Exhibit 10.11
MANAGEMENT SERVICES AGREEMENT
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THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is made and entered
into as of September 30, 1999 by and among City Truck Holdings, Inc., a Delaware
corporation (the "Company"), Brentwood Private Equity Management LLC, a Delaware
limited liability company ("BPEM"), and Aurora Management Partners LLC, a
Delaware limited liability company ("AMP").
WHEREAS, the Company wishes to assure itself of the services of BPEM and
AMP as financial consultants upon the terms and conditions set forth in this
Agreement, and BPEM and AMP are willing to accept such consultancies;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree as follows:
1. Scope of Services. BPEM and AMP, through their respective employees,
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affiliates and employees of affiliates, shall provide the Company with
consultation and advice in such fields as financial services, accounting,
general business management, acquisitions, dispositions, banking and other
matters (the "Services"). BPEM and AMP shall, in their reasonable discretion,
determine the amount of time to be expended by their respective affiliates and
employees in performing such Services. BPEM and AMP shall perform their
respective duties hereunder at such times and places as are reasonable, in the
reasonable discretion of BPEM or AMP, as the case may be, in the light of the
tasks involved. Neither BPEM nor AMP shall be required to comply with any
established work schedule, and neither BPEM nor AMP shall be assigned regularly
scheduled duties by the Company. The Company shall, in soliciting BPEM's or
AMP's advice and requesting BPEM's or AMP's performance of its duties hereunder,
give BPEM or AMP, as the case may be, reasonable advance notice of the same in
consideration of BPEM's and AMP's other business obligations.
2. Compensation.
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(a) In consideration of the Services to be rendered hereunder, the Company
hereby agrees to pay each of BPEM and AMP a fee of $375,000 per annum, to be
paid semiannually in advance.
(b) In addition to the semi-annual fees payable to each of BPEM and AMP
under Section 2(a) above, the Company shall (i) pay to each of BPEM and AMP a
transaction fee for merger and acquisition Services rendered in connection with
acquisitions, sales or dispositions made by or of the Company or any of its
affiliates in which the Company has a direct or indirect ownership interest,
except for any such transactions effected in the ordinary course of the
Company's and its subsidiaries' business for consideration not exceeding
$100,000 in any individual or series of related transactions, such fee to equal
0.75% of the aggregate transaction consideration (including debt assumed by the
purchaser and current assets retained by the seller
and including amounts paid or to be paid under noncompete agreements and
management, consulting or similar agreements with sellers or personnel of
sellers that do not require the individual or entity party thereto to devote
more than 20 hours per week to the performance of the contract services) and
(ii) promptly reimburse each of BPEM and AMP for all reasonable out-of-pocket
costs and expenses incurred in connection with the performance of their
respective obligations under this Agreement. Such costs and expenses include but
are not limited to travel, legal fees and costs and accountants' fees and costs.
In addition, in recognition of the substantial investment of affiliates of BPEM
and AMP in the Company, the Company agrees to reimburse each of BPEM and AMP for
all reasonable fees and expenses incurred in connection with their investments
(and those of their affiliates) in the Company, including without limitation (A)
any requested waivers of any rights of BPEM or any of its affiliates or
investors (solely in their capacity as limited partner investors) (collectively,
the "BPEM Entities") or AMP or their respective affiliates (collectively, the
"AMP Entities") relating to, or the consent of any BPEM Entity or AMP Entity to,
contemplated acts of the Company (whether or not granted or obtained); (B)
preparation and distribution to BPEM Entities and AMP Entities of financial
statements, tax returns and other information or reports relating to such BPEM
Entity's or AMP Entity's interest in the Company (including the reasonable fees
and costs of accountants and other experts incurred in connection therewith);
(C) customary maintenance and monitoring activities associated with their
respective interests in the Company; (D) any sale or other disposition or
distribution of any interest in the Company by any BPEM Entity or AMP Entity,
including without limitation the sale, reorganization, or recapitalization of
the Company itself; and (E) compliance with applicable laws, rules and
regulations with respect to the matters in clauses (A) through (D) of this
paragraph.
3. Term. Unless earlier terminated as provided in Section 4 below, the
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term of this Agreement shall commence on the date hereof and shall automatically
terminate (a) with respect to BPEM, on the date that Brentwood Associates Buyout
Fund II, L.P. ("BABF") and its affiliates no longer retain the voting and
dispositive power with respect to at least 45% of the total number of shares of
Common Stock, par value $.01 per share, of the Company ("Common Stock")
(adjusted to reflect any reverse or forward stock split, stock dividend,
recapitalization or similar event occurring following the consummation of the
transactions contemplated by the Agreement and Plan of Merger, dated as of
September 3, 1999 (the "Merger Agreement"), by and among QDSP Holdings, Inc., a
Delaware corporation, the Company and Fleetpride Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of the Company), that are
held by BABF immediately following the consummation of the transactions
contemplated by the Merger Agreement and (b) with respect to AMP, on the date
that Aurora Equity Partners II, L.P. and Aurora Overseas Equity Partners II,
L.P. (collectively, the "Aurora Funds") and their affiliates no longer retain
the voting and dispositive power with respect to at least 45% of the total
number of shares of Common Stock (adjusted to reflect any reverse or forward
stock split, stock dividend, recapitalization or similar event occurring
following the consummation of the transactions contemplated by the Merger
Agreement) that are held by the Aurora Funds immediately following the
consummation of the transactions contemplated by the Merger Agreement. Any
transfer or distribution by BABF or the Aurora Funds or any of their affiliates
to any of their other affiliates (other than limited partners) will be ignored
for purposes of calculating the 45% referred to in the previous sentence. The
expiration of the term of this Agreement with respect to BPEM or AMP, as the
case may be, shall not adversely affect
BPEM's or AMP's right to receive any compensation accrued prior to the date of
such termination or any rights to receive reimbursement of any out-of-pocket
expenses incurred by BPEM or AMP, as the case may be, prior to the date of such
termination. The provisions of Sections 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15
shall survive the expiration of the term of this Agreement or any termination of
this Agreement.
4. Termination for Cause.
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(a) The Company, by written notice to BPEM authorized by a majority of the
directors other than those appointed by BPEM, may terminate this Agreement with
respect to BPEM for justifiable cause, which shall mean any of the following
events: (i) misappropriation by BPEM of funds or property of the Company; (ii)
gross neglect or willful misconduct by BPEM in the fulfillment of its
obligations hereunder; or (iii) the conviction of BPEM or any person who is then
a managing director (or similar position holder) of BPEM of a felony involving
moral turpitude that has become final and not subject to further appeal. The
termination of this Agreement with respect to BPEM shall not adversely affect
any of AMP's rights under this Agreement.
(b) The Company, by written notice to AMP authorized by a majority of the
directors other than those appointed by AMP, may terminate this Agreement with
respect to AMP for justifiable cause, which shall mean any of the following
events: (i) misappropriation by AMP of funds or property of the Company; (ii)
gross neglect or willful misconduct by AMP in the fulfillment of its obligations
hereunder; or (iii) the conviction of AMP or any person who is then a managing
director (or similar position holder) of AMP of a felony involving moral
turpitude that has become final and not subject to further appeal. The
termination of this Agreement with respect to AMP shall not adversely affect any
of BPEM's rights under this Agreement.
5. Confidential Information. During the term of this Agreement, BPEM and
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AMP will have access to and become acquainted with confidential information of
the Company, including, among other things, customer relationships, processes
and compilations of information, records and specifications that are owned by
the Company. Neither BPEM nor AMP shall use any of the Company's confidential
information in any way that is detrimental to the interests of the Company,
directly or indirectly, either during or within one year after a termination of
this Agreement with respect to BPEM or AMP, as the case may be. It is agreed
that "confidential information" does not include (i) information that is or
becomes generally available to the public other than (A) in the case of BPEM,
through breach by BPEM of this paragraph 5 and (B) in the case of AMP, through
breach of AMP of this paragraph 5, or (ii) information that becomes known to
BPEM or AMP from a source not known to BPEM or AMP, as the case may be, to be
bound by an obligation of confidentiality with respect thereto.
6. Notices. All notices, demands and requests required under this
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Agreement shall be in writing and shall be deemed to have been given if served
personally or sent by registered or certified mail, postage prepaid, or by
telegraph or telex addressed to the addressee set forth or such other addresses
as either party may designate by notice to the other:
If to the Company: City Truck Holdings, Inc.
520 Lake Cook Road
Deerfield, Illinois 60015
Telecopier No: (847) 444-1097
Attn: John J. Greisch
If to BPEM: Brentwood Private Equity LLC
11150 Santa Monica Boulevard
Suite 1200
Los Angeles, California 90025
Telecopier No: (310) 477-1011
Attn: Christopher A. Laurence
If to AMP: Aurora Management Partners LLC
1800 Century Park East
Suite 1000
Los Angeles, California 90067
Telecopier No: (310) 227-5591
Attn: Richard K. Roeder
Notices delivered in person shall be effective when so delivered. Notices
delivered by courier shall be effective three business days after delivery by
the sender to an air courier of national reputation who guarantees delivery
within such three business day period. Telecopied notices shall be effective
when receipt is acknowledged telephonically by the addressee or its agent or
employee. Notices sent by mail shall be effective five business days after the
sender's deposit of such notice in the United States mails, first class postage
prepaid.
7. Assigns and Successors. The rights and obligations of the Company
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under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. The rights and obligations of BPEM under
this Agreement may be assigned by BPEM in its sole discretion to an affiliate of
BPEM, and the rights and obligations of AMP under this Agreement may be assigned
by AMP in its sole discretion to an affiliate of AMP.
8. Attorneys' Fees. If any legal proceeding is necessary to enforce or
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interpret the terms of this Agreement, or to recover damages for breach thereof,
the prevailing party shall be entitled to reasonable attorneys' fees, as well as
costs and disbursements, in addition to any other relief to which such party is
entitled.
9. Indemnity. The Company shall indemnify and hold each of BPEM and AMP
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and their respective members, officers, employees, agents and affiliates and the
controlling persons, stockholders, affiliates, directors, officers and employees
of any of the foregoing (and representatives and agents of any of the foregoing
designated by BPEM or AMP from time to time whether before or after the
occurrence of the event giving rise to the claim for indemnity) (each such
person entitled to indemnity hereunder being referred to as an "Indemnitee")
harmless from any and all losses, costs, liabilities and damages (including
reasonable attorneys' fees) (collectively, "Expenses") arising out of or
connected with, or claimed to arise out of or to be connected with, any act
performed or omitted to be performed under this Agreement or otherwise relating
to the business or affairs of the Company or its affiliates; provided that the
Company will not be required to provide such indemnification if a court of
competent jurisdiction has rendered a judgment that is no longer subject to
appeal or further review that such Expenses have resulted solely from
Indemnitee's gross negligence or willful misconduct. An adverse judgment or
plea of nolo contendere shall not, of itself, create a presumption that the
Indemnitee was grossly negligent or committed willful misconduct. Expenses
incurred in defending any civil or criminal action arising out of or relating to
any event or circumstance to which this Section 9
shall apply shall be paid by the Company upon receipt of an undertaking by or on
behalf of the Indemnitee to repay such amount if it be later shown that such
Indemnitee was not entitled to indemnification. No Indemnitee shall be liable to
the Company or any of its affiliates, stockholders, directors, officers or
employees or any affiliates, stockholders, partners, directors, officers,
employees, representatives or agents of any of the foregoing or any other person
claiming through any of the foregoing for any act or omission by BPEM or AMP, as
the case may be, in the performance of its duties hereunder or otherwise in
relation hereto unless it has been determined by judgment of a court of
competent jurisdiction that is no longer subject to appeal or further review
that such act or omission constituted gross negligence or willful misconduct on
the part of such Indemnitee.
10. Outside Activities of BPEM and AMP. Each of BPEM and AMP shall be
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entitled to and may have business interests and engage in business activities in
addition to the activities contemplated by this Agreement. None of BPEM, AMP,
any member, officer, employee or affiliate of BPEM or AMP or any stockholder,
director, officer or employee of the foregoing shall have any obligation or duty
to offer any investment or business opportunity (other than an opportunity
directly involving heavy duty truck parts distribution or service) of any kind
to the Company or any of its respective stockholders, directors, officers or
employees (under any doctrine of "corporate opportunity" or otherwise), it being
expressly understood that BPEM and AMP and their respective members, officers,
employees and affiliates and the controlling persons, stockholders, directors,
officers and employees of any of the foregoing may make investments in, acquire,
or provide management, advisory or consulting services to, entities engaged in
businesses similar to the business of the Company without any duty, obligation
or liability to the Company or its respective stockholders, directors, officers
or employees.
11. Amendment; Waiver. This Agreement may be amended, and any right or
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claim hereunder waived, only by a written instrument signed by BPEM, AMP and the
Company. Except as provided in Section 9 hereof, nothing in this Agreement,
express or implied, is intended to confer upon any third person any rights or
remedies under or by reason of this Agreement. No amendment or waiver of this
Agreement requires the consent of any individual, partnership, corporation or
other entity not a party to this Agreement, except that any amendment of Section
9 shall only operate prospectively as to any Indemnitee provided therein unless
such Indemnitee shall have agreed in writing to such amendment.
12. Construction. All Section and paragraph titles or captions contained
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in this Agreement are for convenience of reference only and shall not affect the
meaning or interpretation of any provision. All terms used in this Agreement
include, where appropriate, the singular as well as the plural and the
masculine, feminine and neuter genders. The words "herein," "hereof" and
"hereunder," and other words of similar import, refer to this Agreement as a
whole and not to any particular Section, paragraph or other subdivision; and all
Section, paragraph and other subdivision references contained herein refer to
Sections, paragraphs and other subdivisions hereof unless another agreement or
instrument is specifically referenced. Use herein of the term "or" is not
intended to be exclusive, unless the context clearly requires. All
provisions hereof apply to successive events and transactions. Time is of the
essence for each and every term and condition of this Agreement in which time is
a factor.
13. Severability. If any term or provision of this Agreement or the
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application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions of this Agreement or the application of such terms and provisions to
circumstances other than those as to which it is held invalid or enforceable.
14. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be considered an original but all of which
together shall constitute the same instrument.
15. Governing Law. This Agreement shall in all respects be interpreted,
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construed and governed by and in accordance with the laws of the State of
Delaware, disregarding any conflict of laws provisions that may require the
application of the law of another jurisdiction.
[signature page follows]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
CITY TRUCK HOLDINGS, INC.
By: /s/ John J. Greisch
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Name: John J. Greisch
Title: President
BRENTWOOD PRIVATE EQUITY MANAGEMENT LLC
By: /s/ Christopher A. Laurence
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Name: Christopher A. Laurence
Title: Managing Member
AURORA MANAGEMENT PARTNERS LLC.
By: /s/ Richard K. Roeder
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Name: Richard K. Roeder
Title: Vice President and Secretary