Exhibit 10.8
AMENDED AND RESTATED
MONITORING SERVICES AGREEMENT
Amended and Restated Monitoring Services Agreement (this "Agreement") dated
as of May 17, 2004 by and among Transportation Investment Partners, L.L.C.
("TIP"), Caravelle Investment Fund, L.L.C. ("Caravelle"), Albion Alliance
Mezzanine Fund, L.P. ("Albion I"), Albion Alliance Mezzanine Fund II, L.P.
("Albion II" and, collectively with TIP, Caravelle and Albion I, the "Original
Monitors") and Trimaran Fund Management, L.L.C. ("TFM") and Albion Alliance, LLC
("AA" and, collectively with TFM, the "Additional Monitors" and collectively
with the Original Monitors, the "Monitors") and Transportation Technologies
Industries, Inc., a Delaware corporation (the "Company").
WHEREAS, the Company, Caravelle Advisors, L.L.C. ("Caravelle Advisors"),
CIBC WMC Inc. ("CIBCWMC"), Albion I and Albion II have entered into a Management
and Advisory Services Agreement, dated as of March 9, 2000 (the "Original
Agreement");
WHEREAS, pursuant to an agreement date as of June 21, 2000, the Company,
Caravelle, CIBCWMC, Albion I and Albion II amended the Original Agreement (the
"First Amendment");
WHEREAS, pursuant to an agreement dated as of February 28, 2001, the
Company, TIP (as successor in interest to CIBCWMC), Caravelle, Albion I and
Albion II have further amended the Original Agreement (the "Second Amendment");
WHEREAS, pursuant to an agreement dated as of December 19, 2003 the
Company, TIP, Caravelle, Albion I and Albion II have further amended the
Original Agreement (the "Third Amendment" and together with the Second
Amendment, the First Amendment and the Original Agreement, the "Existing
Agreement");
WHEREAS, pursuant to the terms of the Stockholders Agreement dated as of
March 9, 2000 among the Company and the stockholders of the Company (as amended,
the "Stockholders Agreement"), the Monitors and/or certain of their affiliates
(the "Designators") are entitled to nominate candidates to the Company's Board
of Directors;
WHEREAS, the Company desires for the Monitors to provide certain ongoing
monitoring services to the Company, and the Monitors are willing to provide such
services subject to the terms and conditions contained herein; and
WHEREAS, the parties hereto desire to amend and restate in its entirety the
Existing Agreement and to make certain addition modifications all as provided
for herein;
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NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
Section 1. Services. During the term of this Agreement, the Monitors shall
provide such monitoring services to the Company and its subsidiaries as the
Board of Directors of the Company shall reasonably request and the Monitors
shall agree to provide from time to time. Such services shall be performed at
each of the Monitors' offices or at such other locations as the Monitors shall
reasonably determine.
Section 2. Monitoring Fees.
(a) In consideration of the services previously provided and to be
provided in accordance with Section 1, the Company agrees to pay to the
Original Monitors an annual monitoring fee of $1,250,000 (the "Monitoring
Fee") accruing from the date of the Original Agreement and payable, except
as set forth below, annually in arrears on the date on which the Company
makes bonus payments to any of its officers, but in no event later than
February 15 of each year and payable in accordance with Section 2(b) and
upon the date of any termination of this Agreement pursuant to Section 9;
provided that the Monitoring Fee accruing in respect of calendar year 2000
shall be $1,250,000 and shall be payable on the earlier of (i) the date on
which the Company makes bonus payments to any of its officers in respect of
calendar year 2000 and (ii) February 15, 2001. Notwithstanding the
foregoing sentence, the Company and the Original Monitors agree that the
amount of the Monitoring Fee due and payable in respect of any calendar
year shall not exceed an amount equal to 61.57% of the aggregate bonuses
paid to Messrs. Begel, Weller, Tallering, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ in respect
of such calendar year; provided that the amount of the Monitoring Fee in
respect of calendar year commencing with the 2004 calendar year shall not
be less than $450,000 if the aggregate bonuses paid to Messrs. Begel,
Weller, Tallering, Mueller, Cirar and ▇▇▇▇▇▇▇▇ is at least $290,000 for
such year.
(b) The Company and the Monitors agree that the Company shall pay the
Monitoring Fee to the Original Monitors as follows: (i) $892,857.14 to TIP;
(ii) $178,571.43 to Caravelle; (iii) $89,285.71 to Albion I; and (iv)
$89,285.71 to Albion II. To the extent that the Monitoring Fee payable in
respect of any calendar year is reduced as provided in the penultimate
sentence of Section 2(a), the amount of the Monitoring Fee payable to each
Original Monitor shall be reduced pro rata in proportion to the percentage
of the aggregate Monitoring Fee payable to each Original Monitor pursuant
to the first sentence of this Section 2(b).
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(c) In addition to the Monitoring Fee, in consideration for additional
services to be provided to the Company, the Company agrees to pay to the
Additional Monitors an additional monitoring fee (the "Additional
Monitoring Fee") in an annual aggregate amount equal to $300,000, which
Additional Monitoring Fee, with respect to fiscal year 2003 has been paid
in full as of December 19, 2003 and, with respect to each subsequent fiscal
year shall be paid in equal quarterly installments on the first day of each
fiscal quarter of the Company and upon the date of any termination of this
Agreement pursuant to Section 9. $250,000 of such annual Additional
Monitoring Fee shall be paid to TFM and $50,000 of such annual Additional
Monitoring Fee shall be paid to AA.
Section 3. Director Fees.
(a) In consideration for the Designators providing their nominees and/or
observers to the Board of Directors of the Company in accordance with the terms
of the Stockholders Agreement, the Company agrees to pay to the Original
Monitors an aggregate annual director and observer fee of $250,000 (the
"Director Fee" and, collectively with the Monitoring Fee, and the Additional
Monitoring Fee, the "Fees") accruing from the date of the Original Agreement and
payable annually in arrears on the date on which the Company makes bonus
payments to any of its officers, but in no event later than February 15 of each
year and payable in accordance with Section 3(b) and upon the date of any
termination of this Agreement pursuant to Section 9; provided that the Director
Fee accruing in respect of calendar year 2000 shall be $250,000 and shall be
payable on earlier of (i) the date on which the Company makes bonus payments to
any of its officers in respect of calendar year 2000 and (ii) February 15, 2001.
Notwithstanding the foregoing sentence, the Company and the Original Monitors
agree that the amount of the Director Fee due and payable in respect of any
calendar year shall not exceed an amount equal to 12.31% of the aggregate
bonuses paid to Messrs. Begel, Weller, Tallering, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ in
respect of such calendar year. Once any Director Fee has been paid it shall not
be returnable under any circumstances, including upon any termination of this
Agreement by any party hereto.
(b) The Company and the Original Monitors agree that the Company shall pay
the Director Fee to the Original Monitors as follows: (i) $178,571.43 to TIP;
(ii) $35,714.29 to Caravelle; (iii) $17,857.14 to Albion I; and (iv) $17,857.14
to Albion II. To the extent that the Director Fee payable in respect of any
calendar year is reduced as provided in the penultimate sentence of Section
3(a), the amount of the Director Fee payable to each Original Monitor shall be
reduced pro rata in proportion to the percentage of the aggregate Director Fee
payable to each Original Monitor pursuant to the first sentence of this Section
3(b).
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Section 4. Deferral of Payment of Fees. Each of the Company and the
Monitors agrees that the Fees payable hereunder shall only be payable to the
extent such payment is permitted under the terms of the Company's Senior Credit
Facilities and any other financing agreement of the Company entered into after
the date of the Original Agreement. Each of the parties hereto agrees that
notwithstanding that the Company may not be required to pay all or any portion
of any Fee as a result of the application of the terms of the preceding
sentence, all Fees shall nonetheless accrue and be earned on a daily basis and
shall be payable (including all missed payments in respect of any Fee) on the
first date that the payment thereof is permitted under the terms of the Senior
Credit Facilities or such other financing agreement. "Senior Credit Facilities"
collectively, (i) the First Lien Secured Credit Facility, dated as of March 16,
2004, by and among the Company, the lenders party thereto from time to time and
▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇ Commercial Paper Inc., Wachovia Capital Markets,
LLC and Credit Suisse First Boston, as amended from time to time and (ii) the
Second Lien Secured Credit Facility, dated as of March 16, 2004, by and among
the Company the lenders party thereto from time to time and ▇▇▇▇▇▇ Brothers
Inc., ▇▇▇▇▇▇ Commercial Paper Inc., Wachovia Capital Markets, LLC and Credit
Suisse First Boston, as amended from time to time.
Each of the parties hereto agrees that to the extent that Fees due to the
Monitors are deferred as provided in Section 3 above, any catch-up payments
shall first be allocated first to any Additional Monitoring Fee that is due and
payable under this Agreement, second to any Monitoring Fee that is due and
payable under this Agreement and third to any Director Fee that is due and
payable under this Agreement.
Each of the parties hereto agrees that as of December 31, 2003 the
following Fees have accrued and remain unpaid under the Original Agreement:
Additional
Monitoring Fees Monitoring Fees Directors Fees
--------------- --------------- --------------
TIP: $0 $- $57,142.86
Caravelle: $0 $- $11,428.58
Albion I: $0 $- $ 5,714.28
Albion II $0 $- $ 5,714.28
TFM $- $0 $-
AA $- $0 $-
--------------- --------------- --------------
Total: $0 $0 $80,000.00
-------------- --------------- --------------- --------------
Each of the parties hereto agrees that such fees shall continue to accrue
under this Agreement and the obligations of the Company subject to the terms of
this Agreement.
Section 5. Reimbursement. The Monitors and their affiliates shall be
entitled to reimbursement of all reasonable out-of-pocket expenses (including
travel expenses) incurred in connection with the performance of this Agreement
(other than salary expenses
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and associated overhead charges). The Company agrees to pay such amounts
promptly upon request therefor.
Section 6. Indemnity; No Liability. In consideration of the execution and
delivery of this Agreement by the Monitors, the Company hereby agrees to
indemnify, exonerate and hold each of the Monitors and any of their affiliates,
and each of their respective partners, shareholders, directors, officers,
fiduciaries, employees and agents and each of the partners, shareholders,
affiliates, directors, officers, fiduciaries, employees and agents of each of
the foregoing (collectively, the "Indemnitees") free and harmless from and
against any and all actions, causes of action, suits, losses, liabilities and
damages, and expenses in connection therewith, including without limitation
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnitees or any of them as a result of, or
arising out of, or relating to the Monitors' performance of services under this
Agreement except for any such Indemnified Liabilities arising solely on account
of such Indemnitee's gross negligence or willful misconduct, and if and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Company hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. None of the Indemnitees shall be liable to the Company or any of
its affiliates for any act or omission suffered or taken by such Indemnitee that
does not constitute gross negligence or willful misconduct.
Section 7. Assignment; Designation. Each Monitor may at its option assign
its rights and obligations under this Agreement to any of its affiliates or to
any transferee of any capital stock of the Company held by such Monitor or its
affiliates. Each Monitor in its sole discretion may also designate any one or
more of its affiliates as the recipient of any Fees payable under this
Agreement. The Company may not assign its rights or obligations under this
Agreement without the consent of each other party hereto.
Section 8. Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
Section 9. Termination. This Agreement may be terminated with respect to
any Monitor by such Monitor at any time by written notice to the Company. In
addition, this Agreement shall terminate (a) with respect to any Monitor upon
the termination of such Monitor's and its affiliates' right to appoint one or
more members of the Company's Board of Directors in accordance with the terms of
the Stockholders' Agreement and (b) with respect to all Monitors upon the
earlier to occur of (x) a Change of Control (as defined in the Certificate of
Designation of the Company governing the terms of its Series A, 14 1/2% Senior
Redeemable Preferred Stock as in effect on the date hereof) and (y) the date of
the consummation of an initial public offering of common stock of the Company
pursuant to an effective registra-
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tion statement under the Securities Act of 1933; provided that, as a condition
to the termination of this Agreement pursuant to this clause (y), the Company
shall have first paid to the Monitors an aggregate cash termination fee (the
"Termination Fee") in the amount of $3.5 million; provided further that this
clause (y) shall not be effective against any party hereto (i.e. this Agreement
may not be terminated pursuant to such clause (y) and no Termination Fee shall
be payable pursuant to such clause (y)) until such time as the Company shall
have obtained the requisite consents to the effectiveness of such clause (y)
pursuant to and in accordance with the terms of the Senior Credit Facilities.
The Company and the Monitors agree that the Company shall pay the Termination
Fee to the Monitors as follows: (i) $2,083,333.33 to TIP; (ii) $416,666.67 to
Caravelle, (iii) $208,333.33 to Albion I; (iv) $208,333.33 to Albion II, (v)
$486,111.11 to TFM and (vi) $97,222.22 to AA.
Section 10. Amendment, etc. This Agreement may be modified, waived,
discharged or terminated only by a written amendment signed by each of the
parties hereto affected thereby, and no waiver of any provision hereof shall be
effective unless expressed in a writing signed by the party to be charged. No
delay or omission by any party in exercising any right with respect to this
Agreement shall operate as a waiver. A waiver on any one occasion shall not be
construed as a bar to, or waiver of, any right or remedy on any future occasion.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President, General
Counsel and Secretary
TRANSPORTATION INVESTMENT PARTNERS, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. Flyer
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Name: ▇▇▇▇▇▇ ▇. Flyer
Title: Attorney in Fact
CARAVELLE INVESTMENT FUND, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. Flyer
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Name: ▇▇▇▇▇▇ ▇. Flyer
Title: Managing Director
ALBION ALLIANCE MEZZANINE FUND, L.P.
By: Albion Alliance LLC, its
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
ALBION ALLIANCE MEZZANINE FUND II, L.P.
By: AA Mezz II GP, LLC, its
General Partner
By: Albion Alliance LLC,
its Sole Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
TRIMARAN FUND MANAGEMENT, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. Flyer
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Name: ▇▇▇▇▇▇ ▇. Flyer
Title: Managing Director
ALBION ALLIANCE, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director