Exhibit 10.11
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made and entered
into as of September 3, 1999 by and among KRG Capital Partners, L.L.C., a
Delaware limited liability company ("KRG"), TransCore Holdings, Inc., a Delaware
corporation ("Holdings"), and Syntonic Technology, Inc., a Delaware corporation
and its subsidiaries (collectively referred to herein as "OpCo").
BACKGROUND
Holdings, OpCo and each of their respective subsidiaries, if any
(collectively, the "Company"), desire to receive transaction advisory, financial
and management consulting services from KRG and thereby obtain the benefit of
KRG's experience in mergers, acquisitions, buyouts, industry consolidations and
business and financial management generally and its knowledge of the Company's
financial affairs in particular. KRG is willing to provide transaction advisory,
financial and management consulting services to the Company. Accordingly, the
compensation arrangements set forth in this Agreement are designed to compensate
KRG for such services.
NOW, THEREFORE, in consideration of the premises, the respective
agreements hereinafter set forth and the mutual benefits to be derived herefrom,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, each of KRG and the Company hereby agree as follows:
TERMS
1. ENGAGEMENT
The Company hereby engages KRG as a financial and management
consultant and transaction advisor, and KRG hereby agrees to provide financial
and management consulting and transaction advisory services to the Company, all
on the terms and subject to the conditions set forth below.
2. SERVICES OF KRG
KRG hereby agrees during the term of this engagement to consult with
the Company's boards of directors (collectively, the "Board") and management of
the Company in such manner and on such business and financial matters as may be
reasonably requested from time to time by the Board, including, but not limited
to:
(i) Corporate, acquisition and divestiture strategies;
(ii) Budgeting of future corporate investments;
(iii) Public offerings;
(iv) Debt and equity financings;
(v) Sourcing and identifying potential acquisition
candidates;
(vi) Establishing initial contact and negotiating letters of
intent with targets;
(vii) Formulating and negotiating acquisition structures
(i.e., stock/cash mix, earnouts, compensation, etc.);
(viii) Financial modeling of target acquisitions;
(ix) Oversight of lender approval process;
(x) Oversight of due diligence process (including
specialists, i.e., environmental, ERISA, insurance, tax,
etc.);
(xi) Negotiating definitive acquisition agreements and
ancillary documents;
(xii) Coordination and oversight of closing process;
(xiii) Assisting management in implementation of integration
strategy and post-closing matters (i.e., identifying
potential cost savings, plant closings, employee
matters, lease negotiations, supply agreements and other
consolidation opportunities); and
(xiv) Assisting management in presentations to the investment
community and analysts of acquired companies and results
of acquisition strategy.
Principals of KRG will be available to serve on the Board and will devote such
time and attention to the Company's affairs as reasonably necessary to
accomplish the purposes of this Agreement.
3. COMPENSATION
(a) The Company hereby agrees to pay to KRG, as compensation for
services to be rendered by KRG hereunder, an aggregate fee equal to $400,000 per
year (the "Base Fee"). Any subsequent increase in the Base Fee will be effective
only upon approval by the Board. The Base Fee, as set forth herein and
established from time to time, will be payable in twelve (12) equal monthly
installments, with payment in full of each such installment due by the fifth day
of each calendar month. In addition to the Base Fee, the Company agrees to pay
to KRG, as compensation for services rendered to the Company with respect to the
consummation of any acquisition of a toll collection system business, a traffic
management systems business or other business then operated or conducted by the
Company (or in to which the Company seeks strategic expansion) or any other
acquisition in furtherance of the Company's business strategy, which transaction
closes after the date hereof, a transaction closing fee (the "Transaction
Closing Fee") equal to the greater of(i) $75,000, or (ii) six-tenths of one
percent (.6%) of the Transaction
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Value. Notwithstanding the foregoing, (i) KRG's fees in connection with the
closing of the OpCo acquisition will be as set forth in Section 3(b), and (ii)
the Transaction Closing Fee may be adjusted upward if the Board determines that
an acquisition transaction presented unusual complexities. For purposes of this
Agreement, "Transaction Value" will mean the aggregate of all cash and non-cash
consideration paid to the sellers of the company or business being acquired and
the value of all interest-bearing debt assumed by the Company. Any non-cash
consideration will be valued at fair market value, and the value of any equity
securities issued will be fair market value on the date of issuance, assuming
such equity securities are fully vested on such date.
(b) In addition to the fees set forth in Section 3(a) above, the
Company hereby further agrees to pay to KRG: (i) a $450,000 transaction fee for
KRG's services performed in connection with the OpCo acquisition, and (ii)
certain fees as set forth below in Section 4.
(c) In addition to the fees set forth in Section 3(a) above, in the
event of the Sale of the Company (as hereinafter defined), KRG shall be entitled
to a fee equal to (i) one percent (1%) of the Transaction Value of the Sale of
the Company, if the Company does not retain an investment banking firm to act on
its behalf in connection with the transaction and (ii) one-half of one percent
(.5%) of the Transaction Value if the Company does retain an investment banking
firm, provided that in no event shall such fee exceed $750,000 unless approved
in advance by the Board.
4. TERM
This Agreement will be in effect for an initial term of five (5)
years, commencing on the date hereof, and will be renewed automatically
thereafter on a year-to-year basis unless one party gives the other thirty (30)
days' prior written notice of its desire not to renew this Agreement; provided,
however, that this Agreement will immediately terminate on the date KRG gives
the Company written notice of termination. In the event of a Sale of the Company
or an initial public offering of shares of the capital stock of either Holdings
or OpCo (either, an "IPO"), this Agreement will be automatically renewed,
without further action or notice by KRG or the Company, for an additional five
(5)-year term unless the Board, not later than sixty (60) days after the closing
of a Sale of the Company or an IPO, gives KRG written notice of its desire not
to renew this Agreement for such term. In the event that the Board terminates
this Agreement by delivering the required written notice upon an IPO or Sale of
the Company, the Company agrees to pay KRG an accelerated cash payment in an
amount equal to the Base Fee (as then in effect) for a period of time that is
the longer of (A) two and one-half (2 1/2) years, or (B) the remainder of the
term of the Agreement; provided, however, that designees of KRG serving as
directors on the Board shall abstain from participating in any decision by the
Board to terminate this Agreement in connection with an IPO. As used herein, the
term "Sale of the Company" will mean any transaction or series of related
transactions (i) the result of which is that any "person" (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), other than KRG Capital Fund I, L.P., KRG Capital Fund I
(PA), L.P., or KRG Capital Fund I (FF), L.P. (collectively the "Fund"), KRG, any
institutions, individuals or entities that, upon invitation or by contractual
right, co-invest in Holdings with the Fund or KRG (the "Invited Parties" and,
together with KRG and the Fund, the "KRG Investing
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Parties"), or persons controlling, controlled by or under common control with
the KRG Investing Parties, becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), of more than 50% of the issued and outstanding
Voting Stock (as defined below) of Holdings, (ii) that results in the sale of
all or substantially all of the Company's assets, or (iii) that results in the
consolidation or merger of Holdings with or into another corporation or
corporations or other entity in which Holdings is not the survivor (except any
such corporation or entity controlled, directly or indirectly, by the Company).
Notwithstanding the foregoing, beneficial ownership by employees and members of
the management of the Company of more than 50% of the issued and outstanding
Voting Stock resulting from the conversion of or exercise employee stock
options, warrants or of any other rights under which such persons have the right
to acquire Voting Stock, shall not constitute a Sale of the Company for purposes
of this Section 4. No termination of this Agreement, whether pursuant to this
paragraph or otherwise, will affect the Company's obligations with respect to
earned and accrued fees, costs and expenses incurred by KRG in rendering
services hereunder and not paid or reimbursed by the Company as of the effective
date of such termination.
As used herein, the term "Voting Stock" will mean and include (i)
any capital stock of any class of Holdings ("Common Shares") which has the right
to vote on all matters submitted to holders of Common Shares, and (ii) any
security, right, option, warrant or agreement convertible into or exercisable to
obtain any Common Shares or capital stock of any class of Holdings which has the
right to vote on all matters submitted to holders of Common Shares.
Any reference herein to an approval or other action of the Board
will mean a determination based on a finding by a majority vote of the members
of the Board (excluding the votes of those directors who are also principals of
KRG) that the approval or other action is in the best interest of the Company.
5. INDEMNIFICATION
The Company hereby agrees to indemnify and hold harmless KRG, its
principals, officers, agents and employees against and from any and all loss,
liability, suits, claims, costs, damages and expenses (including attorneys'
fees) arising from their performance under this Agreement, except as a result of
their gross negligence or willful misconduct that results in a material adverse
effect on the Company's business operations or financial results.
6. KRG AN INDEPENDENT CONTRACTOR
Each of KRG and the Company hereby agree that KRG will perform
services hereunder as an independent contractor, retaining control over and
responsibility for its own operations and personnel. Neither KRG nor its
principals, officers or employees will be considered employees or agents of the
Company as a result of this Agreement, nor will any of them have authority to
contract in the name of or bind the Company, except as expressly agreed to in
writing by the Company; provided, however, if any principal of KRG is serving as
an officer or director of the Company, such person will have all authority as an
officer or director of
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the Company to contract in the name of or otherwise bind the Company,
notwithstanding any other provision of this Agreement.
7. CONFIDENTIAL INFORMATION
KRG acknowledges that the information, observations and data
obtained by it, its principals, agents and employees during the course of KRG's
performance under this Agreement concerning the business plans, financial data
and business relations of the Company (the "Confidential Data") are the
Company's valuable, special and unique assets. KRG therefore agrees that it will
not, nor will it permit any of its principals, agents or employees, to disclose
to any unauthorized person any of the Confidential Data obtained by KRG during
the course of KRG's performance under this Agreement without the Company's prior
written consent, unless and to the extent that (i) the Confidential Data becomes
generally known to and available for use by the public otherwise than as a
result of KRG's acts or omissions to act, (ii) such disclosure is required by
any statute, rule, regulation or law or any judicial or administrative body
having jurisdiction, or (iii) such disclosure is made in the course of KRG's
performance of its duties under this Agreement to existing or potential lenders
or investors in the Company, potential acquirors or acquisition candidates of
the Company or other third parties performing or proposing to provide services
to the Company who have a need to know such information.
8. NOTICES
Any notice or report required or permitted to be given or made under
this Agreement by one party to another will be deemed to have been duly given or
made if personally delivered, delivered by reputable overnight courier, sent by
telecopy, or, if mailed, when mailed by registered or certified mail, postage
prepaid, to the other party at the following addresses (or at such other address
as will be given in writing by one party to the other):
If to KRG:
KRG Capital Partners, LLC
0000 Xxxxxxxx Xxxxxx
Tower One, Suite 1500
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Managing Director
and Xxxxx X. Xxxxxx, Managing Director
If to the Company:
TransCore Holdings, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxxx, President
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9. ENTIRE AGREEMENT; MODIFICATION
This Agreement (i) contains the complete and entire understanding
and agreement of KRG and the Company with respect to the subject matter hereof,
(ii) supersedes all prior and contemporaneous understandings, conditions and
agreements, oral or written, express or implied, respecting the engagement of
KRG in connection with the subject matter hereof, and (iii) may not be modified
except by an instrument in writing executed by each of KRG and the Company.
10. WAIVER OF BREACH
The waiver by any party of a breach of any provision of this
Agreement by any other party will not operate or be construed as a waiver of any
subsequent breach of that provision or any other provision thereby.
11. ASSIGNMENT
Neither KRG nor the Company may assign their respective rights or
obligations under this Agreement without the express written consent of all
other parties.
12. GOVERNING LAW
This Agreement will be deemed to be a contract made under, and is to
be governed and construed in the accordance with, the internal laws of the State
of Colorado, without regard to conflict of law principles.
* * * * * * *
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date above written.
KRG CAPITAL PARTNERS, L.L.C
By:
---------------------------------------------
Xxxxx X. Xxxxxx
Managing Director
TRANSCORE HOLDINGS, INC.
By:
---------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SYNTONIC TECHNOLOGY, INC.
By:
---------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT
THIS AMENDMENT No. 1 to Management Agreement (the "Amendment") dated as of June
30, 2000 by and among KRG Capital Partners, LLC, a Delaware limited liability
company ("KRG"), TransCore Holdings, inc., a Delaware corporation ("Holdings")
and TransCore, Inc. (formerly Syntonic Technology, Inc.), a Delaware corporation
and its subsidiaries (collectively referred to herein as "Opco").
BACKGROUND
WHEREAS, KRG Holdings and Opco entered into a Management Agreement
dated as of September 3, 1999 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement as set forth below.
NOW, THEREFORE, in consideration of the premises, the respective
agreements hereinafter set forth and the mutual benefits to be derived herefrom,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, each of KRG, Holdings, Opco and its subsidiaries agree
as follows:
TERMS
1. Section 3(a) of the Agreement is hereby amended by deleting the
reference to $250,000 in the second line and inserting $300,000 in lieu thereof.
2. Except as set forth herein, all other terms of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date above written.
KRG CAPITAL PARTNERS, LLC
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Managing Director
TRANSCORE HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxxxxxx
--------------------
Name: Xxxx Xxxxxxxxxxx
Title: President and CEO
TRANSCORE, INC. (FORMERLY
SYNTONIC TECHNOLOGY, INC.)
By: /s/ Xxxx Xxxxxxxxxxx
--------------------
Name: Xxxx Xxxxxxxxxxx
Title President and CEO
Amendment No. 2 to Management Agreement
THIS AMENDMENT No. 2 to Management Agreement (the "Amendment") is made and
entered into as of February -- , 2001 by and among KRG Capital Partners, LLC, a
Delaware limited liability company ("KRG"), TransCore Holdings, Inc., a Delaware
corporation ("Holdings"), and TransCore, Inc. (formerly Syntonic Technology,
Inc.), a Delaware corporation and its subsidiaries (collectively referred to
herein as "Opco").
BACKGROUND
WHEREAS, KRG, Holdings and Opco entered into a Management Agreement
dated as of September 3, 1999 (the "Agreement"); and
WHEREAS, the parties amended the Agreement effective as of June 30,
2000 pursuant to Amendment No. 1;
WHEREAS, the parties desire to further amend the Agreement as set
forth below.
NOW, THEREFORE, in consideration of the premises, the respective
agreements hereinafter set forth and the mutual benefits to be derived herefrom,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, each of KRG, Holdings, Opco and its subsidiaries agree
as follows:
TERMS
1. Section 3(a) of the Agreement is hereby amended by deleting the
reference to "$300,000" in the second line and inserting "$400,000" in lieu
thereof.
2. Except as set forth herein, all other terms of the Agreement shall
remain in full force and effect.
IN WITNESS THEREOF, the parties hereto have duly executed this
Amendment as of the date above written.
KRG CAPITAL PARTNERS, LLC
By:
---------------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Managing Director
TRANSCORE HOLDINGS, INC.
By:
---------------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: President and CEO
TRANSCORE, INC. (FORMERLY SYNTONIC
TECHNOLOGY, INC.)
By:
---------------------------------------------
Name:
Title:
