Legal Update

Agility Legal Case Resolved

Agility today announced a global settlement in the case involving the U.S. government food-supply contracts that the company held from 2003 to 2010 (the “Prime Vendor” contracts).

Agility CEO Tarek Sultan said: “The settlement affirms our long-standing view that Agility acted transparently and responsibly as it carried out to near-perfection the extraordinarily complex mission to deliver food and related materials to U.S. troops in an active war zone.”

The contracts spanned seven years, involved nearly 200,000 invoices to the U.S. government, and were valued at over $8.6 billion. Agility settled on terms that preserve and validate the company’s reputation for integrity.

In the criminal portion of the case, Agility announced earlier that it has agreed to plead to a misdemeanor in connection with a single invoice valued at $551. The misdemeanor is a minor offense, unrelated to any of the original criminal charges. It requires Agility to pay a maximum of $551 in restitution, but carries with it no criminal fine.

In the parallel civil proceedings of the case, the company has agreed to pay $95 million in cash. In addition, Agility and the U.S. government have agreed to mutual releases of all outstanding contract claims related to the food-supply contracts.

The agreement will resolve all legal issues related to these contracts for Agility employees, directors, officers and affiliates. The terms of the settlement are subject to final court approval.

The settlement will allow Agility to resume the pursuit of new U.S. government contracts. Under the terms of the settlement, the U.S. government has agreed to remove Agility and all of its subsidiaries and affiliates from the list of suspended companies on its System for Award Management (SAM) database, formerly known as the Excluded Parties List System (EPLS), within 60 days.

“Today’s settlement removes uncertainty for investors and lenders, ends costly litigation, and opens a pipeline of potential government and commercial contracting opportunities,” Sultan said.

“Agility has a healthy balance sheet and low net debt,” Sultan said. “The company can meet its obligations under the settlement without jeopardizing its current investments or its future growth. By bringing the case to an end, we have the ability to unlock additional value for shareholders.”

Prime Vendor at a Glance

  • 1 million meals/day at peak. 200+ trucks a day servicing a peak of 86 dining facilities, including 56 mobile kitchen trailers 200+ trucks a day servicing a peak of 86 dining facilities, including 56 mobile kitchen trailers.
  • 99 percent “fill rate” over life of the contract
  • 99.9 percent inventory accuracy
  • Two successful DSCP Food Audits-both were the highest-ever overseas Prime Vendor scores including the first ever score of 100 percent
  • Reduced U.S. military cost, footprint, and turn-around time
  • Eliminated the need for 3,000 to 5,000 military personnel to perform this mission in Kuwait and Iraq
  • Increased quality of food consumed by troops
  • Proved in-transit visibility, real-time tracking, and 100 percent line-item detail
  • Eliminated $12 million in waste
  • Built the largest temperature-controlled, freezer-capable warehouse in the Middle East
  • Bought warehouses in Turkey and Jordan to support surge and military operations
  • Purchased 1,600 Mercedes top-of-the-line tractor cabs and 1,800 dry, chilled, and refrigerated trailers
  • Invested in unique real-time tracking an in-transit visibility technology
  • Hired, equipped, and trained dedicated multi-national local security teams
  • Embraced risk: funded upfront costs by acquiring and owning all inventory until delivery in war zone
  • Best Logistics Strategy, Subsistence Prime Vendor Program (2007) – Worldwide Business Research (WBR)
  • Outstanding Industry Leader in Military Logistics (2006) – Institute for Defense and Government Advancement (IDGA)
  • Quality Award for Outstanding Service (2005) – Surface Deployment and Distribution Command (SDDC)
  • Outstanding Readiness Support (2005) – Defense Logistics Agency (DLA)
  • New Contractor of the Year (2005) – Defense Logistics Agency (DLA)
  • Outstanding Customer Service (2004 and 2005) – Defense Supply Center Philadelphia (DSCP)
  • Outstanding Food Service Southwest Asia Region (2004) – Defense Supply Center Philadelphia (DSCP)
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