<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 6, 1996
REGISTRATION STATEMENT NO. 333-15639
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
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 NOVEMBER 6, 1996
PROSPECTUS
1,000,000 SHARES
[LOGO]
[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 11.
------------------------
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 , 1996.
------------------------
COMMONWEALTH ASSOCIATES
The date of this Prospectus is , 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>
The following is a list of all graphs/art that appear in this document and
the page number it appears on.
Page 10 Organization Chart of the Company.
Page 26 A chart which reflects the average annual growth rate of the
world air cargo market.
Page 32 A chart which reflects historical and future growth of
Middle Eastern Airborne traffic.
Page 27 A chart which reflects the annual growth rate for worldwide
air cargo traffic through 2015.
Back cover page Photograph of a fork lift lifting box shipments
in a warehouse.
Photograph of Aramex truck and delivery personnel.
Photograph of a reception desk in an Aramex office.
Photograph of the exterior of a MED SHOP THE WORLD DIRECT
catalog center.
Inside Front A map of the world indicating locations in which the Company
Cover Page conducts its operations. Picture w/ a MED SHOP THE WORLD
DIRECT catalog center.
<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.
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 is the
leading wholesale provider of express services to the Middle East. 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 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. 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
the Boeing Commercial Airplane Group ("Boeing") in its 1996/1997 WORLD AIR CARGO
FORECAST 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 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.
3
<PAGE>
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% 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 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
4
<PAGE>
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 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
5
<PAGE>
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
962-6-603192.
------------------------
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 BERMUDA. 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. 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 OF THE UNITED STATES 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 WOULD (i)
ENFORCE JUDGMENTS OF UNITED STATES COURTS OBTAINED AGAINST THE COMPANY OR SUCH
PERSONS PREDICATED UPON THE CIVIL LIABILITY PROVISIONS OF THE FEDERAL OR STATE
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 OR STATE 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 OUT OF OR RELATING TO THIS OFFERING.
7
<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>
- ------------------------
(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."
8
<PAGE>
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 November , 1996, Aramex
Bermuda subscribed for 219,500 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. 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 West Bank.
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, Turkey and 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.
9
<PAGE>
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.
10
<PAGE>
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. In addition, 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 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 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.
11
<PAGE>
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.
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.
12
<PAGE>
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 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.
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.
13
<PAGE>
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.
LIABILITY AND INSURANCE
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. There can be no assurance that the Company's results of
operations will not be adversely affected by poor claims experiences.
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."
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. 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
14
<PAGE>
Company or such persons predicated upon the securities laws of the United States
or any state. 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 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."
15
<PAGE>
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."
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, 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 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. Such
provision may deter or frustrate a takeover of the Company.
16
<PAGE>
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 to (i) expand into existing and new emerging markets by acquiring
ownership interests or increasing existing participation interests in local
service providers, (ii) open additional SHOP THE WORLD DIRECT catalog centers,
(iii) continue to invest in technology and systems infrastructure in order to
introduce logistics management services, and (iv) 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.
17
<PAGE>
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 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.
18
<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."
19
<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
</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."
20
<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
21
<PAGE>
customer. The table below shows the breakdown of revenues by geographic region
for 1995 and the Nine Month Period.
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.................. 27.9 72 9.1 65 3.6 94 40.6 71
Europe....................... 8.0 21 2.0 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.... $ 25.7 100% $ 14.1 100% $ 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 3 7.9 17
North America.............. 2.4 8 1.6 16 .3 6 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) Represents inter-station express transactions which have been eliminated.
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 9.0% and total revenues increased 21.0% for the
Nine Month Period from the 1995 Period. During the Nine Month Period the Company
achieved better margins on its freight forwarding business due to improved
buying rates from airlines achievement as well as achieving better selling rates
in its markets.
22
<PAGE>
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 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.
23
<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 cash balances were $1.4 million at September 30, 1996 as
compared to $0.8 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
$0.9 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
24
<PAGE>
the Company's lines of credit were 12.3%, 11.3% and 10.3% at September 30, 1996,
and December 31, 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. It is anticipated that the Company may
use a portion of the proceeds to reduce amounts outstanding under its lines of
credit and that Mr. Ghandour's personal guarantee will no longer be required.
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 9.75% 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.
In October 1996, the Company consummated the sale to Airborne of 304,688
shares of Common Stock for an aggregate consideration of $2.0 million. See
"Certain Transactions."
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.
25
<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)
26
<PAGE>
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)
Industry sources estimate that 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.
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
27
<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% 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. OEC was formed in 1990 by Airborne
Express, Aramex, Purolator Courier--Canada, International Bonded Couriers and
Trans Africa Express. 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 and Portugal
Ziegler France, Belgium, Luxembourg, Switzerland & Denmark
</TABLE>
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 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 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
28
<PAGE>
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.
29
<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
30
<PAGE>
by large populations and growing economies which are liberalizing and opening
their markets to the 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................. 27.9 72 9.1 65 3.6 94 40.6 71
Europe...................... 8.0 21 2.0 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..... $ 25.7 100% $ 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................. 24.0 73 7.3 70 3.7 91 34.8 74
Europe...................... 6.3 19 1.5 14 .1 3 8.0 17
North America............... 2.4 8 1.6 16 .3 6 4.3 19
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) Represents inter-station express transactions which have been eliminated.
31
<PAGE>
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 its station 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.
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.
32
<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, DHL, is allowed
to have full service into and out of the country, a situation resembling
the past Saudi experience. In Tunisia and Algeria, the government-owned
company has a monopoly.
- 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.
33
<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>
34
<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 over 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.
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
35
<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 $890,000 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 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.
36
<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., 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 which he was a
37
<PAGE>
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 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. Mr.
Shishtawi joined Aramex in 1984 as Accountant in the Amman headquarters and was
later promoted
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<PAGE>
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.
39
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
-------------
<S> <C>
NAME AND PRINCIPAL POSITION SALARY
- --------------------------------------------------------------------------------------------------- -------------
Fadi Ghandour $ 41,000
President and Chief Executive Officer(1)
</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,
40
<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 a change in
control of the Company), without cause or by Mr. Kingson or Mr. Ghandour for
good reason, 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.
41
<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."
42
<PAGE>
CERTAIN TRANSACTIONS
Aramex Bermuda has agreed to subscribe for 219,500 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 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 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 which, among other things, provides 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 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 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. 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.
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.
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<PAGE>
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. 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.
44
<PAGE>
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.
45
<PAGE>
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 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, 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.
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<PAGE>
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.
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.
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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.
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. 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, "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.
TAXATION OF THE COMPANY
Currently, most of the Company's income 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. 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
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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. However, the Company currently intends to
manage its affairs so as to minimize liability for the PHC tax, but there can be
no absolute 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 ON 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.
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.
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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 could be treated as a "controlled foreign
corporation" (a "CFC") under Subpart F of the Code. It is unclear how
controlling blocks of stock will be valued for these 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 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 (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.
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
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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 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
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
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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 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.
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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, employee or partner of the Representative,
or to officers, employees or partners of any such successor or partner, and are
exercisable during the four-year
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period commencing one year after the effective date of the Registration
Statement of which this Prospectus is a part (the "Warrant 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.
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
57
<PAGE>
Place, Hong Kong, has acted as special counsel to the Company with respect to
certain legal matters of Hong Kong 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 register the Common Stock under Section 12(b) of the
Exchange Act and intends to file annual reports on Form 10-K, quarterly reports
on Form 10-Q and periodic reports on Form 8-K with the Commission. While the
Company is exempt from the rules under the Exchange Act prescribing the content
and distribution of proxy statements, it intends to furnish its shareholders
with annual reports as if it were subject to such rules and quarterly reports
containing unaudited financial information, and intends to substantially comply
with the rules governing the preparation of proxy statements and the
solicitation of proxies (excluding provisions requiring 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."
58
<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
Balance Sheet as of October 31, 1996..................................................................... F-9
Notes to Balance Sheet................................................................................... F-10
Report of Independent Public Accountants................................................................. F-11
Auditors' Report......................................................................................... F-12
Consolidated Balance Sheets at December 31, 1995 and 1994................................................ F-13
Consolidated Statements of Income for the years ended December 31, 1995, 1994 and 1993................... F-14
Statements of Changes in Shareholders' Equity for the years ended December 31, 1995, 1994 and 1993....... F-15
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993............... F-16
Notes to Consolidated Financial Statements............................................................... F-17
</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)
<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"). Aramex
Bermuda is expected to subscribe for 219,500 shares of Aramex Hong Kong (the
"Ordinary Shares") and each share of Aramex Hong Kong outstanding prior to such
subscription will be 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. 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. 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 balance sheet of ARAMEX International
Limited (a Bermuda company) as of October 31, 1996. This balance sheet is the
responsibility of the management of ARAMEX International Limited. Our
responsibility is to express an opinion on this balance sheet based on our
audit.
We conducted our audit in accordance with International Auditing Standards,
which are substantially consistent with those in the United States. Those
standards require that we plan the audit to obtain reasonable assurance about
whether the balance sheet is free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the balance sheet. An audit also includes assessing the accounting principles
and significant estimates made by management, as well as evaluating the overall
balance sheet presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of ARAMEX International Limited as of
October 31, 1996, in conformity with International Accounting Standards.
ARTHUR ANDERSEN
Manama--Bahrain
November 1, 1996
F-8
<PAGE>
ARAMEX INTERNATIONAL LIMITED
BALANCE SHEET
AS OF OCTOBER 31, 1996
(IN U.S. DOLLARS)
<TABLE>
<S> <C>
ASSETS
Total Assets............................................... 0
---------
---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities...................................................... 0
Shareholders' Equity:
Capital shares................................................... 0
---------
Total shareholders' equity................................. 0
---------
Total Liabilities and Shareholders' Equity................. 0
---------
---------
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F-9
<PAGE>
ARAMEX INTERNATIONAL LIMITED
NOTES TO BALANCE SHEET
OCTOBER 31, 1996
1. CAPITAL REORGANIZATION
ARAMEX International Limited (the "Company") was incorporated in Bermuda on
October 31, 1996, to become the successor holding company to ARAMEX
International, Limited, a Hong Kong company ("ARAMEX Hong Kong"), through a
reorganization, resulting in ARAMEX Hong Kong becoming a wholly-owned subsidiary
of the Company and its former direct shareholders becoming shareholders on the
Company.
The Company is authorized to issue 15,000,000 shares of common stock with a
par value of $0.01 per share. After the reorganization, its share ownership is
expected to be detailed as follows:
<TABLE>
<CAPTION>
OWNER SHARES OWNED
- ------------------------------------------------------------------------------- -------------
<S> <C>
Mr. William S. Kingson......................................................... 1,562,500
Mr. Fadi Ghandour.............................................................. 781,250
Mrs. Rula Ghandour............................................................. 781,250
Airborne Freight Corporation................................................... 304,688
-------------
3,429,688
-------------
-------------
</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.
As a result of the reorganization discussed above, the consolidated
financial statements of the Company and its subsidiaries would be similar to the
consolidated financial statements of ARAMEX Hong Kong presented elsewhere in
this registration statement.
2. INITIAL PUBLIC OFFERING
In October 1996, the Company commenced planning for an initial public
offering of 1,000,000 shares of its common stock.
3. EMPLOYEE STOCK OPTION PLAN
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
the grant. No options have been granted to date; however, the Company plans to
grant stock options to acquire approximately 300,000 shares prior to its planned
initial public offering.
F-10
<PAGE>
To the Shareholders and Board of Directors of ARAMEX International Limited:
After the redomiciling transaction discussed in note (1) to the ARAMEX
International Limited's consolidated financial statements is effected, we expect
to be in a position to render the following audit report.
ARTHUR ANDERSEN
Certified Public Accountants
Manama, Bahrain
October 31, 1996.
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 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.
Manama--Bahrain
October 31, 1996
F-11
<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, insofar as it
relates to the amounts included for those stations, is based solely on the
report of the other auditors, except for Nicosia, Montreal and Paris stations
which are unaudited and which statements reflect total assets and revenues of
10% and 6% respectively of the consolidated totals.
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)
F-12
<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-13
<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-14
<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-15
<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-16
<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"). ARAMEX is expected to subscribe for 219,500 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. Pursuant to the Regorganization, ARAMEX 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 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-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)
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-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)
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-19
<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.
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
are principally related to intercompany accounts and deferred income taxes.
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>
All employee advances bear no interest and are due within one year.
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)
3. RECEIVABLES (CONTINUED)
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-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)
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-22
<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-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)
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-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)
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 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
subsidiaries.
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.
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 unsecured loans from shareholders.
These loans are interest free.
F-25
<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)
15. RELATED PARTY TRANSACTIONS (CONTINUED)
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.
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) 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
F-26
<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 (CONTINUED)
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 October 31, 1996, the Company was redomiciled in Bermuda through a
capital reorganization as discussed in Note 1. The officers and directors of the
Company remained in office after the redomiciling transaction.
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-27
<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
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>
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-28
<PAGE>
ARAMEX (UK) INTERNATIONAL COURIERS LIMITED
REPORT OF THE AUDITORS
We have audited the financial statements on pages 5 to 11 in accordance with
Auditing Standards.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 3, 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. 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: 15th August 1994
F-29
<PAGE>
ARAMEX (UK) INTERNATIONAL COURIER LIMITED
REPORT OF THE AUDITORS
We have audited the financial statements on pages 5 to 12 which have been
prepared under the historical cost convention and the accounting policies set
out on page 7 & 8.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 3, 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. 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: 25 May 1995
F-30
<PAGE>
ARAMEX (UK) INTERNATIONAL COURIER LIMITED
REPORT OF THE AUDITORS
We have audited the financial statements on pages 5 to 13.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 3, 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. 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: 18th April 1996
F-31
<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/ Mahamed A. Al-Amri
Dr. Mohamed A. Al-Amri
Certified Public Accountant Date: 15.10.1414 (H)
Registration No. (60) 27.03.1994 (G)
F-32
<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/ Mahamed A. Al-Amri
Dr. Mohamed A. Al-Amri
Certified Public Accountant Date: Shawal 28, 1415 (H)
Registration No. (60) March 29, 1995 (G)
F-33
<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/ Mahamed A. Al-Amri
Dr. Mohamed A. Al-Amri
Certified Public Accountant Shawal 07, 1416 (H)
Registration No. (60) February 25, 1996 (G)
F-34
<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 Aramax 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-35
<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 Aramax 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-36
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Aramex International Courier--Texas, Ltd.
Houston, Texas
We have audited the balance sheet of Aramax 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-37
<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............................................................... 9
The Company's Organization................................................ 10
Risk Factors.............................................................. 11
Use of Proceeds........................................................... 17
Dilution.................................................................. 18
Dividend Policy........................................................... 18
Capitalization............................................................ 19
Selected Consolidated Financial Data...................................... 20
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 21
Business.................................................................. 22
Management................................................................ 37
Principal and Selling Shareholders........................................ 42
Certain Transactions...................................................... 43
Description of Capital Stock.............................................. 45
Stock Eligible for Future Sale............................................ 46
Certain Foreign Issuer Considerations..................................... 47
Taxation.................................................................. 48
Underwriting.............................................................. 56
Legal Matters............................................................. 57
Experts................................................................... 58
Additional Information.................................................... 58
Index to Financial Statements............................................. F-1
</TABLE>
------------------------
UNTIL [ ], 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
, 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............................................. *
Accounting Fees and Expenses................................................... *
Legal Fees and Expenses........................................................ *
Blue Sky Qualification Fees and Expenses....................................... *
Transfer Agent and Registrar Fees.............................................. *
Printing Expenses.............................................................. *
Miscellaneous..................................................................
-------------
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) Prior to the effective date of this Registration Statement, Aramex
International Limited subscribed for 219,500 shares of Aramex Hong Kong and each
shares 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.
(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*
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 dated as of November [ ], 1996, 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 Stockholders Agreement dated October 22, 1996 between William Kingson, Fadi Ghandour and 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 Dr. Mohamed Al-Amri*
23.6 Consent of Mehta & Tengra*
23.7 Consent of Edward Isaacs & Co. LLP
23.8 Consent of Irene P. TSE, J.D.*
23.9 Consent of Frank E. Stanley & Co.*
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
23.10 Consent of Bish & Haffey*
23.11 Consent of Talal Abu-Ghazaleh & Co.*
23.12 Consent of Hachem Albert*
24.1 Powers of attorney executed by certain officers and directors of the Registrant (included on signature
page)
</TABLE>
- ------------------------
* To be filed by amendment.
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:
(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.
II-4
<PAGE>
(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
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, on November 6, 1996.
ARAMEX INTERNATIONAL LIMITED
By: /s/ WILLIAM KINGSON
-----------------------------------------
William Kingson
CHAIRMAN OF THE BOARD
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints William Kingson and Fadi Ghandour, and
each of them, his or her true and lawful agent, proxy and attorney-in-fact, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to (i) act on, sign and file with the
Securities and Exchange Commission any and all amendments (including
post-effective amendments) to this Registration Statement together with all
schedules and exhibits thereto, (ii) act on, sign and file with the Securities
and Exchange Commission any registration statement relating to this Offering
that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, as amended, (iii) act on, sign and file with the Securities and
Exchange Commission any exhibits to such registration statement or pre-effective
or post-effective amendments, (iv) act on, sign and file such certificates,
instruments, agreements and other documents as may be necessary or appropriate
in connection therewith, (v) act on and file any supplement to any prospectus
included in this registration statement or any such amendment and (vi) take any
and all actions which may be necessary or appropriate in connection therewith,
granting unto such agents, proxies and attorneys-in-fact, and each of them, full
power and authority to do and perform each and every act and thing necessary or
appropriate to be done, as fully for all intents and purposes as he or she might
or could do in person, hereby approving, ratifying and confirming all that such
agents, proxies and attorneys-in-fact, any of them or any of his, her or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof
Pursuant to the requirements of the Securities Act of 1933, as amended, this
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 November 6, 1996
William Kingson Officer)
/s/ FADI GHANDOUR President and
- ------------------------------ Chief Executive Officer November 6, 1996
Fadi Ghandour
/s/ RULA GHANDOUR Director
- ------------------------------ November 6, 1996
Rula Ghandour
Accounting and Finance
/s/ EMAD SHISTAWI Manager
- ------------------------------ (Principal Accounting November 6, 1996
Emad Shistawi Officer)
II-6
<PAGE>
Exhibit 10.2
LICENSE AGREEMENT
This Agreement is made in Amman this 1st day of January, 1995, BY AND
BETWEEN
1. Aramex International Limited, a Limited Liability Company duly organized
and existing under the laws of Hong Kong and having its registered office
at Room 1021 Sun Hung Kai Centre, 30 Harbour Road, Hong Kong, acting
through its Amman Regional Office at P.O.Box 960913 Amman, Jordan
(hereinafter referred to as "Licensor") of the one part, and
2. "Licensee"
WHEREAS
A. Licensor is in the business of effecting and coordinating courier services
from country to country around the world and within certain countries under
the name of "Aramex" and has acquired a high level of skill and technical
expertise in the operation of courier service activities and the provision
of expedited door-to-door pickup and delivery services of time-sensitive
small packages, documents and cargo;
B. Licensor is the owner of certain trademarks, service marks and trade names
and has developed and perfected a system (hereinafter referred to as the
"Aramex System") for providing to the public expedited door-to-door pickup
and delivery services of time-sensitive small packages, documents and cargo
from country to country around the world and within certain countries under
the trade name of "Aramex";
C. Licensor is desirous of expanding the Aramex System, and maintaining high
standards of quality and service in connection with the same.
D. Licensee desires upon the terms and conditions set forth, to be licensed to
provide in Licensee's Territory courier services of the same distinctive
nature and high quality and of the same distinguishing characteristics as
those established by Licensor, under and using the same trademarks, service
marks, color pattern and scheme, signs, designs and other distinguishing
characteristics of the Aramex System, as established by Licensor, all in
accordance with the standards of service approved by Licensor.
E. Licensor is ready and willing to grant a license to Licensee for the
operation of such Aramex System business in Licensee's Territory upon the
terms and conditions set forth hereinbelow and upon the compensation to
Licensor as set forth below.
NOW THEREFORE IT IS AGREED BETWEEN THE PARTIES AS FOLLOWS:
<PAGE>
ARTICLE 1. PREAMBLE
The preamble to this Agreement shall constitute part and parcel hereof.
ARTICLE 2. DEFINITIONS
COURIER SERVICES means the provision of expedited door-to-door pickup and
delivery services of time-sensitive small packages and documents (cargo
excluded).
COURIER SHIPMENTS means shipments of time-sensitive small packages,
documents and cargo requiring expedited door-to-door pickup and delivery.
LICENSEE'S TERRITORY means the Territory set out in Schedule 5.
ARAMEX TERRITORY means Jurisdictions other than Licensee's Territory.
LICENSOR'S INTERLINE AGENTS refers collectively to any person, company or
entity other than Licensee rendering transportation and/or courier services to
Licensor.
ARTICLE 3. LICENSING
3.1 Licensor hereby grants to Licensee, subject to the terms and
conditions of this License Agreement, a non-assignable, non-exclusive personal
license to use the registered mark "Aramex" in the operation of its Courier
Services in Licensee's Territory. It clearly understood by the Parties that the
License granted hereby shall not extend to the cargo services of the Licensor
and any reference in this Agreement indicating permission to conduct cargo
services shall be null and void.
3.2 In respect of its Courier Services in Licensee's Territory, Licensee
shall trade under the name of "Aramex" or "Aramex International Courier", the
use of which trade names and any trademarks and/or service marks, color pattern
and scheme, signs, designs and other distinguishing characteristics of the
Aramex System as set out in Schedule I to this Agreement (called "the Licensed
Property") is licensed by Licensor to Licensee for use by it pursuant to the
specific terms of this License Agreement.
3.3 Licensee acknowledges that each item of the Licensed Property is the
sole and exclusive property of Licensor, that Licensor has and shall have the
sole right to use each item of the Licensed Property, that Licensor has the sole
and exclusive right to franchise and license the Licensed Property and that
valuable goodwill is attached to the Licensed Property.
3.4 Licensee shall use the Licensed Property only with respect to its
Courier Services in Licensee's Territory and only in the manner and to the
extent specifically permitted by Licensor. Licensee will acquire no rights to
the use of the Licensed Property other than those expressly and specifically
granted to Licensee hereunder.
2
<PAGE>
3.5 Licensee expressly acknowledges that Licensor is the sole and
exclusive owner of the Licensed property, and agrees not to represent in any
manner that Licensee has acquired any ownership rights therein by virtue of this
Agreement or its use of the Licensed Property pursuant thereto. Licensee
further acknowledges and agrees that any and all goodwill associated with the
Licensed Property shall inure directly and exclusively to the benefit of
Licensor and that, upon the expiration or termination of this Agreement, no
monetary amount shall be assigned or attributed to any goodwill associated with
Licensee's use of the Licensed Property and Licensee's efforts to advance the
image and prestige,of Licensor, the Licensed Property and the Aramex System.
3.6 Licensee agrees that Licensee will not directly or indirectly register
or attempt to register Licensor's Licensed Property or any other item licensed
in any manner to Licensee by Licensor under the terms of this Agreement.
However, should the Licensed Property be registered in contravention of the
terms of this Agreement in the name of Licensee for any reason whatsoever, with
or without the approval of Licensor, then Licensee hereby declares that:
(a) The Licensed Property is registered in the name of Licensee for
the benefit of Licensor;
(b) Licensor is the actual beneficial owner of the Licensed Property;
(c) Licensee will use the Licensed Property only with respect to the
Courier Services and in the manner set out in this Agreement; and
(d) Licensee will transfer the ownership/registration of the Licensed
Property upon the request of Licensor or upon the termination or expiration
of this Agreement to Licensor or to whomever Licensor designates and will
execute any and all documents necessary for effecting same.
3.7 Licensee expressly agrees that the license to use the Licensed
Property granted herein does not extend beyond the termination or expiration of
this Agreement. Licensee expressly covenants that during the term of this
Agreement and thereafter, Licensee shall not, directly or indirectly, commit any
act of infringement or contest or aid others in contesting the validity or
Licensor's sole ownership of the Licensed Property, or take any other action in
derogation thereof.
3.8 Upon the expiration or termination of this Agreement, Licensee shall
immediately execute such documents and take such action as Licensor may deem
necessary or desirable to evidence the fact that Licensee has ceased to use the
Licensed Property and that it has no further interest or rights in the Licensed
Property whatsoever.
PROVIDED that, notwithstanding the foregoing, upon the expiration or termination
of this Agreement, Licensee shall have no further interest in or rights to the
Licensed Property whether or not any such document or documents are executed or
any such action is taken.
3
<PAGE>
3.9 Upon the expiration or termination of this Agreement, Licensee shall
immediately cease and desist from any and all uses of the Licensed Property.
Upon the expiration or termination of this Agreement, any and all materials in
the possession of Licensee displaying or in any way using any of the Licensed
Property shall be immediately destroyed by Licensee unless otherwise requested
by Licensor.
3.10 For the benefit of securing the objects of this section, Licensee
hereby agrees with Licensor that it will enter into all agreements and sign any
document and do those acts and things which may be required and requested by
Licensor.
3.11 The interest of Licensee in the license hereby granted is personal and
shall not be assigned, transferred, assumed or divided in any manner by Licensee
except with the prior written consent of Licensor.
3.12 Licensee agrees that it will not do or suffer to be done any act or
thing which may impair the rights of Licensor to the Licensed Property.
3.13 Licensee shall promptly notify Licensor of any claim, demand or cause
of action that Licensor may have, based upon or arising from any unauthorized
attempt by any person or legal entity to use the Licensed Property or any
colorable imitation or variation thereof in Licensee's Territory. Licensee
shall assist Licensor upon request and at Licensee's expense, in taking such
action, if any, as Licensor may deem appropriate to halt such an infringement,
but shall take no action without Licensor's prior written approval. Licensee
agrees to cooperate with and assist, at its own expense, Licensor in connection
with the protection of its rights with respect to the Licensed Property and to
execute any and all documents and to do such acts and things including, without
limitation, the defense or prosecution of any litigation relating to the
Licensed Property as may be necessary to protect Licensor's rights and interests
in the Licensed Property.
ARTICLE 4. LICENSOR'S STANDARDS OF OPERATION
4.1 Licensee acknowledges that the Aramex System is important to Licensee,
to Licensor, and to other Aramex System Licensees. Licensee agrees at all times
to conform to such standards, methods and procedures as may be promulgated by
Licensor and agrees to instruct and keep Licensee's employees fully informed of
all such methods and procedures, as shall from time to time be promulgated by
Licensor.
4.2 Licensee shall conform to such standards and operate his Courier
Services business in such a manner so as to sustain the goodwill and prestige
which the mark and name "Aramex" enjoys with the public.
4.3 Licensee expressly agrees that as a condition precedent to maintaining
the right to use the trademark of Licensor and to maintain this license, it
shall perform all services described herein by Licensor for Licensee's clients
in a prompt, timely and professional manner, and shall maintain satisfactory
relationships with all clients and shall not take any action which would or
might adversely affect the license granted.
4
<PAGE>
4.4 Licensee agrees to maintain an active Courier Services business
operation pursuant to the terms of this Agreement and to conduct Licensee's
Courier Services business in conformity with all accepted standards of ethical
business conduct. Licensee further agrees to comply with all rules,
regulations, ordinances, laws and statutes in force in-Licensee's Territory.
4.5 If Licensee shall in any way fail to maintain the standards of quality
or service established by Licensor, Licensor shall have the right, but not the
obligation, to assign to such Licensee's business such person or persons it
deems necessary for the training of Licensee's employees in ensuring that such
standards of quality are maintained. Licensee shall bear the cost of such
training including reasonable expenses incurred for transportation, meals and
lodging.
4.6 Licensee agrees to operate the business licensed hereunder and the
Aramex System in conformity with such uniform methods, standards, and
specifications its Licensor may from time to time prescribe for all Aramex
System Licensees in its manuals or otherwise in writing, to ensure that
Licensor's required degree of quality, service and image is uniformly
maintained. Licensee further agrees to refrain from operating in any manner
which adversely reflects on Licensor's name and goodwill, or the Licensed
Property.
4.7 Licensee acknowledges that Licensor has established an image for
providing efficient, courteous and reasonably priced services in accordance with
ethical business standards, which is an integral part of the Aramex System.
Licensee shall not sell any materials or services deemed by Licensor as not in
compliance with such image, nor knowingly allow the premises to be used for any
purpose contrary to such image, if Licensor has reasonable objection thereto.
This provision is intended to protect such image and not to hinder other lawful
activities by Licensee which Licensor does not deem to be harmful thereto.
4.8 Licensee agrees to purchase and install, at Licensee's expense, all
such supplies and signs as may be required by, and meet the specifications of,
the Aramex System, as may be required in this Agreement or in the manuals or
otherwise in writing.
4.9 Licensor may from time to time conduct periodic training seminars for
such periods and at such locations as may be designated by Licensor in its
operating manual or otherwise in writing. Such training shall be provided as
Licensor may deem necessary or appropriate from time to time in its discretion.
Licensee's key personnel must attend Such training seminars. Tuition and
registration fees shall be borne by Licensor. The cost of transportation to
such seminars, the cost of lodging, food, and other expenses of Licensee shall
be borne by Licensee.
5
<PAGE>
ARTICLE 5. COVENANTS OF LICENSEE
5.1 Licensee covenants and agrees as follows:
(a) To conduct its Courier Services in accordance with the terms and
provisions of this License Agreement and according to standards and methods
established from time to time by Licensor.
(b) Throughout the term of this License Agreement, to acquire, secure
and maintain all registrations, licenses, permits and approvals that are
necessary or advisable for the operation of its Courier Services in
Licensee's Territory and for the implementation of this License Agreement.
(c) To be responsible for the efficient and proper management of its
Courier Services operations. Without impairing the generality of the
foregoing, Licensee shall be responsible for providing to its Courier
Services in Licensee's Territory all necessary management services in the
form of financial planning, recruiting, purchasing, advertising and other
incidental and technical services and shall be responsible for providing
all necessary technical know-how, expertise, administration, supervision
and control for the proper conduct of its Courier Services in accordance
with standards and methods established from time to time by Licensor.
(d) To comply with all laws, ordinances, rules and regulations
pertaining to its Courier Services.
(e) To provide efficient, courteous and high quality Courier Services
to the public in accordance with standards and methods established from
time to time by Licensor.
(f) To create goodwill among the public for the Aramex System.
(g) To feature in its Courier Services in Licensee's Territory, in
its principal place of business and all other branches and subsidiaries
connected with its Courier Services and in all advertising and stationery
matter the trademark and trade name "Aramex" or "Aramex International
Courier".
(h) To protect, indemnify and hold harmless Licensor, its other
licensees and Licensor's Interlining Agents from and against all costs,
damages, expenses, claims or other liability imposed by law or otherwise as
a result of or arising out of the Courier Services operated by Licensee
including but not limited to all costs, including attorney's fees, incurred
as a result of suits against Licensor, its other licensees and/or
Licensor's Interlining Agents arising therefrom irrespective of whether any
such suits shall be against Licensor, its other licensees and/or Licensor's
Interlining Agents solely or as co-defendants with Licensee and/or other
parties and irrespective of whether any such suits allege negligence on the
part of Licensor, its other licensees and/or Licensor's Interlining Agents
and regardless of the jurisdiction
6
<PAGE>
in which any such suits shall be brought. In all cases, and without
prejudice to the above, Licensee must ensure that his liability and that of
Licensor, its other licensees and Licensor's Interlining Agents is limited
to a maximum amount of, U.S. Dollars 100 (One Hundred United States
Dollars) per shipment.
(i) To use every reasonable means to encourage the use of the Aramex
System and the Courier Services provided thereby.
(j) To file with Licensor not later than thirty (30) days following
the close of each calendar quarter of each year during the life of this
License Agreement a statement of operations showing the results of its
Courier Services operations during the quarter preceding such filing date
and other reports as Licensor may from time to time require.
(k) That this License Agreement and Licensee's rights and obligations
hereunder are personal to Licensee and non-transferable and nonassignable
without the written consent of Licensor.
(l) That during the term of this Agreement and any extensions
thereof, Licensee shall use its best efforts to recommend, promote, and
encourage the use of the Aramex System by Licensee's customers, clients,
and invitees. It being understood and agreed between the parties hereto
that Licensee shall undertake an extensive advertising campaign in
Licensee's Territory with a minimum yearly budget as set out in Schedule 5
to be subsidized by Licensor up to the maximum set out in Schedule 5.
Licensor grants to Licensee the right to use Licensor's Licensed
Property in advertisements, provided however, that such usage shall only be
in the manner and to the content specifically approved by Licensor. All
stationery, envelopes, business cards, advertising, publicity, signs or
other matter employed by Licensee using the words Aramex or Aramex
International Courier shall be first submitted to and approved by Licensor
prior to such use or publication.
(m) That the licensed business shall at all times be under the direct
supervision of Licensee or a principal thereof, and Licensee agrees to
devote substantial time and energy to the operation of the licensed
business and agrees to assume full responsibility for its day to day
functioning and operations.
(n) That during the term of this Agreement and any extensions
thereof, Licensee will not own and/or operate directly or indirectly, a
business which is the same or similar to the business licensed hereunder,
except another such business under a license agreement with Licensor.
(o) That during the term of this Agreement and any extensions
thereof, Licensee shall not, either directly or indirectly, for himself, or
through, or on behalf of, or in conjunction with any other person or legal
entity:
7
<PAGE>
(1) Direct or attempt to direct, any business of, or any
customer of, the Aramex System to any competitor by direct or
indirect inducement or otherwise.
(2) Use the word "Aramex" in connection with any business which
is the same as or similar to that licensed herein.
(p) That Licensee will not sell, assign, copy, assist, or make
available to anyone any information that will enable such party to
duplicate Licensor's Aramex System. Licensee specifically acknowledges
that the systems, manuals, operations, information and procedures of
Licensor, to be provided under this License Agreement to Licensee
constitute trade secrets of significant value which are unique and are the
sole and exclusive property of Licensor. Licensee specifically agrees, as
an integral portion of compliance with this Agreement, that Licensee will
in no way be entitled to utilize such trade secrets beyond the manner
approved and designated by Licensor either herein or otherwise approved by
Licensor in writing.
(q) That Licensee shall not, during the term of this Agreement and
any extensions thereof, nor thereafter, regardless of the cause of
termination and of the return of any documents as required by this
Agreement, directly or indirectly communicate, divulge to, or use for the
benefit of any other person or legal entity, any trade secrets or any
information, knowledge or know-how deemed confidential under this Agreement
which concerns operation of the Aramex System which may be communicated to
Licensee, or of which Licensee may be apprised, by virtue of Licensee's
operation under this Agreement.
(r) To allow and permit Licensor, its officers, directors, employees
and agents to inspect Licensee's premises and to obtain on their behalf and
at Licensee own cost and expense all necessary licenses, visas and work
permits required to enable same to make such inspection visits into
Licensee's Territory.
(s) To comply with Licensor's technical requirements from time to
time in force including the purchase of the hardware and software systems
used by Licensor such as the Airborne Focus System used by Licensor and
Licensor's system for tracking operations and accounting. Licensee further
undertakes to purchase directly from Licensor the required software for the
price set out in Schedule 5. If Licensee requires assistance in the
operation of such systems, same will be provided by Licensor at Licensee's
expense.
(t) The parties agree that each of the foregoing covenants shall be
construed as independent of any other covenant or provision of this
Agreement. If all or any portion of a covenant in this Article 5 is held
unreasonable or unenforceable by a court or agency having valid
jurisdiction in an unappealed final decision to which Licensor is a party,
Licensee expressly agrees to be bound by any lesser covenant imposing the
maximum duty permitted by law that is covered within the terms of such
covenant, as if the resulting covenant were separately stated in and made a
part of this
8
<PAGE>
Article 5. Licensee further expressly agrees that the existence of any
claim it may have against Licensor whether or not arising from this
Agreement, shall not constitute a defense to the enforcement by Licensor of
the covenants contained herein.
5.2 In order to implement this Agreement, Licensee shall:
(a) Establish a separate division (the "Division") specialized in
conducting Courier Services within the Aramex System.
(b) Submit the management of the Division to Licensor within one (1)
month of the date of this Agreement first written above. In this regard,
Licensee shall enter into the Management Agreement (the "Management
Agreement") set out in Schedule 6 attached hereto and made part and parcel
hereof - it being clearly understood by both properties that this License
is being granted to Licensee on the express condition that the said
Management Agreement is signed and the management of the Division is
surrendered to the Licensee.
5.3 It being understood and agreed by Licensee that all of the above
mentioned acts and things and all other acts inherent therein or incidental
thereto shall be performed and/or provided by Licensee at its own cost and
expense, unless otherwise specified.
ARTICLE 6. DELIVERY SERVICES
6.1 As part of the consideration for the issuance and execution of this
License Agreement by Licensor, Licensee shall tender all Courier Shipments
picked up by Licensee in Licensee's Territory and destined to Aramex Territory
exclusively to Licensor at agreed upon gateway cities.
6.2 Licensor shall from time to time notify Licensee of the destinations
in Aramex Territory to which Licensor can effect deliveries Of Courier
Shipments.
6.3 Licensor agrees to transport said Courier Shipments on an expedited
basis and to deliver same to consignees in accordance with its highest level of
schedule and time parameters.
6.4 Licensee shall adhere to all the Aramex Conditions of Carriage on the
back of the Aramex Airway Bills.
6.5 It is understood and agreed between the parties hereto that all
Courier Shipments picked up by Licensor in Aramex Territory and destined to
Licensee's Territory can be tendered by Licensor for delivery to any other third
party and nothing in this License Agreement shall give, nor be deemed to give,
Licensee any right or interest whatsoever in any such Courier Shipments.
Licensee must, however, accept such Courier Shipments for delivery to Licensee's
Territory if and when same are tendered by Licensor. In this event, Licensee
agrees to transport said Courier Shipments from agreed upon gateways on an
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expedited basis and to deliver same to consignees in accordance with Licensor's
highest level of schedule and time parameters.
6.6 It is further understood and agreed between the parties hereto that
Licensor shall have the right to use Interlining Agents in effecting deliveries
of Courier Shipments as aforesaid.
6.7 It being further understood and agreed between the parties hereto that
this License Agreement and the license granted hereunder do not extend to
Courier Shipments originating in Licensee's Territory and picked up by third
parties and tendered to Aramex for delivery. Nothing in this Agreement shall
give, nor be deemed to give Licensee any right or interest in any such Courier
Shipments.
6.8 Licensor agrees to charge Licensee for the delivery service to be
provided hereunder in accordance with the charges set forth in Schedule 2 to
this License Agreement which Schedule 2 shall constitute part and parcel hereof.
6.9 Licensee agrees to charge Licensor for the delivery service that may
be required of Licensee in Licensee's Territory in accordance with the charges
set forth in Schedule 3 to this Agreement, which Schedule 3 shall constitute
part and parcel hereof.
6.10 The charges set forth in Schedule 2 and Schedule 3 will remain fixed
for a minimum period of 12 months from the date of this License Agreement.
Thereafter, either party may, from time to time as provided hereinbelow, raise
its charges to the other by an amount not exceeding 10% (ten percent) of the
charge in question by giving thirty (30) days written notice of the proposed
increase. After any increase, such rates shall remain fixed for a minimum
period of twelve months from the effective date of each increase.
6.11 Each party's charges as aforesaid shall be invoiced to the other party
together with all supporting documentation every fifteen (15) days and the
receiving patty shall pay such invoiced amounts within ten (10) days of the date
of the invoice at such place as may be agreed from time to time by the parties.
ARTICLE 7. CUSTOMS CLEARANCE/LIABILITY
7.1 Each party shall be responsible for providing customs clearance for
shipments tendered for that party for delivery 'in its respective territory.
7.2 Each Courier Shipment to be transported hereunder shall travel under
an airbill having the same terms and conditions as the International Airbill
used from time to time by Licensor.
7.3 Each party shall be responsible for the handling, resolution and
payment of all claims and costs arising from loss, delay, damage or misdelivery
of Courier Shipments whilst in its possession or in that of its Interlining
Agents or under their control or responsibility and shall hold the other party
and its Interlining Agents harmless and shall indemnify and
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defend them against all claims, costs and actions for loss, delay, damage or
misdelivery of the Courier Shipment whilst in its possession or in that of its
interlining agents or under their control.
ARTICLE 8. FEES, ROYALTIES AND PAYMENTS
8.1 As further consideration for the issuance of this license and of the
rights granted to Licensee, Licensee shall pay to Licensor an initial fee and
royalties as follows:
(a) Licensee shall pay Licensor the initial fee set out in Schedule 5
immediately upon the execution of this Agreement. The initial fee is not
refundable in whole or in part; and
(b) Licensee shall pay to Licensor monthly royalty at the rate set
out in Schedule 5 per month. The royalty shall be paid within fifteen (15)
days after the end of each calendar month; and
(c) Licensee shall pay to Licensor yearly royalty at the rate set out
in Schedule 5. The royalty shall be paid within thirty (30) days after the
end of each calendar year.
8.2 All payments to be made pursuant to this Agreement shall be made in
United States Dollars either by check or by bank transfer to Licensor's Account,
and shall be free and clear of,all taxes, charges and duties of whatever nature.
ARTICLE 9. BOOKS OF ACCOUNT
Licensee shall keep proper and accurate books of account for its Courier
Services which shall be maintained in accordance with accounting principles and
procedures adopted and in use by Licensor for its worldwide operations. If for
any reason it is in the judgment of the parties that deviations from such
principles and procedures are required to meet local legal requirements or to
accord with local practices, such deviations shall be segregated in separate
accounts so that the differences from such principles and procedures are readily
ascertainable. The books of account shall be audited annually by an
international firm of accountants licensed to practice in Licensee's Territory
and approved by Licensor. Licensor shall be entitled to inspect Licensee's
books of account during office hours.
ARTICLE 10. LICENSEE'S MINIMUM VOLUME OF BUSINESS
10.1 Licensee recognizes that Licensee is required to do a minimum volume
of business as a condition of retaining this License and as more clearly set out
in Schedule 5.
10.2 If Licensee fails to tender to Licensor Courier Shipments in
accordance with the amounts specified in Schedule 5, Licensor at its option, may
terminate this Agreement upon thirty (30) days written notice to Licensee, or
alternatively, and without prejudice to the
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terms and conditions contained in this Agreement, Licensor may seek and grant
another license to a third party licensee in Licensee's Territory.
10.3 In the event that Licensor's above mentioned option is not exercised,
neither Licensor nor Licensee are in any way released from the terms and
conditions of this Agreement. Further, the failure of Licensor to exercise such
option at any one time is not to be deemed a waiver of Licensor's right to
exercise such option in the event that Licensee subsequently fails at any other
time to meet the imposed minimum volume of business set out in Schedule 5.
ARTICLE 11. ASSIGNMENT
11.1 Licensee shall not assign or otherwise transfer its interests in this
Agreement and/or its obligations hereunder or any part thereof without obtaining
the prior written consent of Licensor.
11.2 Licensor may without prior consent sell, assign or otherwise transfer
its interest in this Agreement and/or its obligations hereunder or any part
thereof to any other entity or person.
ARTICLE 12. TERM OF AGREEMENT/TERMINATION
12.1 This Agreement shall, subject to the terms of this Article 12,
commence on the date first written above and shall continue for a period of two
years.
12.2 Either party may terminate this Agreement without cause by giving the
other party thirty (30) day advance written notice, provided however, that all
financial obligations are fully and completely settled before such termination.
12.3 This Agreement shall terminate forthwith and without notice upon the
occurrence of any of the following events:
(a) The dissolution or liquidation of Licensor or Licensee, their
bankruptcy, the marshaling or assignment of their assets for the benefit of
creditors, or other analogous events.
(b) The enactment or proclamation of any legislation, statute, law,
decree, order or other edict in Licensee's Territory which in the opinion
of either party affected makes it unlawful or impossible to continue the
operation of this Agreement.
(c) Failure of Licensee to sign the Management Agreement set out in
Schedule 6 and to submit the management of the Division within the required
period.
(d) Violation or default by Licensee of the Management Agreement.
(e) Termination, expiration of the Management Agreement.
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12.4 Licensor may terminate this Agreement at any time if in Licensor's
reasonable opinion, there has been a change in management or ownership of
Licensee that would diminish Licensee's ability to perform the duties embodied
in this Agreement. Such termination will be effective immediately upon the
giving of notice to Licensee.
12.5 Licensor may terminate this Agreement at any time if Licensee shall
acquire any interest, whether by way of holding shares directly in its own name
or otherwise, in any company or entity competing with Licensor or if Licensee
shall represent whether directly or indirectly any other company or entity whose
business or any part thereof competes with or constitutes a conflict of interest
in any way whatsoever with that of Licensor or if Licensee shall in any way
breach or violate its undertakings contained in Article 3 above. Such
termination will be effective immediately upon the giving of notice to Licensee.
12.6 Without prejudice to all of the above, Licensor may terminate this
Agreement at any time and cash in the full value of the Performance Guarantee
provided for in Article 13 if Licensee commits or allows to be committed a
breach of any of its obligations under this Agreement.
Any such termination shall be effective immediately upon giving of a simple
notice in writing to Licensee.
12.7 Upon the expiration or the termination of this Agreement its provided
herein, this Agreement shall not be renewed except by the written agreement of
both parties, it being expressly understood and agreed that neither party has
entered into this Agreement with the expectation of or in reliance upon its
renewal or extension.
12.8 Upon the expiration or termination of this Agreement -or any extension
hereof, Licensor shall not be liable to Licensee for any indemnities,
compensations, damages, expenses or loss of profits or prospective profits
whatsoever and of any kind whether based on clientele created, relations
established or expenses incurred or sustained or arising out of or as a
consequence of such expiration or termination. Any and all claims or rights to
all such indemnities, compensations, damages, expenses or loss of profits or
prospective profits, if any, are hereby irrevocably and unconditionally
relinquished and waived by Licensee.
12.9 In the event of termination or expiration, Licensee shall forthwith
cease all activities in connection with or relating to this Agreement as of the
date of such termination or expiration unless otherwise requested by Licensor.
Both parties shall endeavor in good faith to resolve any outstanding differences
without prejudice to either party's rights under this Agreement and to wind up
in an orderly fashion their affairs between themselves.
ARTICLE 13. USE OF INFORMATION
Licensee shall use promotional literature, data and information furnished
from time to time by Licensor only in furtherance of the objectives of this
Agreement. Licensee shall not use any information acquired from Licensor in any
manner that conflicts or competes with Licensor's interests.
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ARTICLE 14. LICENSEE'S DUTY OF NON-DISCLOSURE
Licensee will not at any time, whether during or after the currency of this
Agreement, disclose to any third party (other than as may be required by law)
any information concerning the business or affairs of Licensor.
ARTICLE 15. ENTIRE AGREEMENT AND AMENDMENTS
This Agreement and all appendices and schedules attached hereto and
referred to herein constitute the entire agreement and understanding between the
parties hereto and supersede all previous agreements, understandings and
arrangements between the parties. This Agreement shall not and cannot be
varied, amended or supplemented except by a written instrument executed by duly
authorized representatives of both parties.
ARTICLE 16. FORCE MAJEURE
16.1 The term "force majeure" means all causes beyond the reasonable
control of Licensor or Licensee but not limited to any event attributable to
such causes such as acts of God, embargoes, governmental direction, war or acts
of war, sabotage, restraints by rules or intervention of civil or military
authorities or other agencies of government, social unrest, revolution, strikes,
lockouts, slow-downs and other similar causes affecting the activities of either
party to the extent that would make it impossible or impracticable for either of
the parties to carry out in whole or in part its obligations under this
Agreement.
16.2 In any case, however, events caused by the acts or omissions of either
party shall not be deemed to be force majeure. No party hereto shall be deemed
to be in default while performance of its obligations is prevented by force
majeure and any time limits specified in this Agreement for the performance of
its obligations hereunder shall accordingly be extended by a period of time
equal to that during which the force majeure shall prevent such-party from
carrying out its obligations under this Agreement.
16.3 Upon the occurrence of any event of force majeure, the party suffering
therefrom shall promptly give the other party written notice specifying the
event or events of force majeure preventing it from carrying its obligations
under this Agreement. In the event that such force majeure shall last
continuously for at least one month, then the parties shall confer and agree on
arrangements for the further implementation of this Agreement.
16.4 In the event that further implementation is impracticable or
impossible, then the parties shall arrange for termination of this Agreement but
without prejudice to their respective rights and obligations prior to such
termination, it being understood that each party hereto shall fulfill its
respective contractual obligations so far as they have fallen due before the
operation of force majeure.
ARTICLE 17. CONFIDENTIALITY
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All information and documents of whatever nature supplied by Licensor to
Licensee.pursuant to this Agreement shall be treated as confidential by Licensee
and shall not be disclosed by it to any third party without the prior express
written consent of Licensor. The obligation of Licensee hereunder shall survive
the termination of this Agreement. All information and documents of whatever
nature supplied by Licensee to Licensor pursuant to this Agreement shall be
treated as confidential by Licensor and shall not be disclosed by Licensor to
any third party without the prior express written consent of Licensee. The
obligation of Licensor hereunder shall survive the termination of this
Agreement.
ARTICLE 18. LANGUAGE AND INTERPRETATION
18.1 Each document, notice or other communication referred to or given in
connection herewith shall be in the English language which language shall govern
the Agreement.
18.2 The descriptive headings contained in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any provision of the Agreement.
18.3 Periods of time referred to in this Agreement shall be based upon the
Gregorian calendar year.
18.4 Unless the context otherwise requires in this Agreement, words
importing the singular shall include the plural and vice versa, the masculine
shall include the feminine and neuter genders and vice versa, and words
importing persons shall include corporations.
ARTICLE 19. NOTICES
19.1 Any notice given by either party to the other party in connection with
this Agreement may be given by registered airmail, telex, facsimile, hand
delivery or hand receipt, or any other customary method of communication
addressed as set out in Schedule 5 or to such other address as the party to
receive such notice shall designate to the other in writing.
The effective date of any notice given in connection with this Agreement
shall be the date on which it is first received by the addressee unless:
(a) given by hand delivery, in which event such notice shall be
deemed to have been received on the date it is actually delivered, or
(b) given by telex or by facsimile in which event such notice shall
be deemed to have been received within twenty-four (24) hours of the date
of despatch.
19.2 The parties hereto hereby dispense with the necessity of exchanging or
service of Notarial Notices.
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ARTICLE 20. BINDING POWER
The covenants, obligations, undertakings, rights and obligations of this
Agreement shall be binding upon and shall inure to the benefit of the respective
parties and their respective heirs, successors, legal representatives and
permitted assigns.
ARTICLE 21. GOVERNING LAW
The validity, construction, interpretation and enforceability of this
Agreement shall be governed in all aspects by English Law.
ARTICLE 22. SETTLEMENT OF DISPUTES
Without prejudice to Licensor's right to institute legal proceedings
against Licensee in any other jurisdiction, all disputes arising out of or in
connection with this Agreement shall be finally settled under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce by one or
more arbitrators appointed in accordance with the said Rules. The venue of
arbitration shall be Cyprus.
ARTICLE 23. RELATIONSHIP--AUTHORITY AND LIMITATIONS
It is hereby understood and agreed between the parties hereto that Licensee
is an independent contractor, that it has no authority whatsoever to obligate
Licensor and that Licensee shall not represent to others that it has any such
authority. Nothing in this Agreement shall authorize or be deemed to authorize
Licensee to, and Licensee agrees that it will not, enter into, make or create
any contract or agreement whatsoever on behalf of Licensor or create any
liability on the part of Licensor. Licensee shall not either expressly or
impliedly hold itself out or permit itself to be held out as having any
authority to create such liability either under the provisions of this Agreement
or otherwise howsoever.
ARTICLE 24. FAILURE TO ENFORCE
Any failure by Licensor at any time or from time to time to enforce or
require the strict performance of any term or provision of this Agreement shall
not constitute a waiver of such term or condition at any time and shall not
prevent Licensor from insisting on the strict performance of such term or
provision at any later time.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in two counterpart originals as of the date first above written
FOR AND ON BEHALF OF LICENSOR
Name:
Title:
FOR AND ON BEHALF OF LICENSEE
Name:
Title:
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SCHEDULE I
ARAMEX LOGOS
<PAGE>
SCHEDULE 2
LICENSOR'S CHARGES FOR DELIVERY SERVICE
<PAGE>
BEY RATES TO SOUTH AND CENTRAL AMERICA
EX-NEW YORK HUB
Effective Date: October 1, 1994
DESTINATION RATES
BEYOND SURCHARGE APX
LATIN AMERICA 3RD ADD 1ST ADD Sur-
1/2 KG 1/2 KG 1/2 KG 1/2 KG Charge
1 ARGENTINA (ADX)
2 ARGENTINA (APX)
3 BELIZE
4 BOLIVIA
5 BRAZIL
6 CHILE
7 COLOMBIA
8 COSTA RICA
9 ECUADOR
10 EL SALVADOR
11 FRENCH GUIANA
12 GUATEMALA
13 GUYANA
14 HONDURAS
15 MEXICO
16 NICARAGUA
17 PANAMA
18 PARAGUAY
19 PERU
20 SURINAM
21 URUGUAY
22 VENEZUELA
CARIBBEAN
ZONE 1
23 ARUBA
24 BAHAMAS
25 BARBADOS
26 BERMUDA
27 BONAIRE
28 CURACAO
29 DOMINICAN REPUBLIC
30 GRAND CAYMAN
31 HAITI
32 JAMAICA
33 PUERTO RICO
34 ST. MAARTEN
35 TORTOLA
36 TRINIDAD & TOBAGO
37 TURKS & CAICOS ISLAND
38 US VIRGIN ISLANDS
ZONE 2
39 ANGUILLA
40 ANTIGUA
41 BARBUDA
42 DOMINICA
43 GRENADA
44 GRENADINES
45 GUADELOUPE
46 MARTINIQUE
47 MONTSERRAT
48 NEVIS
49 ST EUSTATIUS
50 ST KITTS
51 ST LUCIA
52 ST VINCENT
<PAGE>
SCHEDULE 3
LICENSEE'S CHARGES FOR DELIVERY SERVICE
DESTINATION CHARGE PER SHIPMENT
Licensee's Territory
<PAGE>
Exhibit 10.3
MANAGEMENT AGREEMENT
This Agreement is made the 2nd day of January, 1995 by and between
1. Aramex International Limited, a Limited Liability Company duly organized
and existing under the laws of Hong Kong and having its registered office
at Room 1021 Sun Hung Kai Centre, 30 Harbour Road, Hong Kong, acting
through its Amman Regional Office at P.O.Box 960913 Amman, Jordan
(hereinafter referred to as "Aramex") of the one part, and
2. The "Company"
WHEREAS
A. Aramex is in the business of effecting and coordinating courier services
from country to country around the world and within certain countries under
the name of "Aramex" and has acquired a high level of skill and
technical expertise in the operation of courier service activities and the
provision of expedited door-to-door pickup and delivery services of
time-sensitive small packages, documents and cargo;
B. Aramex is the owner of certain trademarks, service marks and trade names
and has developed and perfected a system (hereinafter referred to as the
"Aramex System") for providing to the public expedited door-to-door pickup
and delivery services of time-sensitive small packages, documents and cargo
from country to country around the world and within certain countries under
the trade name of "Aramex";
C. Aramex is desirous of expanding the Aramex System, and maintaining high
standards of quality and service in connection with the same;
D. The Company desires to set up a division (hereinafter referred to as the
"Division") to provide in the Territory (as hereinafter defined) courier
services of the same distinctive nature and high quality and of the same
distinguishing characteristics as those established by Aramex, under and
using the same trademarks, service marks, color pattern and scheme, signs,
designs and other distinguishing characteristics of the Aramex System, as
established by Aramex, all in accordance with the standards of service
approved by Aramex and has therefore signed a License Agreement dated
January lst, 1995 (the License Agreement);
E. The Company wishes to benefit from and use the know-how, good world-wide
reputation and advanced methods of Aramex in operating the said Division
and therefore wishes to appoint Aramex to manage and operate the Division
upon the terms and conditions set forth hereinbelow;
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
PREAMBLE
The preamble to this Agreement shall constitute part and parcel hereof.
ARTICLE 2
DEFINITIONS
Unless the context otherwise requires, in this Agreement the term:
(a) "Territory" shall mean the territory set out in Schedule 2
(attached hereto and mad part and parcel hereof).
(b) "Courier Services" shall mean the provision of expedited
door-to-door pickup and delivery services of time sensitive small packages,
documents and cargo.
(c) "Aramex Companies" shall mean Aramex and all other companies
operating under the Aramex System whether such companies are owned in whole
or in part by Aramex, controlled by it, or operates under any Aramex
license, franchise or other type of agreement.
ARTICLE 3
APPOINTMENT
3.1 The Company hereby appoints Aramex to manage the Division to conduct
Courier Services within the Aramex System, and Aramex hereby accepts such
appointment.
3.2 Aramex shall manage, control and supervise the entire operations of
the Division in the Territory including, without limitation, the provision Of
Courier Services, the control of all records and accounts, account books, bank
accounts and the operation of same, the appointments and hiring of accountants,
auditors, lawyers and employees and the dismissal thereof. The Company shall
not intervene and is not entitled to intervene or to object to any of same on
any ground.
ARTICLE 4
OBLIGATIONS OF THE COMPANY
The Company agrees and undertakes, at its own cost and expense, to
(a) Within one month of the date of this Agreement, effect the
establishment and/or registration, in accordance with the Laws of the
Territory, of the Division in the Territory specializing in performing the
Courier Services.
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(b) Within one month of the date of this Agreement, obtain and secure
from the competent authorities of the Territory all and whatever
registrations, licenses, permits and agreements of whatsoever nature that
are or may become necessary, required or desirable to enable Aramex to
carry out its obligations hereunder in a legal and undisturbed manner.
(c) Obtain and secure all and whatever entry visas, work permits and
the like required for the personnel of Aramex.
(d) Maintain all of the above mentioned registrations, licenses,
permits, agreements, entry visas and work permits legal, valid and in force
and effect as may be required and in accordance with the laws in force in
the Territory.
(e) Liase on behalf of Aramex with whatever government departments
and all other official bodies including customs, aviation and government
ministries, as may be required by Aramex from time to time.
(f) Refrain, throughout the term hereof, from entering into contracts
or dealings -with any other party, which contracts or dealings may compete
with or negatively affect the operations of Aramex and the Division.
(g) Comply with all local, state, and federal laws, ordinances, rules
and regulations pertaining c, to the Division and its operations.
(h) Use every reasonable means to encourage the use of the Aramex
System and the Courier Services provided thereby.
(i) Generally do all acts and things and provide Aramex with all
information as may be required by Aramex from time to time to promote and
facilitate its operations in the Territory.
ARTICLE 5
OBLIGATIONS OF ARAMEX
5.1 Aramex undertakes to perform all its obligations hereunder to the best
of its ability in a manner which is best for both parties.
5.2 Aramex undertakes to appoint and hire competent people capable of
performing their duties in the best manner and in case some employees are found
not to be so competent and capable to replace them by others.
5.3 Throughout the term of this Agreement, Aramex undertakes not to
contract or deal with third parties in the Territory for the performance
of,similar operations.
5.4 Aramex shall.not be responsible for any liabilities or losses made or
incurred by the Division as a result of the implementation of this Agreement.
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5.5 Aramex shall appoint ____________________ as the Division's General
Manager and ___________________ the Division's Assistant General Manager to work
in managing the Division under the direction and instructions of Aramex.
ARTICLE 6
COMPENSATION
Aramex shall provide its services pursuant to this Agreement at charge
to the Company.
ARTICLE 7
TRADE NAME "ARAMEX"
7.1 It is understood and agreed by and between the parties that "Aramex"
is a trade name, service mark and/or a trademark fully owned and registered in
the name of Aramex and/or Aramex Companies in several countries around the
world. Aramex hereby authorizes the Division to use its registered trade name,
service mark and trademark "Aramex" only in relation to the Courier Services of
the Division and only for the duration of this Agreement. The Company
undertakes to use the trade name, service mark and trademark "Aramex" only in
relation to said Division and to protect, defend and prohibit its use by third
parties. The Company warrants and undertakes not to use said trade name,
service mark and trademark in any way whatsoever after the termination of this
Agreement.
7.2 This Article 7 also applies to the symbol and colors of "Aramex" which
appear in Schedule I (attached hereto and made part and parcel hereof).
ARTICLE 8
NON DISCLOSURE
Unless otherwise compelled by law, the Company may not, whether during the
term of this Agreement or thereafter, disclose to any third party any
information relating to the Aramex System, the Courier Services, the contents of
this Agreement and generally the business and operations of Aramex.
ARTICLE 9
TERM AND TERMINATION
9.1 This Agreement shall, subject to the terms of this Article 9, commence
on the date first above written and shall continue for a period of two (2)
years.
9.2 This Agreement shall terminate forthwith and without notice upon the
occurrence of any of the following events:
(a) The dissolution, liquidation or bankruptcy of the Company, or the
marshaling or assignment of its assets for the benefit of creditors or
other similar events.
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(b) The enactment or proclamation of any legislation, statue, law,
decree or order in the Territory or elsewhere which in the opinion of
Aramex makes it unlawful or impossible to perform any of the obligations of
this Agreement.
(c) A change in the management or ownership of the Company which
would diminish Aramex's ability to perform its obligations embodied in this
Agreement.
(d) The Company acquires any interest, whether by way of holding
shares directly in its own name or otherwise, in any company or entity
competing with Aramex or represents, whether directly or indirectly, any
other company or entity whose business or any part thereof competes with or
constitutes a conflict of interest In any way whatsoever with that of
Aramex.
(e) The Company violates Article 7 and 8 of this Agreement.
9.3 Aramex may also terminate this Agreement without notice if the Company
has failed or refuses to obtain the necessary permits, authorizations and visas
or has refused to submit the management of the Division to Aramex pursuant to
Article 3 above, within a period not exceeding one (1) month after the signing
of this Agreement, or in the event that the Company has failed or refuses to
extend/renew such permits, licenses, authorizations or visas within a period not
exceeding fifteen (15) days after the date that such extension/renewal ought
to have been done.
9.4 Without prejudice to all of the above, Aramex may terminate this
Agreement at any time if the Company commits and allows to be committed a breach
of any of its obligations under this Agreement, and, if the breach is capable of
remedy, has not remedied it within thirty days of written notice being given
requiring this to be done. Any such termination shall be effective immediately
upon giving a simple notice in writing to the Company.
9.5 Upon the expiration or the termination of this Agreement as provided
herein, this Agreement shall not be renewed except by the written agreement of
both parties, it being expressly understood and agreed that neither party has
entered into this Agreement with the expectation of or in reliance upon its
renewal or extension.
9.6 Upon the expiration or termination of this Agreement or any extension
hereof, Aramex shall not be liable to the Company for any indemnities,
compensations, damages, expenses or loss of profits or prospective profits
whatsoever and of any kind whether based on clientele created, relations
established or expenses incurred or sustained or arising out of or as a
consequence of such expiration or termination. Any and all claims or rights to
all such indemnities, compensations, damages, expenses or loss of profits or
prospective profits, if any, are hereby irrevocably and unconditionally
relinquished and waived by the Company.
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9.7 In the event that this Agreement is terminated in any way, the Company
hereby undertakes not to use the name, term, trade name, service mark and
trademark "Aramex" or the logo thereof in any way whatsoever.
9.8 Should the Company breach any of the terms of this Agreement then it
shall be responsible for all damages and expenses incurred as a result of said
breach, whether or not such breach results in termination.
ARTICLE 10
BALANCE SHEETS AND BANK ACCOUNTS
10.1 The Division shall have an independent annual balance sheet duly
audited and Aramex shall duly appoint the account auditors.
10.2 Aramex shall have the right to open and maintain bank accounts for the
Division in its name at authorized banks. These accounts shall be controlled
fully by Aramex or by any person or party delegated by Aramex for that purpose,
and the right to operate such accounts and sign thereon shall rest in the person
appointed by Aramex for that purpose.
ARTICLE 11
GENERAL PROVISIONS
11.1 COMPLETE AGREEMENT
This Agreement and its schedules represent the complete agreement and
contract between the parties hereto and supersede and cancel any and all
previous agreements, contracts and arrangements between the parties hereto.
11.2 AMENDMENT OF AGREEMENT AND WAIVER
(a) Any amendment to or alteration of any of the provisions or
conditions of this Agreement shall not be valid or effective unless made in
writing and signed by both parties.
(b) Any indulgence or allowance granted by any of the parties hereto
to the other in regard to any one or more of the provisions or conditions
hereof shall not constitute in any way whatsoever an amendment to or
alteration of any of the provisions or conditions hereof and shall in no
way be construed as a waiver of any of the rights or obligations of the
parties hereto hereunder.
11.3 BINDING EFFECT
The terms and conditions of this Agreement shall extend to, be binding
upon, and inure to the benefit of the heirs, successors, administrators, legal
representatives, and permitted assigns of the respective parties hereto.
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11.4 NOTICES
All notices to be given by any party hereto to another party in connection
with this Agreement shall be given in writing in english. Such notices must be
given by registered mail, telex or telefax, to the addresses set out in Schedule
2 or to such other address as the party to receive such notice shall designate
by written notice to the other party. The effective date of any notice shall be
the date on which it is actually received by the addressee.
11.5 FORCE MAJEURE
In the event of any failure or delay in the performance of this Agreement
by any party due to war, civil commotion, labor dispute, fire, natural disaster
or any other cause whatsoever beyond the control of such party (each hereinafter
call a "Force Majeure Event"), the party so affected shall not be liable for
such failure or delay or for the results thereof. Upon the occurrence of any
Force Majeure Event the party being affected shall, without delay, notify in
writing the other party of the nature and effects of such force Majeure Event,
and the parties shall meet and discuss appropriate or necessary actions to be
taken to deal with the situation.
11.6 ASSIGNMENT
(a) The Company shall not assign or otherwise transfer its interest
in this Agreement and/or its obligations hereunder or any part thereof
without obtaining the prior written consent of Aramex.
(b) Aramex may without prior consent sell, assign or otherwise
transfer its interest in this Agreement and/or its obligations hereunder or
any part thereof to any one of the Aramex Companies.
11.7 GOVERNING LAW
The validity, construction, interpretation and enforceability of this
Agreement shall be governed in all aspects by English Law.
11.8 SETTLEMENT OF DISPUTES
Without prejudice to Aramex's right to institute legal proceedings against
the Company in any other jurisdiction, all disputes arising out of or in
connection with this Agreement shall be finally settled under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce by one or
more arbitrators appointed in accordance with the said Rules. The venue of
arbitration shall be Cyprus.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed in two counterpart originals as of the date first written above.
FOR AND ON BEHALF OF LICENSOR
-----------------------------
Name:
Title:
FOR AND ON BEHALF OF LICENSEE
-----------------------------
Name:
Title:
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SCHEDULE I
ARAMEX LOGOS
<PAGE>
SCHEDULE 2
ARTICLE
2(a) Territory:
11.4 Notices
To the Company
To Aramex:
The Managing Director
Aramex International Limited
P.O.Box 960913
Amman Jordan
Tel. 603192
Telefax 687451
Telex 23129 Aramex JO
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Exhibit 10.4
THIS AGREEMENT is made the ___ day of __________, 1996
(1) MIDDLE EAST DIRECT MARKETING SERVICES of PO Box 3371, Amman 1181, Jordan
(the "Distributor").
(2)
WHEREAS
(A) _____________ is a retailer of _____________ through mail order catalogues.
(B) The Distributor has requested _____________ to supply to the Distributor
products for re-sale to customers and to allow the Distributor to use a
catalogue produced by _____________ to facilitate such sales.
NOW THIS AGREEMENT WITNESSES as follows:
1. DEFINITIONS.
In this Agreement:
1.1 The "Territory" shall mean, Bahrain, Cyprus (Greek Sector), Egypt,
Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, United Arab
Emirates and the Palestinian Territories.
1.2 The "Products" shall mean the merchandise from time to time included
in the Catalogue except such merchandise as _____________ may notify
to the Distributor in writing is excluded from the offer and "Product"
shall be construed accordingly.
1.3 The "Catalogue" shall mean an edition of the _____________ Catalogue
and such other publications as _____________ may make available to the
Distributor from time to time.
1.4 The "Contract Period" shall mean the period from the Date of
Commencement to the date on which this Agreement shall be terminated.
1.5 The "Date of Commencement" shall mean 1st January 1996.
1.6 "Season" shall mean either Spring/Summer or Autumn/Winter as the case
may be.
1.7 "Warehouse" shall mean such of _____________ warehouse in the
_____________ as _____________ may notify to the Distributor in
writing from time to time.
1.8 "Current Catalogue" shall mean a Catalogue in respect of the Season
current at the relevant time.
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1.9 "Ordered Product" shall mean a Product for which _____________ has
received a valid Order from the Distributor.
1.10 "Order" shall mean a request made to _____________ in accordance with
the provisions of the Schedule hereto for the supply to the
Distributor of a Product.
1.11 "___________________" shall mean the corporate trading and brand names
used by and any other part of the including (but
without limitation) and any brand name used in the
Catalogue.
1.12 "Statement Date" shall mean the date of issue by ________ of the first
fortnightly statement to include details of the invoice in respect of
the Ordered Products such invoice to be issued upon the Ordered
Products being made ready for despatch from the Warehouse.
2. CATALOGUES.
2.1 _______ shall supply to the Distributor before or as soon as
practicable after the commencement of each Season the number of
Catalogues specified in the Schedule for the relevant Season as agreed
between the parties from time to time.
2.2 The Catalogue shall be printed in the English language.
2.3 ______ shall make the specified number of Catalogues available for
collection from the Warehouse but shall have no other obligation to
deliver the Catalogues to the Distributor and the Distributor shall be
solely responsible for the shipment of the Catalogues from the
Warehouse.
2.4 The Distributor shall pay to ______ in respect of each Catalogue
delivered to it in accordance with clause 2.3 above the amount
specified in the Schedule or such alternative amount as shall
notify in writing to the Distributor not later than 1 month prior to
the start of relevant Season. Payment of the amount due from the
Distributor in respect of Catalogues shall be made in accordance with
the provisions of the Schedule.
3. ORDERS
3.1 ______ shall (subject to availability) use all reasonable endeavors to
supply to the Distributor within 7 days from the date of the Order all
Products ordered by the Distributor from a Current Catalogue. If
supply of any of the ordered products is delayed beyond such period,
the Distributor shall have the right to cancel the order in respect of
such ordered Products as have not been supplied at the time of such
cancellation upon being requested to do so by the customers.
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3.2 ______ shall at its own expense arrange for all available Ordered
Products to be delivered to the premises specified in the Schedule for
the relevant Season and the risk in such Ordered Products shall pass
to the Distributor upon such delivery but _______ shall not have any
further obligation to deliver the available Ordered Products to the
Distributor and the Distributor shall be responsible for the shipment
of all Ordered Products from such premises.
3.3 The Distributor shall be responsible for obtaining all necessary
licenses or approvals necessary for the importation and sale of the
Ordered Products and will be responsible for payment of all taxes
duties and similar impositions on the Ordered Products.
3.4 The Distributor shall make payment to _______ for an Order by bank
transfer to such account in the United Kingdom as ___________ shall
notify to the Distributor, payment to be made within 28 days of the
Statement Date, in Sterling and otherwise in accordance with the
payment terms set out in the Schedule for the relevant Season.
3.5 _________ shall, following the end of each Season give credit for the
price paid by the Distributor in respect of any Ordered Product which
is not supplied in accordance with Clause 3.1 above subject to due
allowance being made against such price in respect of any merchandise
wrongly supplied to the Distributor by __________ during that Season.
3.6 _________ shall, following the end of each Season, make due allowance
to the Distributor in respect of any Ordered Product which is
defective, subject to the Distributor providing evidence to reasonable
satisfaction that the defect was present when the Ordered Product
was applied.
4. EXCLUSIVITY
4.1 Subject to the value of orders being substantially in accordance with
the attached Business Plan the Distributor shall be the sole ________
distributor in respect of ___________ Export Catalogue and any other
catalog offering substantially the same product ranges that _____ may
decide to issue for distribution in the Territory and (subject to the
provisions of this Agreement) shall be entitled Distributor for
__________ in [-the Territory]". For the avoidance of doubt the
Distributor shall have no entitlement to be the distributor in respect
of any catalogue offering a substantially different product range from
that offered in the Export Catalogue and in the event of ____________
deciding to issue any such catalogue for distribution in the
Territory, the Distribution shall omit the word "Sole" from such
designation if _________ shall so request.
4.2 _________ shall be the exclusive supplier to the Distributor of all
merchandise featured in the Catalogue.
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5. BRAND NAMES
5.1 The Distributor shall not register (whether as a Trademark or
otherwise) or claim any rights in respect of any of the ____________.
5.2 The Distributor will provide all reasonable assistance which may be
requested by _________ in registering, protecting and defending the
use of any of the ________.
5.3 The Distributor will not alter remove or efface any part of the
Catalogue or any of the labels attached to any of the Products (except
as required by the Law of the Territory or as requested in writing by
_________).
6. THIRD PARTY RIGHTS
6.1 The Distributor shall at the request of __________ take any action
which __________ may regard as necessary or desirable to prevent or
limit the infringement of any third party's rights or alleged rights
including any of the following:-
(a) Ceasing to sell or advertise for sale such Products as __________ may
specify;
(b) Ceasing to sell or advertise for sale some or all of the Products in
such part of the Territory as _____________ may specify.
(c) Attaching to each copy of the Catalogue such details of amendments and
such other statements as ____________ may require;
(d) Printing and publicizing in such manner as _________ may reasonably
require any such statements as aforesaid
and _____________ shall reimburse any reasonable additional costs
incurred as a direct result of such request, but shall not be
responsible for any loss of profits or other consequential losses.
6.2 The Distributor is responsible for ensuring that the publication of
the Catalogue and the sale of the Products in the Territory comply
with all relevant Laws in the Territory. However, the Distributor
shall not be responsible for any infringement of the copyright or
trade mark rights of third parties as a result of the content or
design of the Catalogue or any of the Products or any label or
packaging supplied by ___________.
7. OTHER OBLIGATIONS OF THE _____________
7.1 The Distributor shall not sell any Products other than under the brand
name specified by ___________.
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7.2 The Distributor shall not do any act or thing the effect of which may
be to prejudice the reputation of ____________ or any other part of
the __________________.
7.3 In the event that _________ shall not receive payment for any Ordered
Products or Catalogues by the due date (in accordance with Clause 3.4)
the Distributor shall pay interest to ____________ on the amount
outstanding calculated from the said due date to the date of receipt
of payment by _________ at the rate of % above the base lending rate
from time to time of ______ Bank in the _____________.
7.4 The Distributor shall treat as strictly confidential all information
regarding the business or activities of _________ or any other part of
the ___________ (other than information which at the relevant time is
already in the public domain through no fault of the Distributor) and
shall not publish circulate or otherwise disclose or use any such
information except with the prior written consent of _____________.
7.5 The Distributor shall use all reasonable endeavors to promote the
Products and in particular (but without limitation) shall maintain
high levels of service to all its customers.
8. GENERAL
8.1 In the event of the failure by the Distributor to observe or perform
any of its obligations or duties hereunder which is either __________
irremediable or, if remediable, is not remedied to the reasonable
satisfaction of ___________ within One month of written notice of such
failure being given to the Distributor _________ shall be entitled to
terminate this Agreement forthwith by notice in writing to the
Distributor.
8.2 Except as provided below, the Distributor shall not be entitled to
assign the benefit if this Agreement or any of its rights or duties
hereunder. The Distributor shall be entitled to assign the entire
benefit of this Agreement with the prior written consent of _________
(such consent not to be unreasonably withheld) to an offshore company
established in the future by the Distributor which complies with the
following requirements:-
(A) It acts as a holding company for the Distributor's businesses;
(B) It has substantially the same shareholders as the Distributor;
(C) It has provided to __________ in such form as __________ may
reasonably require a legally enforceable commitment to comply
with all the provisions of this Agreement as if such company were
the Distributor.
Following such assignment, the said offshore holding company
shall have the right (subject to giving prior notice thereof to
_________) to subcontract its rights and benefits under this
Agreement to entities
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<PAGE>
controlled by it or by the Distributor in different part of the
Territory PROVIDED ALWAYS THAT such assignment and/or
subcontracting shall hot affect any of _____________ rights and
benefits under this Agreement or the method of implementation o I
this Agreement.
8.3 The Distributor shall not have any authority to enter into any
contract or make ar commitment or representation on behalf of or
perform any act as agent for ________________.
8.4 This Agreement shall not be deemed to constitute a partnership or
joint venture or joint contract of employment between the parties.
8.5 This Agreement contains the full and complete understanding between
the parties and supersedes all prior arrangements and understandings
whether written or oral appertaining to the subject matter of this
Agreement and may not be varied (save as herein expressly provided)
except by an instrument in writing signed by on or behalf of each of
the parties.
8.6 If any provision of this Agreement shall be prohibited or judged to be
unlawful or void or unenforceable such provisions shall to the extent
required be severed from this Agreement and rendered ineffective so
far as possible without modifying the remaining provisions of this
Agreement which shall remain in full force and effect.
8.7 A failure by either party to exercise or enforce (and any delay by
either party in exercising or enforcing) any right in relation to this
Agreement shall not be deemed to be a waiver of any such right or
operate so as to bar the exercise or enforcement of that right at any
subsequent time or times. No exercise by either party of any right
shall operate as a waiver of any breach of contract by the other
party.
8.8 Any notice to be given under this Agreement shall be in writing and
shall be deemed to be sufficiently served if delivered (whether by
courier or otherwise) to the party in question at the address stated
in this Agreement (or such other address as th, relevant party may
notify to the other in writing at any time) and in the case of
any such notice shall be marked for the attention of the Company
Secretary. A notice served by fax transmission or electronic mail
shall be deemed to have bee i sufficiently served only if confirmed in
writing sent by courier on the same or the immediately following
working day.
8.9 Neither party shall be liable to the other for any failure or delay in
performing is obligations hereunder (other than an obligation to pay
money) where such failure or delay is due to an event beyond that
party's reasonable control including but not limited to any fire flood
riot explosion, act of God or industrial action (whether of its own or
any third party's employees).
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8.10 This Agreement shall be governed by and interpreted in accordance with
the Law, If England and Wales and shall be subject to the jurisdiction
of the English Courts.
8.11 The grant to the Distributor of all the rights referred to in this
Agreement is subject all applicable laws and regulations in the
Territory and all prior rights in favour of third parties and all such
rights are granted only in so far as ____________ legally empowered to
grant those rights BUT __________ warrants to the Distributor that has
not granted -D any other person the rights he in conferred upon the
Distributor.
9. DURATION
Subject to the provisions of Clause 8.1 above this Agreement shall
continue until terminated by either party serving on the other not
less than one full Season's notice in writing expiring at the end of a
Season.
IN WITNESS of which this Agreement has been signed for and on behalf of
and the Distributor.
SIGNED FOR AND ON
BEHALF OF
SIGNED FOR AND ON
BEHALF OF MIDDLE EAST
DIRECT MARKETING SERVICES
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SALES PROJECTIONS IN STERLING POUNDS
COUNTRY YEAR
1996 1997 1998 1999 2000
BAHRAIN
CYPRUS
EGYPT
JORDAN
KUWAIT
LEBANON
OMAN
QUTAR
SAUDI ARABIA
SYRIA
UNITED ARAB EMIRATES
PALESTINIAN TERRITORIES
TOTAL
The above projections assume that in the second year sales will double and that
in the two following years the growth rate will be 50%, and in the fifth year it
will normalize to 25%. We believe this is reasonable as the big surge in the
market will be in the second year as the catalog will have become known in the
market with proper advertising, and as our joint good service will have been
tested by customers.
Remark: The potential of the Saudi market is estimated by us to be
theoretically much larger than the sales projections mentioned above. However,
it is a very difficult market to penetrate and cultivate. We believe that once
this is achieved the actual sales will surprise us all. No cataloger has yet
succeeded in tapping into this market in a proper way. We believe it is
possible and achievable. We take it upon ourselves as a challenge to achieve
this.
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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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<PAGE>
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, either (a) an amount equal to three (3) times his then annual
salary; or (b) if the Corporation terminates Executive's employment, or
Executive terminates his employment with the Corporation, in connection with
a Major Event (as defined in paragraph 5.3 below), an amount equal to 2.99
times times the Executive's salary during the term hereof; 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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<PAGE>
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
8
<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.
9
<PAGE>
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
10
<PAGE>
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: ________________________
11
<PAGE>
EXHIBIT A
William Kingson
Chairman of the Board
Annual Base Salary: U.S. $85,000.00
<PAGE>
EXHIBIT 10.6
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.
2
<PAGE>
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
3
<PAGE>
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.
4
<PAGE>
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, either (a) an amount equal to three (3) times his then annual
salary; or (b) if the Corporation terminates Executive's employment, or
Executive terminates his employment with the Corporation, in connection with
a Major Event (as defined in paragraph 5.3 below), an amount equal to three
(3) times times the Executive's salary during the term hereof; 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;
5
<PAGE>
(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
6
<PAGE>
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.
7
<PAGE>
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
8
<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.
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.
9
<PAGE>
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
10
<PAGE>
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: ________________________
11
<PAGE>
EXHIBIT A
FADI GHANDOUR
President, Chief Executive Officer and Deputy Chairman
Annual Base Salary: U.S. $115,000.00
<PAGE>
Exhibit 10.8
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), is made and entered into
as of the 22 day of October, 1996, by and among Aramex International Limited,
a Hong Kong Company limited by shares (the "Company") and Airborne Freight
Corporation, a Delaware corporation (the "Purchaser").
RECITALS
WHEREAS, the Company currently owns and operates a courier and freight
forwarding business serving an international market.
WHEREAS, the Company is authorized to issue 200,000 shares of ordinary
capital stock having a stated value of Hong Kong $10.00 per share (the "Stock"),
of which 2,000 shares of Stock are issued and outstanding.
WHEREAS, the Company intends to sell and issue to Purchaser and Purchaser
intends to purchase and acquire from the Company 195 shares of the authorized
but unissued shares of Stock of the Company, on the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the respective mutual
agreements herein contained, the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
1.1 PURCHASE AND SALE OF STOCK. Simultaneously with the execution of this
Agreement, the Company shall sell and issue to the Purchaser, and the Purchaser
shall Purchase and acquire from the Company, 195 shares of Stock for the
purchase price of two million U.S. dollars (US $2,000,000).
1.2 CLOSING. Simultaneously with the execution of this Agreement, the
Company shall deliver to the Purchaser a certificate representing the number of
shares of Stock to which such Purchaser is entitled and simultaneously therewith
the Purchaser shall deliver to the Company the purchase price therefor by wire
transfer of immediately available funds or by cashier's check and the parties
shall deliver a fully executed shareholders agreement in a form to be agreed.
1.3 LEGEND. The certificates representing shares of stock of the Company
issued pursuant to Section 1.2 by the Company to the Purchaser shall bear a
legend substantially as follows:
<PAGE>
The shares of stock represented by this certificate have not been
registered or qualified under the United States Securities Act of
1933 or under the securities law of any state or country and may
not be sold or transferred in the absence of such registration or
an opinion of counsel satisfactory to the Company that such
registration or qualification is not required.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
2.1 CORPORATE EXISTENCE AND POWER. The Company and each of its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power and authority to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged; and (c) has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement.
2.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery
and performance by the Company of the Agreement, including, without limitation,
the issuance of this Stock: (a) has been duly authorized by all necessary
corporate action; (b) does not contravene the terms of the Company's Memorandum
or Articles of Association, or any amendment of either thereof; and (c) will not
violate, conflict with or result in any breach or contravention of or the
creation of any Lien under, any contract of, or any law or regulation applicable
to, the Company or any of its Subsidiaries, including but not limited to the
Hong Kong Companies Ordinance.
2.3 FINANCIAL CONDITION. The Company has furnished Purchaser with its
audited consolidated financial statements as of and for the years ending
December 31, 1994, and December 31, 1995 (the "Audited Financial Statements")
and for the first six months of 1996 (the "Unaudited Financial Statements").
The Audited Financial Statements and Unaudited Financial Statements fairly
present the consolidated financial position of the Company and its Subsidiaries
as of the respective dates thereof and the results of operations and cash flows
of the Company and its subsidiaries as of the respective dates or for the
respective periods set forth therein, all in conformity with generally accepted
accounting principles consistently applied during the periods involved.
2.4 NO MATERIAL ADVERSE CHANGE; ORDINARY COURSE. Since December 31, 1995,
there has not been any material adverse change, nor is any such change
threatened, in the financial condition of the Company.
2
<PAGE>
2.5 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 200,000 shares
of Stock, stated value of Hong Kong $10.00 per share. After giving effect to
the transactions contemplated by this Agreement, 2,195 shares of Stock will be
issued and outstanding. All outstanding shares of capital stock of the Company
(including the Shares sold to Purchaser) have been, or as of the issue date will
be duly authorized, validly issued, fully paid, nonassessable and free and clear
of any lien.
(b) There are no outstanding securities convertible into or Exchangeable
for capital stock of the Company or options, warrants or other rights to
purchase or subscribe to capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, agreements, understandings or
arrangements of any kind to which the Company is a party relating to the
issuance of any capital stock of the Company or any of its Subsidiaries.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
3.1 CORPORATE EXISTENCE AND POWER. The Purchaser and each of its
subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power and authority to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged; and (c) has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement.
3.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by the Purchaser of this Agreement, including without limitation,
the payment of the purchase price for the Shares: (a) has been duly authorized
by all necessary corporate action; (b) does not contravene the terms of the
Purchaser's Certificate of Incorporation or By-Laws, or any amendment of either
thereof; and (c) will not violate, conflict with or result in any breach or
contravention of or the creation of any lien under, any contract of the
Purchaser or any of its subsidiaries.
3.3 INVESTMENT CONSIDERATIONS. The Purchaser in an Accredited Investor as
that term in used in Regulation D issued pursuant to the United States
Securities Act of 1933, as amended (the "Securities Act"). The Purchaser
acknowledges that an investment in the Stock is a high risk investment and that
such an investment will be illiquid for the foreseeable future. The Purchaser
has sufficient net worth to be able prudently to invest in the Stock, and
sufficient knowledge of the courier and freight forwarding business to
understand the risks of such an investment. The Purchaser has not advertised or
otherwise attempted to solicit participation by others in the investment
contemplated by this Agreement to any extent or in any manner that, to the
Purchaser's knowledge, would require the registration
3
<PAGE>
of the offer and sale of the Stock under the Securities Act or under "blue sky"
laws of any state.
ARTICLE 4
PURCHASER'S RIGHTS AND OBLIGATIONS
4.1 DIRECTORS. The Purchaser shall be entitled to appoint one Director to
the Company's Board of Directors.
4.2 ACCESS TO FINANCIAL INFORMATION. The Company shall furnish the
Purchaser with financial statements as set forth in the shareholders agreement.
4.3 LIMITATIONS. The Purchaser's rights and obligations under Section 4.2
shall terminate should the Company effect an initial public offering. In
addition, Purchaser's rights pursuant to Sections 4.1 and 4.2 shall terminate at
such time as Purchaser shall no longer own at least one-half of the Shares
purchased pursuant to this Agreement.
ARTICLE 5
MISCELLANEOUS
5.1 NOTICES. All notices, demands and other communications provided for
or permitted hereunder shall be in writing and shall be delivered by hand or
sent by facsimile transmission or overnight courier to the following addresses:
(a) Aramex International, Limited
P.O. Box 3371
Amman, Jordan
Attention: Fadi Ghandour
President and Chief Executive Officer
(962) 6 603192 TC
(962) 6 687451 FAX
with a copy to
Ginsburg, Feldman and Bress, Chartered
1250 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attention: Bruce Rabinovitz
(202) 637-9036 TC
(202) 637-9195 FAX
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<PAGE>
(b) Airborne Freight Corporation
3101 Western Avenue
P.O. Box 662
Seattle, Washington 98111-0662
Attention: Robert S. Cline
Chairman and Chief Executive Officer
(206) 285-4600 TC
(206) 281-1448 FAX
with a copy to
Airborne Freight Corporation
3101 Western Avenue
P.0. Box 662
Seattle, Washington 98111-0662
Attention: David C. Anderson
Corporate Secretary/Counsel
(206) 281-1005 TC
(206) 281-1444 FAX
5.2 CHOICE OF LAWS. This Agreement 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 law provisions thereof. Any litigation or other
enforcement procedure brought in conjunction with this Agreement shall be heard
in the state or federal courts of the United States.
5.3 EXPENSES. Each party shall bear its own expenses, fees, and
disbursements in connection with the negotiation, execution, and delivery of
this Agreement.
5.4 MATERIAL BREACH. In the event of a material breach of term or
condition of this Agreement by a Party (the "Breaching Party"), the
non-breaching Party (the "Non-Breaching Party") shall deliver notice of such
material breach to the Breaching Party and the Breaching Party shall have ten
(10) days to cure such material breach. In the event that the Breaching Party
fails to cure the breach within 10 days of receipt of notice, then the
Non-Breaching Party may pursue all remedies available at law and in equity
against the Breaching Party. The Parties agree that breach of this Agreement
could not be adequately compensated with monetary damages and that injunctive
relief and specific performance shall be appropriate remedies.
5
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly authorized by the parties
hereto and is effective upon execution:
THE COMPANY
ARAMEX INTERNATIONAL, LIMITED
Name: William B. Kingson
Title: Chairman
Name: Fadi Ghandour
Title: President and Chief Executive Officer
THE PURCHASER
AIRBORNE FREIGHT CORPORATION
Name:
Title:
6
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Exhibit 10.9
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (the "Agreement"), dated as of the 22 day of
October, 1996 by and among Aramex International, Limited, a Hong Kong company
limited by shares (the "Company"), William S. Kingson, an individual residing
in, New York, 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"),
W I T N E S S E T H:
WHEREAS, the Parties have entered into that certain Stock Purchase
Agreement of even date herewith (the "Purchase Agreement") regarding the
purchase by Airborne of 195 shares of the Company's common stock (the "Shares");
and
WHEREAS, the Parties desire to place certain restrictions on the transfer
of the Shares as well as the shares of the Company's common stock held by
Kingson, F. Ghandour, R. Ghandour (together with Airborne, the "Shareholders");
and
WHEREAS, the Company is planning to consummate an initial public offering
("IPO") of its common stock in the near future;,
NOW, THEREFORE, in consideration of the mutual premises set forth herein,
the Parties hereby agree as follows:
ARTICLE 1. RESTRICTIONS ON TRANSFER.
1.1 "Transfer" shall mean the direct or indirect, through intermediaries
or otherwise, sale, transfer, distribution, assignment, bequest, pledge,
hypothecation, encumbrance, grant of a 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 the Shares or shares, as the case may be, of
the common stock of the Company. "Transfer" shall not include 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.
1.2 Airborne shall not Transfer the Shares or any interest therein to any
one or more companies (each an "Aramex Prohibited Company"), or their
subsidiaries, parents or known affiliates primarily engaged in the
transportation of air freight or air express shipments without first offering
such shares to the Company on the same terms and conditions as the proposed
Transfer to the Aramex Prohibited Company(s). Upon receipt of such offer, the
Company shall have twenty (20) days to accept or reject the terms of the offer
in writing. In the event the Company rejects the offer, Airborne shall be free
to Transfer the Shares which were the subject of the offer to the Aramex
Prohibited
<PAGE>
Company(s) on the same terms and conditions it offered such shares to the
Company. The failure of the Company to accept or reject the offer in writing
shall be treated as a rejection of such offer. In the event that the Company
accepts the offer, the Company must complete the Transfer in accordance with the
same terms and condition set forth in the offer.
1.3 Neither the Company nor Kingson nor F. Ghandour nor R. Ghandour shall
Transfer any shares of the Company's common stock to any one or more of the
following companies (each an "Airborne Prohibited Company") or their
subsidiaries, parents or known affiliates:
(a) DHL Airways, Inc.;
(b) Federal Express Corporation;
(c) United Parcel Service Co.;
(d) TNT; or
(e) any other company primarily engaged in the transportation of air
freight or air express shipments.
without first offering such shares to Airborne on the same terms and conditions
as the proposed Transfer to the Airborne Prohibited Company(s). Upon receipt of
such offer, Airborne shall have twenty (20) days to accept or reject the terms
of the offer in writing. In the event Airborne rejects the offer, the Company,
Kingson, F. Ghandour and/or R. Ghandour, as the case may be, shall be free to
Transfer the shares which were the subject of the offer to the Airborne
Prohibited Company(s) on the same terms and conditions it offered such shares to
Airborne. The failure of Airborne to accept or reject the offer in writing
shall be treated as a rejection of such offer. In the event that Airborne
accepts the offer, Airborne must complete the Transfer in accordance with the
same terms and condition set forth in the offer.
1.4 Except as set forth in sections 1.2 and 1.3 above, and in accordance
with applicable law, the Company and each Shareholder may Transfer the Shares or
shares of the common stock of the Company, as the case may be, PROVIDED,
HOWEVER, that if the Company proposes to sell and issue any authorized but
unissued shares of stock of the Company to a third party for value, the Company
shall advise and consult with Airborne regarding such proposed sale. If the
Company proceeds.with the sale, it shall deliver notice in writing to Airborne
regarding such proposed sale within fifteen (15) days of consummation of the
sale. Notwithstanding the foregoing, an individual (as opposed to an entity)
Shareholder may, without consultation with Airborne but with notice to the
Company and each Shareholder, Transfer shares of the common stock of the Company
to such Shareholder's parents, spouse, spouse's parents, any child or grandchild
of the Shareholder, or a trust of which the trustee and all of the beneficiaries
are such Shareholder or one or more of such Shareholders parents, spouse,
spouse's parents, or children or grandchildren.
2
<PAGE>
1.5 It is agreed that should the Company, Kingson, F. Ghandour and/or R.
Ghandour 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 provision
herein to the contrary, this Article 1.5 shall survive the termination of this
Agreement pursuant to Article 2.1(a), 2.1(b) or 2.1(c).
1.6 Notwithstanding anything to the contrary contained herein, it is
understood and agreed that the Company (and its Bermuda successor entity) may
issue, and the Company, Kingson, F. Ghandour and/or R. Ghandour may Transfer,
shares in the IPO (and create a stock option plan in connection therewith and
issue and Transfer shares thereunder), including pursuant to any exercise of the
over-allotment option granted to the underwriters in the IPO.
ARTICLE 2. TERMINATION.
2.1 This Agreement shall immediately terminate and be of no further force
or effect if one or more of the following events (each a "Terminating Event" and
collectively, the "Terminating Events") occur:
(a) the Company consummates an IPO of its common stock; or
(b) there is a change of control at Airborne. For purposes of this
Article 2(b), a change of control shall mean:
(1) the sale, transfer or similar disposition of 30% or more of
Airborne's Authorized and issued stock to a single person or entity or
affiliated entities; or
(2) the sale, transfer or similar disposition of all or
substantially all of the assets of Airborne;
or
(c) the expiration of two (2) years from the date first written
above.
2.2 It is agreed that should the Company consummate a second public
offering of its common stock, the Company shall, at Airborne's written request,
arrange for the registration of the Shares at the Company's expense (except that
Airborne shall be responsible for its own attorneys' fees), subject to the usual
and customary business practices of such registrations, including without
limitation customary underwriters cutbacks, to be fully negotiated and agreed at
a later date. Notwithstanding any provision herein to the contrary, this
Article 2.2 shall survive termination of this Agreement pursuant to Article
2.1(a), 2.1(b) or 2.1(c).
3
<PAGE>
ARTICLE 3. FINANCIAL INFORMATION.
The Company shall furnish to Airborne a copy of its unaudited quarterly
financial statements within 45 days of the end of each quarter and a copy of its
audited annual financial statements within 90 days of the Company's fiscal
year-end.
ARTICLE 4. REINCORPORATION.
The Company and the Shareholders agree that the officers of the Company are
authorized to take all actions necessary to reincorporate, reorganize, effect a
share exchange or asset transfer under the laws of Bermuda.
ARTICLE 5. MATERIAL BREACH.
5.1 In the event of a material breach of any term or condition of this
Agreement by a Party (the "Breaching Party"), the non-breaching Party(s) (each a
"Non-Breaching Party" and collectively, the "Non-Breaching Parties") shall
deliver notice of such material breach to the Breaching Party and the Breaching
Party shall have ten (10) days to cure such material breach. In the event that
the Breaching Party fails to cure the breach within 10 days of receipt of
notice, then the Non-Breaching Party(s), and each of them, may pursue all
remedies available at law and in equity against the Breaching Party. The
Parties agree that breach of this Agreement could not be adequately compensated
with monetary damages and that injunctive relief and specific performance shall
be appropriate remedies.
5.2 In addition to the above-described remedies, any Transfer of the
Shares or shares of the common stock of the Company shall be null and void
unless the terms, conditions and provisions of this Agreement are strictly
observed and followed.
ARTICLE 6. MISCELLANEOUS.
6.1 Term. This Agreement shall be effective as of the date first written
above and shall remain in effect until such time as a Termination Event occurs.
6.2 Notice. All notices or other written correspondence delivered
hereunder shall be sent via confirmed facsimile transmission, prepaid first
class U.S. mail or recognized express mail carrier:
if to the Company, to: Aramex International, Limited
P.O. Box 3371
Amman, 11181
Jordan
Attn: President
Fax: 011-962-668-7451
4
<PAGE>
if to Kingson, to: Mr. William S. Kingson
969 Fifth Avenue
New York, NY 10021
Fax: (212) 308-3938
if to F. Ghandour, to: Mr. Fadi Ghandour
c/o Aramex International, Limited
P.O. Box 3371
Amman, 11181
Jordan
Fax: 011-962-668-7451
if it R. Ghandour, to: Ms. Rula Ghandour
c/o Aramex International, Limited
P.O. Box 3371
Amman, 11181
Jordan
Fax: 011-962-668-7451
and if to Airborne, to: Airborne Freight Corporation
3101 Western Avenue
Seattle, WA 98111
Attn: Robert S. Cline, Chairman & CEO
Fax: (206) 281-1444
with a copy to: Airborne Freight Corporation
3101 Western Avenue
Seattle, WA 98111
Attn: David C. Anderson,
Corporate Secretary/Counsel
Fax: (206) 281-1444
6.3 Entire Agreement. This Agreement and the Purchase Agreement represent
the entire agreement and understanding of the Parties and supersede all other
prior agreements and understandings, both written and oral, among the Parties,
or any of them, with respect to the subject matter hereof and thereof.
6.4 Modification; Waiver. This Agreement may be modified or amended only
by a writing executed by all Parties hereto. The waiver by any Party of such
Party's rights under this Agreement shall not constitute a waiver of any future
rights and/or enforcement of such rights.
6.5 Assignment. This Agreement shall not be assigned by any Party without
the prior written consent of each of the Parties.
5
<PAGE>
6.6 Severability. If any provision of this Agreement is found to be
illegal, invalid, or unenforceable under any applicable law, such contravention
or invalidity shall not invalidate the entire Agreement. Such provision shall
be deemed to be modified to the extent necessary to render it legal, valid and
enforceable, and if no such modification can render it legal, valid and
enforceable, then this Agreement shall be construed as if not containing such
provision and the rights and obligations of the Parties shall be construed and
enforced accordingly.
6.7 Headings. The headings of the articles and sections hereof have been
inserted for reference only and do not constitute a part of this Agreement.
6.8 Choice of Laws. This Agreement 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. Any litigation or other
enforcement procedure brought in connection with this Agreement shall be heard
in the state or federal courts of the United States.
6.9 Counterparts; Faxed Signatures. This Agreement may be executed in any
number of counterparts, each of which shall be deemed and original and together
shall constitute one and the same document. Signatures transmitted via
facsimile shall be considered original signatures.
6.10 Legend. The certificates representing the Shares shall bear a legend
substantially as follows:
The certificate is transferable only after compliance with the
provisions of that certain Shareholders Agreement dated as of the
day of October, 1996, as amended to date, and affecting the share
represented hereby, a copy of which is on file in the office of
the Secretary of the Company. That Agreement provides generally,
in certain circumstances, that rights of first refusal shall be
extended to Shareholders of the Company or the Company and that
transferee Shareholders and the transferred common stock shall be
subject to the terms, conditions, restrictions, requirements and
other provisions of the Shareholders Agreement.
6.11 Inspection. A copy of this Agreement shall be on file in the office
of the Secretary of the Company, and shall be available for inspection upon
reasonable notice to the Secretary during normal business hours.
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<PAGE>
EXHIBIT 21.1
LIST OF SUBSIDIARIES
Arab American Express Company Ltd., a Jordanian company.
Secretarial and Business Services Co. (Aramex) L.L.C., organized under the laws
of Dubai.
Arabian Express Courier, a subsidiary of Al Khalidia International Group of
Companies, organized under the laws of Abu Dhabi.
Almana Trading Company, organized under the laws of Qatar.
Arab American Express Co., organized under the laws of Bahrain.
Alawsat International Transport Company, Ltd., a Saudi Arabian company.
Aramex International Courier France, a French company.
Aramex (U.K.) International Courier, Ltd., organized under the laws of the
United Kingdom.
Aramex International Courier of Virginia, Inc., a company organized under the
laws of the Commonwealth of Virginia.
Aramex International Inc., a company organized under the laws of New York.
Global Venture Group, a company organized under the laws of Kuwait.
Aramex (Hellas) International S.A., a Greek company.
Aramex International Limited, Israel, organized under the laws of Israel.
Aramex International, Limited, a Hong Kong Company.
<PAGE>
EXHIBIT 23.2
We hereby consent to the use of our name wherever it appears in the
Registration Statement on Form F-1 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,
ALLEN & OVERY
<PAGE>
EXHIBIT 23.3
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 23.7
[EDWARD ISAACS & COMPANY LLP LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
As independent public accountants, we hereby consent to the use 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.
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.
EDWARD ISAACS & COMPANY LLP
New York, New York
November 5, 1996
