the case may
be. Each of the Executive and the Corporation at his or its sole discretion
and without any reason, may elect not to renew this Agreement at the end of
the initial term or any successive term.
2.2 Notwithstanding the provisions of paragraph 2.1 above, the
Corporation shall have the right to terminate the Executive's employment for
Cause (as defined in paragraph 2.3 below); provided, however, that the
Executive shall not be deemed to have been terminated for Cause unless and
until the Board of Directors at a meeting duly called and held for that
purpose shall have determined that the Executive committed an act falling
within the definition of Cause and specifying the basis for such
determination.
2.3 For purposes of this Agreement, the term "Cause" shall mean the
Executive's: (a) engagement in gross misconduct materially injurious to the
Corporation; (b) knowing and willful neglect or refusal to attend to the
material duties assigned to him by the Board of Directors of the Corporation,
which is not cured within 30 days after written notice; (c) intentional
misappropriation of property of the Corporation to the Executive's own use;
(d) commission of an act of fraud or embezzlement; or (e) conviction for a
crime (excluding minor traffic offenses).
2.4 Any purported termination of the Executive's employment by the
Corporation hereunder shall be communicated by a Notice of Termination to the
Executive in accordance with paragraph 15. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice which shall indicate
those specific termination provisions in this Agreement relied upon and which
sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provisions so indicated.
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2.5 For purposes of this Agreement the date of termination shall
be: (a) if this Agreement is terminated by the Corporation for Incapacity (as
defined in paragraph 4.1 below), the date on which a Notice of Termination is
given, (b) if the Executive's employment is terminated by the Corporation for
any other reason (other than death), the date on which a Notice of
Termination is given or (c) if the Executive terminates his employment for
any reason, the date on which he gives the Corporation notice of such
termination.
3. COMPENSATION.
3.1 The Corporation shall pay to the Executive for the services to
be rendered by the Executive hereunder a salary for the initial term of
employment under this Agreement at the rate per annum set forth on Exhibit A
to this Agreement. The salary shall be payable less frequently than monthly
in accordance with the Company's regular policies. Such salary will be
reviewed at least annually after the initial term and may be increased by the
Board of Directors of the Corporation, based upon the recommendations of the
Executive Compensation Committee of the Board of Directors.
3.2 The Executive shall receive a cash bonus with respect to each
whole year of the Corporation during which he is employed hereunder,
commencing with the year ending December 31, 1996, in an amount to be to be
determined by the Board of Directors of the Corporation.
3.3 The Executive shall be entitled to participate in, and receive
benefits from, any vacation, holiday, insurance, medical, disability, or
other employee benefit plan of the Corporation which may be in effect at any
time during the course of his employment by the Corporation and which shall
be generally available to senior executives of the Corporation occupying
positions of comparable status or responsibility. During the term hereof, the
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Company shall provide for the Executive's use a Company automobile and
shall pay all maintenance and operating expenses related thereto, including,
without limitation, depreciation and full risk insurance costs. In addition,
the Company shall obtain comprehensive health and travel insurance for the
Executive and his immediate family.
3.4 The Corporation agrees promptly to reimburse the Executive for
all reasonable and necessary business expenses incurred by him on behalf of
the Corporation in the course of his duties hereunder upon the presentation
by the Executive of appropriate evidence thereof.
4. DEATH; INCAPACITY.
4.1 If, during the Employment Term hereunder, because of illness or
other incapacity, the Executive shall fail for a period of six (6)
consecutive months ("Incapacity"), to render the services contemplated
hereunder, then the Corporation, at its option, may terminate the Employment
Term hereunder by notice to the Executive, effective on the giving of such
notice; provided, however, that the Executive shall be entitled to continue
to receive 60% of his salary hereunder for a two-year period of time from the
Notice of Termination.
4.2 In the event of the death of the Executive during the
Employment Term, the Employment Term hereunder shall terminate on the date of
death of the Executive; provided, however, that the Executive (or his estate)
shall be entitled to any benefits accrued under the Corporation's death,
disability or other benefit plan and shall be entitled to receive a lump sum
payment equal to his then annual salary.
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5. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT.
5.1 If the Executive's employment with the Corporation shall be
terminated (a) by the Corporation other than pursuant to paragraph 2.2 or
paragraph 4, or (b) by the Executive for Good Reason (as defined in paragraph
5.2 below), then the Corporation shall:
(i) pay to Executive as severance pay, payable at the time of
termination, an amount equal to three (3) times his then annual salary,
except that such payment shall be reduced to the extent necessary so that no
portion of such payment will be treated as an "excess parachute payment" (as
defined in Section 280G of the Internal Revenue Code of 1986) and
(ii) arrange to provide Executive, for a twelve-month period
(or such shorter period as Executive may elect), with disability, accident
and health insurance substantially similar to those insurance benefits which
Executive is receiving immediately prior to the earlier of a Major Event, if
any, or the date of termination to the extent obtainable upon reasonable
terms; provided, however, if it is not so obtainable the Corporation shall
pay to the Executive in cash the annual amount paid by the Corporation for
such benefits during the previous year of the Executive's employment.
5.2 For purposes of this Agreement, the term "Good Reason" shall
mean any of the following:
(i) a Major Event;
(ii) the assignment to the Executive by the Corporation of
duties inconsistent with, or a substantial alteration in the nature or status
of, Executive's responsibilities on the later of the date of this Agreement
or on the last date on which such responsibilities are increased;
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(iii) a reduction by the Corporation in the Executive's base
salary as in effect on the later of the date of this Agreement or the last
date on which such base salary is increased;
(iv) a relocation of the Corporation's principal executive
offices to a location outside Amman, Jordon area, or the relocation by the
Corporation of the Executive to any place other than the principal executive
offices of the Corporation, except for required travel by the Executive on
the Corporation's business;
(v) any material breach by the Corporation of any material
provision of this Agreement; provided, however, that the Executive shall give
written notice to the Corporation which shall indicate those specific
provisions in this Agreement relied upon and which shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
such termination;
(vi) any failure by the Corporation to obtain the assumption
of this Agreement by any successor or assign of the Corporation; or
(vii) any purported termination of the Executive's employment
by the Corporation which is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph 2.4 above, and for purposes of this
Agreement, no such purported termination shall be effective.
5.3 For purposes of this Agreement, a "Major Event" shall be
deemed to have occurred if (i) there shall be consummated any consolidation
or merger of the Corporation in which the Corporation is not the continuing
or surviving corporation or pursuant to which shares of the Corporation's
common stock would be converted into cash, securities or other property,
other than a merger of the Corporation in which the holders of the
Corporation's common stock
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immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger; (ii)
there shall be consummated any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or substantially
all, of the assets of the Company; (iii) proceedings or actions for the
liquidation or dissolution of the Company are initiated by the Company; or
(iv) any "person" (as defined in Sections 13(d) and 14(d) of the Exchange
Act) (other than persons who beneficially own more than 30% of the capital
stock of the Company on a fully diluted and as converted basis outstanding as
of the date hereof) becomes the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended ("Exchange Act")),
directly or indirectly, of 30% or more of the Company's outstanding capital
stock on a fully diluted and as converted basis at such time; provided,
however, that a "Major Event" shall not be deemed to have occurred solely by
reason of the consummation of a firmly underwritten public offering by the
Company of common stock registered under the Securities Act of 1933, as
amended.
5.4 (a) The Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor, except to the extent provided in paragraph 5.1
above, shall the amount of any payment provided for under this Agreement be
reduced by any compensation earned by the Executive as a result of employment
by another employer or by retirement benefits after the date of termination,
or otherwise.
(b) The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any benefit plan of the
Corporation, or other contract, plan or arrangement.
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8. NON-COMPETITION.
8.1 From and after the date hereof to and including the first (1st)
anniversary of the date of termination of this Agreement, the Executive shall
not directly or indirectly become employed by any person, corporation,
partnership or other entity which is primarily engaged in, the business of
international express delivery, in each case in the Territory. The term
"Territory" shall mean any county or city in which the Corporation then
conducts its business. The Executive shall be deemed directly or indirectly
to engage in a business if he participates therein as a director, officer,
stockholder, employee, agent, consultant, manager, salesman, partner or
individual proprietor, or as an investor who has made advances or loans,
contributions to capital or expenditures for the purchase of stock, or in any
capacity or manner whatsoever; provided, however, that the foregoing shall
not be deemed to prevent the Executive from investing in securities if such
class of securities in which the investment is so made constitutes no more
than 10% of the voting stock of any company's securities.
9. OPTIONS. Exhibit A describes the options to be granted to
Executive, if any.
10. ARBITRATION. Any dispute, controversy or claim arising under
or in connection with this Agreement, or the breach hereof, shall be settled
exclusively by arbitration in accordance with the rules then in effect of the
International Chamber of Commerce. Judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof. Any
arbitration held pursuant to this Section 10 shall take place in Bermuda.
Should either party hereto, or any heir, personal representative, successor
or assign of either party hereto, resort to litigation or arbitration to
enforce this Agreement, the party or parties prevailing in such litigation
shall be entitled, in addition to such other relief as may be
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<PAGE>
granted, to recover its or their reasonable attorney's fees and costs in such
litigation or arbitration from the party or parties against whom enforcement
was sought.y
11. SUCCESSOR TO THE COMPANY. (a) The Corporation will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Corporation, by agreement expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to
perform it if no such succession or assignment had taken place. As used in
this Agreement, "Corporation" shall mean the Corporation as hereinabove
defined and any successor or assign to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
paragraph 11 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal representatives, executors,
administrators, heirs, distributees, devises and legatees. If the Executive
should die while any amounts are still payable to him hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's estate. This Agreement shall
not otherwise be assignable by the Executive.
12. NO THIRD PARTY BENEFICIARIES. This Agreement does not create,
and shall not be construed as creating, any rights enforceable by any person
not a party to this Agreement, except as provided in paragraph 11 hereof.
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13. HEADINGS. The headings of the paragraphs hereof are inserted
for convenience only and shall not be deemed to constitute a part hereof nor
to affect the meaning thereof.
14. INTERPRETATION. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. If, moreover, any
one or more of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as
to be enforceable to the extent compatible with the applicable law as it
shall then appear.
15. NOTICES. All notices under this Agreement shall be in writing
and shall be deemed to have been given at the time when delivered personally
or by facsimile transmission, sent by recognized overnight courier service,
or mailed by registered or certified mail, addressed to the address set forth
at the end of this Agreement, or to such changed address as such party may
have fixed by notice; provided, however, that any notice of change of address
shall be effective only upon receipt.
16. WAIVERS. If either party should waive any breach of any
provision of this Agreement, he or it shall not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision
of this Agreement.
17. COMPLETE AGREEMENT; AMENDMENTS. The foregoing is the entire
agreement of the parties with respect to the subject matter hereof and
supersedes in its entirety any letter agreements or other writings by and
among the Executive and the Corporation. This Agreement
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may not be amended, supplemented, cancelled or discharged except by written
instrument executed by both parties hereto.
18. GOVERNING LAW. This Agreement is to be governed by and
construed in accordance with the laws of Bermuda, without giving effect to
principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date set forth below, and the parties acknowledge that this Agreement
memorializes their agreement since the effective date set forth below.
ARAMEX INTERNATIONAL LIMITED EXECUTIVE
By: __________________________ ______________________________
Authorized Representative
Address for Notices: Address for Notices:
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
Effective Date of Agreement: ________________________
Execution Date: ________________________
Name of Executive: ________________________
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EXHIBIT A
William Kingson
Chairman of the Board
Annual Base Salary: U.S. $85,000.00
<PAGE>
OH&S DRAFT
12/10/96
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made as of the
____ day of December, 1996, by and between Aramex International Limited, a
Bermuda corporation (the "Company") and Fadi Ghandour ("Indemnitee").
W I T N E S S E T H:
WHEREAS, the Company has been advised that there can be no assurance
that directors' and officers' liability insurance will continue to be available
to the Company and Indemnitee, and believes that it is possible that the cost of
such insurance, if obtainable, may not be acceptable to the Company; and
WHEREAS, the Company and the Indemnitee recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks; and
WHEREAS, Indemnitee is unwilling to serve, or continue to serve, the
Company or any of its subsidiaries or affiliated companies as an officer and/or
director without assurances that adequate liability insurance, indemnification
or a combination thereof is, and will continue to be, provided; and
WHEREAS, the Company, in order to induce Indemnitee to serve or to
continue to serve the Company or any of its subsidiaries or affiliated
companies has agreed to provide Indemnitee with the benefits contemplated by
this Agreement; and
WHEREAS, as a result of the provision of such benefits, Indemnitee has
agreed to serve or to continue to serve as an officer and/or director of the
Company or any of its subsidiaries or affiliated companies.
NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, the Company and Indemnitee
hereby agree as follows:
1. DEFINITIONS. The following terms, as used herein, shall have the
following respective meanings:
<PAGE>
"Covered Amount" means Losses and Expenses which, in type or amount,
are not insured under any directors' and officers' liability insurance
maintained by the Company from time to time.
"Covered Act" means any past, present or future breach of duty, neglect,
error, misstatement, misleading statement, omission or other act done or
wrongfully attempted by Indemnitee or any of the foregoing alleged by any
claimant or any claim against Indemnitee by reason of him at any time being
a director or officer or other agent of the Company or any of its
subsidiaries or affiliated companies or a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise at the request of the Company.
"Determination" means a determination, based on the facts known at the
time, made by:
(i) An award of a neutral arbitrator selected by the parties; or
(ii) A final adjudication by a court of competent jurisdiction.
"Determined" shall have a correlative meaning.
"Excluded Claim" means any payment for Losses or Expenses in
connection with any claim:
(i) Based upon or attributable to Indemnitee gaining in fact any
personal profit or advantage to which Indemnitee is not
entitled; or
(ii) For an accounting of profits in fact made from the purchase
or sale by Indemnitee of securities of the Company within
the meaning of Section 16 of the U.S. Securities Exchange Act
of 1934 as amended, or similar provisions of any applicable
law; or
(iii) Resulting from Indemnitee's knowingly fraudulent,
deliberately dishonest or willful misconduct unless
Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best
interests of the Company as determined by (i) the Board of
Directors of the Company by majority vote of a quorum
consisting of directors who were not parties to the
proceeding for which indemnification is sought, (ii) if a
quorum of disinterested directors so directs or if such
quorum is not obtainable, by independent legal counsel in a
written opinion, or (iii) by a vote of the holders of a
2
<PAGE>
majority of the Company's common stock, excluding the shares
held by Indemnitee; or
(iv) The payment of which by the Company under this Agreement is
not permitted by applicable law; or
(v) Which are not within the Covered Amount, i.e., which are
insured in type and amount under any directors' and
officers' liability insurance maintained by the Company from
time to time.
"Expenses" means any reasonable expenses incurred by Indemnitee as a
result of a claim or claims made or threatened against him for Covered
Acts including, without limitation, counsel fees and costs of
investigative, judicial or administrative proceedings (including an
action by or in the right of the Company), whether civil or criminal,
or appeals and costs of attachment or similar bonds.
"Loss" means any amount which Indemnitee is legally obligated to pay
as a result of a claim or claims made against him for Covered Acts
including, without limitation, damages, judgments, fines and other
sums paid in settlement of a claim or claims.
2. INDEMNIFICATION. The Company shall indemnify, defend Indemnitee
and hold him harmless from the Covered Amount of any and all Losses and Expenses
subject, in each case, to the further provisions of this Agreement.
3. EXCLUDED COVERAGE. The Company shall have no obligation to
indemnify Indemnitee for and defend and hold him harmless from any Loss or
Expense which has been Determined to constitute an Excluded Claim.
4. INDEMNIFICATION PROCEDURES.
(a) Promptly after receipt by Indemnitee of notice of the
commencement of or the threat of commencement of any action, suit or proceeding,
Indemnitee shall, if indemnification with respect thereto may be sought from the
Company under this Agreement, notify the Company of the commencement thereof.
(b) If, at the time of the receipt of such notice, the Company
has directors' and officers' liability insurance in effect, the Company shall
give prompt notice of the commencement of such action, suit or proceeding to the
insurers in accordance with the procedures set forth in the respective policies
in favor of Indemnitee. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of Indemnitee, all
Losses and Expenses payable as a result of such action, suit or proceeding in
accordance with the terms of such policies.
3
<PAGE>
(c) To the extent the Company does not, at the time of the
commencement of or the threat of commencement of such action, suit or
proceeding, have applicable directors' and officers' liability insurance, or if
a Determination is made that any Expenses arising out of such action, suit or
proceeding will not be payable under the directors' and officers' liability
insurance then in effect, the Company shall be obligated to pay the Expenses of
any such action, suit or proceeding in advance of the final disposition thereof;
and the Company, if appropriate, shall be entitled to assume the defense of such
action, suit or proceeding with counsel satisfactory to Indemnitee, upon the
delivery to Indemnitee of written notice of its election so to do. After
delivery of such notice, the Company will not be liable to Indemnitee under this
Agreement for any legal or other Expenses subsequently incurred by Indemnitee in
connection with such defense other than reasonable Expenses of investigation,
PROVIDED THAT Indemnitee shall have the right to employ its counsel in any such
action, suit or proceeding, but the fees and expenses of such counsel incurred
after delivery of notice from the Company of its assumption of such defense
shall be at Indemnitee's expense, PROVIDED FURTHER THAT if (i) the employment of
counsel by Indemnitee has been previously authorized by the Company, (ii)
Indemnitee shall have reasonably concluded, based upon a written opinion of
independent legal counsel, that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, (iii) the Company
shall not, in fact, have employed counsel to assume the defense of such action,
or (iv) Indemnitee necessarily had to consult with counsel or counsel had to act
on Indemnitee's behalf prior to the time that Company-retained outside counsel
was able to act, in each of which cases the fees and expenses of counsel shall
be at the expense of the Company. The Company will not be entitled to assume
the defense of any such action, suit or proceedings brought by or on behalf of
the Company or as to which Indemnitee shall have made the conclusion described
in (ii) above.
(d) All payments on account of the Company's indemnification
obligations under this Agreement shall be made within thirty (30) days of
Indemnitee's written request therefor unless a Determination is made that the
claims giving rise to Indemnitee's request are Excluded Claims or otherwise not
payable under this Agreement, PROVIDED THAT all payments on account of the
Company's obligations to pay Expenses under Paragraph 4(c) of this Agreement
prior to the final disposition of an action, suit or proceeding shall be made
within ten (10) days of Indemnitee's written request therefor and such
obligation shall not be subject to any such Determination but shall be subject
to Paragraph 4(e) of this Agreement.
(E) INDEMNITEE AGREES THAT HE WILL REIMBURSE THE COMPANY FOR ALL
LOSSES AND EXPENSES PAID BY THE COMPANY IN CONNECTION WITH ANY ACTION, SUIT OR
PROCEEDING AGAINST INDEMNITEE IN THE EVENT AND ONLY TO THE EXTENT THAT A
DETERMINATION SHALL HAVE BEEN MADE BY A COURT IN A FINAL ADJUDICATION OR BY
FINAL AND BINDING ARBITRATION FROM WHICH THERE IS NO FURTHER RIGHT OF APPEAL
THAT THE INDEMNITEE IS NOT ENTITLED TO BE INDEMNIFIED BY THE COMPANY FOR SUCH
EXPENSES IN RESPECT OF FRAUD OR DISHONESTY.
4
<PAGE>
5. SETTLEMENT. The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any
action, suit or proceeding effected without the Company's prior written consent.
The Company shall not settle any claim in any manner which would impose any
obligation on Indemnitee without Indemnitee's written consent. Neither the
Company nor Indemnitee shall unreasonably withhold or delay their consent to any
proposed settlement.
6. RIGHTS NOT EXCLUSIVE. The rights provided hereunder shall not be
deemed exclusive of any other rights to which the Indemnitee may be entitled
under any byelaw, agreement, vote of stockholders or of disinterested directors
or otherwise, both as to action in his official capacity and as to action in any
other capacity by holding such office, and shall continue after the Indemnitee
ceases to serve the Company as an officer and/or director.
7. ENFORCEMENT.
(a) In any action for indemnification, the burden of proving
that indemnification is not required under this Agreement shall be on the
Company.
(b) In the event that any action is instituted by Indemnitee
under this Agreement, or to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all court and arbitrator's
costs and expenses, including reasonable counsel fees, incurred by Indemnitee
with respect to such action, unless the court or an arbitrator determines that
each of the material assertions made by Indemnitee as a basis for such action
were not made in good faith or were frivolous.
(c) Indemnitee may elect to submit any action under this
Agreement to final and binding arbitration. Any reference to arbitration herein
shall include the rights of the parties to move to vacate or confirm an
arbitrator's award under Bermuda law.
8. SEVERABILITY. In the event that any provision of this Agreement
is determined by a court to require the Company to do or to fail to do any act
which is in violation of applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a violation
of law, and, as so limited or modified, such provision and the balance of this
Agreement shall be enforceable in accordance with their terms.
9. CHOICE OF LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of Bermuda.
10. CONTINUATION OF INDEMNIFICATION. All agreements and obligations
of the Company contained herein shall continue during the period that Indemnitee
is an officer, and/or director or other Agent of the Company (or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise)
and shall continue thereafter so long as Indemnitee shall be
5
<PAGE>
subject to any possible Loss or Expense by reason of the fact that Indemnitee
was an officer and/or director of the Company or serving in any other capacity
referred to above.
11. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents and take all actions
reasonably requested by the Company to implement such right of subrogation.
12. SUCCESSOR AND ASSIGNS. This Agreement shall be (i) binding upon
all successors and assigns of the Company (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law), and (ii) shall be binding on and inure to the benefit of the
heirs, personal representatives and estate of Indemnitee. In the event that the
Company or any of its assets are sold or in the event that Company is merged
with any other entity, the Company shall insure that a term and condition of the
sale or merger shall be that all of Company's obligations under this Agreement
shall be assumed by the buyer or successor.
13. AMENDMENT. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in writing signed
by each of the parties hereto.
14. AUTHORIZATION AND APPROVAL. The Company confirms and agrees that
it has entered into this Agreement and assumed the obligations imposed on it
under this Agreement to induce Indemnitee to continue as a director and/or
officer of the Company, and acknowledges that Indemnitee is relying upon the
full enforcement and binding nature of this Agreement in continuing in such
capacity. The Company represents and warrants to Indemnitee that all requisite
corporate action has or will be taken promptly to authorize and approve this
Agreement, including obtaining Board and/or shareholder approval of this
Agreement.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement as of the day and year first above written.
ARAMEX INTERNATIONAL LIMITED
By: _______________________________
Title:
INDEMNITEE
___________________________________
6
<PAGE>
AMENDMENT NO. 1 to SHAREHOLDERS AGREEMENT
This AMENDMENT NO. 1 TO SHAREHOLDERS AGREEMENT, dated as of December 11,
1996 ("Amendment No. 1"), by and among Aramex International, Limited, a Hong
Kong company limited by shares (the "Company"), William S. Kingson, an
individual residing in New York ("Kingson"), Fadi Ghandour, an individual
residing in Amman, Jordan ("F. Ghandour"), Rula Ghandour, an individual residing
in Amman, Jordan ("R. Ghandour") and Airborne Freight Corporation, a Delaware
corporation ("Airborne") (each a "Party" and collectively, the "Parties").
WHEREAS, the Parties have entered into a Shareholders Agreement, dated as
of the 22 day of October, 1996 (the "Shareholders Agreement"); and
WHEREAS, the Parties hereto wish to amend the Shareholders Agreement as set
forth herein.
NOW, THEREFORE, in consideration of the mutual premises set forth herein,
the Parties hereby agree as follows.
Article 1. DEFINED TERMS.
Capitalized terms used in Amendment No. 1 and not otherwise defined herein
shall have the respective meanings specified in the Shareholders Agreement.
Article 2. AMENDMENT OF SECTION 1.5 OF THE SHAREHOLDERS AGREEMENT.
Section 1.5 of the Shareholders Agreement is hereby replaced in its
entirety by the following new provision:
"It is agreed that should the Company opt to Transfer any shares of
the common stock of the Company to an Airborne Prohibited Company, Airborne
shall have the right to sell all, but not less than all, of the Shares to the
Company on the same terms and conditions as the sale to the Airborne Prohibited
Company. Notwithstanding any provisions herein, to the contrary, this Article
1.5 shall survive termination of this Agreement pursuant to Article 2.1(a),
2.1(b) or 2.1(c).
It is agreed that should Kingson, F. Ghandour and/or R. Ghandour opt
to Transfer any shares of the common stock of the Company to an Airborne
Prohibited Company, it shall be a condition of such Transfer that Airborne be
offered the right to sell all, but not less than all, of the Shares owned by it
to such Airborne Prohibited Company on the same terms and conditions as the sale
by Kingson, F. Ghandour and/or R. Ghandour to the Airborne Prohibited Company.
Notwithstanding any provisions herein, to the contrary, this Article 1.5 shall
survive termination of this Agreement pursuant to Article 2.1(a), 2.1(b) or
2.1(c)."
<PAGE>
Article 2. MISCELLANEOUS.
2.1. Governing Law. This Amendment No. 1 shall be construed in accordance
with the laws of the State of Delaware and the United States of America, without
regard to the conflict of laws provisions thereof.
2.2. Counterparts. This Amendment No. 1 may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one Agreement.
2.3 . Effectiveness of Amendment No. 1. This Amendment No. 1 has been
dated as of the date first above written for convenience only. This Amendment
No. 1 shall be effective on the date of execution and delivery by each of the
Parties.
IN WITNESS WHEREOF, the Partes have set their hands hereto as of the
date first written above.
ARAMEX INTERNATIONAL, LIMITED,
a Hong Kong company
______________________________
Name: William S. Kingson
Title: Chairman
______________________________
William S. Kingson,
an Individual
______________________________
Fadi Ghandour,
an Individual
______________________________
Rula Ghandour,
an Individual
AIRBORNE FREIGHT CORPORATION,
a Delaware corporation
______________________________
Name:
Title:
2
<PAGE>
EXHIBIT 23.3
DECEMBER 13, 1996
As independent public accountants, we hereby consent to the use of our
reports dated October 31, 1996 and November 1, 1996 and to all references to our
firm included in or made a part of this Registration Statement on Form F-1 and
the related prospectus of Aramex International Limited.
We are independent auditors with respect to Aramex International Limited and
its subsidiaries and affiliates within the meaning of the Securities Act of 1933
and its applicable published rules and regulations thereunder.
/s/ Arthur Andersen
Arthur Andersen
Manama, Bahrain
<PAGE>
Exhibit 23.4
[LETTERHEAD]
Messrs ARAMEX International Limited
Amman, Jordan
Attn: Mr. Fadi Ghandour
President & C.E.O.
2 November 1996
Dear Sir,
As independent public accountants, we hereby consent to the use of our report
dated October 29, 1996 on the 1993 consolidated financial statements of
ARAMEX INTERNATIONAL LTD. and to all references to our firm included in or
made a part of the registration Statement on form F-1 [No. 333-______________]
and related prospectus of Aramex International Limited.
We are independent auditors with respect to the Aramex International Limited
and its subsidiaries and affiliates within the meaning of the Securities Act
of 1933 and the applicable published rules and regulations thereunder.
Adnan Khleif
Partner
/s/ A.S. Khleif
- --------------------
<PAGE>
EXHIBIT 23.4
Messrs ARAMEX International Limited
Amman, Jordan
Attn: Mr. Fadi Ghandour
President & C.E.O.
Dear Sir,
As independent public accountants, we hereby consent to the use of our report
dated October 29, 1996 on the 1993 consolidated financial statements of ARAMEX
INTERNATIONAL LTD. and to all references to our firm included in or made a part
of the Registration Statement on form F-1 No. 333-15639 and related prospectus
of Aramex International Limited.
We are independent auditors with respect to the Aramex International Limited and
its subsidiaries and affiliates within the meaning of the Securities Act of 1933
and the applicable published rules and regulations thereunder.
Khleif & Co.
Public Accountants & Consultants
Amman, Jordan
<PAGE>
EXHIBIT 23.5
Messrs ARAMEX International Limited
Amman, Jordan
Attn: Mr. Fadi Ghandour
President & C.E.O.
Dear Sir,
As independent public accountants, we hereby consent to the use of our report
dated March 20, 1995 on the 1994 financial statements of FALLOUH TRADING AND
EXPRESS SHIPPING and to all references to our firm included in or made a part of
the Registration Statement on form F-1 No. 333-15639 and related prospectus of
Aramex International Limited.
We are independent auditors with respect to the Aramex International Limited and
its subsidiaries and affiliates within the meaning of the Securities Act of 1933
and the applicable published rules and regulations thereunder.
Khleif & Co.
Public Accountants & Consultants
Amman, Jordan
<PAGE>
EXHIBIT 23.6
Messrs ARAMEX International Limited
Amman, Jordan
Attn: Mr. Fadi Ghandour
President & C.E.O.
Dear Sir,
As independent public accountants, we hereby consent to the use of our report
dated March 20, 1995 on the 1994 financial statements of ARAB AMERICAN EXPRESS
CO. (WLL) and to all references to our firm included in or made a part of the
Registration Statement on form F-1 No. 333-15639 and related prospectus of
Aramex International Limited.
We are independent auditors with respect to the Aramex International Limited and
its subsidiaries and affiliates within the meaning of the Securities Act of 1933
and the applicable published rules and regulations thereunder.
Khleif & Co.
Public Accountants & Consultants
Amman, Jordan
<PAGE>
EXHIBIT 23.7
Messrs ARAMEX International Limited
Amman, Jordan
Attn: Mr. Fadi Ghandour
President & C.E.O.
Dear Sir,
As independent public accountants, we hereby consent to the use of our report
dated May 4, 1995 on the 1994 financial statements of ARAMEX INTERNATIONAL LTD.
(Regional Office - Jordan) and to all references to our firm included in or made
a part of the Registration Statement on form F-1 No. 333-15639 and related
prospectus of Aramex International Limited.
We are independent auditors with respect to the Aramex International Limited and
its subsidiaries and affiliates within the meaning of the Securities Act of 1933
and the applicable published rules and regulations thereunder.
Khleif & Co.
Public Accountants & Consultants
Amman, Jordan
<PAGE>
EXHIBIT 23.8
Messrs ARAMEX International Limited
Amman, Jordan
Attn: Mr. Fadi Ghandour
President & C.E.O.
Dear Sir,
As independent public accountants, we hereby consent to the use of our report
dated May 4, 1994 on the 1993 financial statements of ARAMEX INTERNATIONAL LTD.
(Regional Office - Jordan) and to all references to our firm included in or made
a part of the Registration Statement on form F-1 No. 333-15639 and related
prospectus of Aramex International Limited.
We are independent auditors with respect to the Aramex International Limited and
its subsidiaries and affiliates within the meaning of the Securities Act of 1933
and the applicable published rules and regulations thereunder.
Khleif & Co.
Public Accountants & Consultants
Amman, Jordan
<PAGE>
EXHIBIT 23.9
Messrs ARAMEX International Limited
Amman, Jordan
Attn: Mr. Fadi Ghandour
President & C.E.O.
Dear Sir,
As independent public accountants, we hereby consent to the use of our report
dated April 15, 1994 on the 1993 financial statements of ARAB AMERICAN EXPRESS
CO. (WLL) and to all references to our firm included in or made a part of the
Registration Statement on form F-1 No. 333-15639 and related prospectus of
Aramex International Limited.
We are independent auditors with respect to the Aramex International Limited and
its subsidiaries and affiliates within the meaning of the Securities Act of 1933
and the applicable published rules and regulations thereunder.
Khleif & Co.
Public Accountants & Consultants
Amman, Jordan
<PAGE>
EXHIBIT 23.10
Messrs ARAMEX International Limited
Amman, Jordan
Attn: Mr. Fadi Ghandour
President & C.E.O.
Dear Sir,
As independent public accountants, we hereby consent to the use of our report
dated April 18, 1994 on the 1993 financial statements of FALLOUH TRADING AND
EXPRESS SHIPPING and to all references to our firm included in or made a part of
the Registration Statement on form F-1 No. 333-15639 and related prospectus of
Aramex International Limited.
We are independent auditors with respect to the Aramex International Limited and
its subsidiaries and affiliates within the meaning of the Securities Act of 1933
and the applicable published rules and regulations thereunder.
Khleif & Co.
Public Accountants & Consultants
Amman, Jordan
<PAGE>
EXHIBIT 23.11
AL-AWSAT INTERNATIONAL
TRANSPORT COMPANY LIMITED
JEDDAH
SAUDI ARABIA
We have been the independent auditors of Al-Awsat International Transport
Company Limited for the years ended December 31, 1993, 1994 and 1995.
We hereby consent to the use of our audit reports dated 27/3/1994, 29/3/1995 and
February 25, 1996 on Al-Awsat International Transport Company's financial
statements for the years ended December 31, 1993, 1994 and 1995 respectively and
to all references to our firm in connection therewith included in or made a part
of the Registration Statement and the related prospectus.
For Dr. Mohamed Al-Amri & Co.
November 9, 1996 Dr. Mohamed A. Al-Amri
Jamada II 28, 1417 Senior Partner
<PAGE>
EXHIBIT 23.12
The Directors
Aramex International Limited
Regional Office
PO Box 960913
Amman
Jordan
Dear Sirs
ARAMEX (UK) INTERNATIONAL COURIER LIMITED
Further to our letter dated 6 November 1996, we hereby consent to the use of our
revised Auditors' Report for the three years to 31 December 1995, to be included
in or made a part of the Registration Statement on Form F1 and related
prospectus of Aramex International Limited.
Yours faithfully
MEHTA & TENGRA
<PAGE>
EXHIBIT 23.13
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Amendment No. 2 to Registration Statement No.
333-15639 of our reports dated March 30, 1996, February 23, 1996 and March 14,
1995 (relating to the financial statements of Aramex International Courier,
Ltd., Aramex International Courier of Virginia, Inc. and Aramex International
Courier-Texas, Ltd., respectively, not presented separately herein) and to all
references to our firm included in or made a part of the Registration Statement
on Form F-1 and related prospectus of Aramex International Limited.
Edward Isaacs & Co. LLP
New York, New York
December 12, 1996
<PAGE>
Exhibit 23.16
[Bish & Haffey, P.C. Letterhead]
December 13, 1996
Aramex International Limited c/o
Orrick, Herrington & Sutcliff LLP
c/o Merrill/Corporate New York
225 Varick Street
New York, NY 10014
BY FAX: 1-212-645-8552
Re: Aramex International Courier of Virginia
To Whom It May Concern:
We were the independent auditors of Aramex International Courier of Virginia
for the year ended December 31, 1993.
We hereby consent to the use of our audit report dated March 9, 1994 on
Aramex International Limited Courier of Virginia's financial statements for the
year ended December 31, 1993 and to all references to our firm in connection
therewith included in or made a part of the Registration Statement and the
related prospectus.
Sincerely,
Bish & Haffey, P.C.
<PAGE>
EXHIBIT 23.17
BEIRUT DECEMBER 12, 1996
"TO WHOM IT MAY CONCERN"
As independent public accountants, we hereby consent to the use of our
reports dated September 1, 1994 and April 18, 1995 and to all references made to
the mentioned Audited Financial Statements.
We are independent auditors with respect to Aramex S.A.R.L. (LEBANON) and
its affiliates within the meaning of the Securities ACT of 1933 and the
applicable published rules and regulations thereunder and in compliance with the
international Auditing Standards.
Talal Abu Ghazaleh & Co.
/s/ Fouad Najem
- ---------------------
Fouad Najem
Managing Partner
<PAGE>
EXHIBIT 23.18
BEIRUT DECEMBER 12, 1996
"TO WHOM IT MAY CONCERN"
As independent public accountants, we hereby consent to the use of our
reports dated June 30, 1994 and April 19, 1995 and to all references made to the
mentioned Audited Financial Statements.
We are independent auditors with respect to the ARAB AMERICAN EXPRESS
"Courier Company-LTD" and its Beirut Branch affiliates within the meaning of the
Securities ACT of 1933 and the applicable published rules and regulations
thereunder and in compliance with the International Auditing Standards.
Talal Abu Ghazaleh & Co.
/s/ Fouad Najem
- ---------------------
Fouad Najem
Managing Partner
<PAGE>
EXHIBIT 23.19
50 ALMA street TEL: 01.47.68.74.80
92400 COURBEVOIE
FRANCE
siret - 402 270 334 00012
NAF: 741G
FROM: Mr HACHEM ALBERT TO:ARAMEX INTERNATIONAL
COURRIER - FRANCE
5 CHEMIN DE LA DIME
95700 ROISSY EN FRANCE
Dear sir
As independent public accountants, we hereby consent to the use of our
report dated Mars 03, 1996 and to all references to our firm included in or made
a part of the registration statement on form F-1 (No. 333-15639) and related
prospectus of Aramex International Courrier.
We are independent auditors with respect to the Aramex International
Courrier and its subsidiaries and affiliates within the meaning of the
securities act of 1933 and the applicable published rules and regulations
thereunder.
HACHEM Albert
<PAGE>
EXHIBIT 23.20
TO WHOM IT MAY CONCERN
Further to our statement dated 27 November 1996 on the same matter, as
independent public accountants, we hereby reconfirm our consent to the use of
our report dated 28 March 1995 on the financial statements of the Cyprus
Operation of Arab American Express Co Limited for the year ended 31 December
1994 for the purpose of preparing a prospectus in relation to the aforesaid
company.
The report mentioned above, was issued by ourselves acting as independent
auditors and reporting on the Cyprus Operation of Arab American Express Co
Limited for the period from 1 January 1994 to 31 December 1994. Since 1 January
1995, we no longer act as auditors of the above entity.
This confirmation is given at the request of Messrs. Arab American Express
Co Limited and without any guarantees or responsibility on our part.
/s/ KPMG Peat Marwick
Certified Public Accountants (Cyprus)
Limassol 12 December 1996
<PAGE>
EXHIBIT 23.21
The Regional Office
Aramex International Courier
P.O. Box 491
Dolia
Qatar
12 December 1996 Our ref: MP:898/96
Dear Sir
Consent Letter
As independent public accountants, we hereby consent reference to our audit
report dated 27 March 1995 on the financial statements of Aramex International
Courier - Qatar for the year ended 31 December 1994, in the prospectus of Aramex
International Limited. Our audit report is addressed to the Regional Office
Aramex International Courier - Qatar and Al Mana Trading Company (W.L.L.), a
limited liability company registered under the Qatar Commercial Companies Law
No. 11 of 1981 and should be disclosed accordingly.
Please note that our audit report was issued solely for the purpose of
providing an opinion whether the financial statements present fairly, in all
material respects, the financial position of Aramex International Courier -
Qatar as of 31 December 1994 and the results of its operations and its cash
flows for the year then ended in accordance with International Accounting
Standards. Any reference to our Report must therefore explain the specific
purpose of the engagement which was carried out in accordance with International
Standards on auditing.
We are independent auditors with respect to Aramex International Limited and
its subsidiaries and affiliates within the meaning of the Securities Act of 1933
and the applicable published rules and regulations thereunder.
Yours faithfully
/s/ Mumtaz Pasha
- ---------------------
Mumtaz Pasha
PARTNER
for KPMG Peat Marwick
<PAGE>
EXHIBIT 23.22
Mr. Sarmad Halim
GENERAL MANAGER
ARAMEX-Bahrain Branch Our ref: L/ARAM
PO Box 26951
Manama
State of Bahrain
12 December 1996
Dear Sarmad
1994 AUDIT OF THE BAHRAIN BRANCH OF ARAB AMERICAN EXPRESS COMPANY
At your request, we confirm that we were independent auditors with respect
to the Bahrain Branch of American Express Company (ARAMEX), Jordan, for the year
ended 31 December 1994. We conducted our audit in accordnace with International
Standards on Auditing. In our audit report dated 17 April 1995, we had given an
unqualified opinion on the financial statements of the Bahrain Branch of ARAMEX
for the purpose of consolidation in the financial statements of ARAMEX, Jordan.
Yours sincerely,
Iamal Fakhro
MANAGING PARTNER
KI/ki
<PAGE>
EXHIBIT 23.23
We hereby consent to the use of our name wherever it appears in the
Registration Statement of Aramex International Limited, including the Prospectus
constituting a part thereof, as originally filed or as subsequently amended or
supplemented. In giving such consent, we do not consider that we are "experts"
within the meaning of such term as used in the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
issued thereunder, with respect to any part of the Registration Statement,
including this opinion as an exhibit or otherwise.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
Exhibit 23.24
To
Al-Awsat International
Transport Company Limited
Jeddah,
Saudi Arabia.
We refer to our certificate dated November 9, 1996 to you on the subject of
Al-Awsat International Transport Company Limited audit for the years ended
December 31, 1993, 1994 and 1995.
The aforementioned audits performed by us were in accordance with generally
accepted auditing standards (GAAS) relevant to Saudi Arabia and are
substantially consistent with GAAS of the United States of America.
For Dr. Mohamed Al-Amri & Co.
Dr. Mohamed A. Al-Amri
Certified Public Accountant December 9, 1996 (G)
Registration No. 60 Rajab 28, 1417 (H)
<PAGE>
Exhibit 23.25
December 13, 1996
Aramex International Limited
2 Badyr Shaker Alysayyab Street
Um Uthayna, Amman, Jordan
Re: Aramex International Limited Registration
Statement on Form F-1
Ladies and Gentlemen,
At your request, we are rendering this opinion in connection with a proposed
sale by Aramex International Limited, a Bermuda Corporation (the "Company"), of
up to 1,000,000 shares of common shares, $0.01 par value (the "Common Shares"),
and the sale by certain Company stockholders of up to 150,000 shares of Common
Stock.
We hereby confirm that the paragraph contained under the heading "Certain
Foreign Issuer Considerations" on page 51 of the Registration Statement is an
accurate summary of the matters referred to therein.
We hereby consent to the reference to our name in the Registration
Statement.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever it appears in said
Registration Statement, including the Prospectus constituting a part thereof, as
originally filed or as subsequently amended or supplemented. In giving such
consent, we do not consider that we are "experts" within the meaning of such
term as used in the securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission issued thereunder, with
respect to any part of the Registration Statement, including this opinion as an
exhibit or otherwise.
Very Truly yours,
Ali Sharif Zu'bi & Sharif Ali Zu'bi
Law Office
